Document:

Form of Tax Sharing Agreement

 Exhibit 10.1 
 TAX SHARING AGREEMENT 
 between 
 MORGAN STANLEY, 
 on behalf of itself 
 and the members 
 of the Distributing
Group, 
 and 
 DISCOVER FINANCIAL SERVICES, 
 on behalf of itself 
 and the members 
 of the Controlled Group 
 This Agreement is entered into as of the [    ] day of
[                    ], 2007 between Morgan Stanley (“Distributing”), a Delaware corporation, on behalf of itself and the members of
the Distributing Group, as defined below, and Discover Financial Services (“Controlled”), a Delaware corporation, on behalf of itself and the members of the Controlled Group, as defined below. 
 W I T N E S S E T H: 
 WHEREAS, pursuant to
the tax laws of various jurisdictions, certain members of the Controlled Group presently file certain tax returns on an affiliated, consolidated, combined, unitary, fiscal unity or other, group basis (including as permitted by Section 1501 of
the Internal Revenue Code of 1986, as amended (the “Code”)) with certain members of the Distributing Group; 
 WHEREAS,
Distributing and Controlled intend to enter into a Separation and Distribution Agreement, dated as of [                    ], 2007 (the
“Separation Agreement”), providing for the distribution by Distributing to its shareholders of all of the common stock of Controlled that is held by Distributing and certain other matters; 
 WHEREAS, Distributing and Controlled desire to set forth their agreement on the rights and obligations of Distributing, Controlled and the members of the
Distributing Group and the Controlled Group, respectively, with respect to (A) the handling and allocation of federal, state, local and foreign taxes (other than the U.K. taxes governed by the U.K. Tax Sharing Agreement) incurred in taxable
periods beginning prior to the Distribution Date, (B) taxes resulting from transactions effected in connection with the Distribution, including but not limited to the Distribution and the transactions (i) described in or contemplated by
the private letter ruling requests, dated March 7, 2007, March 22, 2007 and 

 
April 12, 2007 (collectively, with all attachments, exhibits and supplements thereto dated March 21, 2007, April 17,
2007, April 26, 2007, April 27, 2007 and [                    ], the “Ruling Request”), submitted by
Distributing to the IRS and the FTB (in each case as defined below), (ii) effected pursuant to, or otherwise described in or contemplated by, the Separation Agreement (including, but not limited to, Schedule 1 thereto) or any Ancillary
Agreement and (iii) described in or otherwise contemplated by the Form 10 (such transactions described in clauses (i), (ii) and (iii) are collectively referred to as the “Restructuring”), and (C) various other
tax matters; 
 NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

 1. Definitions.  
 (a) As used in this Agreement: 
 “Active Business” shall mean an active trade or business relied upon in the
Ruling Request in connection with the Restructuring or the Distribution. 
 “Actually Realized” or “Actually
Realizes” shall mean, for purposes of determining the timing of the incurrence of any Tax liability or the realization of a Refund (or any related income tax or other Tax cost or benefit) in respect of any payment, transaction, occurrence
or event, the time at which the amount of income taxes paid (or Refund realized) is increased above (or reduced below) the amount of income taxes that would otherwise have been required to be paid (or Refund that would otherwise have been realized)
but for such payment, transaction, occurrence or event. 
 “Affiliate” of any Person shall mean any individual, corporation,
partnership or other entity directly or indirectly owning more than 50 percent (by vote or value) of, owned more than 50 percent (by vote or value) by, or under more than 50 percent (by vote or value) common ownership with, such Person. 

“After-Tax Amount” shall mean an additional amount necessary to reflect the hypothetical Tax consequences of the receipt or accrual
of any payment, using the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable to the recipient of such payment for the relevant Taxable year, reflecting for example, the effect of the deductions
available for interest paid or accrued and for Taxes, such as state and local income taxes. 
 “AMT” shall mean the
alternative minimum tax, within the meaning of Section 55 of the Code. 
 “Ancillary Agreement” shall have the meaning
ascribed to it in the Separation Agreement. 
  

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 “Code” shall have the meaning ascribed to it in the first “whereas” clause in
this Agreement. 
 “Combined Apportionment Factor” shall mean the apportionment factor reflected on the applicable
consolidated, combined or unitary state or local income tax return and utilized in computing the combined, consolidated or unitary state or local income tax liability. 
 “Company Proceedings” shall mean the ongoing Tax Proceedings between [            ] and Controlled. 
 “Consolidated Federal Return” shall mean a Pre-Distribution Period Return filed in respect of federal income taxes by a Consolidated
Group. 
 “Consolidated Group” shall mean any group consisting of (i) at least one member of the Distributing Group
that filed (or will file) any Pre-Distribution Period Return that reflects the income, assets or operations of any member of the Controlled Group or (ii) at least one member of the Controlled Group that filed (or will file) any Pre-Distribution
Period Return that reflects the income, assets or operations of any member of the Distributing Group. 
 “Consolidated State
Return” shall mean a Pre-Distribution Period Return filed in respect of state or local income taxes by a Consolidated Group. 
 “Controlled Group” shall mean one or more of Controlled and (i) any Person that is an Affiliate of Controlled immediately after the Distribution and (ii) to the extent not previously included by (i), any Person
that was owned directly or indirectly by Controlled prior to the Distribution for such period of ownership by Controlled, including for both (i) and (ii) any predecessors thereto; provided, however, that for purposes of determining whether
an entity is a member of the Controlled Group, a transfer of beneficial ownership of an entity shall be treated as a transfer of title, regardless of whether title has actually passed. 
 “Distributing Group” shall mean one or more of Distributing and its Affiliates other than those entities comprising the Controlled
Group. 
 “Distribution” shall mean the distribution by Distributing of all of the common stock of Controlled that is held
by Distributing to Distributing’s shareholders pursuant to the Separation Agreement. 
 “Distribution Date” shall mean
the date on which the Distribution shall be effected. 
 “Federal Separate Group Tax Liability” shall
mean the product of a Group’s Separate Group Taxable Income, computed for federal income tax purposes, and the highest federal income tax rate imposed under the Code on the 

  

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Taxable income of a corporation for the relevant Taxable period (or portion thereof), reduced by any Tax credits that the Group would be able to use if it
were calculating its federal income Tax liability on a stand-alone basis. 
 “Final Determination” shall mean (i) with
respect to federal income taxes, (A) a “determination” as defined in Section 1313(a) of the Code, or (B) the date of acceptance by or on behalf of the IRS of Form 870-AD (or any successor form thereto), as a final resolution
of Tax liability for any Taxable period, except that a Form 870-AD (or successor form thereto) that reserves the right of the taxpayer to file a claim for Refund or the right of the IRS to assert a further deficiency shall not constitute a Final
Determination with respect to the item or items so reserved; (ii) with respect to Taxes other than federal income taxes, any final determination of liability in respect of a Tax that, under applicable law, is not subject to further appeal,
review or modification through proceedings or otherwise; (iii) with respect to any Tax, any final disposition by reason of the expiration of the applicable statute of limitations; or (iv) with respect to any Tax, the payment of Tax by any
member of the Distributing Group or the Controlled Group, whichever is responsible for payment of such Tax under applicable law, with respect to any item disallowed or adjusted by a Taxing Authority, provided that the provisions of Section 13
hereof have been complied with, or, if such section is inapplicable, that the party responsible under the terms of this Agreement for such Tax is notified by the party paying such Tax that it has determined that no action should be taken to recoup
such disallowed item, and the other party agrees with such determination. 
 “FTB” shall mean the California Franchise Tax
Board. 
 “Gain Group” shall mean a Group with Separate Group Taxable Income for the relevant Taxable period. 
 “Group” shall mean the Controlled Group or the Distributing Group, as appropriate. 
 “IRS” shall mean the Internal Revenue Service. 
 “Loss Group” shall mean a Group that incurs a Separate Group Taxable Loss for the relevant Taxable period. 
 “Overpayment Rate” shall mean the overpayment rate as set forth in Section 6621 of the Code. 
 “Person” shall have the meaning ascribed to it in Section 7701(a)(1) of the Code. 
  

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 “Post-Distribution Period” shall mean any Taxable period (or portion thereof) beginning
after the close of business on the Distribution Date. 
 “Pre-Distribution Period” shall mean any Taxable period ending on
or before the close of business on the Distribution Date; provided that if a Taxable period ending after the Distribution Date contains any days which fall prior to or on the Distribution Date, only the portion of such Taxable period up to and
including the Distribution Date shall be included in the Pre-Distribution Period. 
 “Refund” shall mean any refund of
taxes, including any reduction in taxes by means of a credit, offset or otherwise. 
 “Restructuring” shall have the meaning
ascribed to it in the third “whereas” clause in this Agreement; provided, however, that “Restructuring” shall exclude any normal business operations. 
 “Return” shall mean any Tax return, statement, report, form, election, claim or surrender (including estimated Tax returns and reports, extension requests and forms, and information returns and
reports) required to be filed with any Taxing Authority. 
 “Ruling Request” shall have the meaning ascribed to it in the
third “whereas” clause in this Agreement. 
 “Separate Group Taxable Income” shall mean, with respect to a Group,
such Group’s Taxable income computed as if such Group were a separate consolidated, combined or unitary group, and applying such Tax principles, including limitations and carryovers (excluding limits for charitable contributions and dividends
received deduction, and accounting for deferred intercompany transactions consistent with the deferral and recognition rules of Treasury Regulations Section 1.1502-13 (or any successor rule) or analogous state or local rule), that would have
been applicable to such Group had such Group never been part of the Consolidated Group or any other consolidated, combined or unitary group. In the context of state and local tax, Separate Group Taxable Income shall be computed prior to the
application of any apportionment formula. Additionally, to the extent a member of a Group has a net operating loss or any other tax attribute that was created prior to becoming a member of the Group but can be carried forward and used by the Group
(in the context of state or local law, either before or after apportionment, as determined under applicable law), such attribute will factor into such Group’s calculation of Separate Group Taxable Income (taking into account any applicable
limitations on the use thereof). 
 “Separate Group Taxable Loss” shall mean, with respect to a Group, such Group’s
Taxable loss computed as if such Group were a separate consolidated, combined or unitary group, and applying such Tax principles, including 

  

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limitations and carryovers (excluding limits for charitable contributions and dividends received deduction, and accounting for deferred intercompany
transactions consistent with the deferral and recognition rules of Treasury Regulations Section 1.1502-13 (or any successor rule) or analogous state or local rule), that would have been applicable to such Group had such Group never been part of
the Consolidated Group or any other consolidated, combined or unitary group. In the context of state and local tax, Separate Group Taxable Loss shall be computed prior to the application of any apportionment formula. Additionally, to the extent a
member of a Group has a net operating loss or any other Tax attribute that was created prior to becoming a member of the Group but can be carried forward and used by the Group (in the context of state or local law, either before or after
apportionment, as determined under applicable law), such attribute will factor into the Group’s calculation of Separate Group Taxable Loss (taking into account any applicable limitations on the use thereof). 
 “Separation Agreement” shall have the meaning ascribed to it in the second “whereas” clause in this Agreement. 
 “State Separate Group Tax Liability” shall mean, with respect to a particular state or locality, the product of the Group’s
Separate Group Taxable Income and the Combined Apportionment Factor and the State Tax Rate, reduced by any applicable Tax credits that the Group would be able to use if it were calculating its Tax liability on a stand-alone basis. 
 “State Tax Rate” shall mean, with respect to a particular state or locality, the highest applicable tax rate imposed under applicable
law on the Separate Group Taxable Income of the Group for the relevant Taxable period (or portion thereof). 
 “Tax” (and
the correlative meaning, “Taxes,” “Taxing” and “Taxable”) shall mean (A) any tax imposed under Subtitle A of the Code, or any net income, gross income, gross receipts, alternative or add-on
minimum, sales, use, business and occupation, value-added, trade, goods and services, ad valorem, franchise, profits, license, business royalty, withholding, payroll, employment, capital, excise, transfer, recording, severance, stamp, occupation,
premium, property, asset, real estate acquisition, environmental, custom duty, or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest and any penalty, addition to tax or additional amount
imposed by a Taxing Authority; (B) any liability of a member of the Distributing Group or the Controlled Group, as the case may be, for the payment of any amounts of the type described in clause (A) for any Taxable period resulting from
such member being a part of a consolidated group pursuant to the application of Treasury Regulations Section 1.1502-6 or any similar provision applicable under state, local or foreign law; or (C) any liability of a member of the
Distributing Group or the Controlled Group for the payment of any amounts described in clause (A) as a result of any express or implied obligation to indemnify any other Person. 
  

