Document:

Lower
        Call Option Transaction

      

      February
        28, 2008

    

     

    To:         
      TXCO
      Resources, Inc.

       
      777 E. Sonterra Blvd., Suite 350

        San
      Antonio, TX 78258

        Attention:
      James E. Sigmon, President 

     

    From:     
      Capital
      Ventures International 

    By:
      Heights Capital Management, Inc., Its Authorized Agent

    101
      California Street, Suite 3250

    San
      Francisco, CA 94111

    Attention:
      Martin Kobinger

     

      
        

      

    

     

    Ladies
      and Gentlemen:

     

    The
      purpose of this letter agreement (this “Confirmation”)
      is to
      confirm the terms and conditions of the Transaction entered into between Capital
      Ventures International (“Party
      A”)
      and
      TXCO Resources, Inc. (“Party
      B”)
      on the
      Trade Date specified below (the “Transaction”).
      This
      Confirmation constitutes a “Confirmation” as referred to in the Agreement
      specified below. 

     

    
      	
              1.

            	
              This
                Confirmation is subject to, and incorporates, the definitions and
                provisions of the 2000 ISDA Definitions (including the Annex thereto)
                (the
                “2000
                Definitions”)
                and the definitions and provisions of the 2002 ISDA Equity Derivatives
                Definitions (the “Equity
                Definitions”,
                and together with the 2000 Definitions, the “Definitions”),
                in each case as published by the International Swaps and Derivatives
                Association, Inc. (“ISDA”).
                In the event of any inconsistency between the 2000 Definitions and
                the
                Equity Definitions, the Equity Definitions will govern.
                

            

    

     

    This
      Confirmation evidences a complete and binding agreement between Party A and
      Party B as to the terms of the Transaction to which this Confirmation relates.
      The parties may agree to negotiate an agreement in the form of the ISDA Form.
      Until any such time, this Confirmation, together with all other documents
      referring to the ISDA Form (each a “Confirmation”)
      confirming Transactions entered into between us (notwithstanding anything to
      the
      contrary in a Confirmation), shall supplement, form a part of, and be subject
      to
      an agreement in the form of the ISDA Form as if we had executed an agreement
      in
      such form (but without any election in the Schedule) on the Trade Date of the
      first such Transaction between us. This Confirmation shall be subject to an
      agreement (the “Agreement”)
      in the
      form of the 2002 ISDA Master Agreement (the “ISDA
      Form”)
      as if
      Party A and Party B had executed an agreement in such form (without any Schedule
      but with the elections set forth in this Confirmation, it being understood
      the
“Cross-Default” shall not apply to this Transaction). For the avoidance of
      doubt, the Transaction shall be the only transaction under the
      Agreement.

     

    All
      provisions contained in, or incorporated by reference to, the Agreement will
      govern this Confirmation except as expressly modified herein. In the event
      of
      any inconsistency between this Confirmation and either the Definitions or the
      Agreement, this Confirmation shall govern.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        LOWER
          CALL OPTION TRANSACTION

      

    

    
      
        
          
            
              
                 

                
                  	2.	
                          The
                            general terms relating to the Transaction are as
                            follows:

                        

                

              

            

          

        

      

    

    

    
      	 	
              Option
                Style:

            	 	
              European,
                subject to the automatic early exercise provisions described
                below.

            
	 	
               

              Option
                Seller:

            	 	
               

              Party
                A

            
	 	
               

              Option
                Buyer:

            	 	
               

              Party
                B

            
	 	
               

              Option
                Multiple Exercise:

            	 	
               

              Not
                Applicable

            
	 	
               

              Strike
                Price:

            	 	
               

              $17.36

            
	 	
               

              Trade
                Date:

            	 	
               

              February
                28, 2008

            
	 	
               

              Effective
                Date:

            	 	
               

              March
                4, 2008

            
	 	
               

              Option
                Type:

            	 	
               

              Call

            
	 	
               

              Issuer:

            	 	
               

              TXCO
                Resources, Inc.

            
	 	
               

              Shares:

            	 	
               

              The
                shares of common stock of the Issuer, par value $0.01 per Share (Ticker
                Symbol: TXCO)

            
	 	
               

              Number
                of Options:

            	 	
               

              1,152,074
                less any Early Exercise Options.

            
	 	
               

              Option
                Entitlement:

            	 	
               

              One
                Share per Option

            
	 	
               

              Market
                Disruption Event:

            	 	
               

              Section
                6.3(a) of the Equity Definitions is hereby amended by replacing clause
                (ii) thereof in its entirety with the following: “(ii) an Exchange
                Disruption, or” and inserting immediately following clause (iii) thereof
                the following: “; in each case that the Calculation Agent determines is
                material.”

            
	 	
               

              Relevant
                Price:

            	 	
               

              VWAP
                Price

            
	 	
               

              VWAP
                Price:

            	 	
               

              The
                “Volume Weighted Average Price” per Share on such day, as displayed on
                Bloomberg Page “TXCO UQ<equity>AQR” (or any successor thereto) for
                the Issuer with respect to the period from 9:30 a.m. to 4:00 p.m.
                (New
                York City time) on such day, as determined by the Calculation Agent.
                If no
                price at such time is available, or there is a Market Disruption
                Event on
                such Expiration Date, the Calculation Agent shall determine the VWAP
                Price
                in a commercially reasonable manner.

            
	 	
               

              Premium:

            	 	
               

              $6,175,116.64

            
	 	
               

              Premium
                Payment Date:

            	 	
               

              Effective
                Date

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
       

      LOWER
        CALL OPTION TRANSACTION

       

    

    
      	 	
              Exchange:

            	 	
              The
                Nasdaq Global Market

            
	 	
               

              Related
                Exchange:

            	 	
               

              Any
                exchange on which options or futures on the relevant Shares are
                traded.

            
	 	
               

              Clearance
                System:

            	 	
               

              DTC

            
	 	
               

              Calculation
                Agent:

            	 	
               

              Party
                A. Whenever the Calculation Agent acts or makes a determination,
                it will
                do so in good faith and in a commercially reasonable manner consistent
                with its obligations under the Equity Definitions. 

            
	 	
               

              Procedure
                for Exercise:

            	 	 
	 	
               

              Expiration
                Time:

            	 	
               

              The
                close of trading on the Exchange

            
	 	
               

              Expiration
                Date:

            	 	
               

              Each
                of the thirty (30) consecutive Scheduled Trading Days (the “Scheduled
                Expiration Period”)
                occurring immediately prior to February 28, 2013 or such earlier
                date
                specified by Party B in a written notice to Party A at least ten
                (10)
                calendar days prior to the Scheduled Expiration Period (an “Early
                Exercise Notice”);
                provided
                that if Party A receives notice that any of the Preferred Shares
                are
                converted prior to the tenth (10th) calendar day prior to the Scheduled
                Expiration Period (an “Early
                Exercise Event”),
                the Expiration Date with respect to a number of Options equal to
                the
                product of (x) the number of Preferred Shares converted and (y) the
                conversion rate then applicable to the Preferred Shares, (such Options
                being referred to herein as “Early
                Exercise Options”)
                shall occur on each of the thirty (30) consecutive Scheduled Trading
                Days
                occurring after the tenth (10th) calendar day after Party A receives
                notice of such event, or such earlier date after the Early Exercise
                Event
                that the Calculation Agent shall deem appropriate. If any Expiration
                Date
                shall not be an Exchange Business Day, such Expiration Date shall
                be
                postponed to the immediately succeeding Exchange Business Day and
                the
                corresponding Expiration Date for each subsequent Daily Number of
                Options
                shall be moved back an equal number of Exchange Business Days reflecting
                such postponement.

            
	 	
               

              Daily
                Number of Options:

            	 	
               

              One
                thirtieth (1/30th) of the Number of Options; provided
                that with respect to any Expiration Date resulting from an Early
                Exercise
                Event, one thirtieth (1/30th) of such Early Exercise
                Options.

            
	 	
               

              Automatic
                Exercise:

            	 	
               

              Applicable

            
	 	
               

              Settlement
                Terms:

            	 	 

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

      
        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	 	
              Settlement
                Method Election:

            	 	
              Applicable;
                provided
                that (i) any such election shall apply to all Exercise Dates (in
                accordance with the terms below) and may be for Cash Settlement or
                Net
                Share Settlement; (ii) references to “Physical Settlement” in Section 7.1
                of the Equity Definitions shall be replaced by references to “Net Share
                Settlement”; and (iii) Party B may elect Cash Settlement only if Party B
                represents and warrants to Party A in writing on the date of such
                election
                that, as of such date, Party B is not aware of any material nonpublic
                information concerning itself or the Shares and is electing Cash
                Settlement in good faith and not as part of a plan or scheme to evade
                compliance with the federal securities laws. At any time prior to
                making a
                Settlement Method Election, Party B may, without the consent of Party
                A,
                amend this Confirmation by notice to Party A to eliminate Party B’s right
                to elect Cash Settlement.

               

            
	 	
              Electing
                Party

            	 	
              Party
                B

               

            
	 	
              Settlement
                Method Election Date

            	 	
              The
                30th Scheduled Trading Day preceding the first Expiration
                Date

               

            
	 	
              Default
                Settlement Method

            	 	
              Net
                Share Settlement

               

            
	 	
              Settlement
                Date:

            	 	
              For
                all Daily Number Options exercised or deemed exercised on each Expiration
                Date, the third Exchange Business Day following the final Expiration
                Date.

               

            
	 	
              Cash
                Settlement

            	 	
              If
                Cash Settlement applies, then, notwithstanding any contrary terms
                of
                Article 8 of the Equity Definitions, for any Daily Number of Options
                exercised or deemed exercised on any Exercise Date, Party A shall
                pay, on
                the Settlement Date, the Cash Settlement Amount to Party B. The Cash
                Settlement Amount shall be determined as follows:

               

              (i)
                If the Settlement Price is less than or equal to the Strike Price,
                then
                the Cash Settlement Amount shall equal zero.

               

              (ii)
                If the Settlement Price is greater than the Strike Price, then the
                Cash
                Settlement Amount shall equal the product of (i) the Daily Number
                of
                Options, (ii) the Option Entitlement and (iii) the Settlement Price
                minus
                the Strike Price.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

      
        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	 	
              Net
                Share Settlement:

            	 	
              On
                the Settlement Date, Party A shall deliver to Party B a number of
                whole
                Shares equal to the Number of Shares to be Delivered and will pay
                to Party
                B the Fractional Share Amount, if any.

               

            
	 	
              Number
                of Shares to be Delivered:

            	 	
              The
                Cash Settlement Amount (determined as if Cash Settlement were applicable)
                divided by
                the Settlement Price, rounded down to the nearest whole
                number.

               

            
	 	
              Cash
                Settlement Payment Date:

            	 	
              For
                all Daily Number of Options exercised or deemed exercised on each
                Exercise
                Date, the third Exchange Business Day following the final Expiration
                Date.

            
	 	
               

              Settlement
                Currency:

            	 	
               

              USD

            
	 	
               

              Settlement
                Price:

            	 	
               

              For
                any Daily Number of Options, the VWAP Price of the Shares on the
                relevant
                Expiration Date determined by Calculation Agent at the Expiration
                Time on
                the relevant Expiration Date for such Daily Number of Options. If
                no price
                at such time is available, or there is a Market Disruption Event
                on such
                Expiration Date, the Calculation Agent shall determine the Settlement
                Price in a commercially reasonable manner. 

