EMPLOYEE MATTERS AGREEMENT

 

Exhibit 10.2

Execution Version

EMPLOYEE MATTERS AGREEMENT

by and between

MORGAN STANLEY

and

MSCI INC.

Dated as of May 22, 2009

TABLE OF CONTENTS

THIS EMPLOYEE MATTERS AGREEMENT dated as of May 22, 2009 between Morgan Stanley, a Delaware corporation (“ Morgan Stanley ”) and MSCI Inc., a Delaware corporation (“ MSCI ”) (collectively, the “ Parties ”).

RECITALS

WHEREAS, Morgan Stanley intends to sell all of the outstanding shares of class A common stock, par value $0.01 per share, of MSCI (“ MSCI Class A Common Stock ”) owned by Morgan Stanley (the “ Sale ”, and the date of the consummation of the disposition of all shares of MSCI Class A Common Stock held by Morgan Stanley, the “ Sale Date ”);

WHEREAS, the Parties hereto have determined to set forth certain agreements that will govern the relationship between the Parties in connection with the Sale;

NOW THEREFORE, in consideration of the mutual covenants contained herein, the Parties hereto agree as follows:

ARTICLE 1

Definitions

Section 1.01 .  Definitions.   Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Tax Sharing Agreement between Morgan Stanley, on behalf of itself and the members of the MS Group, and MSCI, on behalf of itself and the members of the MSCI Group, dated as of November 20, 2007 (the “ Tax Sharing Agreement ”).  As used in this Agreement:

“ Action ” means any demand, claim, suit, action, arbitration, inquiry, investigation or other proceeding by or before any Governmental Authority or any arbitration or mediation tribunal.

“ Agreement ” means this Employee Matters Agreement and all amendments, modifications and changes hereto.

“ Ancillary Agreements ” means the Tax Sharing Agreement and the Separation Agreement.

“ Applicable Law ” means any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental Authority that is binding upon or applicable to such

 

 

 

 

Person, its properties or assets or its business or operations, as amended unless expressly specified otherwise.

“ Applicable Tax Rate ” has the meaning set forth in Section 3.02(d).

“ 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.

“ Claims ” has the meaning set forth in Section 6.01.

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

“ 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.

“ Compensation Deduction Payment ” has the meaning set forth in Section 3.02(d).

“ Employee ” means any Morgan Stanley Business Employee or Former Morgan Stanley Employee or MSCI Business Employee or Former MSCI Employee.

“ EEOC ” means the U.S. Equal Employment Opportunity Commission.

“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

“ Former MSCI Employees ” means all employees who, as of their last day of employment, were employed by any member of the MSCI Group.

“ Former Morgan Stanley Employees ”  means all employees who, as of their last day of employment, were employed by any member of t he MS Group.

“ Governmental Authority ” means any multinational, foreign, federal, state, local or other governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral authority which has any jurisdiction or control over either Party (or their Affiliates).

“ Indemnifying Party ” has the meaning set forth in Section 6.01.

“ Indemnitee ” has the meaning set forth in Section 6.01.

“ Morgan Stanley Business Employee ” means any individual who is, immediately prior to the Sale, employed by Morgan Stanley or any of its Subsidiaries or Affiliates and is not an MSCI Business Employee.

“ Morgan Stanley Equity Awards ” means Morgan Stanley Stock Options and Morgan Stanley RSUs.

“ Morgan Stanley Equity Plans ” means 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 immediately prior to the Sale Date.

“ Morgan Stanley RSU ” means 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, as used in Article 4, 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 Sale.

“ Morgan Stanley Stock Option ” means 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.

“ MSCI Business Employee ” means any individual who is, immediately prior to the Sale, employed by any member of the MSCI Group.  An MSCI Business Employee may not be a Morgan Stanley Business Employee.