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 “Tax Benefit” shall have the meaning ascribed to it in Section 10(d) of this
Agreement. 
 “Tax Proceeding” shall mean any Tax audit, dispute or proceeding (whether administrative, judicial or
contractual). 
 “Taxing Authority” shall mean any governmental authority (domestic or foreign), including, without
limitation, any state, municipality, political subdivision or governmental agency, responsible for the imposition of any Tax. 
 “U.K. Tax Sharing Agreement” shall mean the Supplemental Tax Sharing Agreement Relating to Direct Tax and VAT in the United Kingdom, dated as of [•], 2007, between Distributing and Controlled. 
 “Underpayment Rate” shall mean the underpayment rate as set forth in Section 6621 of the Code. 
 (b) Any term used in this Agreement which is not defined in this Agreement shall, to the extent the context requires, have the
meaning assigned to it in the Code or the applicable Treasury regulations thereunder (as interpreted in administrative pronouncements and judicial decisions), in comparable provisions of applicable law or in the Ruling Request. 
 2. Sole Tax Sharing Agreement. Any and all existing Tax sharing agreements or arrangements, written or unwritten, between any member of the
Distributing Group and any member of the Controlled Group shall be or shall have been terminated upon consummation of the Distribution. Upon consummation of the Distribution, neither the members of the Controlled Group nor the members of the
Distributing Group shall have any further rights or liabilities thereunder, and this Agreement and the U.K. Tax Sharing Agreement shall be the sole Tax sharing agreements between the members of the Controlled Group and the members of the
Distributing Group. Distributing and Controlled shall act in good faith in the performance of this Agreement. 
 3. Federal Income Taxes.

 (a) Return Filing. 
 (i) Distributing shall prepare and file, or cause to be prepared and filed, Consolidated Federal Returns for which the Consolidated Group is required or permitted to file a Consolidated Federal Return using, inter
alia, information previously provided by Controlled. Controlled shall provide Distributing with all necessary information to file a Consolidated Federal Return not 

  

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later than 45 days before such return is due. Each member of the Consolidated Group shall execute and file such consents, elections and other documents as
may be required or appropriate for the filing of such Consolidated Federal Returns. All Tax elections shall be at the sole discretion of Distributing. All income tax computations performed on a consolidated basis will be performed or approved by
Distributing. To the extent reasonably practicable, Distributing shall notify and discuss with Controlled prior to the filing of a Consolidated Federal Return any potential material differences in the information provided by Controlled to be used in
the preparation of such Consolidated Federal Return and the position Distributing intends to take on such Consolidated Federal Return. Not later than 15 days after filing a Consolidated Federal Return, Distributing shall inform Controlled in writing
of any position taken on such Consolidated Federal Return that is materially different from the information provided by Controlled to be used in the preparation of such Consolidated Federal Return. 
 (ii) Distributing shall pay, or cause to be paid, and, subject to the provisions of Section 3(b), shall be responsible for, any and
all federal income taxes due or required to be paid with respect to, or required to be reported on, any such Consolidated Federal Return. 
 (iii) In the event a Consolidated Federal Return is not filed, each relevant member of the Distributing Group and Controlled Group shall be responsible for (i) filing its own Pre-Distribution Period Return in
respect of federal income taxes as a separate entity, including requests for extension, as if this Agreement were not in effect and (ii) making Tax payments (including estimated Tax payments, if necessary). Each such member filing a Return as a
separate entity shall be entitled to any Tax benefit and shall be liable for any Tax burden resulting from the filing of such separate Return. 
 (b) Allocated Tax Charge. 
 (i) Each Group included in the Consolidated Federal Return
shall be responsible for calculating its Separate Group Taxable Income or Separate Group Taxable Loss as if such Group filed a federal income tax Return on a stand-alone basis, and shall bear its Federal Separate Group Tax Liability, if any. For
purposes of such calculation, the deduction for state and local taxes to which each Group is entitled will be determined in a manner consistent with Section 4 of this Agreement. 
  

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 (ii) If the Controlled Group included in the Consolidated Federal Return incurs a
Separate Group Taxable Loss, Distributing shall pay to the Controlled Group (A) the amount, if any, by which the federal income taxes payable with respect to the Consolidated Federal Return are actually reduced by reason of the Controlled
Group’s Separate Group Taxable Loss and (B) any Refund of federal income taxes or other federal income tax benefit attributable to such Separate Group Taxable Loss that is Actually Realized, in each case as determined by Distributing in
its sole discretion (including that any tax benefits of the Distributing Group shall be fully utilized before utilizing any tax benefits of the Controlled Group). To the extent the Controlled Group receives a payment or credit from Distributing in
respect of a Separate Company Taxable Loss pursuant to this Section 3(b)(ii), such loss shall not be carried forward or carried back by the Controlled Group for purposes of determining Separate Group Taxable Income or Separate Group Taxable
Loss in any other Taxable period (or portion thereof). To the extent the Controlled Group does not receive a payment or credit from Distributing in respect of a Separate Group Taxable Loss pursuant to this Section 3(b)(ii), such loss may be
carried forward or carried back, subject to any applicable limitation with respect to carry forward or carry back losses, by the Controlled Group for purposes of determining Separate Group Taxable Income or Separate Group Taxable Loss in another
Taxable period (or portion thereof). 
 (iii) If the Controlled Group included in the Consolidated Federal Return has a
foreign Tax credit or other Tax credit that it is unable to use in its calculation of Federal Separate Group Tax Liability (other than an AMT credit), Distributing shall pay to the Controlled Group (A) the amount, if any, by which the federal
income taxes payable with respect to the Consolidated Federal Return is actually reduced by reason of the Controlled Group’s Tax credit and (B) any Refund of federal income taxes or other federal income tax benefit attributable to such Tax
credit that is Actually Realized, in each case as determined by Distributing in its sole discretion (including that any tax benefits of the Distributing Group shall be fully utilized before utilizing any tax benefits of the Controlled Group). To the
extent the Controlled Group receives a payment or credit from Distributing in respect of a Tax credit pursuant to this Section 3(b)(iii), the Controlled Group’s Federal Separate Group Tax Liability will be adjusted to reflect the fact that
the Controlled Group has 

  

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previously received the benefit of such credit. To the extent the Controlled Group does not receive a payment or credit from Distributing in respect of a Tax
credit pursuant to this Section 3(b)(iii), such Tax credit may be carried forward or carried back , subject to any applicable limitation with respect to carry forward or carry back of Tax credits, by the Controlled Group for purposes of
calculating its Separate Group Tax Liability in another Taxable period (or portion thereof). 
 (iv) In the event a
Consolidated Group incurs an AMT liability with respect to any Taxable period (or portion thereof), Distributing shall be solely responsible for such liability. Any Tax benefit arising from the utilization of a consolidated federal AMT credit shall
be for the sole benefit of Distributing. 
 4. State and Local Income Taxes. 
 (a) Return Filing. 
 (i) Distributing shall prepare and file, or cause to be prepared and filed, Consolidated State Returns for which a Consolidated Group is required or permitted to file a Consolidated State Return using, inter alia, information previously
provided by Controlled. Controlled shall provide Distributing with all necessary information to file a Consolidated State Return not later than 21 days before such return is due. Each member of the Consolidated Group shall execute and file such
consents, elections and other documents as may be required or appropriate for the filing of such Consolidated State Returns. All Tax elections shall be made at the discretion of Distributing. All Tax computations performed on a combined,
consolidated or unitary basis will be performed or approved by Distributing. To the extent reasonably practicable, Distributing shall notify and discuss with Controlled prior to the filing of a Consolidated State Return any potential material
differences in the information provided by Controlled to be used in the preparation of such Consolidated State Return and the position Distributing intends to take on such Consolidated Federal Return. Not later than 15 days after filing a
Consolidated State Return, Distributing shall inform Controlled in writing of any position taken on such Consolidated State Return that is materially different from the information provided by Controlled to be used in the preparation of such
Consolidated State Return. 
 (ii) Distributing shall pay, or cause to be paid, and, subject to the provisions of
Section 4(b), shall be responsible for, any and all income taxes due or required to be paid with respect to, or required to be reported on, any such Consolidated State Return. 
  

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 (iii) In the event a Consolidated State Return is not filed, each relevant member of the
Distributing Group and Controlled Group shall be responsible for (A) filing its own Return as a separate entity, or its own Return in respect of state and local income Taxes relating to a group consisting solely of members of the Distributing
Group or members of the Controlled Group, as the case may be, on behalf of the separate group, in each case including requests for extension, as if this Agreement were not in effect and (B) making Tax payments (including estimated Tax payments,
if necessary). Each such member filing a Return as a separate entity shall be entitled to any Tax benefit and shall be liable for any Tax burden resulting from the filing of such separate Return. 
 (b) Allocated Tax Charge. 
 (i) Each Group included in a Consolidated State Return shall be responsible for calculating its Separate Group Taxable Income or Separate Group Taxable Loss and shall bear its State Separate Group Tax Liability, if
any. 
 (ii) If the Controlled Group included in a Consolidated State Return incurs a Separate Group Taxable Loss,
Distributing shall pay, or shall cause to be paid, to the Controlled Group (A) the amount, if any, by which the state or local income taxes reflected on such Return are actually reduced by reason of the Controlled Group’s Separate Group
Taxable Loss and (B) any Refund of state or local income taxes or other state or local income tax benefit attributable to such Separate Group Taxable Loss that is Actually Realized, in each case as determined by Distributing in its sole
discretion (including that any tax benefits of the Distributing Group shall be fully utilized before utilizing any tax benefits of the Controlled Group). To the extent the Controlled Group receives a payment or credit from Distributing in respect of
a Separate Group Taxable Loss pursuant to this Section 4(b)(ii), such loss shall not be carried forward or carried back by the Controlled Group for purposes of determining Separate Group Taxable Income or Separate Group Taxable Loss in any
other Taxable period (or portion thereof). To the extent the Controlled Group does not receive a payment or credit from Distributing in respect of a Separate Group Taxable Loss pursuant to this Section 4(b)(ii), such loss may be carried forward
or 

  

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carried back, subject to any applicable limitation with respect to carry forward or carry back losses, by the Controlled Group for purposes of determining
Separate Group Taxable Income or Separate Group Taxable Loss in another Taxable period (or portion thereof). 
 (iii) If the
Controlled Group included in a Consolidated State Return has a Tax credit that it is unable to use in its calculation of State Separate Group Tax Liability, Distributing shall pay to the Controlled Group (A) the amount, if any, by which the
state or local income taxes reflected on such Return is actually reduced by reason of the Consolidated Group’s Tax credit and (B) any Refund of state or local income taxes or other state or local income tax benefit attributable to such Tax
credit that is Actually Realized, in each case as determined by Distributing in its sole discretion (including that any tax benefits of the Distributing Group shall be fully utilized before utilizing any tax benefits of the Controlled Group). To the
extent the Controlled Group receives a payment or credit from Distributing in respect of a Tax credit pursuant to this Section 4(b)(i)(C), the Controlled Group’s State Separate Group Tax Liability will be adjusted to reflect the fact that
the Controlled Group has previously received the benefit of such credit. To the extent the Controlled Group does not receive a payment or credit from Distributing in respect of a Tax credit pursuant to this Section 4(b)(iii), such Tax credit
may be carried forward or carried back, subject to any applicable limitation with respect to carry forward or carry back of Tax credits, by the Controlled Group for purposes of calculating its State Separate Group Tax Liability in another Taxable
period (or portion thereof). 
 5. Foreign Income Tax. With respect to the calculation of each Group’s Tax liability for foreign
taxes, other than U.K. taxes governed by the U.K. Tax Sharing Agreement, the principles set forth in Section 4 shall apply mutatis mutandis. 
 6. Estimated Tax Payments. 
 (a) If estimated Tax payments are required with
respect to a Consolidated Group for a Pre-Distribution Period, Distributing shall pay, or cause to be paid, to the IRS, and/or to each relevant state and local Taxing Authority, on behalf of the members of such Consolidated Group, those estimated
Tax payments that are due on the relevant dates prescribed by applicable law. On February 15 (or the proper due date under applicable law) of the year following the current tax year, Distributing 

  

