DEED OF TERMINATION AND AMENDMENT AND RESTATEMENT OF INDEMNITIES

DEED OF TERMINATION
AND AMENDMENT AND RESTATEMENT OF
INDEMNITIES
relating to the Alliance Documents

Clause

Page

1.

Definition

2

2.

Consents in respect of the BTA

4

3.

Condition

4

4.

Termination of Alliance Documents

4

5.

Agreements remaining in force and coming into force

5

6.

Amendment and Restatement of Alliance Agreement indemnity

5

7.

Notices

5

8.

Third party rights

6

9.

Counterparts

7

10.

Law

7

11.

Variation

7

Schedules

1.

Alliance Documents

2.

Wyatt LLP Relationship Deed

(1)

THE WYATT COMPANY HOLDINGS LIMITED a company incorporated under the laws of England and Wales with registered number 908628 and having its registered office at 100 New Bridge Street, London EC4V 6JA ( "WCHL" );

(2)

WATSON WYATT LLP a limited liability partnership incorporated under the laws of England and Wales with registered number OC301975 and having its registered office and its principal place of business at Watson House, London Road, Reigate, Surrey RH2 9PQ ( "WWLLP" );

(3)

WATSON WYATT & COMPANY a Delaware corporation whose principal place of business is at 1717 H Street, NW, Suite 800, Washington D.C. 20006, USA ( "WWC" );

(4)

WATSON WYATT HOLDINGS LIMITED a company incorporated under the laws of England and Wales with registered number 00590853 and having its registered office at Watson House, London Road, Reigate, Surrey RH2 9PQ ( "WWHL" );

(5)

WATSON WYATT HOLDINGS (EUROPE) LIMITED a company incorporated under the laws of England and Wales with registered number 02961740 and having its registered office at Watson House, London Road, Reigate, Surrey RH2 9PQ ( "WWH(E)" );

(6)

THE WYATT COMPANY (UK) LIMITED a company incorporated under the laws of England and Wales with registered number 01166919 and having its registered office at 100 New Bridge Street, London EC4V 6JA ( "WCUK" ); and

(7)

WYATT TRUSTEE LIMITED a company incorporated under the laws of England and Wales with registered number 1231236 and having its registered office at 100 New Bridge Street, London EC4V 6JA acting in its capacity as Wyatt Partner; (" WTL ").

BACKGROUND:

(A)

In April 1995, WWC and the then partners of WWP agreed to form an alliance involving the combination of their operations in the United Kingdom and continental Europe and a framework for mutual cooperation and sharing of resources in the remainder of the world. At that time, the then partners of WWP and WWC set in place the Alliance Documents to achieve this.

(B)

In April 2002 the then partners of WWP incorporated WWLLP and transferred to WWLLP all of the assets and all of the liabilities (with the exception of certain defined liabilities) of WWP. As part of such transfer each Alliance Document was novated from the then partners of WWP to WWLLP.

(C)

WWLLP and WWC have agreed to combine their two firms. The documents required to effect the combination have been entered into by the parties to such documents on or before the date of this Deed.

(D)

The parties to this Deed now wish to terminate various agreements entered into at the time the alliance was established while amending and restating certain of the indemnities included in those documents. Accordingly the parties have agreed to terminate the Alliance Documentation and amend and restate certain indemnities, in each case, on the terms and conditions of this Deed. In addition they wish to confirm the force and effect of certain other documents and enter a new agreement to supplement the arrangements dealing with WTL's ongoing membership of WWLLP.

(E)

The Protector has notified to WTL its prior consent to the amendments to the Alliance Documents as contemplated by this Deed.

THIS DEED WITNESSES that:

1.

DEFINITION

1.1

Defined terms

In this Deed:

"1995 Transfer Agreements" means the Watson European Transfer Agreement, the Wyatt European Transfer Agreement, the Wyatt UK Transfer Agreement and the Tax Deed;

"Alliance Agreement" means the agreement described at paragraph 1 of the Schedule;

"Alliance Documents" means the documents listed in the Schedule;

"BTA" means the business transfer agreement between Watson Wyatt (UK) Acquisitions 2 Limited, WCHL, Watson Wyatt & Company Holdings and WWLLP dated the same date as this Deed;

"Completion" means completion of the sale and purchase of WWLLP's business and assets pursuant to the BTA;

