EXHIBIT
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FIRST
SUPPLEMENTAL SENIOR INDENTURE


 


AMONG


 


MORGAN
STANLEY FINANCE LLC,


 


as
Issuer


 


MORGAN
STANLEY,


 


as
Guarantor


 


AND


 


THE
BANK OF NEW YORK MELLON,


 


as
Trustee


 


________


 


Dated
as of November 16, 2017


 


________


 


SUPPLEMENTAL
TO SENIOR INDENTURE


 


DATED
AS OF FEBRUARY 16, 2016


 


 





 



 


 






     


     


    

 




THIS FIRST SUPPLEMENTAL SENIOR INDENTURE dated as of November 16, 2017 (the “First Supplemental Senior Indenture”)
among MORGAN STANLEY FINANCE LLC, a Delaware limited liability company (the “Issuer”) and a wholly-owned subsidiary
of Morgan Stanley, MORGAN STANLEY, a Delaware corporation (the “Guarantor”), and THE BANK OF NEW YORK MELLON, as trustee
(the “Trustee”),


 


W
I T N E S S E T H:


 


WHEREAS,
the Issuer, the Guarantor and the Trustee are parties to that certain Senior Indenture dated as of February 16, 2016 (the “Indenture”);


 


WHEREAS,
Section 8.01 of the Indenture provides that, without the consent of the Holders of any Securities, the Issuer and the Guarantor,
when each is authorized by a resolution of its Board, and the Trustee may enter into indentures supplemental to the Indenture
for the purpose of, among other things, making any provisions as the Issuer and the Guarantor may deem necessary or desirable,
subject to the conditions set forth therein; provided that no such action shall materially adversely affect the interests
of the Holders of the Securities or Coupons;


 


WHEREAS,
the Issuer and the Guarantor desire to modify certain provisions of the Indenture in connection with certain legal and regulatory
requirements relevant to the Guarantor as a bank holding company;


 


WHEREAS,
the entry into this First Supplemental Senior Indenture by the parties hereto is in all respects authorized by the provisions
of the Indenture; and


 


WHEREAS,
all things necessary to make this First Supplemental Senior Indenture a valid indenture and agreement in accordance with its terms
have been done.


 


NOW, THEREFORE,
for and in consideration of the premises, the Issuer, the Guarantor and the Trustee mutually covenant and agree for the equal
and proportionate benefit of the respective Holders from time to time of the Securities and of the Coupons, if any, appertaining
thereto as follows:


 


ARTICLE
1


 


Section 1.01.
Application of Article 1. The provisions of this Article 1 shall apply solely to Holders of any Securities that may be
issued under the Indenture subsequent to the date hereof.


 


Section 1.02.
Amendment of Section 1.01 of the Indenture. Section 1.01 of the Indenture is hereby amended by adding after the definition
of “Coupon” a new defined term as follows:



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““Covenant
Breach” means, with respect to Securities of any series, failure on the part of the Issuer duly to observe or perform
any of the covenants or agreements on the part of the Issuer in the Securities of such series (other than a covenant or warranty
in respect of the Securities of such series a default in the performance or breach of which is specifically dealt with in Section
5.01) or in this Indenture contained for a period of 60 days after the date on which written notice specifying such failure, stating
that such notice is a Notice of Covenant Breach hereunder and demanding that the Issuer remedy the same, shall have been
given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee
by the holders of at least 25% in aggregate principal amount of the Outstanding Securities of all series affected thereby. A Covenant
Breach shall not be an Event of Default with respect to any Security, except to the extent otherwise specifically provided pursuant
to Section 2.03 with respect to such Security.”


 


Section 1.03.
Amendment of Section 2.03 of the Indenture. Clause 2.03(s) of the Indenture is hereby amended and restated to read in its
entirety as follows:


 


“any
addition to, elimination of or other change in the events of default, covenant breaches or covenants with respect to the Securities
of such series, including making events of default, covenant breaches or covenants inapplicable or changing the remedies available
to Holders of the Securities of such series upon an event of default, a covenant breach or a failure by the Issuer or the Guarantor
to perform a covenant; and”.