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shall pay to the IRS, and to each relevant state and local Taxing Authority, on behalf of the members of any Consolidated Group, the payment, if any,
required to be made with a request for an extension of time in which to file a Consolidated Federal Return or a Consolidated State Return, as the case may be. Each Group’s share of such estimated Tax payments, and payments required to be made
with a request for an extension of time in which to file a Consolidated Federal Return or a Consolidated State Return, shall be determined in a manner consistent with the methods set forth in Sections 3 and 4 of this Agreement. Reimbursement to
Distributing of the Controlled Group’s share of any quarterly estimated tax payments or any payment made with a request for an extension of time in which to file a Consolidated Federal Return or a Consolidated State Return, shall be made within
twenty business days after receiving notice of such liability from Distributing. 
 (b) Notwithstanding the provisions
of Section 6(a), if Distributing requests in writing an advance reimbursement from the Controlled Group of the Controlled Group’s share of a quarterly estimated Tax payment or any payment required to be made with a request for an extension
of time in which to file a Consolidated Federal Return or a Consolidated State Return, which request shall be not more than ten business days and not less than 5 business days prior to the due date of such payment, the Controlled Group shall
reimburse Distributing not later than the due date of such estimated Tax payment. 
 (c) If the Controlled Group is a
Loss Group and if such net operating loss would decrease overall consolidated, combined or unitary Taxable income in respect of the Consolidated Group, Distributing shall pay to the Controlled Group an amount equal to the difference between the Tax
liability of the Distributing Group and the amounts paid to the respective Taxing Authorities 5 business days after all such payments are due to the Taxing Authorities. 
 7. Settlement Procedures; Certain Other Payments. 
 (a) Distributing shall
calculate settlement of the final federal, state, local and foreign Tax liability for all Pre-Distribution Periods, and notify the Controlled Group of such settlement. Subject to Section 21 of this Agreement (relating to dispute resolution
procedures), the Controlled Group shall pay to Distributing its share of such Tax liability, as determined under Sections 3, 4 and 5 of this Agreement, within twenty business days after receiving notice of such Tax liability from Distributing. Any
amounts paid by any member of the Controlled Group pursuant to Section 6 and any amounts receivable by the Controlled Group in respect of a Separate Group Taxable Loss or Tax credit shall be included in 

  

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determining the payments due from the Controlled Group. If the sum of any payments by the Controlled Group pursuant to Section 6, and any amounts
receivable by the Controlled Group in respect of a Separate Group Taxable Loss or Tax credit exceed its Tax liability, such excess shall be refunded to the Controlled Group. Interest will be due on any underpayment or overpayment of Tax, computed
from the date on which a final Return is filed, (i) if owed by the Controlled Group to Distributing on an underpayment, at the Underpayment Rate and (ii) if owed by Distributing to the Controlled Group on an overpayment, the Overpayment
Rate. 
 (b) If a portion or all of an unused loss or Tax credit is allocated to a member of the Consolidated Group,
pursuant to Treasury Regulations Section 1.1502-21(b) or Treasury Regulations Section 1.1502-79, and is carried back or forward to a Taxable year in which such member filed a separate Return or consolidated, combined or unitary Return with
an affiliated group that is not a Consolidated Group, any Refund or reduction in Tax liability arising from such carry back or carryover shall be retained by such member, subject to future audit adjustments. Notwithstanding the foregoing,
Distributing, in its sole discretion, shall determine whether an election shall be made to relinquish the entire carry back period with respect to part or all of a consolidated net operating loss for any Pre-Distribution Period in accordance with
Treasury Regulations Section 1.1502-21(b)(3). 
 (c) Notwithstanding Section 7(b) above, no member of the
Controlled Group shall make any election to carry back any Tax item from a Post-Distribution Period to a Pre-Distribution Period without Distributing’s consent. In the event that Distributing consents to the carry back of any Tax item by a
member of the Controlled Group from a Post-Distribution Period to a Pre-Distribution Period or in the event that a member of the Controlled Group is required by applicable law to carry back a Tax item from a Post-Distribution Period to a
Pre-Distribution Period, Distributing shall currently compensate the Controlled Group only for a Tax item that is carried back which does not result in the loss or deferral of any Tax attribute of any member of the Distributing Group. In the event
that such item of a member of the Distributing Group is only deferred, Distributing shall make a payment to the Controlled Group in respect of such deferred item at the time the Distributing Group Actually Realizes the deferred Tax attribute. To the
extent the Distributing Group suffers a permanent loss of such Tax attribute, no payment shall be made to the Controlled Group. 
 (d) Controlled and Distributing hereby acknowledge and agree that Sections 6 and 7(a) are applicable only with respect to Pre- Distribution Periods for which no final Return has been filed prior to the date hereof. 
  

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 (e) In accordance with the past practice of Controlled and Distributing,
Controlled shall continue to make payments to Distributing in respect of the exercise of options on Distributing stock and the conversion of restricted Distributing stock units (i) prior to the Distribution, by employees of Controlled and the
members of the Controlled Group, and (ii) after the Distribution, by former employees of Controlled and the members of the Controlled Group. 
 8. Other Taxes. All federal, state, local, foreign and other Taxes that are not otherwise expressly dealt with herein or in the U.K. Tax Sharing Agreement, and the filing of any Returns with respect to such Taxes, shall be the
responsibility of the Person who is liable for such Taxes or is responsible for filing such Returns under applicable law. 
 9. Certain
Representations and Covenants. 
 (a) Controlled Representations. Controlled and each member of the Controlled
Group represents that as of the date hereof, and covenants that on the Distribution Date, there is no plan or intention: 
 (i) to liquidate Controlled or to merge or consolidate Controlled, or any member of the Controlled Group conducting an Active Business, with any other person subsequent to the Distribution, 
 (ii) to sell or otherwise dispose of any asset of Controlled or any member of the Controlled Group subsequent to the Distribution, in a
manner that would result in any increased Tax liability or reduction of any Tax asset of the Distributing Group or any member thereof, 
 (iii) to take any action inconsistent with the written information and representations furnished to the IRS or the FTB in connection with the Ruling Request, or to counsel in connection with any opinion being
delivered by counsel with respect to the Distribution or the Restructuring, regardless of whether such information and representations were included in the ruling issued by the IRS or FTB or in the opinion of counsel, 
 (iv) to repurchase stock of Controlled in a manner contrary to the requirements of IRS Revenue Procedure 96-30, as modified by IRS Revenue
Procedure 2003-48, or in a manner contrary to the representations made in the Ruling Request, 
  

 15 

 (v) to take any action that management of Controlled knows, or should have known, is
reasonably likely to contravene any agreement with a Taxing Authority entered into prior to the Distribution Date to which any member of the Controlled Group or the Distributing Group is a party, or 
 (vi) to enter into any negotiations, agreements, or arrangements with respect to transactions or events (including stock issuances,
pursuant to the exercise of options or otherwise, option grants, the adoption of, or authorization of shares under, a stock option plan, capital contributions, or acquisitions, but not including the Distribution) which may cause the Distribution to
be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly Controlled stock representing a “50-percent or greater interest” within the meaning of Section 355(d)(4) of the Code. 
 (b) Controlled Covenants. Controlled covenants to Distributing that, without either (i) the prior written consent of
Distributing, (ii) a supplemental private letter ruling issued by the IRS, or (iii) an unqualified written opinion of tax counsel selected by Distributing (in the case of (ii) and (iii), satisfactory to Distributing in its sole
discretion): 
 (i) during the twelve-month period following the Distribution Date, neither Controlled, nor any member of the
Controlled Group conducting an Active Business, will liquidate, merge or consolidate with any other Person, 
 (ii) during the
two-year period following the Distribution Date, Controlled will not sell, exchange, distribute or otherwise dispose of its assets or those of any member of the Controlled Group in a manner that would result in any increased Tax liability or
reduction of any Tax asset of the Distributing Group or any member thereof, 
 (iii) following the Distribution, Controlled
will, for a minimum of twelve months, continue each Active Business, 
 (iv) Controlled will not, nor will it permit any
member of the Controlled Group to, take any action inconsistent with the information and representations furnished to the IRS or the FTB 

  

 16 

 
in connection with the Ruling Request, or to counsel in connection with any opinion being delivered by counsel with respect to the Distribution or the
Restructuring, regardless of whether such information and representations were included in the ruling issued by the IRS or FTB or in the opinion of counsel, 
 (v) Controlled will not take any action that management of Controlled knows, or should have known, is reasonably likely to contravene any
agreement with a Taxing Authority entered into prior to the Distribution Date to which any member of the Controlled Group or the Distributing Group is a party, 
 (vi) during the two-year period following the Distribution Date, Controlled will not repurchase stock of Controlled in a manner contrary
to the requirements of IRS Revenue Procedure 96-30, as modified by IRS Revenue Procedure 2003-48, or in a manner contrary to the representations made in the Ruling Request, 
 (vii) other than to the extent such action is required by the Separation Agreement, on or after the Distribution Date, Controlled will
not, nor will it permit any member of the Controlled Group to, make or change any accounting method, amend any Return or take any Tax position on any Return, take any other action or enter into any transaction that results in any increased Tax
liability or reduction of any Tax asset of the Distributing Group or any member thereof in respect of any Pre-Distribution Period, and 
 (viii) during the two-year period following the Distribution Date, Controlled will not enter into any transaction or make any change in its equity structure (including stock issuances, pursuant to the exercise of
options or otherwise, options grants, the adoption of, or authorization of shares under, a stock option plan, capital contributions, or acquisitions, but not including, the Distribution) which may cause the Distribution to be treated as part of a
plan pursuant to which one or more Persons acquire directly or indirectly Controlled stock representing a “50-percent or greater interest” within the meaning of Section 355(d)(4) of the Code. 
 Controlled agrees that, regardless of whether Distributing consents to, or receives a ruling or opinion with respect to, any action referred to in this
Section 9(b), Distributing is to have no liability for any Tax resulting from 

  

 17 

 
any such action and Controlled agrees to indemnify and hold harmless the Distributing Group against any such Tax. Controlled shall also bear all costs
incurred by Distributing in connection with obtaining any opinion of counsel, a supplemental private letter ruling or in connection with Distributing’s determination of whether or not to grant any written consent required under this
Section 9(b). 
 10. Indemnities. 
 (a) Controlled Indemnity. Controlled and each member of the Controlled Group will jointly and severally indemnify Distributing and the members of the Distributing Group against, and hold them harmless from:

 (i) any income tax liability of the Controlled Group as determined in accordance with this Agreement; 
 (ii) any liability or damage resulting from a breach by Controlled or any member of the Controlled Group of any representation or covenant
made by Controlled herein; 
 (iii) any income tax liability (a) resulting from the Distribution or any portion of the
Restructuring that is intended to qualify as tax free to Distributing or its shareholders under Sections 355 and/or 368(a)(1)(D) of the Code from failing to so qualify and (b) that is attributable to any action of Controlled or any member of
the Controlled Group, other than any action required by the Separation Agreement or any Ancillary Agreement (including any exhibits or schedules thereto), without regard to whether Distributing has consented to such action; 
 (iv) any Taxes imposed on Distributing or any member of the Distributing Group in respect of the Special Dividend to the extent Controlled
or any member of the Controlled Group has received a Refund with respect to such Taxes; and 
 (v) all liabilities, costs,
expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any
income tax liability or damage described in (i), (ii), (iii) or (iv), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such income tax, liability or
damage. 
  

