**Exhibit10.21**

 

Dated     7September                                2005

 

 

 

 

 

 

 

 

 

 

 

 

WATSON WYATT

 

 

 

 

 

 

 

 

 

TRUST DEED AND RULES OF THEWATSON WYATT SHARE INCENTIVE PLAN 2005

 

 

| Directors’ Adoption |   | 19 August 2005   |
|--------------------------|--------|------------------|
|                     |   |             |
| HMRC Approval            |   | 9 September 2005 |
|                     |   |             |
| HMRC Ref                 |   | A2102/PC         |
|                     |   |             |
| Expiry Date              |   | 9 September 2015 |

 

 

 

 

 

 

One Silk Street

London EC2Y 8HQ

 

 

Telephone(44-20) 7456 2000

Facsimile (44-20)7456 2222

 

Ref 01/145/KKelleher

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**Table of Contents**
| Contents                                                            | ** ** | **Page**                           |
|---------------------------------------------------------------------|------------|------------------------------------|
| Trust Deed and Rules of the Watson Wyatt Share  Incentive Plan 2005 |       | 1                                  |
| Part A - Definitions                                                |       | 2                                  |
| 1                                                                   |       | Meaning of words used              |   | 2 |
| Part B - Operation of the Plan and Joining the Plan                 |       | 4                                  |
| 2                                                                   |       | Operation of the Plan              |   | 4 |
| 3                                                                   |       | Joining the Plan                   |   | 4 |
| Part C - Bonus Shares                                               |       | 6                                  |
| 4                                                                   |       | Bonus Shares                       |   | 6 |
| Part D - Investment Shares                                          |       | 8                                  |
| 5                                                                   |       | Investment Shares                  |   | 8 |
| Part E - Matching Shares                                            |       | 12                                 |
| 6                                                                   |       | Matching Shares                    |   | 12 |
| Part F - Dividends                                                  |       | 14                                 |
| 7                                                                   |       | Dividends                          |   | 14 |
| Part G - General Rules                                              |       | 16                                 |
| 8                                                                   |       | General rules about Shares         |   | 16 |
| 9                                                                   |       | Leaving Employment                 |   | 18 |
| 10                                                                  |       | General rules relating to the Plan |   | 19 |
| 11                                                                  |       | Assets of the Plan                 |   | 22 |
| 12                                                                  |       | Trustees                           |   | 23 |
| 13                                                                  |       | Participating Companies            |   | 24 |
| 14                                                                  |       | Changing the Rules                 |   | 25 |
| 15                                                                  |       | Termination                        |   | 25 |
| 16                                                                  |       | Governing Law                      |   | 26 |

 

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**Trust Deed andRules of the Watson WyattShare Incentive Plan 2005**

**This Trust Deed and Rules** of the Watson Wyatt Share Incentive Plan 2005 are made as a deed on       7September                              2005 between:

**(1)****                             **Watson Wyatt Limited (the “**Company**”)and

**(2)****                             **Halifax Corporate Trustees Limited (the “**Trustees**”)

to set up the Plan with effect from the date of formalapproval of the Plan by HMRC.

**[SEAL]**

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**Part A -Definitions**

**1**                                      Meaning of wordsused

“**Accumulation Period**”means the period during which a Participant’s Contributions are held prior totheir application by the Trustees in acquiring Investment Shares and whichshall not be longer than the period specified in paragraph 51(1) of Schedule 2(currently 12 months).

“**Award Day**”means the date on which Bonus Shares or Matching Shares are awarded under thePlan.

“**Award System**”means the system of calculating the number of Bonus Shares to be awarded fromtime to time, adopted by the Directors and which satisfies paragraph 9 ofSchedule 2 (participation on same terms).

“**Bonus Shares**”means Free Shares, for the purposes of communicating with Employees.

“**the Company**”means Watson Wyatt Limited.

“**Contributions**”means deductions from a Participant’s Salary for the purpose of acquiringInvestment Shares.

“**Directors**”means the board of directors of the Company or a duly authorised committee.

“**Dividend Shares**”means Shares which the Trustees acquire by reinvesting Participants’ cashdividends from their Plan Shares.

“**Employee**”means, except for the purposes of Rule 10.5, an employee of a ParticipatingCompany.

“**Employment**”means employment by the Company or any associated company (within the meaningof paragraph 94 of Schedule 2).

“**Free Shares**”means Shares awarded to Participants without payment under Rule 4.

“**Holding Period**”means the period for holding Bonus Shares, Matching Shares and Dividend Sharesin the Plan.

“**HMRC**”means Her Majesty’s Revenue and Customs;

“**Investment Shares**”means Partnership Shares, for the purposes of communicating with Employees.

“**ITEPA**”means the Income Tax (Earnings and Pensions) Act 2003.

“**the London StockExchange**” means the London Stock Exchange plc.

“**Market Value**”means on any day where Shares are admitted to trading on the NYSE the value pershare fixed at the mid market closing price of the Company’s Shares on the NYSEquoted in the Wall Street Journal on the preceding day or on any day whereShares are admitted to the Official List of the UK Listing Authority and tradedon the London Stock Exchange, the mid market closing price derived from theDaily Official List of the London Stock Exchange on the preceding day. WhereShares are not so admitted, “Market Value” has the meaning given by virtue ofPart VIII of the Taxation of Chargeable Gains Act 1992 and as agreed in advancewith HMRC Shares Valuation.

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“**Matching Shares**”means Shares awarded without payment in proportion to any Investment Sharesallocated to Participants.

“**Method 1**”means the method described in paragraph 41 of Schedule 2.

“**Method 2**”means the method described in paragraph 42 of Schedule 2.

“**NYSE**”means the New York Stock Exchange.

**“Official List”** means the list maintained by the Financial Services Authority for thepurpose of section 74(1) Financial Services and Markets Act 2000;

“**Participant**”means any Employee who has joined the Plan.

“**ParticipatingCompany**” means an employer participating in the Plan being theCompany, any Subsidiary and any other company which (if required) HMRC agreesmay participate and which in both cases is so designated by the Directors.

“**Partnership Shares**”means Shares which the Trustees allocate to Participants in respect of theirContributions.

“**PerformanceMeasures**” means targets set by the Directors from time to time,which meet the requirements of paragraph 39 of Schedule 2 and govern theavailability, number or value of Bonus Shares to be awarded.

“**Plan**”means the Watson Wyatt Share Incentive Plan 2005, as changed from time to time.

“**Plan Shares**”mean the Shares awarded or allocated to Participants under the Plan.

“**Reconstruction orTakeover**” means a transaction affecting any Shares as described inParagraph 86 of Schedule 2.

“**Salary**”has the meaning in paragraph 43(4) of Schedule 2.

“**Schedule 2**”means Schedule 2 to ITEPA.

“**Share**”means a share of Class A common stock of par value US$0.01 of Watson Wyatt& Companies Holdings, which meets the requirements of Part 4 of Schedule 2,and any security which forms part of any new holding referred to in paragraph86, of Schedule 2.