            
	 	
               

              Failure
                to Deliver:

            	 	
               

              Applicable

            
	 	
               

              Other
                Applicable Provisions:

            	 	
               

              To
                the extent Party A is obligated to deliver Shares hereunder, the
                provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that
                the
                Representation and Agreement contained in Section 9.11 of the Equity
                Definitions shall be modified by excluding any representations therein
                relating to restrictions, obligations, limitations or requirements
                under
                applicable securities laws as a result of the fact that Party B is
                the
                issuer of the Shares) and 9.12 of the Equity Definitions will be
                applicable as if “Physical Settlement” applied to the
                Transaction.

            
	 	
               

              Restricted
                Certificated Shares:

            	 	
               

              Notwithstanding
                anything to the contrary in the Equity Definitions, Party A may deliver,
                in whole or in part, any Shares required to be delivered to Party
                B
                hereunder in the form of restricted securities under the Securities
                Act
                (as defined below) and/or in certificated form in lieu of delivery
                through
                the Clearance System. With respect to any such certificated Shares,
                the
                Representation and Agreement contained in Section 9.11 of the Equity
                Definitions shall be modified by deleting the remainder of the provision
                after the word “encumbrance” in the fourth line
                thereof.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      
         

        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	 	
              Adjustments:

            	 	 
	 	
               

              Method
                of Adjustment:

            	 	
               

              Calculation
                Agent Adjustment

            
	 	
               

              Extraordinary
                Dividend:

            	 	
               

              Any
                dividend or distribution that has an ex-dividend date occurring on
                or
                after the Trade Date and on or prior to the date on which Party A
                satisfies all of its delivery obligations hereunder; provided
                that no regular or periodic dividend on any of Party B’s outstanding
                preferred stock (including the Preferred Shares) shall be an Extraordinary
                Dividend.

            
	 	
               

              Extraordinary
                Events:

            	 	 
	 	
               

              Consequences
                of Merger Events and Tender Offers:

            	 	 
	 	
               

              (a)
                Share-for-Share:

            	 	
               

              Modified
                Calculation Agent Adjustment, or at Party A’s election, Cancellation and
                Payment (Calculation Agent Determination)

            
	 	
               

              (b)
                Share-for-Other:

            	 	
               

              Cancellation
                and Payment (Calculation Agent Determination)

            
	 	
               

              (c)
                Share-for-Combined:

            	 	
               

              Component
                Adjustment, or at Party A’s election, Cancellation and Payment
                (Calculation Agent Determination)

            
	 	
               

              Tender
                Offer:

            	 	
               

              Applicable

            
	 	
               

              Delisting,
                Nationalization or Insolvency:

            	 	
               

              Cancellation
                and Payment (Calculation Agent
                Determination)

            

    

     

    Additional
      Disruption Events:

    
      	
               

              (a)
                Change in Law:

            	 	
               

              Applicable;
                provided
                that Section 12.9(a)(ii) of the Equity Definitions is hereby amended
                by
                (i) replacing the phrase “the interpretation” in the third line thereof
                with the phrase “or announcement or statement of the formal or informal
                interpretation” and (ii) immediately following the word “Transaction” in
                clause (X) thereof, adding the phrase “in the manner contemplated by the
                Hedging Party on the Trade Date”.

            
	
               

              (b)
                Failure to Deliver:

            	 	
               

              Applicable

            
	
               

              (c)
                Insolvency Filing:

            	 	
               

              Applicable

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      
         

        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	 	
              (d)
                Hedging Disruption:

            	 	
              Applicable

            
	 	
               

              (e)
                Increased Cost of Hedging: 

            	 	
               

              Applicable

            
	 	
               

              (f)
                Loss of Stock Borrow: 

            	 	
               

              Not
                Applicable

            
	 	
               

              Hedging
                Party:

            	 	
               

              For
                all applicable Additional Disruption Events, Party A

            
	 	
               

              Determining
                Party:

            	 	
               

              For
                all applicable Additional Disruption Events, Party A

            
	 	
               

              Non-Reliance:

            	 	
               

              Applicable

            
	 	
               

              Agreements
                and Acknowledgments Regarding Hedging Activities:

            	 	
               

              Applicable

            
	 	
               

              Additional
                Acknowledgments:

            	 	
               

              Applicable

            
	 	
               

              Additional
                Termination Events:

            	 	
               

              Applicable.
                The following will constitute an Additional Termination
                Event:

               

              (a)
                Such other events specified in this Confirmation as being Additional
                Termination Events. 

               

              For
                the purpose of the foregoing Termination Event, the sole Affected
                Party
                will be Party B. 

            
	 	
               

              Conversion
                Notice

            	 	
               

              In
                the event Party B shall elect a mandatory conversion of some or all
                of its
                Perpetual Convertible Preferred Stock pursuant to Article 2(d)(viii)
                of
                the Certificate of Designation, or if Party B receives a conversion
                notice
                under Section 2(b) of the Certificate of Designation, Party B shall
                promptly notify Party A in writing of such event, and in any event
                no
                later than 2 Exchange Trading Days after such election or receipt
                of such
                conversion notice.

            

    

     

    
      	
              3.

            	
              If
                any of the transactions contemplated by the Securities Purchase Agreement
                dated as of February 28, 2008 (the “Purchase
                Agreement”)
                among Party B and each
                of the Buyers specified therein relating to the sale of Perpetual
                Convertible Preferred Stock (the “Preferred
                Shares”)
                of Party B, shall fail to close on the date specified therein for
                any
                reason, or any subsequent date allowed thereunder for postponements
                permitted under the terms thereof , the entirety of this Transaction
                shall
                terminate automatically and Party B shall be the sole Affected Party
                and
                this Transaction shall be the sole Affected Transaction and
                such termination shall be treated as an Additional Termination
                Event.

            

    

     

    
      	
              4.

            	
              Calculations
                and Payment on Early Termination and on Certain Extraordinary
                Events.
                If
                Party A shall owe Party B any amount pursuant to Sections 12.2, 12.3,
                12.6, 12.7 or 12.9 of the Equity Definitions (except in the event
                of a
                Merger Event, Tender Offer, Insolvency or a Nationalization, in each
                case,
                in which the consideration or proceeds to be paid to holders of Shares
                consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement
                (except in the event of an Event of Default in which Party B is the
                Defaulting Party or a Termination Event in which Party B is the Affected
                Party, that resulted from an event or events within Party B’s control) (a
                “Payment
                Obligation”),
                Party B shall have the right, in its sole discretion, to require
                Party A
                to satisfy any such Payment Obligation by the Share Termination
                Alternative (as defined below) by giving irrevocable telephonic notice
                to
                Party A, confirmed in writing within one Scheduled Trading Day, between
                the hours of 9:00 A.M. and 12:00 P.M. New York City time on the relevant
                Merger Date, Tender Offer Date, Announcement Date or Early Termination
                Date, as applicable (“Notice
                of Share Termination”).
                Upon such Notice of Share Termination, the following provisions shall
                apply on the Scheduled Trading Day immediately following the relevant
                Merger Date, Tender Offer Date, Announcement Date or Early Termination
                Date, as applicable:

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      
         

        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	 	
              Share
                Termination Alternative: 

            	
              Applicable
                and means that Party A shall deliver to Party B the Share Termination
                Delivery Property on the date on which the Payment Obligation would
                otherwise be due pursuant to Section 12.7 or 12.9 of the Equity
                Definitions or Section 6(d)(ii) of the Agreement, as applicable (the
                “Share
                Termination Payment Date”),
                in satisfaction of the Payment Obligation.

            

    

     

    
      
        
          	
                	Share
                  Termination Delivery Property:	
                  A
                    number of Share Termination Delivery Units, as calculated by
                    the
                    Calculation Agent, equal to the Payment Obligation divided by
                    the Share
                    Termination Unit Price. The Calculation Agent shall adjust the
                    Share
                    Termination Delivery Property by replacing any fractional portion
                    of a
                    security therein with an amount of cash equal to the value of
                    such
                    fractional security based on the values used to calculate the
                    Share
                    Termination Unit Price.

                

        

      

    

     

    
      	
            	Share
              Termination Unit Price:	
              The
                value of property contained in one Share Termination Delivery Unit
                on the
                date such Share Termination Delivery Units are to be delivered as
                Share
                Termination Delivery Property, as determined by the Calculation Agent
                by
                commercially reasonable means and notified by the Calculation Agent
                to
                Party A at the time of notification of the Payment Obligation.
                

            

    

     

    
      	
            	Share
              Termination Delivery Unit:	
              In
                the case of a Termination Event, Event of Default or Delisting, one
                Share
                or, in the case of a Merger Event, a Tender Offer, an Insolvency
                or
                Nationalization, a unit consisting of the number or amount of each
                type of
                property received by a holder of one Share (without consideration
                of any
                requirement to pay cash or other consideration in lieu of fractional
                amounts of any securities) in such Merger Event, Tender Offer, Insolvency
                or Nationalization. If such Merger Event, Tender Offer, Insolvency
                or
                Nationalization involves a choice of consideration to be received
                by
                holders, such holder shall be deemed to have elected to receive the
                maximum possible amount of cash.

            

    

     

    
      	
            	FailuretoDeliver:	
              Applicable

            

    

     

    
      	
            	Other
              applicable provisions:	
              If
                Share Termination Alternative is applicable, the provisions of Sections
                9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions will be applicable
                as if “Physical Settlement” were applicable, except that all references to
                “Shares” shall be read as references to “Share Termination Delivery
                Units”; provided
                that the Representation and Agreement contained in Section 9.11 of
                the
                Equity Definitions shall be modified by excluding any representations
                therein relating to restrictions, obligations, limitations or requirements
                under applicable securities laws as a result of the fact that Party
                B is
                the issuer of any Share Termination Delivery Units (or any part
                thereof).

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      
         

        LOWER
          CALL OPTION TRANSACTION

         

      

    

    
      	
              5.

            	
              Additional
                Agreements, Representations and
                Covenants:

            

    

     

    
      	
            	(a)	
              Party
                B hereby represents and warrants to Party A, on each day from the
                Trade
                Date to and including the business day following the date on which
                Party A
                is able to initially complete a hedge of its position created by
                this
                Transaction, that Party B has publicly disclosed all material information
                necessary for Party B to be able to purchase or sell Shares in compliance
                with applicable federal securities laws and that it has publicly
                disclosed
                all material information with respect to its condition (financial
                or
                otherwise). 

            

    

     

    
      	
            	(b)	
              If
                Party B would be obligated to receive cash from Party A pursuant
                to the
                terms of this Agreement for any reason without having had the right
                to
                elect to receive Shares in satisfaction of such payment obligation,
                then
                Party B may elect that Party A deliver to Party B a number of Shares
                having a cash value equal to the amount of such payment obligation
                (such
                number of Shares to be delivered to be determined by the Calculation
                Agent
                acting in a commercially reasonable manner to determine the number
                of
                Shares that could be purchased over a reasonable period of time with
                the
                cash equivalent of such payment obligation). Settlement relating
                to any
                delivery of Shares pursuant to this paragraph (b) shall occur within
                a
                reasonable period of time. 

            

    

     

    
      	
            	(c)	
              Party
                B shall deliver to the Party A an opinion or opinions of counsel
                with
                respect to the matters set forth on Annex 1 hereto on or before the
                Effective Date. 