" Deed of Accession " means the deed of accession dated 2 April, 1995, as amended by a deed of ratification and amendment dated 29 September, 1995, a deed of amendment dated 24 February 1999 and a deed of variation dated 30 April 2002, originally made between WCHL, WCUK, the then partners in WWP, Robert David Masding acting in his capacity as Wyatt Partner and the Protector and subsequently varied and novated pursuant to the Deed of Novation;

"Deed of Novation" means the deed of variation and novation dated 30 April 2002 made between WCHL, WCUK, the then partners of WWP, WWLLP, WWC, Wyatt Trustee Limited, WWHL, WWH(E) and the Protector;

"Distribution Agreement" means the agreement of that name between WWLLP, WCHL, WTL and WWL dated the same date as this Deed;

"Former Partners" has the meaning given in the BTA;

"IFS Subsidiaries" has the meaning given in the BTA;

"Members" has the meaning given in the BTA;

"Protector" has the meaning given to that term in the deed of settlement dated 30 March, 1995 between WCHL, WCUK and Robert David Masding, as amended from time to time thereafter;

"Subsidiary" in relation to a party means a subsidiary of that Party, within the meaning attributed to the term "subsidiary" in ss736 and 736A of the Companies Act 1985;

"Tax Deed" means the deed of tax covenant dated 2 April, 1995, as amended by a deed of amendment and rectification dated 29 September, 1995, originally made between WCHL and the then partners of WWP and subsequently novated pursuant to the Deed of Novation so that, as at the date of this Deed, the parties thereto are WCHL and WWLLP;

"Transaction Documents" has the meaning given in the BTA;

"Transactions" means the distribution of certain of WWLLP's assets pursuant to the Distribution Agreement, the sale of WWLLP's assets and business pursuant to the BTA and all other transactions and steps referred to in or contemplated by the BTA, the Distribution Agreement and the other Transaction Documents;

"Trust Deed" means a deed of settlement dated 30 March, 1995, between WCHL, WCUK, and Robert David Masding;

"Watson European Transfer Agreement" means the agreement relating to the transfer of the Watson European businesses dated 2 April, 1995, as amended by a deed of amendment dated 29 September, 1995, originally made between the then partners of WWP and WWH(E) and subsequently novated pursuant to the Deed of Novation so that, as at the date of this Deed, the parties thereto are WWLLP and WWH(E);

" WW2 Limited " means Watson Wyatt (UK) Acquisitions 2 Limited, a company incorporated under the laws of England and Wales with registered number 5379706 and having its registered office at 100 New Bridge Street, London EC4V 6JA;

" WWCH " means Watson Wyatt & Company Holdings, a company organised and subsisting under the laws of the State of Delaware, USA, whose principal place of business is at 1717 H Street, N.W., Suite 800, Washington D.C. 20006, USA;

" WWL " means Watson Wyatt Limited, a company incorporated under the laws of England and Wales with registered number 5379716 and having its registered office at 100 New Bridge Street, London EC4V 6JA;

" WWLLP Group " means WWLLP, WWP and the Partners and Former Partners and the expression "member of the WWLLP Group" shall be construed accordingly;

" Wyatt LLP Relationship Deed " means the deed of that name in the form set out in Schedule 2 to this Deed, to be entered into pursuant to Clause 5.4;

"WWP" means the English general partnership carried on as Watson Wyatt Partners, and before that as R. Watson & Sons;

"Wyatt European Transfer Agreement" means the agreement relating to the transfer of the Wyatt European operations dated 2 April, 1995, as amended by a deed of amendment dated 29 September, 1995, originally made between WWC, WCHL, WWH(E), Watson Wyatt International Limited and the then partners of WWP and subsequently novated pursuant to the Deed of Novation so that, as at the date of this Deed, the parties thereto are WWC, WCHL, WWH(E), Watson Wyatt International Limited and WWLLP;

"Wyatt Group" means WWCH and its Subsidiaries, other than (i) the Subsidiaries of WWLLP at the date of this Deed (including but not limited to the IFS Subsidiaries), (ii) WW2 Limited, (iii) WWL, and (iv) WTL, and the expression "member of the Wyatt Group" shall be construed accordingly; and

"Wyatt UK Transfer Agreement" means the agreement relating to the transfer of the Wyatt UK operations dated 2 April, 1995, as amended by a deed of amendment dated 29 September, 1995, originally made between WCHL, WCUK, the then p