“**Subsidiary**”means a company which is under the control of the Company within the meaning ofSection 840 of the Taxes Act (as extended by paragraph 91 of Schedule 2).

“**Taxes Act**”means the Income and Corporation Taxes Act 1988.

“**Trustee**”means Halifax Corporate Trustees Limited or the trustees for the time being ofthe Plan.

Words of the masculine gender shall include thefeminine and vice versa.

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**Part B -Operation of the Plan and Joining the Plan**

**2**                                      Operation of thePlan

**2.1**                            Purpose of thePlan

The purpose of the Plan is to help and encourage theholding of Shares by Participants or for their benefit through an employeeshare ownership plan approved under the provisions of paragraph 81 of Schedule2.

The Trustees may achieve the purpose of the Plan byapplying the capital and income of the Plan assets to or for the benefit ofParticipants as described in the Plan rules.

**2.2**                            Time of Operation

The Directors can only operate the Plan at any timeafter its approval by HMRC.

If the Shares are listed on the Official List andadmitted to trading on the London Stock Exchange Bonus Shares will only beawarded within 42 days commencing on any of the following:

**2.2.1****                  **the day on which the Plan is formally approved by HMRC;

**2.2.2****                  **the day after the announcement of the Company’s results to the NYSE orthe London Stock Exchange for any period;

**2.2.3****                  **any day on which the Directors resolve that exceptional circumstancesexist which justify an award of Bonus Shares;

**2.2.4****                  **any day on which changes to the legislation or regulations affectingemployee share ownership plans approved by HMRC under Schedule 2 are announced,effected or made; and

**2.2.5****                  **the day on which Shares are first admitted to the Official List andtraded on the London Stock Exchange (or admitted by any other stock exchangenominated by the Directors).

If the Directors or the Trustees cannot award BonusShares due to restrictions imposed by statute, order, regulation or Governmentdirective, or by any code adopted by the Company based on the Model Code, theDirectors or the Trustees may award Bonus Shares within 42 days after thelifting of such restrictions.

**3**                                      Joining the Plan

**3.1**                            Employees to beinvited

Subject to Rules 3.2 and 3.3, whenever the Directorsdecide to operate the Plan, they must invite all Employees who:

**3.1.1****                  **are UK resident taxpayers (within the meaning of paragraph 8(2) ofSchedule 2); and

**3.1.2****                  **have been employees of a qualifying company (within the meaning ofparagraph 17 of Schedule 2) throughout any qualifying period of service setunder Rule 3.5.

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They may also invite other Employees, provided that ifthere is a qualifying period of service, the Employees satisfy Rule 3.1.2.Every Employee who is invited to participate must be invited on the same terms,in accordance with paragraph 9 of Schedule 2.

**3.2**                            Prohibitedinvitations

However, the Directors must not invite:

**3.2.1****                  **any Employee, in any tax year, who is to participate at the same time inanother employee share ownership plan approved under Schedule 2 which has beenestablished by the Company or a connected company (within the meaning ofparagraph 18(3) of Schedule 2) or would have so participated but for thefailure to meet a performance target;

**3.2.2****                  **anyone who is excluded from participating under paragraph 19 of Schedule2 (no material interest requirement).

**3.3**                            Free shareinvitations - Employees under notice

The Directors may decide not to invite Employees toparticipate in an award of Bonus Shares who have given or received notice oftermination of employment on or before the Award Day relating to that award.

**3.4**                            Form ofinvitation and application

The invitation and application to join the Plan mustbe made in the form determined by the Directors, and approved by HMRC (ifnecessary). This may include invitations and applications by writing or byemail, internet (or other electronic means) or interactive voice response.

The invitation and the application will, ifapplicable, specify whether for that operation of the Plan, Bonus Shares and/orInvestment Shares and Matching Shares (and, where relevant, Dividend Shares)may be acquired. If Investment Shares are offered, the application form willcomply with Rule 5.

**3.5**                            Qualifying periodof service

The Directors may set a qualifying period of servicefor any operation of the Plan, and if they do it must apply in relation to, andbe the same for, all Employees.

If Bonus Shares are offered, the qualifying period ofservice must not be more than 18 months, ending with the Award Day of thoseBonus Shares.

If Investment Shares are offered and there is noAccumulation Period, the qualifying period of service must not be more than 18months, ending with the start of Contributions. If there is an AccumulationPeriod, the qualifying period of service must not be more than 6 months, endingwith the start of the relevant Accumulation Period.

**3.6**                            Submission ofApplications

Employees invited to participate in the Plan and whowish to do so, must submit the completed application by the date specified, ifany. In doing so they agree to the terms and conditions of participation setout in the application. Anyone who has not submitted a completed applicationform as required will not participate in the Plan.

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**Part C - BonusShares**

**4**                                      Bonus Shares

**4.1**                            Limit

If the Plan is operated to provide Bonus Shares, BonusShares awarded to each Employee participating in the Plan must not have aninitial market value of more than £3,000 in any tax year, or any greater amountspecified for the purposes of paragraph 35(1) of Schedule 2. Rule 10.9(Participation in more than one employee share ownership plan) also applies.

“Initial market value” means the Market Value of theBonus Shares on the Award Day and, the market value of Shares subject torestrictions or risk of forfeiture shall be determined as if there were norestriction or risk.

**4.2**                            Terms relating toBonus Shares

The Directors will set the following:

**4.2.1****                  **the Award System for the operation of the Plan including any PerformanceMeasures which apply, using either Method 1 or Method 2;

**4.2.2****                  **the Holding Period, which must be at least three years but not more thanfive years beginning with the Award Day, must be the same for all Bonus Sharesin an award and cannot be increased once that award has been made; and

**4.2.3****                  **any forfeiture provisions under Rule 4.4.

During this Holding Period, Rule 8.4 applies inrelation to the Bonus Shares.

**4.3**                            NotifyingParticipants of Performance Measures

If Performance Measures apply to the availability,number or value of Bonus Shares, the Directors will as soon as reasonablypracticable, write and tell:

**4.3.1****                  **all Employees in general terms of the Performance Measures to be used tocalculate the number of Bonus Shares awarded to each Participant. But theDirectors may exclude from such notice any information if they reasonablyconsider that to disclose it would prejudice commercial confidentiality; and

**4.3.2****                  **each Participant about the Performance Measures which will be used tocalculate the number or value of Bonus Shares awarded to him.

**4.4**                            Forfeiture ofBonus Shares

The Directors may decide that an award of Bonus Shareswill be made on the basis that if Participants leave Employment for a specifiedreason (other than for a reason set out in paragraph 32(2) of Schedule 2)within a specified period (not exceeding 3 years from the Award Day) they willlose any right to receive Bonus Shares.