            

    

     

    
      	
            	(d)	
              In
                addition to the representations and warranties in the Agreement and
                those
                contained elsewhere herein, Party B represents and warrants to and
                for the
                benefit of, and agrees with, Party A as
                follows:

            

    

     

    (i) (A)
      On
      the Effective Date, the Shares or securities that are convertible into, or
      exchangeable or exercisable for Shares, are not, and shall not be, subject
      to a
“restricted period,” as such term is defined in Regulation M (“Regulation
      M”)
      under
      the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)
      and
      (B) Party B shall not engage in any “distribution,” as such term is defined in
      Regulation M, other than a distribution meeting the requirements of the
      exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M,
      until
      the second Exchange Business Day immediately following the Trade
      Date.

     

    (ii) Party
      B
      is not entering into this Confirmation to create actual or apparent trading
      activity in the Shares (or any security convertible into or exchangeable for
      Shares) or to manipulate the price of the Shares (or any security convertible
      into or exchangeable for Shares) or otherwise in violation of the Exchange
      Act.

     

    (iii) Without
      limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction
      will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

    

    (iv) Prior
      to
      the Effective Date, Party B shall deliver to Party A a resolution of Party
      B’s
      board of directors authorizing the Transaction and such other certificate or
      certificates as Party A shall reasonably request.

     

    (v) Party
      B
      is not, and after giving effect to the transactions contemplated hereby will
      not
      be, required to register as an “investment company” as such term is defined in
      the Investment Company Act of 1940, as amended.

     

    (vi) On
      the
      Trade Date (A) the assets of Party B at their fair valuation exceed the
      liabilities of Party B, including contingent liabilities, (B) the capital of
      Party B is adequate to conduct the business of Party B and (C) Party B has
      the
      ability to pay its debts and obligations as such debts mature and does not
      intend to, or does not believe that it will, incur debt beyond its ability
      to
      pay as such debts mature.

     

    (vii) Party
      B
      acknowledges its responsibilities under applicable federal securities laws,
      including without limitation Rule 10b-5 under the Exchange Act, in relation
      to
      the Transaction.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      
         

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            	(e)	
              Each
                of Party A and Party B agrees and represents that it is an “eligible
                contract participant” as defined in Section 1a(12) of the U.S. Commodity
                Exchange Act, as amended. The parties hereto further agree and acknowledge
                (A) that this Confirmation is (i) a “securities contract,” as such term is
                defined in Section 741(7) of the Bankruptcy Code, with respect to
                which
                each payment and delivery hereunder is a “settlement payment,” as such
                term is defined in Section 741(8) of the Bankruptcy Code, and (ii)
                a “swap
                agreement,” as such term is defined in Section 101(53B) of the Bankruptcy
                Code, with respect to which each payment and delivery hereunder is
                a
                “transfer,” as such term is defined in Section 101(54) of the Bankruptcy
                Code, and (B) that Party A is entitled to the protections afforded
                by,
                among other sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g),
                555
                and 560 of the Bankruptcy Code. 

            

    

     

    
      	
            	(f)	
              Party
                B intends that all documentation with respect to this Transaction
                is
                intended to qualify this Transaction as an equity instrument for
                purposes
                of SFAS 150 and EITF 00-19. Party A acknowledges and agrees that
                this
                Confirmation is not intended to convey to it rights with respect
                to the
                Transaction that are senior to the claims of common stockholders
                in the
                event of Party B’s bankruptcy. For the avoidance of doubt, the parties
                agree that the preceding sentence shall not apply at any time other
                than
                during Party B’s bankruptcy to any claim arising as a result of a breach
                by Party B of any of its obligations under this Confirmation or the
                Agreement. 

            

    

     

    
      	
              6.

            	
              Staggered
                Settlement:

            

    

     

    If
      Party
      A determines reasonably and in good faith that the sum of (i) the number of
      Shares required to be delivered to Party B hereunder on any Cash
      Settlement
      Payment Date, and (ii) any other Shares beneficially owned by Party A, would
      exceed 9.9%
      of
      all outstanding Shares, then Party A may, by notice to Party B on or prior
      to
      such Cash Settlement Payment Date (a “Nominal
      Settlement Date”),
      elect
      to deliver the Shares comprising the related Cash Settlement Amount (in the
      case
      of Net Share Settlement) on two or more dates (each, a “Staggered
      Settlement Date”)
      as
      follows: 

     

    
      	
            	(a)	
              in
                such notice, Party A will specify to Party B the related Staggered
                Settlement Dates (the first of which will be such Nominal Settlement
                Date
                and the last of which will be no later than the twentieth (20th)
                Exchange
                Business Day following such Nominal Settlement Date) and the number
                of
                Shares that it will deliver on each Staggered Settlement Date;
                

            

    

     

    
      	
            	(b)	
              the
                aggregate number of Shares that Party A will deliver to Party B hereunder
                on all such Staggered Settlement Dates will equal the number of Shares
                that Party A would otherwise be required to deliver on such Nominal
                Settlement Date; and 

            

    

     

    
      	
            	(c)	
              if
                the Net Share Settlement terms set forth above were to apply on the
                Nominal Settlement Date, then the Net Share Settlement terms will
                apply on
                each Staggered Settlement Date, except that the Shares comprising
                the Cash
                Settlement Amount will be allocated among such Staggered Settlement
                Dates
                as specified by Party A in the notice referred to in clause (a) above.
                

            

    

     

    Notwithstanding
      anything herein to the contrary, Party A shall be entitled to deliver Shares
      to
      Party B from time to time prior to the date on which Party A would be obligated
      to deliver them to Party B pursuant to the Net Share Settlement terms set forth
      above, and Party B agrees to credit all such early deliveries against Party
      A’s
      obligations hereunder in the direct order in which such obligations arise.
      To
      the extent Party A receives or is entitled to receive any distribution or
      payment in respect of Shares by reason of Party A’s being a holder of record of
      such Shares on any date after the Nominal Settlement Date which Party A would
      have delivered to Party B on such Nominal Settlement Date but for the provisions
      of this Section 6, Party A shall deliver such distribution or payment to Party
      B
      at the time Party A delivers the related Shares to Party B in accordance with
      this Section 6, if such distribution or payment has already been received by
      Party A at such time, or within a reasonable period of time following Party
      A’s
      receipt of the distribution or payment, if such distribution or payment has
      not
      already been received by Party A at the time Party A delivers the related Shares
      to Party B in accordance with this Section 6. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      
         

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              7.

            	
              Transfer.
                Party
                B shall not transfer or assign its rights or obligations hereunder
                and
                under the Agreement without the prior written consent of Party A.
                Party A
                may transfer or assign without Party B’s consent its rights and
                obligations hereunder and under the Agreement, in whole or in
                part.

            

    

     

    
      	
              8.

            	
              Disposition
                of Hedge Shares.
                Party B hereby agrees that if, in the good faith reasonable judgment
                of
                Party A or Issuer, based on the advice of counsel, the Shares (the
                “Hedge
                Shares”)
                acquired by Party A for the purpose of hedging its obligations pursuant
                to
                the Transaction
                cannot be sold in the public market by Party A without registration
                under
                the Securities Act, Party B shall, at its election: (i) in order
                to allow
                Party A to sell the Hedge Shares in a registered offering, make available
                to Party A an effective registration statement under the Securities
                Act to
                cover the resale of such Hedge Shares and (A) enter into an agreement,
                in
                form and substance satisfactory to Party A, substantially in the
                form of
                an underwriting agreement for underwritten follow-on offerings of
                equity
                securities of companies of comparable size, maturity and lines of
                business, (B) provide accountant’s “comfort” letters in customary form for
                underwritten follow-on offerings of equity securities of companies
                of
                comparable size, maturity and lines of business, (C) provide disclosure
                opinions of nationally recognized outside counsel to Party B as are
                customarily requested in connection with underwritten follow-on offers
                of
                equity securities of companies of comparable size, maturity and lines
                of
                business, (D) provide other customary opinions, certificates and
                closing
                documents customary in form for underwritten follow-on offers of
                equity
                securities of companies of comparable size, maturity and lines of
                business
                and (E) afford Party A a reasonable opportunity to conduct a “due
                diligence” investigation with respect to Party B customary in scope for
                underwritten follow-on offers of equity securities of companies of
                comparable size, maturity and lines of business; provided,
                however, that
                if Party A, in its sole discretion, is not satisfied with access
                to due
                diligence materials, the results of its due diligence investigation,
                or
                the procedures and documentation for the registered offering referred
                to
                above, then clause (ii) of this Section 8(c) shall apply; provided
                that Party A has given the Party B reasonable notice of its determination
                and provided the Party B with reasonable opportunity to satisfy Party
                A’s
                concerns;
                (ii) in order to allow Party A to sell the Hedge Shares in a private
                placement enter into a private placement agreement substantially
                similar
                to private placement purchase agreements customary for private placements
                of equity securities of companies of comparable size, maturity and
                lines
                of business, in form and substance reasonably satisfactory to Party
                A,
                including customary representations, covenants, blue sky and other
                governmental filings and/or registrations, indemnities to Party A,
                due
                diligence rights (for Party A or any designated buyer of the Hedge
                Shares
                from Party A), opinions and certificates and such other documentation
                as
                is customary for private placements agreements, all reasonably acceptable
                to Party A (in which case, the Calculation Agent shall make any
                adjustments to the terms of the Transaction that are necessary, in
                its
                reasonable judgment, to compensate Party A for any discount from
                the
                public market price of the Shares incurred on the sale of Hedge Shares
                in
                a private placement). 

            

    

     

    
      	
              9.

            	
              Account
                Details: 

            

    

    

    
      	 	
              Payments
                to Party A:

            	
              To
                be provided in writing upon request

            
	 	
               

              Payments
                to Party B:

            	
               

              To
                be advised in writing upon request

            
	 	
               

              Deliveries
                to Party B:

            	
               

              To
                be advised in writing upon request

            

    

     

    
      	
              10.

            	
              Waiver
                of Jury Trial. EACH
                OF PARTY B AND PARTY A HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF
                AND,
                TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS)
                ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
                (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
                RELATING
                TO THE TRANSACTION OR THE ACTIONS OF PARTY B OR ITS AFFILIATES OR
                PARTY A
                OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT
                HEREOF 

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
      
         

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              11.

            	
              Governing
                Law. THE AGREEMENT AND THIS CONFIRMATION AND ANY OTHER MATTERS ARISING
                OUT
                OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF PARTY B OR ITS
                AFFILIATES OR PARTY A OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE
                OR
                ENFORCEMENT HEREOF SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
                NEW YORK.
                THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION
                OF THE
                COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE
                SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING
                HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY
                CLAIM OF
                INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
      
         

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    Please
      confirm that the foregoing correctly sets forth the terms of your agreement
      by
      signing and returning this Confirmation.

    

      
        	 	
                Very
                  truly yours,

              
	 	
                 

              
	 	
                CAPITAL
                  VENTURES INTERNATIONAL

              
	 	
                BY:
                  HEIGHTS CAPITAL MANAGEMENT, INC, 

              
	 	
                Its
                  Authorized Agent

              
	 	
                (Party
                  A)

              
	 	
                 

              
	 	
                By:

              	
                /s/
                  Martin Kobinger

              
	 	
                Name:
                  Martin Kobinger

              
	 	
                Title:
                  Investment Manager

              

      

    

     

    Confirmed
      as of the date first written above: 

     

    TXCO
      RESOURCES INC.

