EXHIBIT 10.2

AMENDMENT TO

401(k) PLAN

Morgan Stanley & Co. Incorporated (the “Corporation”) hereby amends the Morgan
Stanley 401(k) Plan (the “401(k) Plan”) as follows:

1. Effective July 1, 2007, the first sentence of the third paragraph of the
definition of “Earnings” in Section 2 of the 401(k) Plan shall be amended to
read as follows:

“Notwithstanding the foregoing, the annual Earnings of each Participant taken
into account under the Plan, including in determining the Pre-Tax Contributions
and After-Tax Contributions a Participant may elect to contribute and in
determining Retirement Contribution Earnings, shall not exceed the $200,000
compensation limit under Code section 401(a)(17), as adjusted for cost-of-living
increases in accordance with Code section 401(a)(17)(B).”

2. Effective July 1, 2007, the definition of “Investment Funds” in Section 2 of
the 401(k) Plan, and the second sentence of Section 8(b)(i) of the 401(k) Plan,
shall be amended by adding the phrase “, the Discover Stock Fund” immediately
after the phrase “Morgan Stanley Stock Fund.”

3. Effective July 1 2007, the reference to “Section 8(b)(ii)” in the definition
of “Morgan Stanley Stock Fund” in Section 2 of the 401(k) Plan shall be deleted
and replaced with “Section 8(b)(ii)(A).”

4. Effective July 1, 2007, the definition of “Qualified Non-Elective
Contributions” in Section 2 of the 401(k) Plan shall be amended by adding the
phrase “, Retirement Contributions” immediately following the phrase “Matching
Contributions.”

5. Effective July 1, 2007, the definition of “Retirement” in Section 2 of the
401(k) Plan shall be amended to read as follows:

““Retirement” means termination of a Participant’s employment with a
Participating Company and all members of the Affiliated Group on or after the
date he or she has both (i) attained age 55 and (ii) completed five years of
service under the qualified defined benefit plan of the Company or Affiliated
Group member covering such Participant, or, in the case of a Participant who is
not covered by any such plan, completed five years of service as determined
under the Morgan Stanley Employees Retirement Plan.”

6. Effective July 1, 2007, the following new definitions of “Discover Spin-off,”
“Discover Stock,” “Discover Stock Fund,” “Post-June 30, 2007 Hire,” “Retirement
Contribution,” and “Retirement Contribution Earnings” shall be added in the
appropriate places to Section 2 of the 401(k) Plan:

 

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““Discover Spin-off” means the spin-off of Discover Financial Services and
certain affiliates from Morgan Stanley and its affiliates pursuant to the 2007
Separation and Distribution Agreement between Morgan Stanley and Discover
Financial Services.”

““Discover Stock” means the common stock of Discover Financial Services, a
Delaware corporation.”

““Discover Stock Fund” means that part of the Trust Fund invested as provided in
Section 8(b)(ii)(B).”

““Post-June 30, 2007 Hire” means any Eligible Employee who is hired or rehired
by a Participating Company, or transferred to a Participating Company from a
member of the Affiliated Group that is not a Participating Company, on or after
July 1, 2007, or any other Employee who is converted to Eligible Employee status
on or after that date, other than any such individual who is eligible to
actively participate and accrue benefits under the Morgan Stanley Employees
Retirement Plan under the terms of that Plan.”

““Retirement Contribution” means a contribution made to the Plan pursuant to
Section 6(e).”

““Retirement Contribution Earnings” means the Earnings paid to a Member who is
eligible for a Retirement Contribution under Section 6(e), excluding amounts
paid before the first day of the month coincident or next following the Member’s
completion of one Year of Service.”

7. Effective July 1 2007, Section 3(b)(iii) of the 401(k) Plan shall be amended
to read as follows:

“(iii) A Member who becomes ineligible to receive Company Contributions due to
termination of employment in accordance with Section 6 shall again become
eligible to receive Company Contributions, subject to Section 6, on the first
day he or she is rehired as an Eligible Employee.”