 18 

 (b) Distributing Indemnity. Distributing and each member of the Distributing Group
will jointly and severally indemnify Controlled and the members of the Controlled Group against, and hold them harmless from: 
 (i) any income tax liability of the Consolidated Group, other than any such liabilities described in Section 10(a); 
 (ii) any Taxes imposed on Controlled or any member of the Controlled Group under Treasury Regulation 1.1502-6 (or similar provision of state, local or foreign law) solely as a result of Controlled or any such member being or having been a
member of a Consolidated Group to the extent payment is first sought by a Taxing Authority from a member of the Controlled Group; 
 (iii) any liability or damage resulting from a breach by Distributing or any member of the Distributing Group of any representation or covenant made by Distributing herein; and 
 (iv) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and
expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any income tax liability or damage described in (i), (ii) or (iii) including those incurred in the
contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such income tax, liability or damage. 
 If a member of the Distributing Group ceases to be an Affiliate of Distributing as a result of a sale of its stock to a third party (whether or not treated as a sale or exchange of stock for Tax purposes), such member of the Distributing
Group shall be released from its obligations under this Agreement upon such sale and neither Distributing nor any member of the Distributing Group shall have any obligation to indemnify Controlled or any member of the Controlled Group under
Section 10(b)(iii) for any liability or damage attributable to actions taken by such Affiliate after such sale. 
 (c)
Discharge of Indemnity. Controlled, Distributing and the members of the Controlled Group and Distributing Group, respectively, shall discharge their obligations under Sections 10(a) and 10(b) hereof, respectively, by paying the relevant amount
within 30 days of demand therefor. Any such demand shall include a statement showing the amount due under Section 10(a) or 10(b), as the case may be. Items described in Section 10(a)(i) and 10(b)(i) shall be calculated as set forth in
Sections 3 

  

 19 

 
and 4. Notwithstanding the foregoing, if either Controlled, Distributing or any member of the Controlled Group or Distributing Group disputes in good faith
the fact or the amount of its obligation under Section 10(a) or Section 10(b), then no payment of the amount in dispute shall be required until any such good faith dispute is resolved in accordance with Section 21 hereof; provided,
however, that any amount not paid within 30 days of demand therefor shall bear interest as provided in Section 14. 
 (d) Tax Benefits. If an indemnification obligation of any member of the Distributing Group or any member of the Controlled Group, as the case may be, under this Section 10 with respect to a Consolidated Group arises in respect
of an adjustment that makes allowable to a member of the Controlled Group or a member of the Distributing Group, respectively, any deduction, amortization, exclusion from income or other allowance (a “Tax Benefit”) which would not,
but for such adjustment, be allowable, then any payment by any member of the Distributing Group or any member of the Controlled Group, respectively, pursuant to this Section 10 shall be an amount equal to (x) the amount otherwise due but
for this subsection (d), minus (y) the present value of the product of the Tax Benefit multiplied (i) by the maximum applicable federal, foreign, state or local, as the case may be, corporate Tax rate in effect at the time such Tax Benefit
becomes allowable to a member of the Controlled Group or a member of the Distributing Group (as the case may be) or (ii) in the case of a credit, by 100 percent. The present value of such product shall be determined by discounting such product
from the time the Tax Benefit becomes allowable at a rate equal to the Prime Rate as published in the Wall Street Journal, Eastern Edition. 
 11. Guarantees. Distributing or Controlled, as the case may be, shall guarantee or otherwise perform the obligations of each member of the Distributing Group or the Controlled Group, respectively, under this
Agreement 
 12. Communication and Cooperation. 
 (a) Consult and Cooperate. Controlled and Distributing shall consult and cooperate (and shall cause each member of the Controlled
Group or the Distributing Group, respectively, to cooperate) fully at such time and to the extent reasonably requested by the other party in connection with all matters subject to this Agreement. Such cooperation shall include, without limitation,

 (i) the retention, and provision on reasonable request, of any and all information including all books, records,
documentation or other information pertaining to Tax matters relating to the Distributing Group and the Controlled Group, any 

  

 20 

 
necessary explanations of information, and access to personnel, until one year after the expiration of the applicable statute of limitation (giving effect to
any extension, waiver, or mitigation thereof); 
 (ii) the execution of any document that may be necessary (including to give
effect to Section 13) or helpful in connection with any required Return or in connection with any audit, proceeding, suit or action; and 
 (iii) the use of the parties’ best efforts to obtain any documentation from a governmental authority or a third party that may be necessary or helpful in connection with the foregoing. 
 (b) Provide Information. Distributing and Controlled shall keep each other fully informed with respect to any material development
relating to the matters subject to this Agreement. 
 (c) Tax Attribute Matters. Distributing and Controlled shall
promptly advise each other with respect to any proposed Tax adjustments relating to a Consolidated Group, which are the subject of an audit or investigation, or are the subject of any proceeding or litigation, and which may affect any Tax liability
or any Tax attribute of Distributing, Controlled, the Distributing Group, the Controlled Group or any member of the Controlled Group or the Distributing Group (including, but not limited to, basis in an asset or the amount of earnings and profits).

 (d) In the event that any Taxes are imposed or threatened to be imposed on Distributing or any member of the
Distributing Group in respect of the Special Dividend, Controlled shall, at the written request of Distributing, use its reasonable best efforts to obtain a Refund of any Taxes paid by Controlled or a member of the Controlled Group with respect to
amounts received by Controlled or a member of the Controlled Group that give rise to a payment of the Special Dividend. 
 13. Audits and
Contest. 
 (a) Distributing or Controlled shall promptly notify the other in writing upon the receipt of any
notice of Tax Proceeding from the relevant Taxing Authority that could reasonably result in an indemnity obligation of a party under this Agreement; provided, that a party’s right to indemnification under this Agreement shall not be limited in
any way by a failure to so notify, except to the extent that the indemnifying party is materially prejudiced by such failure. 
  

 21 

 (b) Notwithstanding anything in this Agreement to the contrary, Distributing shall
have full control over all matters relating to any Return or any Tax Proceeding relating to any Tax matters of at least one member of the Distributing Group. Except as provided in Section 13(c), Distributing shall have absolute discretion with
respect to any decisions to be made, or the nature of any action to be taken, with respect to any matter described in the preceding sentence. Distributing shall act in good faith in the performance of this Section 13(b). Controlled may, at its own
expense, participate in any such Tax Proceeding. 
 (c) 
 (i) Upon request, during the course of any Tax Proceeding relating to a Tax liability or damage described in Section 10(a),
Controlled shall from time to time furnish Distributing with evidence reasonably satisfactory to Distributing of Controlled’s ability to pay the amount for which it could reasonably be expected to be responsible pursuant to Section 10(a).
If at any time during such Tax Proceeding Distributing determines that Controlled could not pay such amount, then Controlled shall be required to furnish a guarantee or performance bond satisfactory to Distributing in an amount equal to the amount
for which Controlled could reasonably be expected to be responsible pursuant to Section 10(a). 
 (ii) Notwithstanding
anything to the contrary in this Agreement, in the event a Tax Proceeding involves an issue that is common to both the Distributing Group and the Controlled Group, Distributing shall use its best efforts to settle such issues on behalf of the
Distributing Group and the Controlled Group on a consistent basis. 
 (iii) Notwithstanding anything to the contrary in this
Agreement, with respect to any Tax Proceeding involving issues relating solely to a Tax liability of one or more members of the Controlled Group (taking into account the parties’ obligations under Section 10), Controlled shall have control
over such Tax Proceeding. 
 (d) The indemnified party agrees to give notice to the indemnitor of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of which indemnity may be sought hereunder within 30 days of such assertion or commencement, or such earlier time that would allow the indemnitor to timely respond to such
claim, suit action or proceeding. 
  

 22 

 (e) With respect to Returns relating to Taxes solely attributable to one or more
members of the Controlled Group (taking into account the parties’ obligations under Section 10), Controlled and the members of the Controlled Group shall have full control over all matters relating to any Tax Proceeding in connection
therewith. Controlled and the members of the Controlled Group shall have absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any matter described in the preceding sentence.

 (f) Controlled and Distributing shall jointly control the conduct of the Company Proceedings. Controlled shall not
agree to any settlement in respect of the Company Proceedings without the consent of Distributing, which consent shall not be unreasonably withheld. 
 14. Payments. 
 (a) Mechanics. All payments to be made hereunder shall be made
in immediately available funds. Except as otherwise provided, all payments required to be made pursuant to this Agreement will be due 30 days after the receipt of notice of such payment or, where no notice is required, 30 days after the fixing of
liability or the resolution of a dispute. Payments shall be deemed made when received. Any payment that is not made by the Distributing Group when due shall bear interest at Overpayment Rate for each day until paid. Any payment that is not made by
the Controlled Group when due shall bear interest at the Underpayment Rate for each day until paid. If, pursuant to a Final Determination, any amount paid by Distributing or the members of the Distributing Group or Controlled or the members of the
Controlled Group, as the case may be, pursuant to this Agreement results in any increased Tax liability or reduction of any Tax asset of Controlled or any member of the Controlled Group or Distributing or any member of the Distributing Group,
respectively, then Distributing or Controlled, as appropriate, shall indemnify the other party and hold it harmless from any interest or penalty attributable to such increased Tax liability or the reduction of such Tax asset and shall pay to the
other party, in addition to amounts otherwise owed, the After-Tax Amount. With respect to any payment required to be made or received under this Agreement, Distributing has the right to designate, by written notice to Controlled, which member of the
Distributing Group will make or receive such payment. 
 (b) Tax Treatment. The parties agree that payments made
pursuant to this Agreement shall be treated for all Tax purposes as adjustments to the amount contributed by Distributing to Controlled in connection with the Restructuring immediately prior to the Distribution, or, if appropriate, as distributions
from Controlled to MSDCI and, except as otherwise required by law, none of the parties shall take any position inconsistent with such treatment. 
  

 23 

 15. Notices. Any notice, demand, claim, or other communication under this Agreement shall be in
writing and shall be deemed to have been given upon the delivery or mailing, thereof, as the case may be, if delivered personally or sent by certified mail, return receipt requested, postage prepaid, to the parties at the following addresses (or at
such other address as a party may specify by notice to the other): 
 If to Distributing or the Distributing Group, to: 
 [to come] 
 If to Controlled or the
Controlled Group, to: 
 [to come] 
 16. Costs and Expenses. 
 (a) Except as expressly set forth in this Agreement,
each party shall bear its own costs and expenses incurred pursuant to this Agreement. For purposes of this Agreement, costs and expenses shall include, but not be limited to, reasonable attorneys’ fees, accountant fees and other related
professional fees and disbursements. Notwithstanding anything to the contrary in this Agreement, each of the Controlled Group and the Distributing Group will be responsible for its allocable portion, as determined by Distributing, of (i) all
costs and expenses attributable to filing any Return that reflects the income, assets or operations of the Controlled Group or the Distributing Group, respectively, and any Return required to be filed in connection with the Restructuring, and
(ii) all costs and expenses incurred by Distributing or Controlled, respectively, in complying with the provisions of Section 12 of this Agreement. 
 (b) With respect to all Tax Proceedings, including any pending litigation with any Taxing Authority, costs shall be allocated in
good faith by Distributing. Each party hereto shall be liable for its allocable portion of such costs as provided in Section 10. 
 17. Effectiveness; Termination and Survival. This Agreement shall become effective upon the consummation of the Distribution. All rights and obligations arising hereunder shall survive until they are fully effectuated or performed
and, provided, further, that notwithstanding anything in this Agreement to the contrary, this Agreement shall remain in effect and its provisions shall survive for one year after the full period of all applicable statutes of limitation 

  

 24 

 
(giving effect to any extension, waiver or mitigation thereof) and, with respect to any claim hereunder initiated prior to the end of such period, until such
claim has been satisfied or otherwise resolved. 
 18. Section Headings. The headings contained in this Agreement are inserted for
convenience only and shall not constitute a part hereof or in any way affect the meaning or interpretation of this Agreement. 
 19.
Entire Agreement; Amendments and Waivers. 
 (a) Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein. No alteration, amendment, modification, or waiver of any of the terms of this Agreement shall be valid unless made by an instrument signed by an authorized officer of each of
Distributing and Controlled, or in the case of a waiver, by the party against whom the waiver is to be effective. 
 (b)
Amendments and Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver hereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any right, power or privilege. This Agreement shall not be waived, amended or otherwise modified except in writing, duly executed by all of the parties hereto. 
 20. Governing Law and Interpretation. This Agreement shall be construed and enforced in accordance with the laws of the State of New York without
giving, effect to laws and principles relating to conflicts of law. 
 21. Dispute Resolution. In the event of any dispute relating to
this Agreement, including but not limited to whether a transaction is part of the Restructuring and whether a Tax liability is a liability of the Distributing Group or the Controlled Group, the parties shall work together in good faith to resolve
such dispute within 30 days. If the parties are unable to resolve such dispute within 30 days, such dispute shall be resolved by an accounting firm whose selection shall be reasonably satisfactory to both parties and whose fees and costs shall be
shared equally by Distributing and Controlled. 
 22. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. 
 23. Assignments; Third
Party Beneficiaries. Except as provided below, this Agreement shall be binding upon and shall inure only to the benefit of the parties hereto and their respective successors and assigns, by merger, 

  

 25 

 
acquisition of assets or otherwise (including but not limited to any successor of a party hereto succeeding to the Tax attributes of such party under
applicable law). This Agreement is not intended to benefit any person other than the parties hereto and such successors and assigns, and no such other person shall be a third party beneficiary hereof. If, during the period beginning on the
Distribution Date and ending upon the expiration of the survival period set forth in Section 17, any Person becomes an Affiliate of Controlled, such Affiliate shall be bound by the terms of this Agreement and Controlled shall provide evidence
to Distributing of such Affiliate’s agreement to be bound by the terms of this Agreement. 
 24. Authorization, etc. Each of the
parties hereto hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this
Agreement constitutes a legal, valid and binding obligation of each such party, and that the execution, delivery and performance of this Agreement by such party does not contravene or conflict with any provision or law or of its charter or bylaws or
any agreement, instrument or order binding on such party. 
 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the day and year first written above. 
  