    (Party
      B)

    

      
        	
                By:  

              	
                /s/
                  James E. Sigmon

              	 
	
                Name:

              	
                 James
                  E. Sigmon

              	 
	
                Title:

              	
                 President

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

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    ANNEX
      I

     

    Matters
      to be covered in Opinion of Counsel to Party B 

     

    1. Party
      B
      is validly existing as a corporation in good standing under the laws of the
      State of Delaware. 

     

    2. Party
      B
      has the requisite corporate power and authority to enter into the Transaction
      (for purposes of this Annex 1, the “Agreement”)
      and to
      carry out the Transactions contemplated thereby. 

     

    3. The
      execution and delivery by Party B of the Transaction, and the performance by
      Party B of its obligations under the Transaction, have been duly authorized
      by
      all necessary corporate action on the part of Party B. 

     

    4. The
      Transaction has been duly authorized, executed and delivered by Party
      B.

     

    5. No
      consent, approval or authorization of, or registration, filing or declaration
      with, any governmental or public body or authority is required in connection
      with the execution, delivery or performance by Party B of the Transaction.
      

     

    6. The
      execution, delivery and performance by Party B of the Transaction and compliance
      by Party B with the terms and provisions thereof will not, whether with or
      without the giving of notice or lapse of time or both, result in a breach or
      violation of any of the terms and provisions of, or constitute a default under,
      (A) any material indenture, mortgage, deed of trust, loan, purchase or credit
      agreement, lease, corporate charter or by-laws, or any other agreement or
      instrument to which Party B or any subsidiary is bound or by which Party B
      or
      any subsidiary or any of their respective properties may be bound or affected,
      or (B) any Delaware or federal law, statute, rule, regulation or order or any
      judgment, order, writ or decree of any governmental agency or body or any court
      having jurisdiction over Party B or any of its properties. 

     

    7. Neither
      Party B nor any subsidiary is an “investment company” or a company “controlled”
by an “investment company”, in each case within the meanings ascribed to such
      terms in the Investment Company Act of 1940, as amended, nor is Party B or
      any
      subsidiary subject to regulation under said Act.Exhibit 10.1

                           FOURTH AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

                  This  FOURTH   AMENDED  AND  RESTATED   EMPLOYMENT   AGREEMENT
("Agreement") is dated as of the [ ] day of February 2008, by and between WILLIS
GROUP HOLDINGS LIMITED, a company established under the laws of Bermuda ("Willis
Holdings"), WILLIS NORTH AMERICA, INC. (Willis US", and collectively with Willis
Holdings, "Employer") and JOSEPH J. PLUMERI ("Executive").

                  WHEREAS, on October 15, 2000 (the "Commencement Date"), Willis
US and Willis Group Limited  (f/k/a Willis Group plc,  "Willis UK") entered into
an employment  agreement in order to employ  Executive as Executive  Chairman of
Willis US and  Chairman  and Chief  Executive  Officer of Willis UK, among other
things; and

                  WHEREAS, effective on or about May 8, 2001, as a result of the
exchange of ordinary shares of TAI Limited, a company established under the laws
of England  and Wales and the former  ultimate  parent  company of Willis UK and
Willis US, for shares of common stock of Willis Holdings (such stock,  "Holdings
Stock"),  Willis  Holdings  instead  become the ultimate  parent  company of TAI
Limited, Willis US and Willis UK (the "Share Exchange"); and

                  WHEREAS,  in connection with the Share  Exchange,  as of March
26, 2001, Willis US and Willis UK, along with Willis Holdings (collectively, the
"Willis  Group")  agreed  to  amend  and  restate  this  Agreement  (the  "First
Restatement"); and

                  WHEREAS, Willis Holdings, as the ultimate parent of Willis US,
became  jointly  and  severally  liable  with  Willis  US  for  all  obligations
hereunder;

                  WHEREAS,  the parties last amended and restated this Agreement
as of May 25, 2004, creating the Third Amended and Restated Employment Agreement
(the "Third Amendment"); and

                  WHEREAS,  the parties  desire to make  certain  changes to the
Third  Amendment,  including to extend the Term and to bring this Agreement into
compliance with Section 409A of the Internal  Revenue Code of 1986, as it may be
amended from time to time ("Section 409A").

                  NOW,  THEREFORE,  in consideration of the mutual covenants and
promises contained herein and for other valuable consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereby  agree as
follows:

     1.  Employment,  Compensation  and  Benefits.  During  the  period  of this
Agreement,  Employer  agrees to employ  Executive  in the  capacity,  to pay the
remuneration, and to provide the benefits, described below.

     (a) Title and Duties.

         (i) During the Term (as defined in Section 2 herein),  Executive  shall
be  employed as  Executive  Chairman of Willis US, and shall hold the offices of
Executive  Chairman and Chief Executive Officer of Willis Holdings and Willis US
and the  offices of  Chairman,  Chief  Executive  Officer  and  Senior  Managing
Director of Willis UK. During the Term,  Executive shall also be a member of the

<PAGE>
                                                                               2

Board of Directors of Willis  Holdings  (the "Board") (or such other most senior
governing board of Willis Holdings) and Executive  Committee of Willis Holdings,
Willis UK and  Willis  US.  Executive  shall also be  appointed  to such  senior
director  and  executive  positions,  as  the  Board,  after  consultation  with
Executive, deems appropriate, of each subsidiary of Willis Holdings.

                  (ii)   Executive   shall   have   the    customary     duties,
responsibilities  and authority of a chairman and a chief executive officer at a
corporation of a similar size and status as the Willis Group.

                  (iii) Executive shall report directly to the Board.

                  (iv)  Executive's  principal  office  shall be  located  at an
office of Willis US in Manhattan, New York City, New York.

     (b) Remuneration.

                  (i)  Base  Salary.   Beginning  on   the   Commencement  Date,
Executive's base salary shall be at the rate of $1,000,000 per annum, payable in
the United States in accordance with Willis U.S.'s normal payroll practices. The
amount of  Executive's  Base Salary  shall be reviewed  annually and may, at the
discretion of the Board, be adjusted (but never below the then Base Salary). Any
such increased amount shall constitute "Base Salary" hereunder. Unless otherwise
specified  hereunder,  all dollar  amounts  referred to in this Agreement are in
U.S. dollars and all amounts are to be paid in the United States.

                  (ii) Bonus. So  long  as Executive remains employed hereunder,
Executive  shall be  eligible  for an annual  bonus for each  fiscal year ending
during the Term (the "Fiscal Year") pursuant to the Employer's annual bonus plan
(currently The Willis Group Senior  Management  Incentive  Plan). So long as the
applicable performance criteria under the annual bonus plan for his position are
satisfied,  bonuses shall be paid to Executive as set forth on Exhibit A hereto.
The bonus for the 2007 fiscal year shall be paid in 2008 in accordance  with the
terms of this Agreement prior to this restatement.  Except as otherwise provided
on  Exhibit  A  hereto,  all  bonuses  shall be paid in the  calendar  year next
following the end of the fiscal year in which it is measured.

                  (iii) Deferral  of  Receipt of  Remuneration.  Executive shall
have the right to defer, on an annual basis,  receipt of his Base Salary and, to
the extent permitted by the Deferred  Compensation Plan, his annual bonus to the
full extent  provided and otherwise in  accordance  with the terms of Employer's
deferred  compensation  plan in which Executive  participates  (or any successor
plan thereto) as in effect from time to time (the "Deferred  Compensation Plan")
and Section 409A.

     (c) Benefits.

                  (i) Willis US Plans  Generally.   Employer  shall provide,  or
shall cause to be provided,  Executive with those benefits,  including  medical,
life  insurance,  disability,  pension  and other  benefit  programs,  plans and
practices to which  similarly-situated,  full-time executive employees of Willis
US and its subsidiaries  (commensurate with Executive's position with Willis US)
are  entitled  (under  the  applicable  benefit  plans  as in  effect  as of the
Commencement  Date or as may be amended from time to time),  as set forth in the

<PAGE>
                                                                               3

Staff Handbook (the "Company  Plans"),  as well as fringe benefits  commensurate
with the Executive's  position,  including,  at Employer's  expense,  reasonable
availability  of private  air  transportation,  as  determined  appropriate  for
business travel by Executive in his reasonable,  good faith discretion and, when
reasonably necessary for security reasons,  personal travel of Executive and his
family, unless otherwise expressly waived by Executive in writing.

                  (ii)  Deferred  Compensation  Benefit.  So  long  as Executive
remains employed by Employer  hereunder,  Executive shall be entitled to receive
an annual deferred  compensation credit of $800,000 (the "Deferred  Compensation
Benefit") under the Deferred  Compensation  Plan in respect of the Contract Year
beginning on October 15, 2003 and each full (or partial) Contract Year occurring
thereafter.  Each such  Deferred  Compensation  Benefit  shall be credited to an
account  established  for Executive  under the Deferred  Compensation  Plan (the
"Deferral  Account") in four equal  installments of $200,000 each,  beginning on
January 14, April 14, July 14 and October 14 of each Contract Year in respect of
which such  Deferred  Compensation  Benefit is being  credited.  Notwithstanding
anything set forth in this Agreement,  or the Deferral  Account to the contrary,
(A) Executive has received an additional Deferred Compensation Benefit credit in
respect of the Contract  Year ending on October 14, 2003,  of which one half was
credited on each of July 14, 2003 and October 14, 2003 and (B) on each date that
any Deferred Compensation Benefit is credited to the Deferral Account, Executive
shall be vested in, but not then entitled to payment of, such  credited  amount.
Subject to the foregoing,  all Deferred Compensation Benefits shall otherwise be
treated  under the  Deferred  Compensation  Plan in the same manner  (including,
without  limitation  but  subject to  Section  3(a)(ii)  below) as any  elective
deferrals  of Base Salary and annual bonus  amounts made by Executive  under the
Deferred Compensation Plan as provided in Section 1(b)(iii) above.

     (d) U.K.  Corporate  Housing.  The  Company  shall  continue to provide the
Executive with hotel housing when in London,  England on Company business at the
same level as provided in 2007.

     (e) Other Expenses.  All expenses of Executive  incurred in connection with
the  performance  of his  services  hereunder or prior  hereto,  other than with
respect  to the  commutation  by  Executive  from his home in New  Jersey to his
office in New York City,  shall be payable or reimbursed by Employer  (including
but not limited to those fringe benefits set forth in Sections 1(c)(i) and 1(d),
above) and, to the extent,  if any, such expenses would be taxable to Executive,
shall be grossed up by Employer such that  Executive  has no after-tax  cost for
such expenses or additional  gross-up  amount.  Expenses  shall be reimbursed as
soon  as   practicable   after   Executive   incurs  such  expense  and  submits
documentation  thereof (which shall be submitted  within ninety (90) days of the
incurrence of the expense).  All taxable payments and reimbursements,  including
any gross-up  payment  related to expenses  paid  pursuant to this Section 1(e),
shall be paid in accordance with Section 7(l)(iii) hereof.