8. Effective January 1, 2007, clause (ii) in the second sentence of Section 6(a)
of the 401(k) Plan shall be amended to read as follows:

“(ii) the Member (A) is employed as an Eligible Employee in such Business Unit
on December 31 of such Plan Year (including any Member on an Authorized Absence)
or (B) was employed as an Eligible Employee in such Business Unit immediately
prior to his or her termination of employment due to death, Total and Permanent
Disability, Retirement or Release during such Plan Year.”

 

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9. Effective July 1, 2007, the following new Section 6(e) shall be added to the
401(k) Plan:

“(e) Retirement Contributions.

“(i) Eligibility for Retirement Contributions. A Member shall be eligible to
receive an allocation of Retirement Contributions for a Plan Year if the Member
(A) is a Post-June 30, 2007 Hire, (B) has Retirement Contribution Earnings for
such Plan Year and (C) (I) is an Eligible Employee on December 31 of such Plan
Year (including any Member on an Authorized Absence) or (II) was an Eligible
Employee immediately prior to his or her termination of employment due to death,
Total and Permanent Disability, Retirement or Release during such Plan Year.

“(ii) Allocation of Retirement Contributions. The amount of the Retirement
Contribution allocated to an eligible Member for a Plan Year, as set forth in
the following schedule, shall be based on (A) the Member’s completed Years of
Service (as defined below) on December 31 of such Plan Year and (B) the Member’s
Retirement Contribution Earnings for such Plan Year:

 

Years of Service on December 31

  

% of Annual Retirement Contribution Earnings

Less than 10 Years

   2%

10-19 Years

   3%

20-29 Years

   4%

30 or More Years

   5%

“(iii) Years of Service. For purposes of this Section 6(e), a Member’s Years of
Service shall be determined under the rules set forth in Section 4, provided,
however, that Years of Service for this purpose will not include any period of
service in which the Member is not employed by a Participating Company as an
Eligible Employee.”

10. Effective July 1, 2007, the following new Section 6(f) shall be added to the
401(k) Plan:

“(f) Form of Contributions. Company Contributions to the Plan for a Plan Year
shall be made in the form of cash, unless the Company determines that any or all
such contributions shall be made in the form of Company Stock.”

11. Effective July 1, 2007, the second sentence in Section 8(b)(ii) of the
401(k) Plan shall be amended to read as follows:

“The Morgan Stanley Stock Fund shall consist of all Morgan Stanley Stock Fund
investments held by the Trustee and all cash held by the Trustee which is
derived from dividends, interest or other income from Morgan Stanley Stock Fund
investments, from Qualified Non-elective and Qualified Matching Contributions,
from any other amounts directed by the Participants to be invested in the Morgan
Stanley Stock Fund, and from the proceeds of the sale or redemption of Morgan
Stanley Stock Fund investments.”

 

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12. Effective July 1, 2007, Section 8(b)(ii) of the 401(k) Plan shall be
designated as Section 8(b)(ii)(A) and the following new Section 8(b)(ii)(B)
shall be added to the Plan:

“(B) Except as otherwise set forth below, the Discover Stock Fund shall be
invested and reinvested exclusively in Discover Stock, except that pending
investments in Discover Stock, amounts held in the Discover Stock Fund may be
invested and reinvested temporarily in interest-bearing short-term investments,
including (without limitation) savings accounts, certificates of deposit, money
market instruments, United States treasury bills and such group annuity
contracts, insurance company pooled separate accounts, bank common or collective
trust funds, mutual funds and other pooled investment funds as the Trustee deems
suitable for temporary investments of the Discover Stock Fund. The Discover
Stock Fund shall consist of all Discover Stock Fund investments held by the
Trustee and all cash held by the Trustee which is derived from interest or other
income from Discover Stock Fund investments and from the proceeds of the sale or
redemption of Discover Stock Fund investments. Any cash held by the Trustee
shall be invested as provided herein.