 


Section 1.04.
Amendment of Section 5.01 of the Indenture.





 


(a) Clause
5.01(b) of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“default
in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due
and payable either at maturity, upon any redemption, by declaration or otherwise, and continuance of such default for a period
of 30 days; or”.


 


(b) Clause
5.01(c) of the Indenture is hereby deleted in its entirety.


 


(c) Clauses
5.01(d), 5.01(e) and 5.01(f) of the Indenture are hereby amended by being renumbered as clauses 5.01(c), 5.01(d) and 5.01(e),
respectively.


 


(d) The second
paragraph of Section 5.01 of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“If
an Event of Default described in clauses 5.01(a), 5.01(b) or 5.01(e) (if the Event of Default under clause 5.01(e) is with respect
to less than all series of Securities then Outstanding) occurs and is continuing, then, and in each and every 



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such case, except
for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Securities of each such affected series then Outstanding hereunder (voting
as a single class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire
principal (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all Securities of all such affected series, and the interest accrued
thereon, if any, to be due and payable immediately, and upon any such declaration, the same shall become immediately due and payable.
If an Event of Default described in clause 5.01(e) (if the Event of Default under clause 5.01(e) is with respect to all series
of Securities then Outstanding), 5.01(c) or 5.01(d) occurs and is continuing, then and in each and every such case, unless the
principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than
25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing
to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original
Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities then
Outstanding, and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall
become immediately due and payable. For the avoidance of doubt, except to the extent otherwise specifically provided pursuant
to Section 2.03 with respect to a particular Security or Securities, neither the Trustee nor any Holders shall be entitled to
accelerate the maturity of any Security, nor shall the maturity of any Security be otherwise accelerated, as a result of a Covenant
Breach.”


 


Section 1.05.
Amendment of Section 5.02 of the Indenture. The first paragraph of Section 5.02 of the Indenture is hereby amended and
restated to read in its entirety as follows:


 


“The
Issuer covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Securities
of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days
or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series
when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption
or by declaration or otherwise, and such default shall have continued for a period of 30 days—then upon demand of the Trustee,
the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then
shall have become due and payable on all Securities of such series, and such Coupons, for principal or interest, as the case may
be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further
amount as shall be 



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sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee
and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith.”


 


Section 1.06.
Amendment of Section 5.04 of the Indenture. Section 5.04 of the Indenture is hereby amended by after the phrase “Event
of Default” inserting “or a Covenant Breach”.


 


Section 1.07.
Amendment of Section 5.08 of the Indenture. The second paragraph of Section 5.08 of the Indenture is hereby amended by
after each occurrence of the phrase “Event of Default” inserting “or Covenant Breach”.


 


Section 1.08.
Amendment of Section 5.10 of the Indenture.


 


(a) The first
paragraph of Section 5.10 of the Indenture is hereby amended by replacing the phrase “event of default” with “Event
of Default or a Covenant Breach” and by replacing the phrase “any past default or Event of Default described in ‎Section
5.01” with “any past default, Event of Default described in ‎Section 5.01 or Covenant Breach”.


 


(b) The second
paragraph of Section 5.10 of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“Upon
any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of
Default or Covenant Breach arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of
this Indenture; but no such waiver shall extend to any subsequent or other default, Event of Default or Covenant Breach or impair
any right consequent thereon.”


 


Section 1.09.
Amendment of Section 5.11 of the Indenture. Section 5.11 of the Indenture is hereby amended by after the phrase “Event
of Default” inserting “or a Covenant Breach”.


