Citigroup (C)

POST-CLOSING ADJUSTMENTS

Section 3.1 CAM Final Closing Date Balance Sheet.

(a) (i) Not later than 90 days after the Closing Date or such other time as is mutually agreed by the Parties, Citigroup shall prepare, or cause to be prepared, and deliver, or cause to be delivered, to Legg Mason a balance sheet of the CAM Business (the “CAM Final Closing Date Balance Sheet”), as of immediately prior to the Closing, and calculations in reasonable detail based upon such CAM Final Closing Date Balance Sheet setting forth the amounts of CAM Tangible Book Value, together with a certificate duly executed by an appropriate officer of a Citigroup Seller certifying that the CAM Final Closing Date Balance Sheet and such calculation were prepared in accordance with the accounting principles, procedures, policies and methods used by Citigroup in preparing the CAM Base Balance Sheet, including the types of adjustments used in preparing the CAM Base Balance Sheet as set forth in the notes thereto.

(ii) From and after the Closing, in connection with the preparation and delivery of the CAM Final Closing Date Balance Sheet and calculations of the CAM Tangible Book Value as set forth therein and during the period of any dispute contemplated by this Section 3.1, Legg Mason shall, and shall cause the Legg Mason Sellers and CAM Subsidiaries to, and Citigroup shall, and shall cause the Citigroup Sellers and the PC/CM Subsidiaries to, (A) provide the other Party and the other Party’s authorized representatives with reasonable access to the relevant books and records, facilities and employees and (B) cooperate in good faith with the other Party and its authorized representatives, including by providing on a timely basis all information reasonably necessary in or reasonably related to the preparation of the CAM Final Closing Date Balance Sheet and calculations of CAM Tangible Book Value as set forth therein.

(b) Within 30 days following its receipt of the CAM Final Closing Date Balance Sheet, Legg Mason shall deliver to Citigroup either (i) its agreement as to the calculation of CAM Tangible Book Value as set forth therein or (ii) a written dispute notice, specifying in reasonable detail the nature of its dispute of the calculation of CAM Tangible Book Value as set forth therein; provided that Legg Mason may dispute the calculation of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet only on the basis that such calculation was not made in accordance with the accounting principles, procedures, policies and methods employed by Citigroup in preparing the CAM Base Balance Sheet, or on the basis of arithmetic error. During the 30 days after the delivery of a dispute notice to Citigroup, Legg Mason and Citigroup shall attempt in good faith to resolve any such dispute and finally determine the amounts, as applicable, of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet. If at the end of such 30-day period, Legg Mason and Citigroup have failed to reach agreement with respect to such dispute, the matter shall be submitted to a nationally recognized accounting firm that is not the principal independent auditor for either Citigroup or Legg Mason and is otherwise neutral and impartial; provided, however,

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that if Citigroup and Legg Mason are unable to select such other accounting firm within 45 days after delivery of a dispute notice to Citigroup, either party may request the American Arbitration Association to appoint, within 20 Business Days from the date of such request, an independent accounting firm meeting the requirements set forth above or a neutral and impartial certified public accountant with significant relevant experience. The accounting firm or accountant so selected shall be referred to herein as the “Accountant.” The Accountant shall resolve the disputed portions of the calculation of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet in accordance with the terms and conditions of this Agreement. In making such determination, the Accountant may only consider those items and amounts as to which Legg Mason and Citigroup have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of this Agreement; provided that the determination of the Accountant will neither be more favorable to the Citigroup Sellers than reflected in the CAM Closing Date Balance Sheet nor more favorable to Legg Mason than reflected in Legg Mason’s dispute notice. The Accountant shall deliver to Citigroup and Legg Mason, as promptly as practicable after its appointment, a written report setting forth the resolution of each disputed matter and its determination of the amounts of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet as determined in accordance with the terms of this Agreement. Such report shall be final and binding upon the Parties to the fullest extent permitted under Requirements of Law and may be enforced in any court having jurisdiction. Each of Legg Mason and Citigroup shall bear all the fees and costs incurred by it in connection with this arbitration, except that all fees and expenses relating to the foregoing work by the Accountant shall be borne by Legg Mason and Citigroup in inverse proportion as they may prevail on the matters resolved by the Accountant, which proportionate allocation will also be determined by the Accountant and be included in the Accountant’s written report.

(c) Each Party shall make available to the other Party its (and shall use its reasonable best efforts to cause its accountants’) work papers, schedules and other supporting data as may reasonably be requested by such Party to enable such Party to verify the calculations of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet, subject to customary confidentiality and indemnity agreements.

Section 3.2 PC/CM Final Closing Date Balance Sheets.

(a) (i) Not later than 90 days after the Closing Date or such other time as is mutually agreed by the Parties, Legg Mason shall prepare, or cause to be prepared, and deliver, or cause to be delivered, to Citigroup a balance sheet of the PC/CM Business (the “PC/CM Final Closing Date Balance Sheet”), as of immediately prior to the Closing, and calculations in reasonable detail based upon such PC/CM Final Closing Date Balance Sheet setting forth the amount of PC/CM Tangible Book Value and the capital ratio, together with a certificate duly executed by an appropriate officer of a Legg Mason Seller certifying that the PC/CM Final Closing Date Balance Sheet and such calculations were prepared in accordance with the accounting principles, procedures, policies and methods used by Legg Mason in preparing the PC/CM Base Balance Sheet, including the types of adjustments set forth in the notes thereto.