     (f)  Indemnification.  Employer shall provide  Executive with Directors and
Officers and Errors and Omissions insurance in amounts reasonably  acceptable to
Executive.  Willis  Holdings  and Willis US each  agrees,  and shall cause their
respective  subsidiaries  to agree,  to indemnify and defend  Executive,  to the
fullest extent permitted by applicable law and by their  respective  Articles of
Incorporation and by-laws (or the applicable  equivalent  governing  documents),
with  respect to any and all claims  which  arise from or relate to  Executive's
duties as an officer,  member of the Board (and any other board of directors (or
equivalent   governing  entity)  of  Willis  UK,  Willis  US  or  any  of  their
affiliates),  employee of Willis US, and duties performed in connection with the

<PAGE>
                                                                               4

offices of Willis UK and Willis Holdings held by Executive, or as a fiduciary of
any employee  benefit plan or a similar capacity with any other entity for which
Executive  is  performing  services at  Employer's  request,  whether  performed
heretofore or hereafter.

     (g) Equity Participation.

                  (i) General. The provisions of the Third Amendment as to prior
equity grants shall continue to apply.

                  (ii) Registration  Rights.  Executive  shall  be  entitled  to
registration rights in accordance with the 2004 Registration Rights Agreement.

                  (iii) Change of Control. The  definition  of Change of Control
applicable  to any  equity  grant  made to the  Executive  or in any  equity  or
employee  benefit  plan as it  applies  to  Executive  shall  be the same as the
definition of Change of Control set forth herein,  provided that this subsection
(ii) shall not apply to any already  outstanding equity grant as of May 25, 2004
to the extent  application of it would result in an adverse accounting charge to
the Employer because of a change in the definition of Change in Control.

                  (iv) 2008 Equity  Grant. Executive  shall be entitled to stock
option grants as provided in Exhibit B hereto.

                  (v) Future Grants. Executive shall be eligible for such future
equity awards as determined by the Compensation Committee of the Board.

     (h)  Executive  shall be  entitled  to  vacation  time and  holidays as are
provided in general to executive employees of Willis US but shall, in any event,
be entitled to no less than four (4) weeks of vacation per year. Any unused days
accrued in a particular year may not be carried over to a subsequent year.

     2. Term and Termination.

     (a) Term.  This  Agreement  shall become  effective as of the  Commencement
Date.  Unless terminated  earlier pursuant to Section 2(b),  below,  Executive's
employment  hereunder  shall  remain in effect  until the annual  meeting of the
Employer occurring in 2011. For purposes of this Agreement,  the employment term
(which  began on the  Commencement  Date) shall be deemed to be the "Term",  and
each  twelve-month  period  commencing  on the  Commencement  Date  and on  each
anniversary  thereof occurring during the Term shall be deemed to be a "Contract
Year".

     (b)  Termination.  The Term shall  terminate on the earlier to occur of (i)
the expiration of the Term and (ii) the date upon which  Executive's  employment
is terminated by Employer or Executive. Subject to the conditions and procedures
of Section  3(d)(iii) and (iv),  below,  either party may terminate the Term and
Executive's employment at any time by providing 90 days' prior written notice to
the other party of the termination of Executive's  employment.  A termination by
either  Employer  shall be deemed a  termination  by the  Employer and all other
members of the Willis Group and their respective subsidiaries.

<PAGE>
                                                                               5

     3. Effect of Certain Terminations.

     (a) Termination  without Cause by Employer or Resignation  with Good Reason
by  Executive.  If at any time during the Term,  Employer  terminates  Executive
without Cause (as defined below) or the Executive terminates his employment with
the Willis Group for Good Reason (as defined below), Executive shall be entitled
to the following:

                  (i) Subject to Section  7(l) hereof,  within  thirty (30) days
after such termination,  Employer shall pay to Executive as severance the lesser
of (x) Four Million Dollars ($4,000,000) and (y) Two Million Dollars (2,000,000)
multiplied  by a  fraction,  the  numerator  of which is the  number  of  months
remaining in the Term (without regard to the Termination) and the denominator of
which is twelve (12); provided, however, if (I) after the occurrence of a Change
in Control (or prior thereto,  at the direction of an  anticipated  successor or
otherwise in connection therewith), Executive's employment is terminated for any
reason by Employer (or their respective successors) or (II) after the occurrence
of a Change in Control,  Executive's  employment is terminated by Executive with
or without Good Reason, then, in lieu of Executive's  entitlements for severance
as set forth above,  Employer (or its applicable successor) shall be required to
pay Executive as severance,  subject to Section 7(l) hereof,  within thirty (30)
days  after  such   termination,   an  amount  equal  to  Six  Million   Dollars
($6,000,000); and

                  (ii) Employer  shall  provide,  or shall cause to be provided,
Executive  with his (x) Accrued  Amounts (as defined  below) and (y) his Accrued
Rights (as defined below);  provided,  however,  that any Deferred  Compensation
Benefit that would otherwise have been credited to Executive's  Deferral Account
pursuant  to Section  1(c)(ii)  above if  Executive  had  remained  employed  by
Employer hereunder for the balance of the Term shall instead be credited in full
to the Deferral Account  effective as of the date of such  termination,  and all
Deferred  Compensation  Benefits  then  credited to the Deferral  Account  shall
otherwise be paid to Executive pursuant to and in accordance with the provisions
of the Deferred  Compensation  Plan and in  accordance  with the  provisions  of
Section 409A, as applicable.

     (b) Other Terminations. In the case of any other termination not covered by
Section 3(a) alone,  Executive shall only be entitled to his Accrued Amounts and
Accrued  Rights;  provided,  however,  that after the  occurrence of a Change in
Control, if Executive terminates his employment without Good Reason, Executive's
Deferred  Compensation Benefits shall be credited and payable in the same manner
and pursuant to the same terms as set forth in Section 3(a)(ii) above.

     (c) No Mitigation;  No Offset.  The amounts due under Section 3(a) shall be
paid without any obligation of mitigation or offset for future earnings or other
amounts, and shall be paid without setoff,  counterclaims or defense.  Executive
shall not be eligible for any amounts of a similar  nature that would be payable
to Executive pursuant to other severance plans of the Willis Group.

     (d) Definitions. For purposes of this Agreement, the capitalized terms used
above shall have the following meanings:

                  (i) "Accrued  Amounts" shall mean (x) all accrued  but  unpaid
Base Salary and vacation pay, to be paid  promptly  after  termination;  (y) any
bonus due as a result of actual  performance but unpaid for any completed fiscal
year, to be paid in the calendar year of such  termination when bonuses are paid

<PAGE>
                                                                               6

to its  senior  level  executives  in respect to such  fiscal  year;  and (z) in
respect  of the  Fiscal  Year in which the  termination  occurs,  payment  of an
amount, (the "Prorated Bonus") equal to a pro rated portion of the actual annual
bonus  earned  based  on  performance  during  the  Fiscal  Year  in  which  the
termination  occurs  based  on  actual  results,  which  bonus  shall be paid to
Executive in the calendar year next  following the calendar year of  termination
and at the same  time as said  payment  would  be made if  Executive  was  still
employed  by  the  Employer;  provided,  however,  that  upon a  termination  of
Executive's employment for Cause or by Executive without Good Reason (other than
as a result of death, Disability,  Mutual Retirement (as defined below) prior to
the end of the  Term or at or  after  the  annual  meeting  in  2011),  "Accrued
Amounts"  shall not  include a Prorated  Bonus in respect of the Fiscal  Year in
which the termination occurs.

                  (ii) "Accrued  Rights" shall  mean any amounts or benefits due
to Executive under any benefit or equity plan or program (other than a severance
plan),  and Executive's  rights under Sections 1(c), 1(e), 1(f), 4 and 7 hereof,
payable in accordance with the terms of such plan or program.

                  (iii) "Cause"  shall  mean (A)  Executive's  conviction of, or
pleading nolo contendere to, a misdemeanor  involving sexual  misconduct or to a
felony (other than a traffic infraction not involving actual imprisonment),  (B)
Executive's willful and continuous misconduct with regard to his material duties
and  responsibilities  which causes  demonstrable  harm of a material nature (C)
Executive's  serious or persistent  breach of Executive's  material  obligations
under this  Agreement  (including  any  repeated  failure to abide by the legal,
written  directives  presented to him by the Board,  which directives are not in
violation of Section 1(a)(ii)  hereof) or (D) gross negligence  (other then as a
result of physical or mental  impairment)  with regard to his duties;  provided,
that,  in the case of (B),  (C) and  (D),  above,  such  misconduct,  breach  or
negligence  was not resolved or cured within  fifteen  (15) days  following  the
applicable Employer's written notice to Executive of the Employer's intention to
terminate  Executive's  employment for Cause as a result of such  circumstances,
which notice  (pursuant  to Section  2(b))  describes  such  circumstances  with
sufficient  particularity to give Executive a reasonable  opportunity to resolve
or cure  any  such  misconduct,  breach  or  negligence.  For  purposes  of this
definition,  an act (or omission) shall not be deemed "willful", if, in the good
faith belief of Executive,  such act (or omission) was in the best  interests of
the Willis Group (or any of their respective subsidiaries),  and such belief was
reasonable.

                  (iv)  "Change   of   Control"  means  (a) the  acquisition  of
ownership,  directly or indirectly,  beneficially or of record, by any Person or
group (within the meaning of the  Securities  Exchange Act of 1934 and the rules
of the  Securities and Exchange  Commission  thereunder as in effect on the date
hereof),  of  equity  interests  representing  more  than  30% of the  aggregate
ordinary voting power represented by the issued and outstanding equity interests
of Willis Holdings; (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of Willis  Holdings by Persons who were neither
(i) nominated by the board of directors of Willis Holdings nor (ii) appointed by
directors  so  nominated;  provided a Person shall not be deemed so nominated or
appointed if such  nomination or appointment is the result of a proxy contest or
a threatened proxy contest;  (c) the failure of Willis Holdings to own, directly
or indirectly,  at least 50% of the aggregate  ordinary voting power represented
by the issued and  outstanding  equity  interests of Willis US (or the successor
entity owing all or substantially  all of the assets  previously owned by Willis
US if such  assets  are  transferred);  (d) a  merger,  consolidation  or  other
corporate  transaction  of  Willis  Holdings  (a  "Transaction")  such  that the

<PAGE>
                                                                               7

shareholders of Willis Holdings immediately prior to such Transaction do not own
more than 50 percent of the  aggregate  ordinary  voting power of the  surviving
entity (or its parent)  immediately  after such Transaction in approximately the
same proportion to each other as immediately  prior to the Transaction;  (e) the
sale  of all or  substantially  all of the  assets  of  Willis  Holdings  or (f)
approval by the  shareholders  of Willis  Holdings of a plan of  liquidation  or
dissolution of Willis Holdings.

                  (v)   "Good  Reason"  shall   mean  Executive  terminates  his
employment  as a result of (A) any  diminution by any member of the Willis Group
of his titles,  positions or status within the Willis Group, without Executive's
written   consent   thereof,   (B)  any  material   diminution  of  his  duties,
responsibilities or authority, or the assignment to him of any duties materially
inconsistent  with his positions  within the Willis Group,  without  Executive's
written  consent  thereof,  (C) any relocation of his principal  office from New
York, New York, without  Executive's  written consent thereof,  (D) any material
breach of this Agreement by Employer,  (E) the occurrence of a Change in Control
or (F) the Board  repeatedly  overrides,  supersedes  or  disregards  reasonable
decisions by Executive or  recommendations  made by Executive to the Board, such
that the Board  materially  interferes with  Executive's  ability to effectively
function as the Executive  Chairman and Chief  Executive  Officer,  or the Board
otherwise  takes actions that  constructively  represent a lack of confidence in
Executive's ability to perform his duties and responsibilities;  provided,  that
in all cases  (other than (E) above),  such action or breach is not  resolved or
cured within fifteen (15) days following Executive's written notice (pursuant to
Section  2(b)) to  Employer  of the event  that he asserts is the basis for Good
Reason,  and which  event or behavior  Employer  does not resolve or cure during
such 15-day period.