 


Section 1.10.
Amendment of Section 5.12 of the Indenture. Section 5.12 of the Indenture is hereby amended and restated to read in its
entirety as follows:


 


“In
lieu of the provisions set forth in Section 315(e) of the Trust Indenture Act of 1939, all parties to this Indenture agree, and
each Holder of any Security or Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its



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 discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted
by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal
amount of the Securities of such series, or, in the case of any suit relating to or arising under clause 5.01(e) (if the suit
relates to Securities of more than one but less than all series), 10% in aggregate principal amount of Securities then Outstanding
and affected thereby, or in the case of any suit relating to or arising under clause 5.01(e) (if the suit under clause 5.01(e)
relates to all the Securities then Outstanding), 5.01(c) or 5.01(d), 10% in aggregate principal amount of all Securities then
Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest
on any Security on or after the due date expressed in such Security or any date fixed for redemption.”


 


Section 1.11.
Amendment of Section 6.01 of the Indenture.


 


(a) The first
paragraph of Section 6.01 of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“With
respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default
or a Covenant Breach with respect to the Securities of a particular series and after the curing or waiving of all Events of Default
or Covenant Breaches which may have occurred with respect to such series, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. In case an Event of Default or a Covenant Breach with respect to the Securities
of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities
such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of his own affairs.”


 


(b) Clause
6.01(a) of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“prior
to the occurrence of an Event of Default or a Covenant Breach with respect to the Securities of any series and after the curing
or waiving of all such Events of Default or Covenant Breaches with respect to such series which may have occurred:”


 


Section 1.12.
Amendment of Section 6.02 of the Indenture. Clause 6.02(g) of the Indenture is hereby amended and restated to read in its
entirety as follows:


 


“prior
to the occurrence of an Event of Default or a Covenant Breach hereunder and after the curing or waiving of all Events of Default
or Covenant 



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Breaches, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in
aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within
a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor Trustee, shall
be repaid by the Issuer upon demand;”


 


Section 1.13.
Amendment of Section 9.01 of the Indenture. Section 9.01 of the Indenture is hereby amended and restated to read in its
entirety as follows:


 


“The
Issuer covenants that it will not merge or consolidate with any other Person or sell, lease or convey all or substantially all
of its assets to any other Person (other than the sale, lease or conveyance of all or substantially all of the Issuer’s
assets to one or more of the Guarantor’s Subsidiaries), unless (i) either the Issuer shall be the continuing Person, or
the successor Person by merger or consolidation or the Person which acquires by sale, lease or conveyance substantially all the
assets of the Issuer (if other than the Issuer) shall be a Person organized under the laws of the United States of America or
any State thereof or the District of Columbia and shall expressly assume the due and punctual payment of the principal of and
interest on all the Securities and Coupons, if any, according to their tenor, and the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed or observed by the Issuer, by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such Person, and (ii) the Issuer, such successor Person
or such acquiring Person, as the case may be, shall not, immediately after such merger or consolidation, or such sale, lease or
conveyance, be in default in the performance of any such covenant or condition. For the avoidance of doubt, the Person referred
to in this Section 9.01 may be the Guarantor or any Subsidiary of the Guarantor.”


 


Section 1.14.
Amendment of Section 10.01 of the Indenture.


 


(a) Clause
10.01(c) of the Indenture is hereby amended by after the phrase “Event of Default under Section 5.01” inserting “or
a Covenant Breach”.


 


(b) Subparagraph
10.01(c)(ii) of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“No
Event of Default or Covenant Breach or event which with notice or lapse of time or both would become an Event of Default or a
Covenant Breach



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 with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as
subsections ‎5.01(c) and ‎5.01(d) are concerned, at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).”


 


Section 1.15.
Amendment of Section 12.05 of the Indenture.


 


(a) The third
paragraph of Section 12.05 of the Indenture is hereby amended by after the phrase “no defaults in the payment of”
and before the word “interest” inserting “principal or” and after the phrase “Events of Default”
inserting “or Covenant Breaches”.