(ii) From and after the Closing, in connection with the preparation and delivery of the PC/CM Final Closing Date Balance Sheet and calculations of PC/CM Tangible

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Book Value and the capital ratio as set forth therein and during the period of any dispute contemplated by this Section 3.2, Citigroup shall, and shall cause the Citigroup Sellers and the PC/CM Subsidiaries to, and Legg Mason shall, and shall cause the Legg Mason Sellers and the CAM Subsidiaries to, (A) provide the other Party and the other Party’s authorized representatives with reasonable access to the relevant books and records, facilities and employees and (B) cooperate in good faith with the other Party and its authorized representatives, including by providing on a timely basis all information reasonably necessary in or reasonably related to the preparation of the PC/CM Final Closing Date Balance Sheet and calculations of PC/CM Tangible Book Value and the capital ratio as set forth therein.

(b) Within 30 days following its receipt of the PC/CM Final Closing Date Balance Sheet, Citigroup shall deliver to Legg Mason either (i) its agreement as to the calculations of PC/CM Tangible Book Value and the capital ratio as set forth therein or (ii) a written dispute notice, specifying in reasonable detail the nature of its dispute of the calculations of PC/CM Tangible Book Value and the capital ratio as set forth therein; provided that Citigroup may dispute the calculations of PC/CM Tangible Book Value set forth in the PC/CM Final Closing Date Balance Sheet only on the basis that such calculations were not made in accordance with the accounting principles, procedures, policies and methods employed by Legg Mason in preparing the PC/CM Base Balance Sheet, or on the basis of arithmetic error. During the 30 days after the delivery of a dispute notice to Legg Mason, Citigroup and Legg Mason shall attempt in good faith to resolve any such dispute and finally determine the amount of PC/CM Tangible Book Value and the capital ratio set forth in the PC/CM Final Closing Date Balance Sheet. If at the end of such 30-day period, Citigroup and Legg Mason have failed to reach agreement with respect to such dispute, the matter shall be submitted to the Accountant (as selected pursuant to Section 3.1(b)), which shall act as arbitrator. The Accountant shall resolve the disputed portions of the calculations of PC/CM Tangible Book Value and the capital ratio set forth in the PC/CM Final Closing Date Balance Sheet in accordance with the terms and conditions of this Agreement. In making such determination, the Accountant may only consider those items and amounts as to which Citigroup and Legg Mason have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of this Agreement; provided that the determination of the Accountant will neither be more favorable to Legg Mason Sellers than reflected in the PC/CM Final Closing Date Balance Sheet nor more favorable to Citigroup than reflected in Citigroup’s dispute notice. The Accountant shall deliver to Legg Mason and Citigroup, as promptly as practicable after its appointment, a written report setting forth the resolution of each disputed matter and its determination of the amount of PC/CM Tangible Book Value and the capital ratio set forth in the PC/CM Final Closing Date Balance Sheet as determined in accordance with the terms of this Agreement. Such report shall be final and binding upon the Parties to the fullest extent permitted under Requirements of Law and may be enforced in any court having jurisdiction. Each of Citigroup and Legg Mason shall bear all the fees and costs incurred by it in connection with this arbitration, except that all fees and expenses relating to the foregoing work by the Accountant shall be borne by Citigroup and Legg Mason in inverse proportion as they may prevail on the matters resolved by the Accountant, which proportionate allocation will also be determined by the Accountant and be included in the Accountant’s written report.

(c) Each Party shall make available to the other Party its and its accountants’ work papers, schedules and other supporting data as may be reasonably requested by such Party to

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enable such Party to verify the calculations of PC/CM Tangible Book Value and the capital ratio set forth in the PC/CM Final Closing Date Balance Sheet, subject to customary confidentiality and indemnity agreements.

Section 3.3 Post-Closing Balance Sheet Adjustment Payment. On the second Business Day after the later of (x) the date Legg Mason and Citigroup agree to the calculations of CAM Tangible Book Value as set forth in the CAM Final Closing Date Balance Sheet and PC/CM Tangible Book Value as set forth in the PC/CM Final Closing Date Balance Sheet and (y) if Legg Mason and Citigroup are unable to agree on such calculations of CAM Tangible Book Value and PC/CM Tangible Book Value, the date that Legg Mason and Citigroup receive notice from the Accountant of the final determination of the amount(s) being so disputed,

(a) (i) in the event that the Net Adjustment Amount as calculated using the CAM Final Closing Date Balance Sheet and the PC/CM Final Closing Date Balance Sheet (and amounts calculated therefrom) is greater than the Net Adjustment Amount as calculated using the CAM Estimated Closing Date Balance Sheet and the PC/CM Estimated Closing Date Balance Sheet (and amounts calculated therefrom), the Note Principal Amount shall be increased by an amount equal to such excess (effective as of the Closing Date); and

(ii) in the event that the Net Adjustment Amount as calculated using the CAM Final Closing Date Balance Sheet and the PC/CM Final Closing Date Balance Sheet (and amounts calculated therefrom) is less than the Net Adjustment Amount as calculated using the CAM Estimated Closing Date Balance Sheet and the PC/CM Estimated Closing Date Balance Sheet (and amounts calculated therefrom), the Note Principal Amount shall be reduced (effective as of the Closing Date) by an amount equal to such difference.