**4.5**                            Payments by ParticipatingCompanies and acquiring Shares

The Directors will notify each Participating Companyof the amount it is required to contribute in respect of an award of BonusShares. Each Participating Company will pay this amount to the Trustees and theTrustees will use the funds to purchase or subscribe for Shares, as agreed withthe Directors.

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**4.6**                            Awards of BonusShares

The Trustees will award Bonus Shares to eachParticipant on the basis set out in the Award System and any PerformanceMeasures.

**4.7**                            Award EligibilityRequirement

The Trustees will not award Bonus Shares to aParticipant who is not an Employee on the Award Day.

**4.8**                            Notification byTrustees

As soon as practicable after the award of BonusShares, the Trustees will write and tell each Participant of the award. TheTrustees will include in the notification the number and description of theBonus Shares, the Holding Period applying to the Bonus Shares and their MarketValue on the Award Day.

**4.9**                            Transfer of legaltitle

After the end of the Holding Period, the Participantmay at any time direct the Trustees to transfer legal title of Bonus Shares tohim or as he may direct.

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**Part D -Investment Shares**

**5**                                      Investment Shares

**5.1**                            Application forInvestment Shares

If the Plan is operated to provide Investment Shares,Employees invited must complete the relevant section of the application form.This section will satisfy the requirements of Part 6 of Schedule 2 and willinclude the notice required under paragraph 48 of Schedule 2 (notice ofpossible effect of deductions on benefit entitlement).

**5.2**                            Amount ofContributions

The Directors will determine the maximum Contributionwhich will apply in relation to that operation of the Plan which will not bemore than the lower of:

**5.2.1****                  **10% of Salary for that tax year; or

**5.2.2****                  **£1,500 in any tax year; or

**5.2.3****                  **a greater percentage or amount specified for the purposes of paragraph46 of Schedule 2 from time to time.

If Contributions exceed these limits, the excessamount will be repaid to the Participant as soon as practicable (afterdeducting any income tax and national insurance contributions due). Rule 10.9(Participation in more than one employee share ownership plan) also applies.

**5.3**                            MinimumContribution

The Directors may set from time to time a minimumamount (not more than £10) for Contributions on any occasion. If there is sucha minimum amount, it will be set out in the application.

**5.4**                            Limit onInvestment Shares

The Directors may set from time to time a limit on thenumber of Shares which may be acquired as Investment Shares. If there is such alimit, it will be set out in the application.

**5.5**                            Scaling down

If there is a limit on the number of Shares which maybe acquired as Investment Shares and the Contributions set out in theapplication forms exceed that number, the Directors will scale downapplications by taking any one or more of the following steps in turn:

**5.5.1****                  **reduce the excess of Contributions over any set minimum amount forContributions proportionately; then

**5.5.2****                  **reduce all monthly Contributions to any set minimum amount forContributions; then

**5.5.3****                  **select applications to contribute the minimum amount for Contributionsby lot.

The Directors will notify Participants of the scalingdown and their application will be deemed changed or withdrawn.

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**5.6**                            HoldingContributions

The Participants’ Contributions will be transferred tothe Trustees as soon as practicable. The Trustees will hold the Contributionsin an account with:

**5.6.1****                  **a person falling within section 840A(1)(b) of the Taxes Act; or

**5.6.2****                  **a building society; or

**5.6.3****                  **a firm falling within section 840A(1)(c) of the Taxes Act.

The account may, but need not, pay interest on theContributions held. If it does, the Trustees must account to each Participantfor the interest earned on his Contributions.

**5.7**                            Repayment ofContributions

The Trustees must pay to a Participant anyContributions it holds (after deducting any income tax and national insurancecontributions due) together with any interest if, before acquiring InvestmentShares on behalf of the Participant;

**5.7.1****                  **they receive a termination notice under Rule 15.1 (Termination); or

**5.7.2****                  **HMRC notifies the Company that it has withdrawn the approval of the Planunder Schedule 2; or

**5.7.3****                  **the Participant ceases to be in Employment during an Accumulation Period.

**5.8**                            ExcessContributions

If the Participant agrees when completing theapplication, the Trustees may carry forward and add to the amount of the nextContribution any Contributions not used to acquire Investment Shares. If thereis no such agreement, the Trustees must pay the excess to the Participant assoon as practicable after deducting any income tax and national insurancecontributions due.

**5.9**                            AccumulationPeriods

The Directors may determine in relation to anyoperation of the Plan whether there will be an Accumulation Period.

The start and end of any Accumulation Period must beset out in the application. The Accumulation Period must start on or before thedate of the first deduction of Contributions. It must not exceed 12 months. Thesame Accumulation Period or periods must apply to all Participants for eachoperation of the Plan.

If, during the Accumulation Period, a transactionoccurs in relation to the Shares which results in a new holding of shares beingequated with the Shares for the purposes of capital gains tax purposes (“newshares”), then the Contributions held may, with the agreement of theParticipant, be used at the end of the Accumulation Period to acquire newshares. By signing the application form Participants agree to the acquisitionof new shares.

**5.10**                     Stopping and re-startingContributions

A Participant may give notice to the Company to stopmaking Contributions. He may also give notice to the Company at any time thathe wishes Contributions to re-start, but he may not make up any missedContributions. If the Plan is operated with an Accumulation Period, theDirectors may determine whether Participants can re-start their Contributions

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more than once in an Accumulation Period. If such adetermination is made, it will be set out in the application form and willapply equally to all Participants.

The Company will arrange for Contributions to stopwithin 30 days of receiving the notice, unless the notice specifies a laterdate. The Company will arrange for Contributions to re-start by the next duedate for Contributions which is more than 30 days after receipt of the noticeto re-start, unless the notice specifies a later date.

**5.11**                      VaryingContributions

A Participant may vary his Contributions with theagreement of the Company.

**5.12**                     Withdrawal fromagreement to make Contributions

A Participant may at any time withdraw from theagreement to make Contributions made at the time of joining the Plan and askfor the return of any Contributions which have not been used to acquireInvestment Shares by giving notice to the Company. The Participant will betreated as having stopped Contributions 30 days after the receipt of thenotice, unless a later date is specified in the notice. The Trustees must payto the Participant any Contributions they hold as soon as practicable (afterdeducting any income tax and national insurance contributions due) togetherwith any interest, if payable. Any Investment Shares already allocated will notcease to be subject to the Plan as a result of such a withdrawal.

**5.13**                     Allocating shares -Accumulation Period

**5.13.1****           **If there is an Accumulation Period, the Trustees must allocateInvestment Shares to each Participant within 30 days after the end of thatperiod.

**5.13.2****           **The number of Shares allocated to each Participant will be calculatedusing the lower of the Market Value of the Shares at the beginning of theAccumulation Period and:

(i)                                  if all the Investment Shares to be allocated to Employees on thatoccasion are purchased by the Trustees on the date of allocation, and providedthe Company is quoted on the NYSE and/or on the London Stock Exchange, theaverage price actually paid by the Trustees for the Shares; or

(ii)                               the Market Value at the date of allocation.

