AMENDED AND RESTATED JOINT VENTURE CONTRIBUTION AND FORMATION AGREEMENT

EXHIBIT 10.1

 

 

 

 

AMENDED AND RESTATED JOINT VENTURE CONTRIBUTION AND
FORMATION AGREEMENT

     by and among

CITIGROUP INC.,

MORGAN STANLEY

and

MORGAN STANLEY SMITH BARNEY HOLDINGS LLC

 

Dated as of May 29, 2009

TABLE OF CONTENTS

 

 

SCHEDULES  

 

 

EXHIBITS

 

AMENDED AND RESTATED JOINT VENTURE
CONTRIBUTION AND FORMATION AGREEMENT

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

RECITALS

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

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

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

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

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

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

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

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ARTICLE 1

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ CGMI ” means Citigroup Global Markets Inc.

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

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

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

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

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

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

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

(ii)  the Citigroup Contributed Equity Interests;

(iii) Citigroup’s Contributed Real Property;

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

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

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

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

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

(ix) the Citigroup Contributed Contracts;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Closing Date ” means May 31, 2009.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ FINRA ” means the Financial Industry Regulatory Authority.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(ii) the Morgan Stanley Contributed Equity Interests;

(iii) Morgan Stanley’s Contributed Real Property;

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

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

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

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

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

(ix) the Morgan Stanley Contributed Contracts;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(xxiv) the FID Inventory;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ NYSE ” means the New York Stock Exchange.

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

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

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

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

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

“ Parent ” means each of Citigroup and Morgan Stanley.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 2

FORMATION OF VENTURE; CLOSING; RELATED TRANSACTIONS

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

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

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

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

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

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

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

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

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

Section 2.4     Deliveries and Other Actions at the Closing .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 2.5     Contributions on Self-Clearing Dates .

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

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

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

Section 2.6     Delayed Contribution Businesses .

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

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

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

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

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

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

(g)     Each of Citigroup and Morgan Stanley shall use its reasonable best efforts to effect the transfer of its Delayed Contribution Businesses to the Company as provided herein as soon as possible after the Closing Date. Notwithstanding anything in this Agreement to the contrary, the provisions of Sections 4.1, 4.2, 4.3, 4.4(c) and 4.4(d) of this Agreement shall continue to apply to each Delayed Contribution Business after the Closing until such time as such Delayed Contribution Business has been transferred to the Company (with each reference therein to the Citigroup Contributed Business or the Morgan Stanley Contributed Business being

deemed to be a reference to the applicable Delayed Contribution Business and with each reference therein to the Closing Date being deemed to be a reference to Delayed Closing Date). In addition, prior to such time as any Morgan Stanley Delayed Contribution Business or Citigroup Delayed Contribution Business has been transferred to the Company, Citigroup and Morgan Stanley shall have the rights set forth in Section 4.12(a) of the LLC Agreement with respect to such Delayed Contribution Business (with (x) the reference to the Company in the lead-in paragraph of such Section 4.12(a) being deemed to be a reference to Morgan Stanley in the case of a Morgan Stanley Delayed Contribution Business and Citigroup in the case of the Citigroup Delayed Contribution Business and (y) references to the Company in clause (i) through clause (ix) of such Section 4.12(a) being deemed to be references to such Delayed Contribution Business).

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

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

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

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

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

Section 2.7     Delayed Distribution Businesses .

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

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

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

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

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

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

(f)     Morgan Stanley shall indemnify, defend and hold harmless Citigroup, Citigroup’s Affiliates and the Company Entities and their respective Affiliates from and against, without duplication, any Losses (other than Taxes, which shall be governed by Section 4.5(a)(i) of this Agreement) that aris