(b) In the event that the capital ratio of the PC/CM Business is less than 15% as calculated using the PC/CM Final Closing Balance Sheet and in accordance with Section 1.3(a)(iii), Legg Mason shall make a payment in cash to the Affiliate of Citigroup as designated by Citigroup in an amount equal to the amount that would have been required to be contributed to the PC/CM Business at the Closing to have the capital ratio equal to 15%, without giving effect to any capital contributions made by Legg Mason or one of its Affiliates to the PC/CM Business to fund the Legg Mason Continuing Deferred Compensation Amount.

Section 3.4 Post-Closing True-Up. Notwithstanding any other provisions of this Agreement, in the event that any CAM Advisory Client has not, on or prior to the Closing Date, (a) provided its written Consent to the assignment or deemed assignment of its CAM Advisory Contract(s) (each such Person, a “True-Up CAM Advisory Client”) to the extent required under Section 6.6(a) or (b) terminated or informed any CAM Subsidiary in writing or orally of its intention to terminate its CAM Advisory Contract(s) and, in either case, has not, on or prior to the first Business Day that is six months after the Closing Date, terminated or informed any CAM Subsidiary in writing or orally of its intention to terminate its CAM Advisory Contract(s), then the Note Principal Amount shall be increased (effective as of the Closing Date) by an amount equal to the excess, if any, of (i) the Net Amount calculated using an amount equal to the sum of (x) Aggregate Closing Revenue Run Rate plus (y) the increase in such Aggregate Closing Revenue Run Rate that would have resulted if all of the CAM Advisory Clients referred to in this Section 3.4(a) and (b) had provided their written Consent in respect of

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the applicable CAM Advisory Contracts on or prior to the Closing over (ii) the Net Amount as calculated pursuant to Section 1.2(c) at the Closing; provided that in no event shall the increase in the Note Principal Amount pursuant to this Section 3.4 exceed the CAM Revenue Adjustment.

Section 3.5 Allocation of Purchase Price.

(a) Legg Mason and Citigroup shall endeavor in good faith to agree, within 120 days after the Closing Date, on the allocation of the total consideration paid to the Citigroup Sellers by Legg Mason and its Affiliates pursuant to this Agreement for the CAM Transferred Shares and any CAM Purchased Assets (the “CAM Allocation”) and the allocation of the total consideration paid to the Legg Mason Sellers by Citigroup and its Affiliates pursuant to this Agreement for the PC/CM Transferred Shares (the “PC/CM Allocation”). Each of the CAM Allocation and the PC/CM Allocation shall be made in accordance with Section 1060 of the Code and the rules and regulations promulgated thereunder. Any amount allocated to any CAM Transferred Shares or any PC/CM Transferred Shares that, in each case, are shares of an entity that is disregarded as separate and apart from its owner for United States federal income tax purposes (a “Disregarded Entity”), shall be allocated among the assets of such Disregarded Entity in accordance with Section 1060 of the Code and the rules and regulations promulgated thereunder.

(b) In the event that Citigroup and Legg Mason agree on the CAM Allocation and the PC/CM Allocation, except as may be required by a Determination, Citigroup and Legg Mason agree to act in accordance with the CAM Allocation and the PC/CM Allocation in the preparation and filing of all Tax Returns (including filing Form 8594 with their respective federal income tax returns for the taxable year that includes the Closing Date and any other forms or statements required by the Code, Treasury Regulations, the Internal Revenue Service (“IRS”) or any applicable state or local or foreign Governmental Authority) and in the course of any Tax Proceeding.

(c) In the event that Citigroup and Legg Mason do not agree on the CAM Allocation or the PC/CM Allocation, Citigroup and Legg Mason (and their respective Affiliates) shall independently determine the manner in which such allocations should be made, and, for all Tax purposes, neither Citigroup (and any of its Affiliates) nor Legg Mason (and any of its Affiliates) shall be bound by the other party’s allocations; provided that Citigroup shall not allocate less than 85% of the total consideration to the domestic CAM Subsidiaries, in the aggregate.

(d) Any subsequent adjustments to the total consideration shall be reflected in the CAM Allocation or the PC/CM Allocation, as the case may be, and made in accordance with Section 1060 of the Code and the rules and regulations promulgated thereunder and consistent with the methodology provided above.

(e) Citigroup and Legg Mason shall promptly inform one another in writing of any challenge by any Governmental Authority to any allocation made pursuant to this Section 3.5 and shall consult and keep one another informed with respect to the status of such challenge.

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(f) Section 8.4(d) shall govern all allocations resulting from any CAM Election or PC/CM Election.