**5.13.3****           **All Investment Shares must be allocated on the same date.

**5.14**                     Allocating shares - noAccumulation Period

**5.14.1****           **If there is no Accumulation Period, the Trustees must allocateInvestment Shares to the Participants by a date set by the Trustees. This datemust be not later than 30 days after the last day on which the relevantdeduction of Contributions takes place.

**5.14.2****           **If all the Investment Shares to be allocated to Employees on thatoccasion are purchased by the Trustees on the date of allocation, and providedthe Company is quoted on the NYSE and/or on the London Stock Exchange, thenumber of Shares allocated to each Participant will be calculated using theaverage price actually paid by the Trustees for the Shares.

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**5.14.3****           **If all the Investment Shares to be allocated to Employees on thatoccasion are not purchased by the Trustees on the date of allocation, thenumber of Shares allocated to each Participant will be calculated using theMarket Value on the date of allocation.

**5.14.4****           **All Investment Shares must be allocated on the same date.

**5.15**                     Allocation EligibilityRequirement

The Trustees will not allocate Investment Shares to anindividual who is not an Employee at the following times:-

**5.15.1****           **where there is no Accumulation Period, at the time the relatedContributions are deducted; and

**5.15.2****           **where there is an Accumulation Period, at the time of the firstdeduction of the related Contributions.

Rule 9.1 applies if an Employee leaves Employmentduring the acquisition period for an award of Investment Shares.

**5.16**                     Notification by Trustees

As soon as reasonably practicable after the Trusteeshave allocated Investment Shares to a Participant, the Trustees will notifythat Participant in writing. The Trustees will set out the number anddescription of the Investment Shares, the amount of Contributions used toacquire the Shares and the price per Share which was used to calculate thenumber of Investment Shares allocated in accordance with Rule 5.13 or 5.14.

**5.17**                     Access to InvestmentShares

A Participant may at any time take out of the Plan anyInvestment Shares allocated to him. This is subject to any income tax andnational insurance due and Rule 6.4 (Forfeiture of Matching Shares).

A Participant may, at any time, direct the Trustees totransfer legal title of Investment Shares to him or as he may direct.

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**Part E - MatchingShares**

**6**                                      Matching Shares

**6.1**                            Ratio of MatchingShares to Investment Shares

If the Plan is operated to provide Matching Shares, aParticipant who is allocated Investment Shares is entitled to an award ofMatching Shares. The Directors will set the ratio of Matching Shares toInvestment Shares from time to time and the ratio which applies will be set outin the application form. The same ratio must apply to all those who participatein the related allocation of Investment Shares.

The ratio cannot exceed the ratio specified inparagraph 60 of Schedule 2, which is currently two Matching Shares to oneInvestment Share.

The ratio may change in the circumstances set out inthe application. The Directors will write and tell Participants if the ratiochanges, before the allocation of the related Investment Shares.

**6.2**                            Rights andrestrictions

Matching Shares must be shares of the same class andcarry the same rights as the Investment Shares to which they relate.

Rules 4.2.2 (holding period) and 8.4 (Restrictions ondisposals of Shares) apply to the award of Matching Shares.

**6.3**                            Payments byParticipating Companies and acquiring Shares

The Directors will notify each Participating Companyof the amount it is required to contribute in relation to Matching Shares. EachParticipating Company will pay this amount to the Trustees and the Trusteeswill immediately use the funds to purchase or subscribe for Shares, as agreedwith the Directors.

**6.4**                            Forfeiture ofMatching Shares

The Directors may decide that an award of MatchingShares will be made on the basis that if a Participant leaves Employment for aspecified reason or takes the Matching Shares out of the Plan (other than for areason specified in paragraph 32(2) of Schedule 2) within a specified period (notexceeding 3 years from the Award Day) he will lose any right to receiveMatching Shares.

The Directors may also decide that an award ofMatching Shares will be made on the basis that a Participant who takes out ofthe Plan the Investment Shares in respect of which the Matching Shares wereawarded (other than for a reason specified in paragraph 32(2) of Schedule 2)within a specified period (not exceeding 3 years from the Award Day) will notbe entitled to any Matching Shares in respect of those Investment Shares.

**6.5**                            Awards ofMatching Shares

The Trustees will award Matching Shares to eachParticipant on exactly the same basis. The terms will be set out in theapplication form.

The Trustees will award Matching Shares on the sameday as they allocate the related Investment Shares to Participants.

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However, the Directors may decide to operate the Planon the basis that if any Investment Shares allocated are not sufficient toresult in the award of a Matching Share on the same day, the match will be madewhen sufficient Investment Shares have been allocated.

**6.6**                            Notification byTrustees

The notification requirements set out in Rule 4.8 willapply to Matching Shares, except that Market Value will be notified as theprice per Share used to calculate the number of Investment Shares allocated onthe same day in accordance with Rule 5.13 or 5.14.

**6.7**                            Transfer of legaltitle

After the end of the Holding Period, the Participantmay at any time, direct the Trustees to transfer legal title of Matching Sharesto him or as he may direct.

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**Part F -Dividends**

**7**                                      Dividends

**7.1**                            Dividend Shares

The Directors may from time to time decide thatinstead of Participants receiving cash dividends:

**7.1.1****                  **the Trustees must re-invest cash dividends they receive in respect ofPlan Shares in additional Shares to be held on behalf of Participants; or

**7.1.2****                  **the Trustees must re-invest cash dividends as set out in Rule 7.1.1 butonly in respect of Plan Shares of Participants who have chosen this bycompleting the relevant section on the application form.

The total amount so reinvested cannot exceed £1,500 ineach tax year (or such greater amount specified for the purposes of paragraph64(1) of Schedule 2). If the Directors have not made such decisions, or to theextent that the cash dividends exceed the limit, the Trustees must pay overcash dividends to the relevant Participant as soon as practicable. Rule 10.9(Participation in more than one employee share ownership plan) also applies.

**7.2**                            AllocatingDividend Shares

**7.2.1****                  **If all the Dividend Shares to be allocated to Employees on any occasionare purchased by the Trustees on the date of allocation, and provided theCompany is quoted on the NYSE and/or the London Stock Exchange, then the numberof Dividend Shares allocated to each Participant will be calculated using theaverage price actually paid by the Trustees for the Shares.

**7.2.2****                  **If all the Dividend Shares to be allocated to Employees on any occasionare not purchased by the Trustees on the date of allocation, then the number ofDividend Shares allocated to each Participant will be calculated using theMarket Value on the date of allocation.

**7.2.3****                  **Dividend Shares must be allocated on or before a date set by theTrustees. This date must be no later than 30 days after the date they receivecash dividend.

All the Dividend Shares must be allocated on the samedate. In allocating Shares the Trustees must treat Participants fairly andequally.

**7.3**                            Cash dividendscarried forward and paid

The Trustees may retain, carry forward and add to theamount of the next cash dividend to be reinvested the amount of any cashdividend which is not sufficient for the allocation of one or more DividendShares. But the Trustees must keep these amounts separately identifiable andamounts derived from an earlier cash dividend are treated as reinvested beforean amount derived from a later cash dividend.