“All Discover Stock received by the Plan in connection with the Discover
Spin-off shall be invested in the Discover Stock Fund. Discover Stock received
by the ESOP in connection with the Discover Spin-off also shall be transferred
to the Plan and invested in the Discover Stock Fund as described in Supplement J
to the Plan. A Participant may dispose of all or any part of his or her interest
in the Discover Stock Fund at any time, subject to the restrictions set forth
below in Section 8(d), but, notwithstanding anything in the Plan to the
contrary, may not elect to make additional contributions or investment transfers
to the Discover Stock Fund on or after July 1, 2007. Cash dividends on shares of
Discover Stock shall be invested in accordance with a Participant’s current
directions with respect to the investment of contributions under
Section 8(d)(i).

“The Discover Stock Fund shall be continued as an investment option under the
Plan through December 31, 2008, unless the Investment Committee determines that
continuing such fund is inconsistent with the requirements of ERISA or other
applicable law.”

13. Effective July 1, 2007, the following parenthetical shall be added at the
end of Section 8(b)(v) of the 401(k) Plan:

“(except as otherwise provided in Section 8(b)(ii)(B) with respect to dividends
on Discover Stock)”

14. Effective July 1, 2007, the last sentence in Section 8(d)(i) of the 401(k)
Plan shall be amended by deleting the words “a money market or similar fund” and
inserting in their place the words “one or more funds.”

 

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15. Effective January 1, 2007, the following paragraph (vi) shall be added at
the end of Section 8(d) of the 401(k) Plan:

“(vi) The provisions of Sections 8(d)(iv) and (v) shall be interpreted in a
manner that is consistent with the requirements of Code section
401(a)(35)(D)(ii)(II).”

16. Effective July 1, 2007, the following sentence shall be added at the end of
Section 8(e) of the 401(k) Plan:

“These provisions also shall apply with respect to the voting and tender of
Discover Stock under this Plan.”

17. Effective July 1, 2007, Section 10(a)(i) of the 401(k) Plan shall be amended
by adding the phrase “and Retirement Contributions” after the phrase “Firm
Contributions” in each place the latter phrase appears therein.

18. Effective July 1, 2007, Section 10(b)(i) of the 401(k) Plan shall be amended
by adding the phrase “Retirement Contributions,” after the phrase “Firm
Contributions,” in the first sentence thereof.

19. Effective July 1, 2007, Section 10(b)(ii) of the 401(k) Plan shall be
amended by deleting the phrase “Firm Contributions” in the first sentence
thereof and replacing it with the phrase “Company Contributions.”

20. Effective July 1, 2007, Sections 11(a), 12(c) and 12(g)(iii) of the 401(k)
Plan shall be amended by adding the phrase “or Discover Stock Fund” immediately
after the phrase “Morgan Stanley Stock Fund” in each place the latter phrase
appears therein.

21. Effective July 1, 2007, the first sentence in Section 12(e) of the 401(k)
Plan shall be amended to read as follows:

“All withdrawals under this Section 12 shall be distributed in the form of a
lump sum payment consisting of (i) cash equal to the value of the portion of the
Participant’s Accounts being withdrawn or (ii) at the election of the
Participant and as permitted under this Section 12, whole shares of Morgan
Stanley Stock or Discover Stock (each as may be credited to the Participant’s
Account) and cash equal to the amount of any uninvested cash, plus the value of
the portions of the Participant’s Accounts that are invested in all Investment
Funds other than the Morgan Stanley Stock Fund or Discover Stock Fund, in such
proportions as the Participant may elect and in the aggregate equal to the value
of the portion of the Participant’s Accounts being withdrawn.”

 

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22. Effective January 1, 2007, Section 13(a)(i) of the 401(k) Plan shall be
amended to read as follows:

“(i) Anything in the Plan to the contrary notwithstanding, distributions under
this Plan shall meet the requirements of Code section 401(a)(9) and the
regulations thereunder, including the minimum distribution incidental death
benefit requirement of Code section 401(a)(9)(G). Distributions shall be made in
accordance with Treas. Reg. sections 1.401(a)(9)-1 through 1.401(a)(9)-9. Such
requirements shall override any inconsistent distribution options in the Plan.
Such requirements are incorporated herein by reference.”