                  (vi) "Mutual  Retirement"   shall  mean a Retirement  with the
mutual agreement of the Executive and the Board with a successor chief executive
officer approved by both in writing in place.

                  (vii)  "Retirement"   shall  mean  Executive's  termination of
employment  with the Willis Group after  Executive  has been  employed  with the
Willis Group for at least five years following the Commencement Date.

                  (viii)  "Section   409A"  shall   mean  Section  409A  of  the
Internal Revenue Code of 1986, as it may be amended from time to time.

     (e) Disability  Termination.  Employer may terminate Executive's employment
as a result of a  "Disability"  if Executive,  as a result of mental or physical
incapacity,  has  been  unable  to  perform  his  material  duties  for  six (6)
consecutive  months (or 180 days in any 360-day period).  Such termination shall
be only permitted while Executive is still so disabled and shall be effective on
thirty (30) days written  notice to Executive,  provided  that such  termination
shall not be  effective  if Executive  returns to full time  performance  of his
material  duties  within such thirty (30) day period and  continues in such full
time  capacity  (which full time status shall be deemed to continue  even in the
event that vacation or intermittent  and de minimis sick leave is taken) for six
(6) consecutive months thereafter. For the avoidance of doubt, in the event that
Executive  does return to full time  performance  but does not  continue in such
full time capacity for six (6)) consecutive months  thereafter,  the termination
shall be deemed  effective on thirty (30) days written notice following the most
recent  date that  Executive  fails to  continue  in such  full  time  capacity.
Notwithstanding the foregoing,  in the event that as a result of absence because
of mental or physical  incapacity  Executive  incurs a "separation from service"

<PAGE>
                                                                               8

within the meaning of such term under Section 409A, Executive shall on such date
automatically be terminated from employment as a Disability Termination.

     4. Excise Tax.

     (a) In the  event it shall be  determined  that  any  payment,  benefit  or
distribution (or combination thereof) by Employer, any of Employer's affiliates,
one or more trusts established by Employer for the benefit of its employees,  or
any other person or entity, to or for the benefit of Executive  (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
or  otherwise  pursuant to or by reason of any other  agreement,  policy,  plan,
program or arrangement,  including  without  limitation any stock option,  stock
appreciation  right,  phantom  equity awards or similar  right,  or the lapse or
termination of any  restriction on the vesting or  exercisability  of any of the
foregoing) (a  "Payment")  would be subject to the excise tax imposed by Section
4999 of the Internal  Revenue Code of 1986, as amended (the "Code") by reason of
being  "contingent  on a change in  ownership or control" of Willis US or Willis
Holdings,  within Section 280G of the Code (or any successor  provision thereto)
or any  interest or penalties  are  incurred by  Executive  with respect to such
excise tax (such excise tax,  together  with any such  interest  and  penalties,
hereinafter  collectively referred to as the "Excise Tax"), then Executive shall
be entitled to receive an additional payment or payments (a "Gross-Up  Payment")
in an amount such that after  payment by Executive of all taxes  (including  any
interest or penalties  imposed with respect to such taxes),  including,  without
limitation,  any income  taxes (and any  interest  and  penalties  imposed  with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up  Payment  equal to the Excise Tax imposed upon
the Payments.

     (b) Subject to the  provisions of Section 4(a) hereof,  all  determinations
required to be made under this Section 4, including  whether and when a Gross-Up
Payment is required and the amount of such Gross-Up  Payment and the assumptions
to be utilized in arriving at such determination,  shall be made by a nationally
recognized  certified  public  accounting firm as may be designated by Employer,
and reasonably  satisfactory to Executive (the "Accounting  Firm"),  which shall
provide detailed  supporting  calculations both to Employer and Executive within
fifteen  (15)  business  days of  Termination  Date,  or such earlier time as is
requested by Employer;  provided that for purposes of determining  the amount of
any Gross-Up  Payment,  it is recognized  that Executive will pay federal income
tax at the highest marginal rates applicable to individuals in the calendar year
in which any such  Gross-Up  Payment is to be made to pay state and local income
taxes at the highest  effective rates  applicable to individuals in the state or
locality of Executive's residence or place of employment in the calendar year in
which any such Gross-Up  Payment is to be made, net of the maximum  reduction in
federal income taxes that can be obtained from deduction of such state and local
taxes,  taking into account  limitations  applicable to  individuals  subject to
federal income tax at the highest  marginal rates.  All fees and expenses of the
Accounting  Firm shall be borne solely by Employer.  Any  Gross-Up  Payment,  as
determined  pursuant to this  Section 4, shall be paid by Employer to  Executive
(or  to the  appropriate  taxing  authority  on  Executive's  behalf)  when  due
immediately  prior to the date  Executive  is  required  to make  payment of any
Excise Tax or other taxes.  If the Accounting Firm determines that no Excise Tax
is payable by Executive,  it shall so indicate to Executive in writing,  with an
opinion that Executive has substantial authority not to report any Excise Tax on
his/her federal state,  local income or other tax return.  Any  determination by
the  Accounting  Firm shall be binding upon Employer and the Executive  absent a
contrary  determination  by the Internal Revenue Service or a court of competent
jurisdiction;  provided,  however, that no such determination shall eliminate or

<PAGE>
                                                                               9

reduce  Employer's  obligation to provide any Gross-Up Payment that shall be due
as a result of such contrary  determination.  As a result of the  uncertainty in
the application of Section 4999 of the Code (or any successor provision thereto)
and the possibility of similar  uncertainty  regarding state or local tax law at
the time of any  determination by the Accounting Firm hereunder,  it is possible
that the amount of the Gross-Up Payment  determined by the Accounting Firm to be
due to (or on behalf  of)  Executive  was lower  than the  amount  actually  due
("Underpayment").  In the event that Employer  exhausts its remedies pursuant to
Section  4(c) and  Executive  thereafter  is  required  to make a payment of any
Excise Tax, the Accounting Firm shall  determine the amount of the  Underpayment
that has occurred as promptly as possible and notify  Employer and  Executive of
such calculations,  and any such Underpayment (including the Gross-Up Payment to
Executive) shall be promptly paid by Employer to or for the benefit of Executive
within  five  (5)  business  days  after  receipt  of  such   determination  and
calculations.

     (c) Executive shall notify Employer in writing of any claim by the Internal
Revenue  Service that, if  successful,  would require the payment by Employer of
any Gross-Up Payment.  Such  notification  shall be given as soon as practicable
but no later than ten (10) business days after  Executive is informed in writing
of such  claim and shall  apprise  Employer  of the nature of such claim and the
date on which such claim is requested to be paid.  The  Executive  shall not pay
such claim prior to the  expiration of the thirty (30) day period  following the
date on which he gives such notice to Employer (or such shorter period ending on
the date that any  payment  of taxes  with  respect  to such  claim is due).  If
Employer  notifies  Executive in writing prior to the  expiration of such period
that it desires to contest  such claim,  Executive  shall (i) give  Employer any
information which is in Executive's  possession reasonably requested by Employer
relating to such claim, (ii) take such action in connection with contesting such
claim as  Employer  shall  reasonably  request  in  writing  from  time to time,
including,  without limitation,  accepting legal  representation with respect to
such claim by an attorney reasonably selected by Employer,  (iii) cooperate with
Employer in good faith in order to  effectively  contest  such  claim,  and (iv)
permit  Employer  to  participate  in any  proceedings  relating  to such claim;
provided,  however,  that  Employer  shall bear and pay  directly  all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such  contest  and  shall  indemnify  and hold  Executive  harmless,  on an
after-tax  basis,  for any  Excise  Tax or income tax  (including  interest  and
penalties with respect thereto) imposed as a result of such  representation  and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 4(c),  Employer shall control all  proceedings  taken in connection
with such  contest  and,  at its sole  option,  may pursue or forego any and all
administrative  appeals,  proceedings,  hearings and conferences with the taxing
authority  in respect of such claim and may, at its sole option,  either  direct
Executive  to pay the tax  claimed  and sue for a refund or contest the claim in
any  permissible  manner,  and Executive  agrees to prosecute  such contest to a
determination  before  any  administrative  tribunal,  in  a  court  of  initial
jurisdiction and in one or more appellate  courts,  as Employer shall determine;
provided,  further, that if Employer directs Executive to pay such claim and sue
for a refund,  Employer  shall pay the  amount of such claim to  Executive,  and
shall indemnify and hold Executive  harmless,  on an after-tax  basis,  from any
Excise Tax or income tax (including  interest or penalties with respect thereto)
imposed with respect to such payment or with respect to any imputed  income with
respect to such payment (including the applicable  Gross-Up Payment);  provided,
further,  that if Executive is required to extend the statute of  limitations to
enable Employer to contest such claim, Executive may limit this extension solely
to such contested amount.  Employer's control of the contest shall be limited to
issues with respect to which a Gross-Up  Payment would be payable  hereunder and

<PAGE>
                                                                              10

Executive shall be entitled to settle or contest,  as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.  The
reimbursement  of  expenses  incurred  by  Executive  due  to a tax  contest  or
litigation  addressing the existence or amount of an Excise Tax liability  shall
be  reimbursed  promptly,  but in no  event  be made  later  than the end of the
calendar  year next  following  the  calendar  year in which the taxes  that are
subject of the contest or litigation are remitted to the taxing authority (or if
no taxes are  remitted as a result of such audit or  litigation,  the end of the
calendar  year next  following the calendar year in which the audit is completed
or there is a final and  nonappealable  settlement  or other  resolution  of the
litigation).  In addition,  without extending the time of any obligation in this
Section 4, any tax Gross-Up  Payment  shall be made no later than the end of the
calendar year next following the calendar year in which the Executive remits the
related tax.

     (d) If,  after the  receipt  by  Executive  of an amount  paid by  Employer
pursuant to this  Section 4,  Executive  becomes  entitled to receive any refund
with  respect to a Gross-Up  Payment,  Executive  shall  (subject to  Employer's
complying  with the  requirements  of Section 4(c)) promptly pay to Employer the
amount of such refund  received  (together  with any  interest  paid or credited
thereon after taxes applicable thereto).  Notwithstanding the foregoing,  in the
event  that the  obligation  to refund any amount  shall be a  violation  of the
Sarbanes-Oxley Act of 2002, such obligation to refund shall be null and void.

     (e) To the extent that the applicable  regulations  under Code Section 280G
permits  a  later   recalculation   by  the   Employer,   or  requires  a  later
recalculation,  of whether  the  Payments  are  subject to the Excise  Tax,  the
provisions   of  this  Section  4  shall  again  be  applied   based  upon  such
recalculation.