The Trustees must pay to the Participant, as soon aspracticable, any cash amounts referred to above:

**7.3.1****                  **which are not reinvested in Dividend Shares within 3 years of payment ofthe dividend; or

**7.3.2****                  **if the Participant ceases to be in Employment; or

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**7.3.3****                  **if the Trustees receive a termination notice under Rule 15.1.

When making the payment, the Trustees will supply tothe Participant the information referred to in paragraph 80(4) of Schedule 2.

**7.4**                            Notification

As soon as practicable after the Trustees haveallocated any Dividend Shares to a Participant, the Trustees will notify theParticipant in writing. The Trustees will set out the number and description ofthose Dividend Shares, the price per Share which was used to calculate thenumber of Dividend Shares allocated in accordance with Rule 7.2.1 or 7.2.2, theHolding Period and any cash dividends carried forward as described in Rule 7.3.

**7.5**                            Rights andrestrictions

Dividend Shares must be shares of the same class andcarry the same rights as the Shares in respect of which the dividend is paid.They must not be subject to any forfeiture.

Rule 4.2.2 applies to Dividend Shares but the HoldingPeriod must be 3 years starting on the date the Trustees allocated the DividendShares as described in Rule 7.2 Rule 8.4 also applies to Dividend Shares.

**7.6**                            Transfer of legaltitle

After the end of the Holding Period the Participantmay at any time direct the Trustees to transfer legal title of Dividend Sharesto him or as he may direct.

**7.7**                            Other dividends

Cash dividends payable in respect of Plan Shares andnot reinvested in Dividend Shares (because they exceed the limit set out inRule 7.1 or for any other reason) will belong to the relevant Participant. TheTrustees will pay those dividends to the Participant as soon as practicableafter receipt.

The Trustees are not required to pay a Participant anyinterest earned on any dividend to which the Participant is entitled.

Where any dividends received are foreign cashdividends within the meaning of paragraph 75(6) of Schedule 2 the Trustees willnotify the Participant of the amount of any foreign tax deducted from thedividend before it was paid.

**7.8**                            Scrip dividends

The Trustees may receive, following a direction fromthe Participant, Shares credited as fully paid in whole or in part instead of acash dividend (a scrip dividend). These Shares will not form part of theParticipant’s Plan Shares. The Trustees will take all reasonable steps totransfer such Shares to the Participant.

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**Part G - GeneralRules**

**8**                                      General rulesabout Shares

**8.1**                            Listing

If and so long as Shares are admitted to trading onthe NYSE and/or to listing on the Official List and to dealing on the LondonStock Exchange, the Company will, where relevant, apply for listing of anyShares subscribed under the Plan as soon as practicable after their allotment.

**8.2**                            Rights

Shares issued on subscription will rank equally in allrespects with the Shares. However, the Directors may determine that they willnot rank equally in all respects for any dividends or other distributionspayable or made in respect of a period beginning before their date of issue.

Where Shares are transferred they will have thebenefit of all rights attaching to the Shares by reference to a record date onor after the date on which they are allocated or awarded.

The Trustees may award Shares, a proportion of whichwill rank for dividends or other rights attaching to Shares by reference to arecord date preceding the relevant Award Day and a proportion of which willnot. If this happens, the Trustees will award the Shares to each Participant asfar as practicable in those same proportions.

**8.3**                            Acquisition ofShares

The Company may from time to time ask the Trustees toacquire any number of Shares specified by it for award or allocation toParticipants on a later operation of the Plan. If the Trustees agree to acquireShares, the Company will ensure that the Trustees have sufficient funds to doso. The Trustees may also acquire Shares at any other time, if they havesufficient funds to do so. These Shares must satisfy the conditions specifiedin Part 4 of Schedule 2. Before any such Shares are awarded or allocated underthe Plan, they will be held on general trust for the purposes of the Plan.

**8.4**                            Restrictions ondisposals of Shares

The Participant must permit the Trustees to retain hisBonus Shares, Matching Shares and Dividend Shares throughout the Holding Periodand the Trustees must retain them. The Participant cannot assign, charge orotherwise dispose of his beneficial interests in the Bonus Shares, MatchingShares and Dividend Shares in any way during the Holding Period, and theTrustees shall not dispose of the Bonus Shares, Matching Shares and DividendShares (whether by transfer to the Participant or otherwise) during the HoldingPeriod, unless the Participant has ceased to be in Employment, or if thecircumstances set out in paragraphs 36(4) or 77 of Schedule 2 apply.

**8.5**                            Plan limits

The number of Shares which may be allotted under thePlan on any day must not, when added to the aggregate of the number of Shareswhich have been allotted in the previous 10 years under the Plan and any otheremployees’ share schemes operated by the Company, exceed 10 per cent of theordinary share capital of the Company in issue immediately before that day.

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In this Rule 8.5 “allotted” means, in the case of anyshare option scheme, the placing of unissued shares under option and, inrelation to other types of employees’ share scheme, includes the issue ofshares. In determining the limits above, no account shall be taken of anyShares where the right to acquire Shares was released or lapsed without beingexercised. For the avoidance of doubt, the acquisition of any shares by marketpurchase by, or for the purpose of, an employee share scheme is not within themeaning of “allotted”.

**8.6**                            Voting

The Trustees will invite Participants to direct themon the exercise of any voting rights attaching to Plan Shares held by theTrustees on their behalf. The Trustees will only be entitled to vote on a showof hands if all directions received from Participants who have given directionsin respect of a particular resolution are identical. The Trustees will not beunder any obligation to call for a poll. In the event of a poll the Trusteeswill follow the directions of Participants.

The Trustees must not vote in respect of unallocatedShares or any Shares they hold under the Plan which have not been registered intheir name.

**8.7**                            Offers

The Participant (or anyone properly authorised) maydirect the Trustees on the appropriate action to take in relation to any rightrelating to a Participant’s Plan Shares to receive other shares, securities orrights of any description, and in relation to a Reconstruction or Takeover. TheTrustees may not take any action without such a direction. If the Trustees areto be involved in any liability they may require an indemnity from theParticipant which they consider appropriate.

Where the Trustees exercise rights under a rightsissue in respect of a Participant’s Plan Shares, any shares, securities orrights allotted as a result shall be treated as if they were Plan Sharesidentical to the Shares in respect of which the rights were conferred and as ifthey were awarded to the Participant under the Plan in the same way and at thesame time as those Shares. But this only applies if the rights issue is offeredin respect of all ordinary shares in the company and is subject to paragraphs88(3) to 88(5) of Schedule 2.

On a Reconstruction or a Takeover, the Trustees willhold any new shares (as described in paragraph 87 of Schedule 2) as Sharessubject to the Plan, as if they were the original Shares.