23. Effective July 1, 2007, Section 13(b)(ii)(1) of the 401(k) Plan shall be
amended to read as follows:

“(1) If the annual additions otherwise made to the Accounts of a Participant
would cause the limitations of Code section 415 that are applicable to that
Participant to be exceeded for the limitation year, the amount by which such
limitations are exceeded will be eliminated (A) by returning to the Participant
the Participant’s Pre-Tax Contributions and/or After-Tax Contributions for such
limitation year, in whole or in part as necessary, and then (B) to the extent
necessary, by reducing any Firm or Retirement Contributions allocated to the
Participant in accordance with Section 6. Such excess amounts of Firm or
Retirement Contributions shall be applied to reduce such contributions for such
Participant for the next limitation year (and succeeding limitation years, if
necessary).”

24. Effective July 1, 2007, Section 13(b)(ii)(2) of the 401(k) Plan shall be
amended by deleting the phrase “Firm Contributions” and replacing it with the
phrase “Firm or Retirement Contributions” in the last sentence thereof.

25. Effective July 1, 2007, the following paragraph shall be added at the end of
Appendix A to the 401(k) Plan:

“Cessation of Participation of Discover Employers. Effective July 1, 2007,
Discover Financial Services (fka Novus Services, Inc.), Discover Bank (fka
Greenwood Trust Company), NOVUS Credit Services Inc., and PULSE EFT Association,
Inc. shall cease to be Participating Companies in the Plan as set forth in
Supplement J.”

26. Effective as of the dates listed below, the list of Participating Companies
in Appendix B of the 401(k) Plan shall be amended by adding the following to the
end thereof:

 

“Morgan Stanley Capital International Inc.    05/01/2003 “Morgan Stanley Capital
Group Inc.    11/16/2004 “FrontPoint Partners LLC    01/01/2007 “FrontPoint
Management Inc.    01/01/2007 “Morgan Stanley Mortgage Capital Holdings LLC   
06/16/2007”

 

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27. Effective January 1, 2007, Appendix B of the 401(k) Plan shall be amended by
adding the following to the end thereof:

“FrontPoint Partners LLC and FrontPoint Management Inc. Any individual who
became an Eligible Employee in connection with the acquisition of FrontPoint
Partners LLC and FrontPoint Management Inc. pursuant to an agreement titled
“Agreement and Plan of Merger Dated as of October 31, 2006 Among MS Holdings
Incorporated, MS Acquisition Sub X LLC, FrontPoint Partners LLC and the
Unitholder’s Committee Identified Herein,” and who was, immediately prior to
becoming an Eligible Employee, an employee of FrontPoint Partners LLC or
FrontPoint Management Inc., shall (i) become eligible to commence participation
in the Plan effective January 1, 2007, and (ii) the term “Period of Service”
shall include such individual’s service up to five years with FrontPoint
Partners LLC or FrontPoint Management Inc. for purposes of determining the
vested percentage of such Eligible Employee’s Plan Benefit pursuant to
Section 10 of the Plan. An Hour of Service as defined in Section 4(a) of the
Plan shall include each hour for which a former employee of FrontPoint Partners
LLC or FrontPoint Management Inc. was paid, or entitled to payment, for the
performance of services for FrontPoint Partners LLC or FrontPoint Management
Inc.”

28. Effective July 1, 2007, the following new Supplement J shall be added to the
401(k) Plan:

“MORGAN STANLEY 401(K) PLAN

“SUPPLEMENT J

“SPECIAL PROVISIONS IN CONNECTION WITH SPIN-OFFS OF DISCOVER

401(K) PLAN AND DISCOVER FINANCIAL SERVICES

“1. Definitions. For purposes of this Supplement, the following terms shall have
the following meanings:

“(a) “Discover Employer” means Discover Financial Services and any affiliate
spun off from the Morgan Stanley Group pursuant to the Distribution Agreement.

“(b) “Discover 401(k) Plan” shall mean the Discover Financial Services 401(k)
Plan.

“(c) “Distribution Agreement” means the 2007 Separation and Distribution
Agreement between Morgan Stanley and Discover Financial Services.