     5.  Ownership  of  Business.  All  business  activity  participated  in  by
Executive as an employee of Employer,  and  Executive's  execution of his duties
and responsibilities to the Willis Group and their related entities as set forth
in Section 1(a),  above (the "Business  Activity")  shall be conducted solely on
behalf of Employer and their related entities.  Executive shall have no right to
share in any commission or fee resulting from such Business Activity, other than
the compensation  referred to in Section 1(b),  above, and any monies due to any
member of the Willis  Group or their  related  entities  as a result of Business
Activity  which may be  collected  by Executive on behalf of the Willis Group or
their  related  entities  shall be promptly  paid over to of the Willis Group or
their related entities, as applicable.

     6.  Confidential  Information;   Noncompetition  and  Nonsolicitation.   In
consideration of Employer entering into this Agreement with Executive, Executive
hereby agrees effective as of the Effective Date that,  without Employer's prior
written  consent,  Executive  shall not while employed by the Employer and for a
period of one year following termination of Employee's employment with Employer:

     (a) On behalf of an  entity,  which,  aggregated  with its  affiliates,  is
primarily in the insurance brokerage  business,  directly or indirectly solicit,
accept,  or  perform,  other than on  Employer's  behalf,  insurance  brokerage,
insurance agency, risk management,  claims  administration,  consulting or other
business  performed  by the  Employer  from or with  respect  to (i)  clients of
Employer with whom Employee had business contact or provided services to, either
alone or with others,  while employed by Employer and,  further  provided,  such
clients were clients of Employer either on the date of termination of Employee's
employment with Employer or within twelve (12) months prior to such  termination
(the "Restricted  Clients") and (ii) active prospective clients of Employer with

<PAGE>
                                                                              11

whom  Employee  had  business  contacts  regarding  the business of the Employer
within  six (6)  months  prior to  termination  of  Employee's  employment  with
Employer (the "Restricted Prospects").

     (b)  Directly  or  indirectly,  other  than in  performing  his  duties for
Employer,  (i) solicit any employee of Employer ("Protected  Employees") to work
for Employee or any third party, including any competitor (whether an individual
or a competing company) of Employer or (ii) induce any such employee of Employer
to leave the  employ of  Employer,  provided  the  foregoing  shall not apply to
Executive's  personal assistants and personal  non-executive staff, shall not be
violated by general  advertising  not  specifically  targeted at the  Employer's
employees  and shall not prevent  Executive  from serving as a reference for any
given individual.

     (c)  Provide  services  to  Aon  Corporation  or  Marsh,   Inc.  (or  their
subsidiaries)  as  an  employee,  consultant  or  director,  provided  that  the
foregoing  shall  not  prevent  Executive  from  providing  such  services  to a
conglomerate that hereafter  acquires such entities that is not primarily in the
insurance  brokerage  business and services to such entities by Executive is not
the primary focus of Executive's position.

For purposes of this  paragraph 6,  "Territories"  shall refer to those counties
where the Restricted Clients,  Restricted  Prospects,  or Protected Employees of
Employer are present and available for solicitation.

     7. Miscellaneous

     (a) Integrated  Agreement.  Except as otherwise provided in this Section 6,
this document,  together with the letter  agreement  dated as of March 26, 2001,
which shall remain in full force and effect, embodies the complete understanding
and  agreement  of  the  parties  hereto  relating  to  Executive's  employment;
provided,  however,  that, except as otherwise  provided in Section 1(g), above,
this  Agreement  shall  be in  addition  to and not in  lieu  of the  agreements
relating to Executive's  subscription  to,  purchase of, and option to purchase,
Holdings Stock, as referenced in Section 1(g),  above. This Agreement may not be
amended or  terminated  orally,  but only by a writing  executed  by the parties
hereto.

     (b) Severability; Effect of Certain Securities Laws and Other Restrictions.
If any term of this  Agreement  is  rendered,  declared or held to be invalid or
unenforceable  by  any  judicial,  legislative  or  administrative  action,  the
remaining  provisions hereof shall remain in full force and effect,  shall in no
way be  affected,  impaired  or  invalidated,  and shall be enforced to the full
extent permitted by law and equity.  In addition,  notwithstanding  anything set
forth in this Agreement to the contrary, in the event and to the extent that any
term of this Agreement (or benefit provided  hereunder) is or becomes prohibited
by  applicable  securities  laws  (and  any  rules  or  regulations  promulgated
thereunder)  or rules or  regulations of any exchange on which Holdings Stock is
traded,  such term or benefit  shall be suspended  unless and until such term or
benefit  ceases  to be  prohibited  by such  laws,  rules  or  regulations,  and
Executive  hereby  acknowledges  and agrees  that any such  suspension  will not
constitute a breach of this Agreement by Employer.

     (c) Notices.  Any notices given pursuant to this Agreement shall be sent by
certified  mail or a  nationally  recognized  courier  service,  with  proof  of
delivery,  to the  addresses  set forth  below  (or,  in the event of an address

<PAGE>
                                                                              12

change by either party, to the  then-current  address of the party, as specified
in any written  change-of-address  notice properly  furnished under this Section
7(c)).

         If to Employer, then to:

                               Willis North America, Inc.
                               26 Century Boulevard
                               Nashville, Tennessee 37214
                               Attention:  Mary Caizzo, Esq.
                  -and-

                               Willis Group Holdings Limited
                               c/o Willis of New York, Inc.
                               One World Financial Center
                               200 Liberty Street
                               New York, New York 10281
                               Attention:  Adam Ciongoli, Esq.

         If to Executive:

                               To Executive's most recent address set forth in
                               the personnel records of Willis US

         With a copy to:

                               Proskauer Rose LLP
                               1585 Broadway
                               New York, New York 10036
                               Attention:  Michael S. Sirkin, Esq.

     (d) Governing Law; Remedies.  The substantive laws of New York shall govern
this Agreement,  without giving effect to its conflicts of law  principles.  Any
disputes or issues  arising out of or relating to any equity in Willis  Holdings
that  Executive  has  received or may become  entitled to receive  shall also be
governed  by the laws of the  State of New York or,  with  respect  to any stock
options   granted  on  Holdings   Stock   (except  to  the  extent  it  involves
interpretation  under the Employment  Agreement),  the laws of Bermuda,  without
regard to conflicts of law principles in any event.  Executive acknowledges that
there is no adequate remedy at law for any breach of the provisions of Section 6
of this  Agreement and that,  in addition to any other  remedies to which it may
otherwise  be  entitled  as a  matter  of law,  Employer  shall be  entitled  to
injunctive relief in the event of any such breach.

     (e) Waiver.  The waiver by any party of any breach of this Agreement  shall
not  operate  or be  construed  as a  waiver  of that  party's  rights  upon any
subsequent or different breach.

     (f) Successors and Assigns; Third-Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon and  enforceable  against the heirs,
legal  representatives and assigns of Executive and the successors and permitted
assigns of Employer.  Any amounts due Executive as of his death shall be paid to
his designated beneficiary,  or if none, his estate. Willis Holdings' direct and

<PAGE>
                                                                              13

indirect subsidiaries are intended third-party beneficiaries of all promises and
covenants made by Executive herein in favor of Willis US in Section 6 hereof. As
such, insofar as they are affected by any breach of this Agreement by Executive,
Willis  Holdings'  direct and  indirect  subsidiaries  may  enforce  Executive's
covenants and promises herein to the same extent that Employer has a right to do
so.  Neither  Willis  Holdings  nor Willis US may assign this  Agreement  or its
rights  hereunder  except as part of a sale of, and to the  acquirer  of, all or
substantially  all of the securities  and/or assets of Willis Holdings or Willis
US and then only if the assignee and the ultimate  parent entity of the assignee
(if  applicable)  promptly  deliver to  Executive  a written  assumption  of the
obligations  hereunder in a form reasonably  acceptable to Executive (or, to the
extent  otherwise  required to bind an entity other than an entity  incorporated
under the laws of the United States, the equivalent documentation therefor).

     (g)  Counterparts.  This Agreement may be signed in  counterparts,  each of
which shall be an original,  with the same effect as if the  signatures  thereto
and hereto were upon the same instrument.

     (h) Legal Fees.  Employer shall promptly pay Executive's  reasonable  legal
and  financial  advisory  fees  incurred in  connection  with entering into this
Agreement  and shall,  to the extent such amounts would be taxable to Executive,
fully gross up such payments so that Executive  shall have no net after-tax cost
in respect of such  payments.  Any  reimbursement  hereunder  that is treated as
taxable  income  shall be paid to  Executive  promptly  and in  accordance  with
Section 7(l)(iii) hereof.

     (i)  Arbitration.  Any dispute  hereunder or with regard to any document or
agreement  referred to herein,  other than injunctive  relief under Section 7(d)
hereof,  shall be  resolved  by  arbitration  before  the  American  Arbitration
Association  in New York City,  New York.  The  determination  of the arbitrator
shall be final and binding on the parties hereto and may be entered in any court
of competent  jurisdiction.  In the event of any  arbitration  or other disputes
with regard to this  Agreement or any other  document or  agreement  referred to
herein,  Employer shall pay Executive's  legal fees and  disbursements  promptly
upon presentation of invoices thereof,  subject to an obligation of Executive to
repay  such  amounts  if an  arbitrator  finds  Executive's  positions  in  such
arbitration or dispute to have been frivolous or made in bad faith. In the event
of any  arbitration or other disputes with regard to this Agreement or any other
document or agreement  referred to herein,  such fees and costs shall be paid by
the Employer prior to final  disposition  and promptly as such fees are incurred
and submitted to the Employer for payment on a quarterly basis which  submission
shall be made within forty-five (45) days after the end of such quarter, subject
to an  obligation  of  Executive to repay such  amounts if an  arbitrator  finds
Executive's  positions in such  arbitration or dispute to have been frivolous or
made in bad faith.

     (j) Jurisdiction. Willis US and Willis Holdings each hereby consents to the
jurisdiction  of the  federal  and  state  courts  in  the  State  of New  York,
irrevocably  waives any objection it may now or hereafter  have to laying of the
venue of any suit,  action,  or proceeding in connection  with this Agreement in
any such court,  and agrees that service upon it shall be  sufficient if made by
registered mail, and agrees not to asset the defense of forum nonconveniens.

     (k) Joint and Several  Liability.  Willis US and Willis Holdings shall each
be jointly and  severally  liable to Executive for all  obligations  of Employer
hereunder  and,  in the event of any  failure of such  obligations  to be timely

<PAGE>
                                                                              14

fulfilled,  Executive may seek applicable  remedies  against either Willis US or
Willis  Holdings,  or both,  without  adversely  affecting his rights under this
Agreement. Any determination by an arbitrator against either Willis US or Willis
Holdings shall be deemed a determination with regard to both such entities.

     (l) Section 409A.

                  (i) The  intent  of the parties is that  payments and benefits
under this Agreement  comply with Section 409A and the  regulations and guidance
promulgated thereunder and, accordingly,  to the maximum extent permitted,  this
Agreement  shall be  interpreted  to be in  compliance  therewith.  If Executive
notifies  the  Employer  (with  specificity  as to  the  reason  therefor)  that
Executive  believes  that any  provision of this  Agreement  (or of any award of
compensation,  including equity  compensation or benefits) would cause Executive
to incur any  additional  tax or interest  under  Section  409A and the Employer
concurs with such belief or the Employer  (without any obligation  whatsoever to
do so)  independently  makes  such  determination,  the  Employer  shall,  after
consulting  with  Executive,  reform  such  provision  to attempt to comply with
Section 409A through good faith  modifications to the minimum extent  reasonably
appropriate  to conform  with  Section  409A.  To the extent that any  provision
hereof is modified in order to comply with Section 409A, such modification shall
be made in good faith and shall,  to the  maximum  extent  reasonably  possible,
maintain the original intent and economic  benefit to Executive and the Employer
of the applicable  provision  without  violating the provisions of Section 409A.
The Employer shall  promptly  modify all plans,  programs and payroll  practices
that Executive participates in to comply with Section 409A.