			
	 Distributing on its own behalf and on behalf of the members of the Distributing Group.

		
	By:	 	  

	Name:	 	
	Title:	 	
	
	 Controlled on its own behalf and on behalf of the members of the Controlled Group.

		
	By:	 	  

	Name:	 	
	Title:	 	

  

 26Form of Employee Matters Agreement

 Exhibit 10.2 
 U.S. EMPLOYEE MATTERS AGREEMENT 
 by and between 
 MORGAN STANLEY 
 and 
 DISCOVER FINANCIAL SERVICES 
 Dated as of
[            ], 2007 
  

 TABLE OF CONTENTS 
  

					
	 	 	 	  	PAGE
	
	ARTICLE 1
	SCOPE AND DEFINITIONS
			
	Section 1.01.	 	Scope	  	1
	Section 1.02.	 	Definitions	  	2
	Section 1.03.	 	Interpretation	  	5
	
	ARTICLE 2
	ASSIGNMENT OF EMPLOYEES	  	
			
	Section 2.01.	 	Active Employees.	  	7
	Section 2.02.	 	Former Employees.	  	8
	Section 2.03.	 	Employment Law Obligations.	  	9
	Section 2.04.	 	Employee Records.	  	10
	
	ARTICLE 3
	EQUITY COMPENSATION PLANS
			
	Section 3.01.	 	Stock Options	  	11
	Section 3.02.	 	Restricted Stock Units	  	12
	Section 3.03.	 	Approval and Terms of Equity Awards	  	12
	Section 3.04.	 	Responsibility for Tax Withholding, Reporting, and Social Insurance Contributions	  	13
	Section 3.05.	 	No Change of Control	  	13
	
	ARTICLE 4
	EMPLOYEE STOCK PURCHASE PLAN
			
	Section 4.01.	 	ESPP	  	13
	
	ARTICLE 5
	GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
			
	Section 5.01.	 	General Principle.	  	14
	Section 5.02.	 	Establishment of Discover Plans.	  	15
	Section 5.03.	 	Transfer of Assets and Liabilities	  	16
	Section 5.04.	 	Exceptions	  	16
	Section 5.05.	 	Cooperation.	  	16
	Section 5.06.	 	Service Credit.	  	17
	Section 5.07.	 	Plan Administration.	  	18

					
	ARTICLE 6
	U.S. PENSION PLAN SPIN-OFF
			
	Section 6.01.	 	General Principle	  	18
	Section 6.02.	 	Determination and Transfer of Initial Transfer Amount	  	19
	Section 6.03.	 	Determination of the Final Pension Transfer Amount.	  	19
	Section 6.04.	 	True-Up Adjustment	  	21
	Section 6.05.	 	Form and Selection of Assets to be Transferred	  	21
	Section 6.06.	 	Adjustment Payment for Data Errors	  	22
	
	ARTICLE 7
	U.S. 401(K) PLAN AND ESOP
			
	Section 7.01.	 	General Principle	  	22
	Section 7.02.	 	Transfer of Accounts	  	23
	Section 7.03.	 	Funding of 2007 Matching Contribution	  	23
	Section 7.04.	 	Continuing Obligations Regarding Proxy Statement, Tender Offers and Similar Rights and Restrictions	  	24
	
	ARTICLE 8
	U.S. WELFARE BENEFIT PLANS
			
	Section 8.01.	 	General Principle and Exceptions.	  	24
	Section 8.02.	 	Establishment of Discover Plans.	  	25
	Section 8.03.	 	No Transfer of Assets	  	26
	Section 8.04.	 	Insurance Contracts	  	26
	Section 8.05.	 	Third Party Vendors	  	27
	
	ARTICLE 9
	FRINGE BENEFIT AND OTHER U.S. PLANS AND
PROGRAMS
			
	Section 9.01.	 	General Principle and Exceptions.	  	27
	Section 9.02.	 	Transition of Coverage Under Plans and Programs.	  	27
	
	ARTICLE 10
	WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION
			
	Section 10.01.	 	Allocation of Workers Compensation and Unemployment Claims	  	29
	
	ARTICLE 11
	COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE
MATTERS
			
	Section 11.01.	 	Restrictive Covenants in Employment and Other Agreements	  	29
	Section 11.02.	 	Non-Solicitation of Employees	  	30
	Section 11.03.	 	Severance	  	30

  

 2 

					
	Section 11.04.	 	Accrued Vacation Days Off	  	31
	Section 11.05.	 	Leaves of Absence	  	31
	Section 11.06.	 	Morgan Stanley Assets	  	31
	
	ARTICLE 12
	GENERAL PROVISIONS
			
	Section 12.01.	 	Preservation of Rights to Amend	  	31
	Section 12.02.	 	Confidentiality	  	31
	Section 12.03.	 	Administrative Complaints/Litigation	  	32
	Section 12.04.	 	Reimbursement and Indemnification	  	32
	Section 12.05.	 	Costs of Compliance with Agreement	  	32
	
	ARTICLE 13
	MISCELLANEOUS
			
	Section 13.01.	 	Notices	  	33
	Section 13.02.	 	Amendments; No Waivers	  	33
	Section 13.03.	 	Successors and Assigns	  	33
	Section 13.04.	 	Governing Law	  	34
	Section 13.05.	 	Counterparts; Effectiveness; Third-Party Beneficiaries	  	34
	Section 13.06.	 	Entire Agreement	  	34
	Section 13.07.	 	Jurisdiction	  	34
	Section 13.08.	 	WAIVER OF JURY TRIAL	  	35
	Section 13.09.	 	Severability	  	35
	Section 13.10.	 	Survival	  	35
	Section 13.11.	 	Captions	  	35
	Section 13.12.	 	Specific Performance	  	35
	Section 13.13.	 	Limited Liability	  	36
	Section 13.14.	 	Mutual Drafting	  	36
	Section 13.15.	 	Dispute Resolution	  	36
	Section 13.16.	 	Effect if Distribution Does Not Occur	  	36
	Section 13.17.	 	Corporate Authorization	  	36

  

 3 

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

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

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

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

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

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

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

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

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

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

  

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

 (e) Severance. The Distribution and the assignment, transfer or continuation of the employment of employees in connection therewith
shall not be deemed a severance of employment of any employee for purposes of any plan, policy, practice or arrangement of Morgan Stanley, Discover or any of their respective Subsidiaries, except as otherwise provided herein. 
 Section 2.02. Former Employees.  
 (a) General Principal. Except as otherwise provided in this Agreement, each former employee of Morgan Stanley or any Morgan Stanley Subsidiary or Discover or any Discover Subsidiary as of the Distribution Date will be considered a
former employee of the business as to which his or her duties were primarily related immediately prior to his or her termination of employment with all of Morgan Stanley, Discover and their respective Affiliates. 
 (b) Former Morgan Stanley Employees. For these purposes, former employees of Morgan Stanley and the Morgan Stanley Subsidiaries shall be deemed to
include (i) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates, had employment duties primarily related to the Morgan Stanley Business and (ii) without limiting the
foregoing, all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates were employed by Morgan Stanley entities providing institutional or asset management services, including, without
limitation, Van Kampen Funds Inc., Miller Anderson & Sherrard, LLP, Discover Brokerage Direct, Barra, Inc. and any other former Affiliate of the Dean Witter or Morgan Stanley Asset Management or Morgan Stanley Institutional Securities group
(collectively, the “Former Morgan Stanley Employees”). 
 (c) Former Discover Employees. Former employees of Discover
and the Discover Subsidiaries shall be deemed to include (i) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates, had employment duties primarily related to the Discover
Business and (ii) without limiting the foregoing, all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates were employed by Sears Roebuck and Co./Sears Holdings Corporation, The
Allstate Corporation, Coldwell Banker Real Estate Corporation, Sears Mortgage Corporation/Sears Mortgage Banking Group, Sears Savings Bank, any other former Sears Affiliate (other than an entity in the Dean Witter or Morgan 

  

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

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

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 (e) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying
and permitting access to all such information, Morgan Stanley and Discover shall each comply with all applicable laws, regulations and internal policies, and each Party shall indemnify and hold harmless the other Party from and against any and all
liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its agents) to so comply with all applicable laws, regulations and internal policies applicable to such information. 
 (f) No Access to Computer Systems or Files. Except as set forth in the Distribution Agreement or any Transition Services Agreement(s), no
provision of this Agreement shall give either Party direct access to the computer systems or other files, records or databases of the other Party, unless specifically permitted by the owner of such systems, files, records or databases. 

(g) Relation to Distribution Agreement. The provisions of this Section 2.04 shall be in addition to, and not in derogation of, the
provisions of the Distribution Agreement governing Confidential Information and access to and use of employees, information and records, including Sections 5.01 and 5.05 of the Distribution Agreement. 
 ARTICLE 3 
 EQUITY
COMPENSATION PLANS 
 Section 3.01. Stock Options. Morgan Stanley and Discover shall take any and
all action as shall be necessary or appropriate, so that each award of Morgan Stanley Stock Options issued and currently outstanding under any Morgan Stanley Equity Plan held at the close of business on the Distribution Date by a Discover Business
Employee shall be adjusted, pursuant to the terms of the Morgan Stanley Equity Plans and the Morgan Stanley Stock Options, by converting such options into Discover Stock Options. Such adjustment shall be effected by replacing such Morgan Stanley
Stock Options with substitute Discover Stock Options in a manner such that immediately following the Distribution, (i) each such holder of a Morgan Stanley Stock Option will receive a number of substitute Discover Stock Options equal to the
Conversion Ratio multiplied by the number of Morgan Stanley Stock Options held by such holder, and (ii) the per share option exercise price of each such Discover Stock Option will be determined by dividing the exercise price of the original
Morgan Stanley Stock Option by the Conversion Ratio, and such adjustment shall be effected in a manner intended to satisfy requirements of Section 424 of the Code and avoid treatment of the Discover Stock Options as non-qualified deferred
compensation 

  

 11 

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

  

 12 

 
which the relevant predecessor award was granted (as such plan and award documents may have been duly amended from time to time), except to the extent that
the terms of such Discover Adjustment Award shall be varied pursuant to the terms of this Agreement or by any action of Discover. 
 Section 3.04. Responsibility for Tax Withholding, Reporting, and Social Insurance Contributions. Morgan Stanley and Discover agree that, unless prohibited by applicable law, Discover shall be responsible for all tax withholding
and reporting obligations and shall pay the employer’s share of any social insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the adjusted replacement awards held by Discover
Business Employees. Morgan Stanley and Discover further agree that, unless prohibited by applicable law, Morgan Stanley shall be responsible for all tax withholding and reporting obligations and shall pay the employer’s share of any social
insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the equity awards held by Morgan Stanley Business Employees, Former Morgan Stanley Business Employees and Former Discover Business
Employees. Morgan Stanley and Discover agree to enter into any necessary agreements regarding the subject matter of this Section 3.04 to enable them to fulfill their respective obligations hereunder, including but not limited to compliance with
all applicable laws and regulations regarding the reporting, withholding or remitting of income and social insurance taxes. 
 Section 3.05. No Change of Control. For the avoidance of doubt, the Distribution will not constitute a “change of ownership” or a “change in control” or a termination of the employment of any employee for
purposes of Morgan Stanley equity awards which are outstanding as of the Distribution Date. 
 ARTICLE 4 
 EMPLOYEE STOCK PURCHASE PLAN 
 Section 4.01. ESPP. Discover Business Employees and Former Discover Employees shall be treated for purposes of the Morgan Stanley ESPP as
terminated Morgan Stanley employees as of and after the Distribution Date and shall be entitled to receive benefits in accordance with the provisions of the ESPP; provided, however, that Morgan Stanley may take such actions as it deems appropriate
with respect to the shares of Discover Common Stock received by participant accounts under the Morgan Stanley ESPP as a result of the Distribution, including, without limitation, modification of the plan and notification to plan participants to
facilitate (i) the retention of such shares within the participant’s accounts under the plan in lieu of an automatic distribution of such shares to participants and/or (ii) an election by participants to receive distribution of such
shares or direct the sale of such shares and the distribution of the proceeds of such sale to the participant; provided, further that Discover 

  

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Business Employees shall not, as a result of any such changes, be treated any less favorably under the ESPP than similarly situated Morgan Stanley Business
Employees. Discover Business Employees shall not contribute to the Morgan Stanley ESPP after the Distribution Date, unless they shall become employed by Morgan Stanley following the Distribution Date. 
 ARTICLE 5 
 GENERAL
PRINCIPLES FOR ALLOCATION OF LIABILITIES 
 Section 5.01.
General Principle.  
 (a) Cessation of Participation in Morgan Stanley Pension and Welfare Benefit Plans and Non-ERISA U.S. Benefit
Arrangements. Morgan Stanley and Discover shall take any and all action as shall be necessary or appropriate so that participation in Morgan Stanley Pension and Welfare Benefit Plans and Morgan Stanley Non-ERISA U.S. Benefit Arrangements by all
Discover Business Employees and Former Discover Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of as of the close of business on the
Distribution Date) and Discover and each Discover Subsidiary shall cease to be a participating employer under the terms of such Morgan Stanley Pension and Welfare Benefit Plans and Morgan Stanley Non-ERISA U.S. Benefit Arrangements as of such time.