“ MSCI Group ” means one or more of (i) MSCI, (ii) on or before the Deconsolidation Date, any Person that is, or was, a Subsidiary of MSCI for such period of ownership by MSCI and (iii) to the extent not previously included by (ii), Barra and its Subsidiaries, including for (i), (ii) and (iii) any predecessors and successors thereto.   In addition, for purposes of this Agreement and the Separation Agreement, “ MSCI Group ” shall include any Person that is, or was, a Subsidiary of MSCI for such period of ownership by MSCI after the Deconsolidation Date.

 “ Separation Agreement ” means the Separation Agreement between Morgan Stanley and MSCI dated as of May 22, 2009.

Section 1.02 . 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;

(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 or Section mean such Article or Section of 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;

(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 MSCI, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;

(k)         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;

(l)         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

(m)        unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.

ARTICLE 2

Agreements by Morgan Stanley

Section 2.01 .  Systems Infrastructure .   Morgan Stanley agrees to allow MSCI to use Morgan Stanley PeopleSoft systems infrastructure for a reasonable time period, but in no event later than May 31, 2009, until MSCI is able to implement and maintain its own independent systems infrastructure; provided that to the extent necessary, access to specified Morgan Stanley systems infrastructure may be extended for such necessary period of time after May 31, 2009.

Section 2.02.   Morgan Stanley Funds .  Unless specifically not permitted under the respective fund agreement or by Applicable Law, Morgan Stanley agrees to allow each MSCI Business Employee who is invested in any Morgan Stanley private equity fund as of the Sale Date to continue his or her participation in such fund after the Sale Date on the terms of the applicable fund agreement, as though such Employee were employed by Morgan Stanley.

Section 2.03.   Employee Discounts .  Morgan Stanley agrees to continue to provide to MSCI Business Employees who, as of the Sale Date, are MSCI Business Employees who have a Morgan Stanley brokerage account, employee discounts on Morgan Stanley brokerage accounts for three years after the Sale Date.

Section 2.04.   Trading.   Morgan Stanley agrees to extend the amount of time during which MSCI Business Employees located outside of the United States shall be permitted to trade through the Morgan Stanley trading desk for a period of time to be mutually agreed by Morgan Stanley and MSCI, which shall be no less than 30 days after the Sale Date, and no more than 90 days after the Sale Date.

ARTICLE 3

Equity Compensation Awards

Section 3.01 .  Stock Options and Restricted Stock Units.   For each unvested Morgan Stanley Stock Option and each unvested Morgan Stanley RSU held by an MSCI Business Employee and issued and outstanding under any Morgan Stanley Equity Plan, at the time of the Sale, such MSCI Business Employee will be treated as involuntarily terminated not for cause by Morgan Stanley and per the terms of the applicable award, will become fully vested in such Morgan Stanley Stock Option and Morgan Stanley RSU on the Sale Date.

Section 3.02 .  Responsibility For Dividend Equivalent Payments, Tax Deduction, Tax Withholding and Reporting Obligations

(a)          Dividend Equivalent Payments.   With respect to each Morgan Stanley Equity Award held by an Employee who was employed by any member of the MSCI Group at the time of grant, Morgan Stanley will have the obligation to pay MSCI 60% of all dividend equivalent amounts owing to such employee in respect of such

 

 

 

 

award, which amount shall be the dividend equivalent amount owing to such employee net of the estimated tax benefit to MSCI, as determined by Morgan Stanley.  MSCI will have the obligation to pay such employees as set forth in the preceding sentence 100% of all such dividend equivalent amounts net of any applicable tax withholding.

(b)          Party Eligible to Record Tax Deduction .  With respect to each Morgan Stanley Equity Award, including all dividend equivalent amounts paid in respect of such award, held by an Employee, the Party that will record the tax deduction with respect to such equity award will be the employer entity at the time of grant.  For the avoidance of doubt, MSCI will record the tax deduction with respect to each Employee who was employed by any member of the MSCI Group at the time of grant, including all dividend equivalent amounts paid to such employee in respect of such award, and Morgan Stanley will record the tax deduction with respect to each Morgan Stanley Equity Award held by an Employee who was employed by any member of the MS Group at the time of grant, including all dividend equivalent amounts paid to such employee in respect of such award.

(c)          Responsibility for Tax Withholding and Reporting Obligations.