 

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“(d) “Effective Time” means the time of the spin-off of the Discover Employers
from the Morgan Stanley Group pursuant to the Distribution Agreement.

“(e) “Morgan Stanley Group” means Morgan Stanley and all Affiliated Group
members (determined by treating Morgan Stanley as a Participating Company),
excluding, for periods after the Effective Time, the Discover Employers.

“(f) “Transferred Employee” means (i) any current employee of a Discover
Employer as of the Effective Time and (ii) any former employee of a Discover
Employer as of the Effective Time, excluding any former employee more recently
employed by a member of the Morgan Stanley Group that is not a Discover
Employer. A Transferred Employee also shall include any individual not described
in the preceding sentence who, as of the Effective Time, has a benefit under the
Plan with respect to employment with an entity listed in Supplement C, D, E or F
of Exhibit B to the Morgan Stanley Employees Retirement Plan, other than an
entity which is a member of the Morgan Stanley Group and not a Discover
Employer.

“2. Special Provisions in Connection with Plan Transfer

“(a) Transfer of Assets and Liabilities. As of the Effective Time, the assets
and liabilities attributable to all benefits accrued by all Transferred
Employees under the Plan shall be transferred to the Discover 401(k) Plan.

“(b) Discover Employers. As of the Effective Time, each Discover Employer that
has previously adopted the Plan shall cease to be a Participating Company and
shall instead become a participating employer in the Discover 401(k) Plan.

“(c) Participation and Benefits. As of the Effective Time, each Transferred
Employee participating in the Plan shall cease to participate in the Plan and
shall instead become a participant in the Discover 401(k) Plan in accordance
with the provisions of the Discover 401(k) Plan. The Discover 401(k) Plan shall
provide each Transferred Employee with a benefit that is not less than the
accrued benefit of such Transferred Employee under the Plan as of the Effective
Time (plus the accrued benefit of such Transferred Employee under the ESOP as of
the Effective Time, which shall also be transferred to the Discover 401(k) Plan
as of the Effective Time), and all rights with respect to such accrued benefit,
including, without limitation, rights with respect to vesting and forms of
distribution, required by applicable law. No Transferred Employee who is
employed by a Discover Employer immediately prior to the Effective Time shall be
treated as experiencing a termination of employment for Plan purposes at the
Effective Time solely by reason of the spin-off of the Discover Employers.

 

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“(d) Cessation of Liability With Respect to Transferred Employees. As of the
Effective Time, the Plan shall have no further liability or responsibility with
respect to the benefits accrued by the Transferred Employees under the Plan, and
such transfer shall be in full discharge of such responsibilities and
liabilities.”

“(e) Conditions. The transfers described in the foregoing provisions shall be
conditioned upon the following: (i) the providing by Discover Financial Services
to the Plan Administrator of all records and information reasonably necessary to
carry out such transfers; and (ii) a commitment by Discover Financial Services
to apply for and obtain a determination letter from the Internal Revenue Service
that the Discover 401(k) Plan is qualified under Code section 401(a).

“3. Special Provisions in Connection with Spin-off of Discover Employers. As
soon as practicable following the Effective Time, all Discover Stock investments
held in each participant’s account under the ESOP as a result of the spin-off of
Discover Financial Services and the other Discover Employers from the Morgan
Stanley Group shall be transferred to such participant’s account under this Plan
and invested in the Discover Stock Fund. Following such transfer, the amounts
transferred shall continue to be subject to any vesting restrictions applicable
to such amounts under the terms of the ESOP (for which purpose, the ESOP’s
vesting provisions are generally summarized in Section 10(a)(ii) of this Plan).
The forms of distribution available with respect to such amounts shall be the
forms of distribution available under this Plan, plus such other forms as may be
required to be provided under Code section 411(d)(6), as determined by the Plan
Administrator.”

* * * * * * * * *

IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed on
its behalf as of this 29th day of June, 2007.

 

MORGAN STANLEY & CO. INCORPORATED By:  

/s/ KAREN JAMESLEY

Title:  

Global Head of Human Resources

 

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