 Except as otherwise agreed below, Discover shall have all liabilities and all assets relating to employee benefits for Discover Business
Employees and Former Discover Employees and Morgan Stanley shall have all liabilities and all assets relating to employee benefits for Morgan Stanley Business Employees and Former Morgan Stanley Employees. 
 (b) Assumption of Certain Obligations by Discover Group. Except as otherwise provided in this Agreement, effective as of the close of business on
the Distribution Date, Discover shall assume or continue the sponsorship of, and none of Morgan Stanley or any Morgan Stanley Subsidiary shall have any further liability for or under, the following agreements, obligations and liabilities, and
Discover shall indemnify Morgan Stanley and the Morgan Stanley Subsidiaries, and the officers, directors, and employees of each, and hold them harmless with respect to such agreements, obligations or liabilities: 
 (i) Agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and Discover Business Employees and Former Discover
Employees; 
  

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 (ii) Agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and
independent contractors providing services primarily to the Discover Business; 
 (iii) All collective bargaining agreements,
collective agreements, trade union, or works council agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and any union, works council, or other body representing only Discover Business Employees and Former Discover
Employees; 
 (iv) All wages, salary, incentive compensation, commissions, bonuses and results share payable to Discover
Business Employees and Former Discover Employees on or after the Distribution Date, without regard to when such wages, salary, incentive compensation, commissions, bonuses and results share are or may have been earned; 
 (v) All moving expenses and obligations related to relocation, repatriation, transfers, or similar items incurred by or owed to Discover
Business Employees and Former Discover Employees; 
 (vi) All immigration-related, visa, work application, or similar rights,
obligations and liabilities related to Discover Business Employees and Former Discover Employees; and 
 (vii) All
liabilities and obligations whatsoever of the Discover Business with respect to claims made by or with respect to Discover Business Employees and Former Discover Employees or any other persons who at any time prior to the Distribution Date had
employment duties primarily related to the Discover Business relating to any employee benefit plan, program or policy not otherwise retained or assumed by Morgan Stanley pursuant to this Agreement, including such liabilities relating to actions or
omissions of or by Discover or any officer, director, employee or agent thereof prior to the Distribution Date. 
 Section 5.02.
Establishment of Discover Plans. Except as otherwise provided in this Agreement, sponsorship of Morgan Stanley benefit plans that cover solely Discover Business Employees and Former Discover Employees shall be transferred to Discover immediately
prior to the Distribution Date. Morgan Stanley benefit plans that cover Discover Business Employees and Former Discover Employees and that also cover Morgan Stanley Business Employees and/or Former Morgan Stanley Employees shall be split into two
separate plans, one covering Discover Business Employees and Former Discover Employees and one covering Morgan Stanley Business Employees and/or Former Morgan Stanley Employees, and sponsorship of the plans covering Discover Business Employees and
Former Discover Employees shall be transferred to Discover immediately prior to the Distribution Date. 
  

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 Section 5.03. Transfer of Assets and Liabilities. To the extent necessary to effectuate the
foregoing, Discover and Morgan Stanley shall, in compliance with applicable law, transfer assets (if any) and liabilities of any such benefit plans to each other, including under the following plans: 
 (i) the MS Pension Plan; 
 (ii) the MS 401(k) Plan; 
 (iii) the MS ESOP; 
 (iv) MS Excess Plan; and 
 (v) MS SERP. 
 Section 5.04. Exceptions. Notwithstanding Section 5.02, Section 5.03,
or any other provision of this Agreement to the contrary, the following plans in which both Morgan Stanley and Discover participate shall not be split: 
 (i) health, welfare and wellness plans described below in Section 8.01; 
 (ii) the MS
ESPP; and 
 (iii) fringe benefit plans. 
 In addition, no transfer of assets or liabilities shall be made with respect to such plans. 
 Section 5.05. Cooperation. Discover and Morgan Stanley and their respective Affiliates shall cooperate to share data necessary for each other to administer their respective benefit plans. Except as provided under any Transition
Services Agreement(s) or in any secondment agreement that may be entered into in accordance with Section 2.01(d), neither Discover nor Morgan Stanley shall charge the other any fee for such cooperation. Except as set forth in the Distribution
Agreement or any Transition Services Agreement(s), this provision shall not require Discover or Morgan Stanley to provide the other with direct access to such company’s databases or records. This provision shall continue in effect as long as
necessary. 
  

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 Section 5.06. Service Credit.  
 (a) Service for Eligibility and Vesting. Except as otherwise provided in any other provision of this Agreement (i) for purposes of
participation eligibility and vesting under the Discover Pension and Welfare Benefit Plans, Discover shall, and shall cause the Discover Subsidiaries to, give to each Discover Business Employee and Former Discover Employee service credit for any
employment with Morgan Stanley or any Morgan Stanley Affiliate prior to the Distribution Date to the extent that such service is taken into account pursuant to the terms of the comparable Morgan Stanley plan and (ii) for purposes of
participation eligibility and vesting under the Morgan Stanley Pension and Welfare Benefit Plans, Morgan Stanley shall, and shall cause the Morgan Stanley Subsidiaries to, give to each Morgan Stanley Business Employee and Former Morgan Stanley
Employee service credit for any employment with Discover or any Discover Affiliate prior to the Distribution Date, except under the MS SERP and MS Excess Plan; and provided, further, that the foregoing vesting service credit under any plan subject
to Section 401(a) of the Code will be limited to the minimum amount of service credit required to fully vest the employee under the relevant plan. 
 (b) Service for Benefit Purposes. Except as otherwise provided in any other provision of this Agreement (i) for purposes of benefit levels and accruals, post-retirement welfare benefit contribution rates
and benefit commencement entitlements under the Discover Pension and Welfare Benefit Plans, Discover shall, and shall cause the Discover Subsidiaries to, give to each Discover Business Employee and Former Discover Employee service credit for any
employment with Morgan Stanley or any Morgan Stanley Affiliate prior to the Distribution Date to the extent that such service is taken into account pursuant to the terms of the comparable Morgan Stanley plan and (ii) for purposes of benefit
levels and accruals, post-retirement welfare benefit contribution rates and benefit commencement entitlements under the Morgan Stanley Pension and Welfare Benefit Plans, Morgan Stanley shall, and shall cause the Morgan Stanley Subsidiaries to, give
to each Morgan Stanley Business Employee and Former Morgan Stanley Employee service credit for any employment with Discover or any Discover Affiliate prior to the Distribution Date (including under the MS Retiree Medical Plan and for determining the
level of retirement credits under the post-July 1, 2007 retirement design under the MS Pension Plan). 
 (c) Evidence of Prior
Service. Notwithstanding anything to the contrary, but subject to applicable law, upon reasonable request by one Party to the other Party, the first Party will provide to the other copies of any records available to the first Party to document
such service, plan participation and membership and cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with
respect to such Discover Business Employees and Former Discover Employees. 
  

 17 

 Section 5.07. Plan Administration.  
 (a) Transition Services. Morgan Stanley will administer Discover’s benefit programs for a transitional period under the terms of the
applicable Transition Services Agreement, which will include appropriate provisions relating to HIPAA. 
 (b) Administration. Discover
shall, and shall cause the Discover Subsidiaries to, administer its benefit plans in a manner that does not jeopardize the tax favored status of the tax favored benefit plans maintained by Morgan Stanley and the Morgan Stanley Subsidiaries. Morgan
Stanley shall, and shall cause the Morgan Stanley Subsidiaries to, administer its benefit plans in a manner that does not jeopardize the tax favored status of the tax favored benefit plans maintained by Discover and the Discover Subsidiaries.

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

  

 18 

 
benefits under the MS Pension Plan after the date on which such employee becomes eligible to participate under the Discover Pension Plan, unless such
Discover Pension Beneficiary shall become employed by Morgan Stanley or a Morgan Stanley Subsidiary after such date. A Morgan Stanley Business Employee shall not accrue benefits under the Discover Pension Plan, unless such Morgan Stanley Business
Employee shall become employed by Discover or a Discover Subsidiary. For purposes of the provisions in the MS Pension Plan bridging service for breaks in service of less than 12 months, a break in the service of an employee which includes a period
of service as a Discover Business Employee or Former Discover Employee following the Distribution shall not be counted as a bridgeable break in service. Following the Initial Transfer Date (i) an enrolled actuary appointed by Morgan Stanley
(the “MS Actuary”) shall determine the Final Pension Transfer Amount (as defined below) and (ii) a True-Up Adjustment shall be made with respect to the MS Pension Plan and the Discover Pension Plan, as provided below. The
Parties shall use reasonable best efforts to cause the determination of the Final Pension Transfer Amount and the True-Up Adjustment to be completed as reasonably promptly as practicable, subject to the time frames established under
Section 6.03, but in no event later than December 31, 2007. Before or promptly after the date hereof, Morgan Stanley and Discover shall file requests with the IRS for qualification determination letters under Code Section 401(a) with
respect to the MS Pension Plan and the Discover Pension Plan and shall take any and all reasonable action, including the adoption of any amendments requested by the IRS, as shall be necessary to obtain such determination letters. The transfers
hereunder shall occur prior to, but subject to the subsequent receipt of, favorable determination letters issued by the IRS with respect to the MS Pension Plan and Discover Pension Plan, copies of which shall be shared among Morgan Stanley and
Discover promptly upon issuance. 
 Section 6.02. Determination and Transfer of Initial Transfer Amount. On or before the
Distribution Date, with the assistance of the MS Actuary, Morgan Stanley shall establish and communicate to Discover the amount equal to 95% of the amount carried on Morgan Stanley pension plan books as attributable to benefits accrued by Discover
Pension Beneficiaries under the MS Pension Plan as of the Pension Measurement Date, adjusted for contributions, distributions, trust gains and losses, payments and other appropriate items as of the Initial Transfer Date, all as estimated in good
faith by Morgan Stanley (the “Initial Transfer Amount”). Following the determination of the Initial Transfer Amount by Morgan Stanley, Morgan Stanley shall cause to be transferred from the trust under the MS Pension Plan to the
trust under the Discover Pension Plan assets having an aggregate Value (as defined below) equal to the Initial Transfer Amount. Such assets shall be in the form of cash, securities and other property, determined in accordance with the provisions
below. 
  