**8.8**                            Fractionalentitlements

Where, following any offer described in Rule 8.7, theTrustees receive rights or securities, they will allocate them among theParticipants concerned on a proportionate basis, rounding down if necessary.The Trustees will then add the fractions not allocated and sell the unallocatedrights and securities. The Trustees will deduct all expenses of sale andapplicable tax from the proceeds of sale and distribute the net proceeds ofsale proportionately among the Participants whose allocation was rounded down.However, if a Participant’s entitlement is under £3 the Trustees may retainthat sum and hold it on trust for the purposes of the Plan.

**8.9**                            Capital Receiptsand other amounts

When the Trustees receive money which is a capitalreceipt (within the meaning of Section 502 of ITEPA) or the proceeds of any disposal,they will transfer the sum to the Participant

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after complying with their PAYE obligations. TheTrustees may, however, retain any capital receipt under £3 due to anyParticipant and hold it on trust for the purposes of the Plan.

The Trustees must also pay over to each Participantany money or money’s worth relating to any of his Plan Shares, apart from money’sworth consisting of new shares as described in Rule 8.7. But the Trustees areentitled to retain any amounts needed to discharge their PAYE obligations andcash dividends reinvested or carried forward under Rule 7.3.

**8.10**                     Tax liabilities

The Trustees will maintain the necessary records tocomply with their PAYE obligations and those of the Participating Companies sofar as they relate to the Plan.

The Trustees will pay to the relevant employingcompanies sufficient sums to enable the employing companies to discharge anyobligations to make PAYE deductions for income tax or national insurancecontributions which arise in the circumstances in Section 510(1) of ITEPA.

The Trustees may dispose of a Participant’s PlanShares in order to raise sufficient sums in order to meet any obligation underthis Rule 8.10 unless the Participant makes a payment in advance to theTrustees of a sum equal to the amount required to discharge the obligation.

When a Participant becomes liable to tax under ITEPAor Schedules D (Case V) or F of the Taxes Act in relation to his Plan Shares,the Trustees must give the Participant any information relevant to determiningthat liability.

**9**                                      LeavingEmployment

**9.1**                            LeavingEmployment

**9.1.1****                  **If a Participant leaves Employment, his Plan Shares will cease to besubject to the Plan.

**9.1.2****                  **Unless the Directors decide otherwise, the Plan will operate on thebasis that if a Participant leaves Employment for any reason, the Trustees willtransfer the Participant’s Plan Shares to the Participant or as he may direct(or, if the Participant has died, to the personal representatives) as soon asreasonably practicable.

**9.1.3****                  **If a Participant leaves Employment during the acquisition periodrelating to an allocation of Investment Shares, he shall:

(i)                                  for the purpose of awards of Investment Shares and Matching Shares betreated as ceasing to be in Employment immediately after the allocation of InvestmentShares; and

(ii)                               for the purpose of determining when his Plan Shares cease to be subjectto the Plan, be treated as ceasing to be in Employment immediately after theallocation of Investment Shares.

**9.1.4****                  **For the purposes of this Rule 9.1 “acquisition period” has the meaninggiven to it in paragraph 97(3) of Schedule 2.

**9.1.5****                  **For the purposes of paragraph 98 of Schedule 2 the retirement age is 50.

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**9.2**                            Tax freewithdrawal of Plan Shares

In accordance with paragraph 498 of ITEPA, aParticipant is not liable to income tax or national insurance contributions onhis Shares ceasing to be subject to the Plan on leaving Employment for any ofthe following reasons:

**9.2.1****                  **because of injury or disability;

**9.2.2****                  **on being dismissed by reason of redundancy;

**9.2.3****                  **by reason of a transfer to which the Transfer of Undertakings(Protection of Employment) Regulations 1981 (S.I. 1981/1794) applies;

**9.2.4****                  **if the relevant employment is employment by an associated company (seeparagraph 95(2) of Schedule 2), by reason of a change of control or othercircumstances ending that company’s status as an associated company;

**9.2.5****                  **by reason of the Participant’s retirement on or after reaching thespecified retirement age of 50; or

**9.2.6****                  **on the Participant’s death.

**10**                               General rules relatingto the Plan

**10.1**                     Notices

Any notice or other document which has to be given inconnection with the Plan may be delivered to a Participant or sent by post tohim at his home address using the records of that Participant’s employingcompany, or such other address as the Company or the Trustees considerappropriate or sent by e-mail (or other electronic means) to any address whichaccording to the records of his employing company is used by him (or such othere-mail (or electronic) address as he may from time to time specify). Any noticeor other document which has to be given to the Company or the Trustees inconnection with the Plan may be delivered or sent by post to them at theirregistered offices (or such other place as the Directors or the Trustees mayfrom time to time write and tell the Participants) or if the Directors allowand subject to such conditions as they may specify, sent by e-mail (or otherelectronic means) to the e-mail (or electronic) address for the time beingnotified by the Company. Notices sent by post will be deemed to have been givenon the second day following the date of posting. Notices sent by e-mail (orother electronic means), in the absence of evidence to the contrary, will bedeemed to have been received on the first day after sending.

**10.2**                     Documents sent toShareholders

The Company may send to Participants copies of anydocuments or notices normally sent to the holders of its Shares.

**10.3**                     Directors’ and Trustees’decisions

The decision of the Directors (or of the Trustees ifthe Directors so decide) in any dispute or question affecting any Employee orParticipant will be final and binding on the parties concerned.

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**10.4**                     Regulations

The Directors and the Trustees will have the powerfrom time to time to make or vary regulations for the administration andoperation of the Plan, but these must be consistent with this Deed.

**10.5**                     Terms of Employment

**10.5.1****           **For the purposes of this Rule 10.5, “Employee” means any Participant,any Employee (within the meaning of Rule 1) or any other person.

**10.5.2****           **This Rule 10.5 applies:

(i)                                  whether the Company has full discretion in the operation of the Plan, orwhether the Company could be regarded as being subject to any obligations inthe operation of the Plan;

(ii)                               during an Employee’s employment or employment relationship; and

(iii)                            after the termination of an Employee’s employment or employmentrelationship, whether the termination is lawful or unlawful.

**10.5.3****           **Nothing in the Rules or the operation of the Plan forms part of thecontract of employment or employment relationship of an Employee. The rightsand obligations arising from the employment relationship between the Employeeand the Company are separate from, and are not affected by, the Plan.Participation in the Plan does not create any right to, or expectation of,continued employment or a continued employment relationship.

**10.5.4****           **The award or allocation of Plan Shares on a particular basis in any yeardoes not create any right to or expectation of the award or allocation of PlanShares on the same basis, or at all, in any future year.

**10.5.5****           **Without prejudice to Rule 3.1, no Employee is entitled to participate inthe Plan, or be considered for participation in it, at a particular level or atall. Participation in one operation of the Plan does not imply any right toparticipate, or to be considered for participation in any later operation ofthe Plan.