 


(b) The sixth
paragraph of Section 12.05 of the Indenture is hereby amended and restated to read in its entirety as follows:


 


“The
Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption
of Securities for such series by operation of the sinking fund during the continuance of a default in payment of principal or
interest on such Securities or of any Event of Default or Covenant Breach except that, where the giving of notice of redemption
of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided
that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default, Event of Default or Covenant Breach shall occur, and any moneys thereafter
paid into the sinking fund, shall, during the continuance of such default, Event of Default or Covenant Breach, be deemed to have
been collected under ‎Article 5 and held for the payment of all such Securities. In case such Event of Default or Covenant
Breach shall have been waived as provided in ‎Section 5.10 or the default cured on or before the sixtieth day preceding the
sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date
in accordance with this Section to the redemption of such Securities.”


 


Section 1.16.
Amendment of Section 13.11 of the Indenture. Section 13.11 of the Indenture is hereby amended and restated to read in its
entirety as follows:


 


“The
Guarantor covenants that it will not merge or consolidate with any other Person or sell, lease or convey all or substantially
all of its assets to any other Person (other than the sale, lease or conveyance of all or substantially all of the Guarantor’s
assets to one or more of the Guarantor’s Subsidiaries), unless (i) either the Guarantor shall be the continuing Person,
or the successor Person by merger or consolidation or the Person which acquires by sale, lease or conveyance substantially all
the assets of the Guarantor (if other than the Guarantor) shall be a Person organized under the laws of the United States of America
or any State thereof or the District of Columbia and shall expressly assume the full, 



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irrevocable and unconditional guarantee
of the due and punctual payment of the principal of and interest on all the Securities and Coupons, if any, according to their
tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed
or observed by the Guarantor, by supplemental indenture satisfactory to the Trustee, executed and delivered to the Trustee by
such Person, and (ii) the Guarantor, such successor Person or such acquiring Person, as the case may be, shall not, immediately
after such merger or consolidation, or such sale, lease or conveyance, be in default in the performance of any such covenant or
condition. For the avoidance of doubt, the Person referred to in this Section 13.11 may be any Subsidiary of the Guarantor.”


 


ARTICLE
2


 


Miscellaneous
Provisions


 


Section 2.01.
Further Assurances. Each of the Issuer and the Guarantor will, upon request by the Trustee, execute and deliver such further
instruments and do such further acts as may reasonably be necessary or proper to carry out more effectively the purposes of this
First Supplemental Senior Indenture.


 


Section 2.02.
Other Terms of Indenture. Except insofar as herein otherwise expressly provided, all provisions, terms and conditions of
the Indenture are in all respects ratified and confirmed and shall remain in full force and effect.


 


Section 2.03.
Terms Defined. All terms defined elsewhere in the Indenture shall have the same meanings when used herein.


 


Section 2.04.
Governing Law. This First Supplemental Senior Indenture shall be deemed to be a contract under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required
by mandatory provisions of law.


 


Section 2.05.
Counterparts. This First Supplemental Senior Indenture may be executed in any number of counterparts, each of which shall
be an original; but such counterparts shall together constitute but one and the same instrument.


 


Section 2.06.
Responsibility of the Trustee. The recitals contained herein shall be taken as the statements of the Issuer or the Guarantor,
as applicable, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations
as to the validity or sufficiency of this First Supplemental Senior Indenture.







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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Senior Indenture to be duly executed as of November
16, 2017.


 


	 	MORGAN STANLEY
    FINANCE LLC, ISSUER
	 	 
	 	 
	 	By:	/s/ Kevin Woodruff
	 	Name: Kevin
    Woodruff
	 	Title:
        President

        




 


	 	MORGAN STANLEY,
    GUARANTOR
	 	 
	 	 
	 	By:	/s/Kevin Sheehan
	 	Name: Kevin
    Sheehan
	 	Title: Assistant
    Treasurer


 


	 	THE BANK
    OF NEW YORK MELLON, TRUSTEE
	 	 
	 	 
	 	By:	/s/ Laurence J. O’Brien
	 	Name: 	Laurence J. O’Brien
	 	Title: 	Vice President







 


 



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