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 Section 6.03. Determination of the Final Pension Transfer Amount.  
 (a) Calculation of the MS Actuary. Following the Distribution Date, the MS Actuary shall determine the Final Pension Transfer Amount, which shall
be equal to the amount required to be transferred from the MS Pension Plan to the Discover Pension Plan in respect of the assumption by the Discover Pension Plan of the benefit obligations of the MS Pension Plan of benefits accrued by the Discover
Pension Beneficiaries as of the Pension Measurement Date, as determined in accordance with Section 414(l) of the Code and the regulations thereunder and the actuarial assumptions and methods set forth in Schedule 6.03 hereof, as appropriately
adjusted to reflect the following amounts arising after the Pension Measurement Date and before the True-Up Adjustment: (A) any distributions and contributions made in respect of the Discover Pension Beneficiaries, (B) administrative
expenses of the MS Pension Plan reasonably allocable to the Discover Pension Beneficiaries, (C) earnings realized by the MS Pension Plan, (D) the net gain or loss (realized and unrealized) of the MS Pension Plan and (E) other
appropriate items. Morgan Stanley and Discover shall each cause the appropriate amount of assets to be contributed to the MS Pension Plan prior to the Distribution Date so that the MS Pension Plan is deemed to be fully funded as of December 31,
2006 and no ERISA Section 4044 allocation is required. Promptly upon determination of the Final Pension Transfer Amount, Morgan Stanley shall cause the MS Actuary to provide to Discover a written statement of the Final Pension Transfer Amount,
a summary of the calculation of such amount (the “Pension Statement”) and a written statement that the sum of the Initial Transfer Amount and the Final Transfer Amount satisfies the requirements of Section 414(l) of the Code.

 (b) Resolution of Differences. Morgan Stanley shall provide Discover with all information reasonably necessary to review the
calculation of the Final Pension Transfer Amount in all material respects and to verify that such calculations have been performed in a manner consistent with the terms of this Agreement. The determination of the Final Pension Transfer Amount by the
MS Actuary shall be final, conclusive and binding for all purposes under this Agreement, unless Discover provides to Morgan Stanley, within thirty (30) days after receipt of the Pension Statement, a written objection prepared by an enrolled
actuary retained by Discover setting forth in detail a reasonable basis for the conclusion that the Final Pension Transfer Amount set forth in the Pension Statement is understated by an amount in excess of 5%. Upon receipt of such objection, Morgan
Stanley and Discover shall make a good faith attempt to resolve their dispute as to the Final Pension Transfer Amount. Should such dispute remain unresolved for more than thirty (30) days, Morgan Stanley and Discover shall promptly select and
appoint a third enrolled actuary who is mutually satisfactory to both Parties. The third actuary shall recalculate the Final Pension Transfer Amount and if such recalculated amount exceeds the Final Pension Transfer Amount set forth in the Pension
Statement by more than 5%, then such recalculated amount shall serve as the Final Pension Transfer Amount for all purposes under this Agreement. If such recalculated amount does not 

  

 20 

 
exceed the Final Pension Transfer Amount set forth in the Pension Statement by more than 5%, then for all purposes under this Agreement the Final Pension
Transfer Amount shall be the Final Pension Transfer Amount as set forth in the Pension Statement. The recalculation of such third party actuary shall be completed within thirty (30) days of the retention of such third party actuary and shall be
conclusive as to any dispute with respect to the Final Pension Transfer Amount, except as set forth in Section 6.06 below. The cost of such third party actuary shall be divided equally between Morgan Stanley and Discover. Each Party shall be
responsible for the cost of its own actuary. 
 Section 6.04. True-Up Adjustment. The following transfer shall be made promptly
after the date that the Final Pension Transfer Amount is determined as set forth above: (A) if the Final Pension Transfer Amount exceeds the Initial Transfer Amount, Morgan Stanley shall promptly cause to be transferred from the MS Pension Plan
trust to the Discover Pension Plan trust assets having a Value equal to such excess and (B) if the Initial Transfer Amount exceeds the Final Pension Transfer Amount, Discover shall promptly cause to be transferred from the Discover Pension Plan
trust to the MS Pension Plan trust assets having a Value equal to such excess. 
 Section 6.05. Form and Selection of Assets to be
Transferred. The assets to be transferred in the Initial Transfer and the True-Up Adjustment Assets will be transferred in-kind or in cash pro rata from each investment manager under the transferring plan in a manner that represents, as closely
as commercially practical, a pro rata portion of each asset and position held by the manager as of the date of such transfer, except that reasonable adjustments shall be made where Morgan Stanley determines such transfers cannot reasonably be made
by the MS Pension Plan due to investment manager account minimums or where other considerations prevent such pro rata transfers or render such pro rata transfers impractical. Notwithstanding the foregoing, with respect to long duration fixed income
investments to be transferred from the MS Pension Plan to the Discover Pension Plan (i) assets will be transferred from no more than two of the four current long duration fixed income managers under the MS Pension Plan, to be determined by
Morgan Stanley and reasonably acceptable to Discover and (ii) long duration fixed income investments to be transferred shall be selected so as to be reasonably representative based on the relative demographics of the Morgan Stanley Business
Employees and Former Morgan Stanley Employees and the Discover Pension Beneficiaries, as determined by Morgan Stanley. For purposes of the Agreement, the “Value” of all pension assets shall be the value of such assets as determined
in good faith by Morgan Stanley based on all relevant information known to Morgan Stanley at the time of such determination, including the most recent account statements or schedules of asset values provided to Morgan Stanley by any service
providers maintaining or overseeing any such assets or any investment vehicles which represent or hold the relevant plan assets. Morgan Stanley shall select the assets to be transferred and provide a schedule of such assets to 

  

 21 

 
Discover 14 days prior to the transfer of such assets. Discover shall communicate to Morgan Stanley any objection to the schedule of the assets to be
transferred promptly, and upon receipt by Morgan Stanley of such objection, Morgan Stanley and Discover shall make a good faith attempt to resolve their dispute as to the assets to be transferred within the period remaining prior to the transfer of
the assets. Should such dispute remain unresolved upon the asset transfer date, the assets shall be transferred in accordance with the schedule provided by Morgan Stanley. Any assets that are liquidated prior to transfer shall be reduced by the
asset liquidation expenses actually incurred. 
 Section 6.06. Adjustment Payment for Data Errors. If, after the completion of
the True-Up Adjustment, critical data used in the determination of the Final Pension Transfer Amount, the True-Up Adjustment or the Value of assets for purposes of the transfers under this Article 6 are determined to have been erroneous, the Final
Pension Transfer Amount and True-Up Adjustment shall be recalculated using corrected data (but otherwise applying the same methodologies used to determine the Final Pension Transfer Amount) and upon completion of the recalculation Discover shall pay
to Morgan Stanley, or Morgan Stanley shall pay to Discover, as the case may be, an amount necessary to reflect the corrected data; provided that no such correction payment shall be made unless the aggregate of all such correction adjustments is
greater than 1% of the Final Pension Transfer Amount used for purposes of the original True-Up Adjustment. Any payment under this Section 6.06 shall be made by wire transfer in readily available funds. Notwithstanding the foregoing provisions
of this Section 6.06, no payment or corrective adjustment shall be made by either Party with respect to an error unless the Party seeking such payment or adjustment has provided written notice identifying the specific error to the other Party
prior to June 30, 2008. 
 ARTICLE 7 
 U.S. 401(K) PLAN AND ESOP 
 Section 7.01. General Principle. Effective on
or before the Distribution Date, Discover shall establish and adopt a qualified employee cash or deferred arrangement under Code Section 401(k) (the “Discover 401(k) Plan”) containing a Discover common stock fund intended to be
an employee stock ownership plan and a Morgan Stanley common stock fund, and intended to be qualified under Code Section 401(a) and containing provisions that will provide benefits for each Discover Business Employee and Former Discover
Employee (and each beneficiary and alternate payee of such person) (the “Discover DC Plan Beneficiaries”) identical to those in effect for the Discover DC Plan Beneficiaries as of the date of transfer of assets and liabilities with
respect to such plan (as described below). Before or as soon as practicable after the Distribution Date, the assets and liabilities relating to the Discover DC Plan Beneficiaries under the MS 401(k) Plan and the MS ESOP shall be
transferred to the Discover 401(k) 

  

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

 Section 7.03. Funding of 2007 Matching Contribution. Discover shall fund and allocate the full amount of any 2007 matching
contribution accrued under the terms of the MS 401(k) Plan and MS ESOP to eligible Discover DC Plan Beneficiaries under the Discover 401(k) Plan within the time permitted by law (determined based on the terms of the MS 401(k) Plan and MS ESOP
immediately prior to the transfer to the Discover 401(k) Plan as if the transfer to the Discover 401(k) Plan did not occur, but paid and contributed by Discover to the Discover 401(k) Plan). 
  

 23 

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

  

 24 

 (iii) Discover Business Employees and Former Discover Employees shall cease to be covered
under the Morgan Stanley executive disability and life insurance plans on or about May 31, 2007, except that employees already contributing to an executive disability or life insurance policy shall be permitted to continue such policy on an
individual basis; 
 (iv) Discover Business Employees and Former Discover Employees shall cease to be covered under the
Morgan Stanley severance plan as of the Distribution Date; 
 (v) Morgan Stanley Business Employees and Former Morgan Stanley
Employees shall cease to be covered under the Morgan Stanley SelectHealth Medical Option no later than the Distribution Date, the CMO contract for which shall be transferred to Discover effective no later than the Distribution Date; 
 (vi) Discover Business Employees and Former Discover Employees shall cease to be covered under the Morgan Stanley Kaiser Medical Options
as of the Distribution Date; and 
 (vii) Discover Business Employees and Former Discover Employees shall cease to be covered
under the Morgan Stanley VEBA as of the Distribution Date. 
 Section 8.02. Establishment of Discover Plans.  
 (a) General Rule. Discover Business Employees and Former Discover Employees shall cease to participate in the Morgan Stanley welfare benefit plans
on or about May 31, 2007. Discover shall indemnify Morgan Stanley for any liability relating to Discover Business Employees or Former Discover Employees on account of any such plan. 
 (b) Treatment of Claims Incurred. Morgan Stanley shall retain the liability for payment of all covered claims (including medical, dental, life
insurance and long-term disability) and expenses incurred by any Discover Business Employee and beneficiaries thereof under the Morgan Stanley Welfare Plans and Morgan Stanley Non-ERISA U.S. Benefit Arrangements, and Discover shall not assume nor
shall it be responsible for any liability with respect to any such claims or expenses. Discover shall have the liability only for covered claims incurred under the terms of the Discover Welfare Plans and Discover Non-ERISA U.S. Benefit Arrangements.

  

 25 

 (c) Credit for Deductibles and Other Limits. With respect to each Discover Business Employee and
Former Discover Employee, and each covered dependent, beneficiary, or other related party of such individual (the “Discover Welfare Plan Participants”), the Discover welfare benefit plans will give credit in the year of the
Distribution Date for any amount paid under the comparable type Morgan Stanley plan by such Discover Welfare Plan Participant in the year of the Distribution Date toward deductibles, out-of-pocket maximum, or other, similar limitations to the extent
such amounts are taken into account under the comparable type Morgan Stanley plan. For purposes of any life-time maximum out-of-pocket limit on expenses paid by a covered participant, the Discover welfare plans will recognize any expenses incurred
by a Discover Welfare Plan Participant prior to the Distribution to the same extent such expenses would be recognized in respect of an active plan participant under the comparable type Morgan Stanley plan. 
 (d) COBRA. Effective as of the date of cessation of participation in the Morgan Stanley welfare benefit plans by the Discover Business Employees
and Former Discover Employees (as provided above), Discover shall assume and satisfy all requirements under COBRA with respect to all Discover Business Employees and Former Discover Employees and their qualified beneficiaries, including for
individuals who are already receiving benefits as of such date under COBRA. 
 (e) Disabled Persons. The Parties intend that any
Employee who has, prior to the Distribution Date, become eligible to receive any long-term disability benefits pursuant to any third-party insurance policy applicable under any welfare benefit plan shall continue to be eligible to receive such
benefits in accordance with the terms of such plan and policy. 
 Section 8.03. No Transfer of Assets. No assets held in the
Morgan Stanley VEBA, the Morgan Stanley short term disability trust or any other trust, account or other funding vehicle shall be transferred between or on account of the Discover and Morgan Stanley welfare benefit plans, unless any such trust,
account or funding vehicle shall have material net assets as of the Distribution Date, in which case the Parties shall negotiate in good faith to determine an equitable allocation of such assets. 
 Section 8.04. Insurance Contracts. To the extent any Morgan Stanley welfare benefit plan is funded through the purchase of an insurance
contract, Morgan Stanley and Discover will cooperate and use their reasonable best efforts to “clone” such insurance contracts for Discover and to maintain any pricing discounts or other preferential terms for both Morgan Stanley and
Discover through the end of the term of the applicable Transition Services Agreement. Morgan Stanley shall not be liable for failure to obtain such pricing discounts or other preferential terms for Discover. The cost of “cloning”,
including any 

  

 26 

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

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

 27 

 Section 9.02. Transition of Coverage Under Plans and Programs. 
 (a) Commuter Benefit Plan. Effective as of June 1, 2007, Discover shall adopt a commuter benefits plan for Discover Business Employees with
substantially the same terms as in effect as of May 31, 2007 under the Morgan Stanley commuter benefits plan. No commuter benefits will paid to Discover Business Employees in respect of commutation occurring after the Distribution Date.