**10.5.6****           **Without prejudice to an Employee’s right to receive any Free or MatchingShares awarded to him or any Investment Shares or Dividend Shares allocated tohim subject to and in accordance with the express terms of the Rules, noEmployee has any rights in respect of the exercise or omission to exercise anydiscretion, or the making or omission to make any decision, relating to thePlan. Subject to the provisions of Schedule 2, any and all discretions,decisions or omissions relating to the invitation and application of Employeesto join the Plan on any particular occasion may operate to the disadvantage ofthe Employee, even if this could be regarded as capricious or unreasonable, orcould be regarded as in breach of any implied term between the Employee and hisemployer, including any implied duty of trust and confidence. Any such impliedterm is excluded and overridden by this Rule 10.5.

**10.5.7****           **No Employee has any right to compensation for any loss in relation tothe Plan, including:

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(i)                                  any loss or reduction of any rights or expectations under the Plan inany circumstances or for any reason (including lawful or unlawful terminationof employment or the employment relationship);

(ii)                               any exercise of a discretion or a decision taken in relation to aParticipant or to the Plan, or any failure to exercise a discretion or take adecision;

(iii)                            the operation, suspension, termination or amendment of the Plan.

**10.5.8****           **Participation in the Plan is permitted only on the basis that theParticipant accepts all the provisions of the Rules, including in particularthis Rule 10.5. By participating in the Plan, an Employee waives all rights,other than those expressly set out in the Plan.

**10.5.9****           **Nothing in this Plan confers any benefit, right or expectation on aperson who is not an Employee. No such third party has any rights under theContracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan.This does not affect any other right or remedy of a third party which mayexist.

**10.5.10****    **Each of the provisions of this Rule 10.5 is entirely separate andindependent from each of the other provisions. If any provision is found to beinvalid then it will be deemed never to have been part of these Rules and tothe extent that it is possible to do so, this will not affect the validity orenforceability of any of the remaining provisions.

**10.6**                     Beneficiary who isincapable

If the Trustees consider that a person cannot lookafter his affairs (because of illness, mental disorder, age or other reason)they may use any amounts or Shares due to that person for his or her benefit,or may pay or transfer them to some other person to do so. The receipt of theperson to whom the Trustees make payments or transfer Shares will discharge theTrustees from any obligation in respect of the amounts or Shares concerned.

**10.7**                     Setting up costs

The Company will pay the costs and expenses of thepreparation and execution of these Plan rules.

**10.8**                     Errors and omissions

If as a result of an error or omission Bonus Shares,Investment Shares, Matching Shares or Dividend Shares are not awarded to aParticipant in accordance with the Plan rules, the Trustees may, but withoutany obligation to do so, do all such acts or things as may be agreed with HMRCto rectify the error or omission notwithstanding that such actions may falloutside the time limits contemplated by or otherwise conflict with the otherprovisions of the Plan rules.

**10.9**                     Participation in morethan one employee share ownership plan

When calculating the limits on individualparticipation in the Plan, awards which have been made to an Employee in thesame tax year under employee share incentive plans established by the Companyor a connected company (within the meaning of paragraph 18(3) of Schedule 2)shall be included. Employee share ownership plans means plans approved underSchedule 2.

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Awards means (depending on the limit being considered)awards of free shares or the acquisition by an employee of partnership sharesor dividend shares under such approved plans.

The Trustees will maintain all records necessary toenable this rule to be complied with.

**10.10**              Data protection

By participating in the Plan the Participant consentsto the holding and processing of personal data provided by him to the Company,any Participating Company, the Trustees or third party service provider for allpurposes relating to the operation of the Plan. These include, but are notlimited to:

**10.10.1****    **administering and maintaining records;

**10.10.2****    **providing information to the Company, any Participating Company, theTrustees, registrars, brokers or third party administrators of the Plan;

**10.10.3****    **providing information to future purchasers of the Company or thebusiness in which the Participant works;

**10.10.4****    **transferring information about the Participant to a country or territoryoutside the European Economic Area that may not provide the same statutoryprotection for the information as the Participant’s home country.

**11**                                Assets of thePlan

**11.1**                      Assets held ontrust

The Trustees will hold all the payments they receiveand the assets representing them from time to time and all income on trust forthe purposes of the Plan. The Trustees may also accept gifts of cash and Shareswhich will be held on trust for the purposes of the Plan.

**11.2**                      Use of assets

The Trustees may invest any moneys held by them andnot immediately required for the purpose of the Plan in such manner as they maychoose. The Trustees are not under a duty to invest trust property.

The Trustees may borrow in order to acquire Shares forthe purposes of the Plan or, but only after getting the written consent of theCompany, for any other purpose.

**11.3**                      Plan expenses

The Trustees will pay the expenses of the Plan(including their own expenses incurred in attending to Plan business) from thePlan’s assets, if the assets are sufficient and the Company decides in writing.If there is no such direction, the expenses of the Plan will be met by theParticipating Companies in proportion to the amounts paid by them under thePlan or (if the Trustees decide) in proportion to the number of Shares awardedto their Participants under the Plan in the related year, or in proportion toboth.

**11.4**                      Trustees’ dutiesrelating to Shares

During the Holding Period, the Trustees may only sellor transfer any Bonus Shares, Matching Shares or Dividend Shares in the followingcircumstances:

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**11.4.1****            **if a Participant instructs this as described in Rule 8.7; or

**11.4.2****            **to obtain sufficient funds to secure rights arising under a rights issueaffecting Plan Shares; or

**11.4.3****            **to discharge PAYE obligations under Rule 8.10; or

**11.4.4****            **if they receive a termination notice as described in Rule 15.1.

**11.5**                      Trustees holdingShares

Where a Participant loses any right to receive Sharesunder the Plan, the Trustees will hold those Shares on general trusts for thepurposes of the Plan.

**12**                               Trustees

**12.1**                     Appointment and removal

The Company may appoint new or additional trustees ora body corporate as a sole trustee. The Company may also remove trustees.

These powers will be exercised by resolution of theDirectors. These powers may be exercised without giving a reason.

There must be at least two trustees, except when thereis a sole corporate trustee.

All the trustees must be resident in the UnitedKingdom for United Kingdom tax purposes at all times.

**12.2**                     Retirement

A trustee may retire by giving to the Company writtennotice of his wish to retire. The notice will take effect at the expiry of 3months after the date of the notice, or on any other date agreed with theCompany. The retiring trustee need not give a reason for retiring and will notbe responsible for any costs arising from his retirement. The retiring trusteewill take the necessary action, as directed by the Company, to give effect tohis retirement including delivering all documents which he has relating to thePlan. If necessary to achieve compliance with Rule 12.1, the Company willprocure a replacement trustee to replace the retiring trustee at the end of thenotice period. Any continuing trustee is authorised to effect the transfer ofPlan assets on behalf of a retiring trustee.

**12.3**                     Exercise of powers

If there is more than one trustee, the Trustees mayact by majority vote and may delegate powers duties or discretions to anypersons and on any terms (including terms which allow the delegate tosub-delegate).