 (b) Legal Assistance Plan. Legal assistance benefits will not be provided to Discover Business Employees under the Morgan Stanley
legal assistance program in respect of legal services after the Distribution Date; provided, however, that if a Discover Business Employee has begun a representation under the Morgan Stanley legal assistance program on or prior to May 31, 2007,
such representation shall be covered under the Morgan Stanley legal assistance program through December 31, 2007 in accordance with the terms of that program. 
 (c) Service Award Program. Discover Business Employees who have reached their milestone anniversary on or prior to the date of the Distribution Date shall be entitled to receive a gift under the Morgan Stanley
Service Award Program. Discover shall reimburse Morgan Stanley for the cost of providing such benefit in an amount determined consistently with the cost allocation method in effect prior to the Distribution Date. Discover Business Employees who
reach their milestone anniversary after the Distribution Date shall not be eligible to receive a gift under the Morgan Stanley Service Award Program. 
 (d) Adoption Assistance Program. Discover Business Employees who have completed an adoption that is eligible under the Morgan Stanley Adoption Assistance Program on or prior to the Distribution Date shall be
entitled to benefits under that program. Discover shall reimburse Morgan Stanley for the cost of providing such benefits in an amount determined consistently with the cost allocation method in effect prior to the Distribution Date. Discover Business
Employees who complete an adoption after the Distribution Date shall not be eligible to receive benefits under the Morgan Stanley adoption assistance program. 
 (e) Baby Spoon Program. Discover Business Employees who are employed as of Distribution Date and have given birth to a baby or completed an eligible adoption prior to the Distribution Date shall be entitled to
receive a baby spoon under the Morgan Stanley baby spoon program. Discover shall reimburse Morgan Stanley for the cost of providing such benefit in an amount determined consistently with the cost allocation method in effect prior to the Distribution
Date. Discover Business Employees who give birth or complete adoption of a child after the Distribution Date shall not be eligible to receive a baby spoon under the Morgan Stanley baby spoon program. 
  

 28 

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

  

 29 

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

 30 

 (d) It is not intended that any Discover Business Employee will be eligible for termination or severance
payments or benefits from Morgan Stanley or its Subsidiaries or Affiliates as a result of the transfer or change of employment from Morgan Stanley to Discover or their respective Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in
the event that any such termination or severance payments or benefits become payable on account of such transfer, change or the refusal of a Discover Business Employee to accept employment with Discover, Discover shall indemnify Morgan Stanley, and
its Subsidiaries and Affiliates, for the amount of such termination or severance payments or benefits. 
 Section 11.04. Accrued
Vacation Days Off. Discover shall recognize and assume all liability for all vacation, holiday, sick leave, flex days, personal days and Paid-Time Off, including banked time, accrued by Discover Business Employees as of the Distribution Date and
Discover shall credit each Discover Business Employee with such accrual. 
 Section 11.05. Leaves of Absence. Discover will
continue to apply the leave of absence policies maintained by Morgan Stanley to inactive Discover Business Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by Discover Business Employees prior to
the Distribution Date shall be deemed to have been taken as employees of Discover. 
 Section 11.06. Morgan Stanley Assets.
Except as otherwise set forth herein, Morgan Stanley shall retain all reserves, bank accounts, trust funds or other balances maintained with respect to Morgan Stanley Non-ERISA U.S. Benefit Arrangements. 
 ARTICLE 12 
 GENERAL
PROVISIONS 
 Section 12.01. Preservation of Rights to Amend. The rights of Morgan Stanley or Discover to amend or
terminate any plan, program, or policy referred to herein shall not be limited in any way by this Agreement. 
 Section 12.02.
Confidentiality. Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of
the confidentiality provisions set forth in the Distribution Agreement. 
 Section 12.03. Administrative Complaints/Litigation.
Except as otherwise provided in this Agreement, as of and after the Distribution Date, Discover shall assume, and be solely liable for, the handling, administration, investigation and 

  

 31 

 
defense of actions, including, without limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal,
discrimination or human rights and unemployment compensation claims, asserted at any time against Morgan Stanley, or Discover or their respective Affiliates by any Discover Business Employee or Former Discover Employee (including any dependent or
beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with the Discover
Business. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both Morgan Stanley Business Employees (or Former Morgan Stanley Employees) and Discover Business Employees (or Former Discover
Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable
assessment of the relative proportion of Morgan Stanley Business Employees (or Former Morgan Stanley Employees) and Discover Business Employees (or Former Discover Employees) included in or represented by the putative or certified plaintiff class.
The procedures contained in the indemnification and related litigation cooperation provisions of the Distribution Agreement shall apply with respect to each Party’s indemnification obligations under this Section 12.03. 
 Section 12.04. Reimbursement and Indemnification. The Parties hereto agree to reimburse each other, within 30 days of receipt from the other
Party of reasonable verification, for all costs and expenses which each may incur on behalf of the other as a result of any of the Welfare Plans, Pension Plans and Non-ERISA U.S. Benefit Arrangements and, as contemplated by Section 11.03, any
termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by Discover pursuant to this Agreement, and all liabilities retained, assumed or indemnified against by Morgan Stanley pursuant to this
Agreement, shall in each case be subject to the indemnification provisions of the Distribution Agreement. Notwithstanding anything to the contrary, no provision of this Agreement shall require Discover or any Discover Subsidiary to pay or reimburse
to Morgan Stanley or any Morgan Stanley Affiliate any benefit-related cost item that Discover or any Discover Subsidiary has previously paid or reimbursed to Morgan Stanley or any Morgan Stanley Affiliate. 
 Section 12.05. Costs of Compliance with Agreement. Except as otherwise provided in this Agreement or any other Distribution Document, each
Party shall pay its own expenses in fulfilling its obligations under this Agreement. 
  

 32 

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

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

 Section 13.03. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted assigns; provided that neither Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other Party hereto.
If any Party or any of its successors or permitted assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer
all or substantially all of its 

  

 33 

 
properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of such Party shall
assume all of the obligations of such Party under the Distribution Documents. 
 Section 13.04. Governing Law. This Agreement
shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of laws rules thereof. 
 Section 13.05. Counterparts; Effectiveness; Third-Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other
party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Neither this Agreement nor any provision hereof is
intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and permitted assigns. No Employee or other current or former employee of Morgan
Stanley or Discover or any Subsidiary or Affiliate of either (or his/her spouse, dependent or beneficiary), or any other person not a party to this Agreement, shall be entitled to assert any claim hereunder. Without limiting the foregoing, the
provisions of this Agreement are not intended to, nor shall they confer upon any Person other than the Parties hereto any right or expectation as to the adoption, amendment, maintenance, continuation, operation or funding of any employee benefit
plan, policy or arrangement. 
 Section 13.06. Entire Agreement. This Agreement and the other Distribution Documents constitute
the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof
and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein or in the other Distribution Documents has been made or relied upon by any party hereto. Regardless of anything else contained herein, the
parties do not intend for this Agreement to amend any employee benefit plans or arrangements. 
 Section 13.07. Jurisdiction. Any
Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in the United States District Court for the Southern District of New York
or any other New York State court sitting in New York County, and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent 

  

 34 

 
permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 13.01 shall be deemed effective service of process on such Party. 
 Section 13.08. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 Section 13.09. Severability. If any one
or more of the provisions contained in this Agreement should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be
affected or impaired thereby so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a declaration, the Parties shall modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible. 
 Section 13.10. Survival. All covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date
indefinitely, unless a specific survival or other applicable period is expressly set forth herein. 
 Section 13.11. Captions.
The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 
 Section 13.12. Specific Performance. Each Party to this Agreement acknowledges and agrees that damages for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and irreparable harm would
occur. In recognition of this fact, each Party agrees that, if there is a breach or threatened breach, in addition to any damages, the other nonbreaching Party to this Agreement, without posting any bond, shall be entitled to seek and obtain
equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction, attachment, or any other equitable remedy which may then be available to obligate the breaching Party (i) to perform its
obligations under this Agreement or (ii) if the breaching Party is unable, for whatever reason, to perform those obligations, to take any other actions as are necessary, advisable or appropriate to give the other Party to this Agreement the

  

 35 

 
economic effect which comes as close as possible to the performance of those obligations (including, but not limited to, transferring, or granting liens on,
the assets of the breaching Party to secure the performance by the breaching Party of those obligations). 
 Section 13.13. Limited
Liability. Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Discover or Morgan Stanley, nor any individual employed or previously employed by
Discover or Morgan Stanley or their respective Affiliates and serving or previously serving as a fiduciary of any benefit plan of Discover or Morgan Stanley or their respective Affiliates (or any body consisting of such individuals), in his, her or
its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of Discover or Morgan Stanley under this Agreement and, to the fullest extent legally permissible, each of Discover and Morgan Stanley, for
itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law. 
 Section 13.14. Mutual Drafting. This Agreement shall be deemed to be the joint work product of Morgan Stanley and Discover and any rule of
construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable. 
 Section 13.15. Operating Committee. (a) The parties shall use an operating committee (the “Operating Committee”) to implement the terms of this Agreement. Each of Morgan Stanley and Discover shall appoint three
employees to the Operating Committee and designate one of such employees to be such party’s lead representative (each, a “Lead Representative”) for the purpose of fielding queries from representatives of the relevant Group
concerning the implementation and ongoing operation of this Agreement. In addition, the Lead Representatives shall have such other functions and responsibilities as may be determined by the Operating Committee from time to time. The Operating
Committee will oversee the implementation and ongoing operation of this Agreement and shall attempt in good faith to resolve disputes between the parties. Each of the parties shall have the right to (i) replace one or more of its Operating
Committee members at any time with employees or officers with comparable knowledge, expertise and decision-making authority and (ii) designate an alternative Lead Representative. 
 (b) The Operating Committee shall act by a majority vote of its members. If the Operating Committee fails to make a decision, resolve a dispute or agree
upon any necessary action, the unresolved matter shall be referred to [Name] of Morgan Stanley and [Name] of Discover, who shall attempt in good faith within a period of 14 days to conclusively resolve any such matter. 
 (c) During the term of this Agreement, the full Operating Committee shall meet at such times as may be required by either Lead Representative. Meetings of
the Operating Committee may be in person or via teleconference and shall be convened and held in accordance with such procedures as the Operating Committee may determine from time to time. 
 Section 13.16. Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Distribution
Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect. 
 Section 13.17.
Corporate Authorization. The officers of Morgan Stanley and Discover are hereby authorized, empowered and directed, in the name and on behalf of each of Morgan Stanley and Discover, respectively, to take or cause to be taken all such further
action, to execute and deliver or cause to be executed and delivered all such further agreements, certificates, instruments and documents, to make or cause to be made all such filings with governmental or regulatory authorities, and to pay or cause
to be paid all such fees and expenses, in each case which shall in such officers’ judgment be deemed necessary, proper or advisable to effect and carry out the intent of this Agreement, such determination to be evidenced conclusively by such
officers’ execution and delivery thereof or taking of action in respect thereto. 
  

 36 

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

			
	MORGAN STANLEY
		
	By:	 	  

	Name:	 	
	Title:	 	

  

			
	DISCOVER FINANCIAL SERVICES
		
	By:	 	  

	Name:	 	
	Title:	 	

  

 37 

 Schedule 1.01(i) 
 Employees Employed Outside the U.S. but Covered 
 Under U.S. Compensation and Benefit Plans

 [Reserved] 
  

 1 

 Schedule 1.01(ii) 
 Employees Located Within the U.S. 
 but Employed by U.K. Entities 
 [Reserved] 
  

 1 

 Schedule 2.04(c) 
 Employee Data 
 [Reserved] 
  

 1 

 Schedule 6.03 
 Assumptions and Methods to be 
 Used for the Calculation of the Final Pension Transfer Amount

 [Reserved] 
  

 1

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