The Trustees may allow any Shares to be registered inthe name of an appointed nominee but these Shares must be registered in adesignated account.

Trustees who delegate powers or use a nominee are notdivested of any responsibility under the Rules or under Schedule 2.

The Trustees may at any time, and must if the Companyso directs, revoke any delegation made under this Rule, or require any Planassets held by another person to be returned to the Trustees, or both.

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**12.4**                     Trustees’ charges

A trustee who carries on a profession or business maycharge for services provided on a basis agreed with the Company, as also may acompany or firm in which a trustee is interested. These charges will also bepaid from the Plan assets, if available, unless the Directors decide otherwise.

**12.5**                     Limit of Liability

A trustee will not be liable for any breach of trustexcept wilful wrongdoing (but a paid trustee will also be liable fornegligence).

**12.6**                     Indemnity

The Participating Companies will jointly and severallyindemnify each of the trustees (except a paid trustee) against any expenses andliabilities which are incurred through acting as a trustee of the Plan butwhich cannot, for any reason, be met from the Plan’s assets. But this does notapply to expenses and liabilities which are incurred through wilful wrongdoing(or negligence in the case of a paid trustee) or covered by insurance underRule 12.7. The indemnity in this Rule 12.6 is in addition to and withoutprejudice to the right which the Trustees have under general law and the TrusteeAct 2000 to be indemnified out of the Plan’s assets.

**12.7**                     Insurance

The Trustees may insure the Plan against any losscaused by it or any of its employees, officers, agents or delegates. They mayalso insure themselves and any of these persons against liability for breach oftrust not involving wilful wrongdoing. Except in the case of a paid trustee,the premiums may be paid from the Plan assets.

If the Trustees are insured, they will waive theprotection of Rule 12.5.

**12.8**                     Personal Interest

The Trustees and any director, officer or employee ofa corporation acting as trustee, may be interested in any securities of aParticipating Company or any company in which a Participating Company may beinterested. Such person may enter into a contract with any such companies andwill not be liable to account for any profits obtained.

**12.9**                     Dividend waiver

The Trustees waive and cancel their rights andentitlements in respect of the Shares which are not Plan Shares to alldividends to be declared by the Company in the future.

**12.10**              Qualifying Transfers

The Trustees will comply with paragraph 78 of Schedule2 if there is a qualifying transfer of shares to the Trustees in accordancewith that paragraph.

**13**                               ParticipatingCompanies

**13.1**                     Inclusion in the Plan

An employer wishing to participate in the Plan mustenter into a deed with the Company and the Trustees agreeing to comply with therules of the Plan. The deed must be in a form agreed by HMRC.

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**13.2**                     Ceasing to participate

Any Participating Company will cease to participate inthe Plan:

**13.2.1****           **when it ceases to be a Subsidiary; or

**13.2.2****           **if and during any times when the Directors decide that the Plan will notapply to it. (But in making this decision the Directors must ensure that theconditions in paragraph 10 of Schedule 2 are still satisfied. These conditionsare that the Plan must not have any features which may discourage certainemployees from participating and that the Plan cannot benefit mainly directorsor higher paid employees).

**14**                               Changing theRules

**14.1**                     Before HMRC approval

Before HMRC approves the Plan under Schedule 2 theDirectors can change the Rules as necessary in order to obtain approval.

**14.2**                     After HMRC approval

After the Plan is approved by HMRC, the Directors andthe Trustees may, together by deed at any time, change the Plan rules. But if akey feature of the Plan is to be changed at a time when the Plan is approved byHMRC under Schedule 2, and the approved status of the Plan is to be maintained,the change will not have effect until it has been approved by HMRC.

A “key feature” is any provision needed to comply withthe requirements of Schedule 2.

The Directors must not make any changes to the Planwhich would breach the rule against perpetuities (see Rule 15.4).

**15**                               Termination

**15.1**                     Termination notice

The Company in general meeting or the Directors may atany time resolve to terminate the Plan. If they so resolve, they must issue atermination notice and give it without delay to:

**15.1.1****           **HMRC;

**15.1.2****           **the Trustees; and

**15.1.3****           **all individuals who have Plan Shares, and all Employees who havereturned valid application forms but have not been awarded or allocated anyShares.

**15.2**                     Effect of terminationnotice

Once the Trustees receive the termination notice, theymust not award or acquire any more Shares on behalf of Participants.

The Trustees must remove each Participant’s PlanShares from the Plan by either transferring them or the proceeds of their saleto the Participant or as he may direct. (If the Participant has died, hispersonal representatives may give these instructions.) This should be done assoon as practicable once three months have passed from the date the terminationnotice was given under Rule 15. But the Trustees must also delay the removal

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of Plan Shares until this can be done without anyliabilities to income tax under Sections 501 to 507 of ITEPA. The Trustees mayonly remove Plan Shares at an earlier time if the Participant agrees afterreceiving the termination notice.

The Trustees must also pay to Participants, as soon asthey receive the termination notice, any cash dividends they are holding (Rule7.3) or any Contributions they are holding (Rule 5.7).

**15.3**                     Surplus Assets

Any surplus assets left after the Trustees havedecided when Plan Shares will be removed under Rule 15.2 will be paid toParticipating Companies, so far as practicable, in proportion to the totalamounts paid by each of them to the Plan, but the Trustees may decide onpayments in different proportions.

**15.4**                     Perpetuity Period

The perpetuity period relating to the Plan is fifteenyears. The Trustees may not award Shares more than ten years after the date ofthese Plan rules.

The end of the “perpetuity period” is the time bywhich Participants or other persons must have an interest in Shares, withoutrisk of loss of any rights.

**16**                               Governing Law

English law governs the Plan and its administration.

Executed as a deed on the date shown at the top ofthis document.

 
| THE COMMON SEAL of Watson  Wyatt  Limited was put onto this deed in the  presence of:               |                        |        |   |
|-----------------------------------------------------------------------------------------------------|-----------------------------|--------|--------|
|                                                                                                |                        |   |
| Director                                                                                            | /s/ John J.  Haley          |   |   |   |   |
|                                                                                                |                        |   |   |
|                                                                                                |                        |   |   |
| Secretary                                                                                           | /s/ Walter W.  Bardenwerper |   |   |   |   |
|                                                                                                |                        |   |   |
|                                                                                                |                        |   |   |
| THE COMMON SEAL  of Halifax  Corporate Trustees Limited was put  onto this deed in the presence of: |                        |        |   |
|                                                                                                |                        |   |
|                                                                                                |                        |   |   |
| Director                                                                                            | /s/ [illegible]             |   |   |   | [SEAL] |
|                                                                                                |                        |   |   |
|                                                                                                |                        |   |   |
| Secretary                                                                                           | /s/ [illegible]             |   |   |   |   |
|                                                                                                     |                             |        |        |  |  |  |  |  |  |  |

 

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