                  (ii) A termination of employment shall not be deemed  to  have
occurred  for  purposes of any  provision of this  Agreement  providing  for the
payment of any amounts or benefits upon or following a termination of employment
unless such  termination is also a "separation  from service" within the meaning
of Section  409A and,  for  purposes of any such  provision  of this  Agreement,
references to a  "termination,"  "termination of employment" or like terms shall
mean  "separation  from  service."  If  Executive  is  deemed  on  the  date  of
termination to be a "specified  employee"  within the meaning of that term under
Section  409A(a)(2)(B),  then with regard to any payment or the provision of any
benefit  that is  specified  herein as subject to this  Section or is  otherwise
considered  "deferred  compensation"  under  Section  409A  (whether  under this
Agreement,  any other  plan,  program,  payroll  practice  or any equity  grant)
(including but not limited to the Restricted  Stock Units granted March 14, 2007
and each grant  hereafter  made in accordance  with Exhibit A hereto) and is due
upon Executive's  separation from service,  such payment or benefit shall not be
made or provided  until the date which is the earlier of (A) the  expiration  of
the six  (6)-month  period  measured  from  the  date of such  "separation  from
service" of the  Executive,  and (B) the date of  Executive's  death (the "Delay
Period") and this  Agreement and each such plan,  program,  payroll  practice or
equity grant shall hereby be deemed amended accordingly.  Upon the expiration of
the Delay  Period,  all payments and benefits  delayed  pursuant to this Section
7(l)(ii)  (whether they would have  otherwise been payable in a single sum or in
installments  in the  absence  of such  delay)  shall be paid or  reimbursed  to
Executive in a lump sum with interest at the prime rate as published in the Wall
Street Journal on the first business day of the Delay Period  (provided that any
payment  measured by a change in value that  continues  during the Delay  Period
shall not be credited  with  interest for the Delay  Period),  and any remaining
payments  and  benefits  due under this  Agreement  shall be paid or provided in
accordance with the normal payment dates specified for them herein.

<PAGE>
                                                                              15

                  (iii) All  expenses  or other  reimbursements paid pursuant to
Sections 1(e) and 7(h) hereof that are taxable income to the Executive  shall in
no event be paid  later than the end of the  calendar  year next  following  the
calendar year in which  Executive  incurs such expense or pays such related tax.
With regard to any provision herein that provides for reimbursement of costs and
expenses or in-kind benefits, except as permitted by Section 409A, (i) the right
to  reimbursement  or in-kind  benefits  shall not be subject to  liquidation or
exchange  for  another  benefit,  (ii)  the  amount  of  expenses  eligible  for
reimbursement,  of in-kind benefits,  provided during any taxable year shall not
affect the  expenses  eligible  for  reimbursement,  or in-kind  benefits  to be
provided,  in any other  taxable year,  provided that the foregoing  clause (ii)
shall  not  be  violated  without  regard  to  expenses   reimbursed  under  any
arrangement  covered by Internal Revenue Code Section 105(b) solely because such
expenses  are  subject to a limit  related to the period the  arrangement  is in
effect  and  (iii)  such  payments  shall be made on or  before  the last day of
Executive's  taxable  year  following  the  taxable  year in which  the  expense
occurred.  Any tax gross-up  shall be made no later than the end of the calendar
year next following the calendar year in which the Executive  remits the related
tax.

                  (iv)  Whenever a payment  under this   Agreement  specifies  a
payment period with reference to a number of days (e.g.,  "payment shall be made
within thirty (30) days following the date of termination"),  the actual date of
payment within the specified  period shall be within the sole  discretion of the
Employer,

                  (v) (x) The  Employer  acknowledges  and agrees  that  if  any
payment,  award,  benefit or distribution  (or any  acceleration of any payment,
award, benefit or distribution) made or provided to Executive or for Executive's
benefit in connection  with this Agreement,  or Executive's  employment with the
Employer or the  termination  thereof  (the  "Payments")  are  determined  to be
subject to the excise tax imposed by Section  409A, or any interest or penalties
with  respect to such excise taxes (such excise  taxes,  together  with any such
interest and penalties, are referred to collectively as the "Section 409A Tax"),
then the Executive  will be entitled to receive an  additional  payment (a "409A
Gross-Up  Payment")  from the  Company  such that the net amount  the  Executive
retains after paying any applicable  Section 409A Tax and any federal,  state or
local income or FICA taxes on such 409A Gross-Up Payment,  shall be equal to the
amount  the  Executive  would have  received  if the  Section  409A Tax were not
applicable to the Payments.

                  (y) All  determinations  of the  Section  409A  Tax  and  409A
Gross-Up  Payment,  if any,  will be made by tax  counsel or other tax  advisers
designated by Executive  and approved by the Company,  which  approval  won't be
unreasonably  withheld or delayed. For purposes of determining the amount of the
409A Gross-Up  Payment,  if any,  Executive will be deemed to pay federal income
tax at the actual  marginal rate of federal income taxation in the calendar year
in which the total  Payments  are made and state and local  income  taxes at the
actual  marginal  rate of  taxation  in the state and  locality  of  Executive's
residence on the date the total Payments are made, net of the maximum  reduction
in federal  income taxes that could be obtained from deduction of such state and
local taxes.  If the Section  409A Tax is  determined  by the  Internal  Revenue
Service,  on audit or  otherwise,  to  exceed  the  amount  taken  into  account
hereunder in calculating the 409A Gross-Up  Payment  (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
409A Gross-Up Payment),  the Employer must make another 409A Gross-Up Payment in
respect of such excess (plus any  interest,  penalties  or additions  payable by
Executive  with  respect  to such  excess)  within  the ten (10)  business  days
immediately  following  the date  that the  amount  of such  excess  is  finally

<PAGE>
                                                                              16

determined.  The Employer and Executive shall each reasonably cooperate with the
other in connection with any administrative or judicial  proceedings  concerning
the  existence or amount of  liability  for Section 409A Tax with respect to the
total Payments.  The 409A Gross-Up  Payments provided to Executive shall be made
no later than the tenth (10th) business day following the last date the Payments
are made.

                            [Signatures on next page]

<PAGE>
                                                                              17

          IN WITNESS  WHEREOF,  the  parties  hereto have  executed  this Fourth
Amended and Restated Employment Agreement as of the date first above written.

WILLIS NORTH AMERICA, INC.

By:________________________________
Name:______________________________
Title:_____________________________

AND, signed as a Deed and delivered    )   __________________________________
By WILLIS GROUP HOLDINGS               )   Director
LIMITED                                )
                                           __________________________________
                                           Director/Secretary
EXECUTIVE:

_________________________
Joseph J. Plumeri

<PAGE>

                                    EXHIBIT A
                                    ---------

                              ANNUAL BONUS SCHEDULE

         The amount of the annual  bonus  earned by  Executive  shall be paid to
Executive  fifty percent (50%) in cash and 50 percent (50%) in restricted  stock
units ("RSU's").  The form of RSU's shall be the same as the RSU bonus form used
in 2007 for  Executive  and the  conversion  from bonus value to number of RSU's
shall be the same as used for the 2007  RSU  bonus  grant.  Notwithstanding  the
foregoing,  all RSU's shall vest no later than the annual meeting in 2011,  upon
Executive's earlier death, Disability Termination,  Termination without Cause or
Termination for Good Reason,  Mutual Retirement or upon a Change in Control, all
as  defined  in  Executive's  Employment  Agreement.  Any  distribution  of  the
underlying share with regard to the bonus RSU's shall be subject to Section 7(l)
of the Employment  Agreement.  Furthermore,  notwithstanding the foregoing,  the
parties  may agree,  to the extent  permitted  by Section  409A,  on a different
allocation  between cash and RSU's or a different timing of payment of the RSU's
at any time prior to six (6) months before the end of a performance period or at
such other time as permitted under Section 409A.

The bonus  shall be paid based on actual  EBIT for the Fiscal  Year  compared to
budgeted  EBIT for such  Fiscal  Year with a bonus at target of at least 337% of
Base Salary. If achievement is 95% of budget the bonus shall be at least 225% of
Base Salary,  and, if achievement is at least 105% of budget, the bonus shall be
at least 450% of Base  Salary.  The  Compensation  Committee  will in good faith
consider and award bonuses if  appropriate  at lower levels of  achievement  and
will also in good  faith  consider  and award  higher  bonuses in any case where
deserved.

<PAGE>

                                    EXHIBIT B
                                    ---------

                               Stock Option Grant

         Provided that the shareholders of the Company approve a new equity plan
or increase the number of shares  available under the current equity plan at the
next  annual  meeting,  the  Executive  shall  promptly  thereafter  be  awarded
1,700,000  options  at the fair  market  value on the date of grant,  subject to
earning and vesting, as follows:

               1. Earning of 1,200,000 based on earnings per share and operating
               budgets for calendar 2008,  2009 and 2010 with a catch-up in 2010
               for nonvesting in 2008 and 2009, as follows:

               (x)
                    EPS                        At least    Options Earned
                    ---                        --------    --------------

                    2008                       $2.85       200,000

                    2009                       $3.30       200,000

                    2010                       $4.00       200,000 plus any
                                                           unearned options from
                                                           2008 or 2009
               (y)
                    Operating Margin           Target      Options Earned
                    ----------------           ------      --------------

                    2008                       24.0%       200,000

                    2009                       26.0%       200,000

                    2010                       28.0%       200,000 plus any
                                                           unearned options from
                                                           2008 or 2009
               (z)
                    Kicker                     Target      Options Earned
                    ------                     ------      --------------

                    2010 EPS                   Exceed      250,000
                                               $4.10

                    Annual Average             At least    250,000
                    TSR from 2008-2010         S&P 500
                                               & 1.5%

               The  Compensation  Committee  will have  discretion  to treat the
               kicker  options  as earned  if  targets  are not met for  reasons
               beyond Executive's control. To be considered in good faith by the
               Compensation Committee and Board.

               2. Options shall have at least a 7-year term (or such longer term
               as provided in grants to other executives at or about the time of
               grant)  with two years  (not to go beyond the  original  term) to
               exercise  after later of (A) the end of the relevant  performance
               period,  if applicable,  and (B) death,  Disability  Termination,

<PAGE>
                                                                              20

               Termination  without Cause or  Termination  for Good Reason,  any
               termination  on  or  after  annual  meeting  in  2011  or  Mutual
               Retirement.  If  employed  at the time of the  annual  meeting in
               2011,  the  earned  options  will be  exercisable  from that date
               forward.  If  not so  employed  because  of any of the  foregoing
               events,  options will be  exercisable  from the dates provided in
               the prior  sentence.  If termination is for Cause or without Good
               Reason (and, in both cases,  not either after the annual  meeting
               in 2011 or as a result of Mutual  Retirement),  the options shall
               be forfeited upon such termination.

               3. In the event of termination  as a result of death,  Disability
               Termination,  Termination  without  Cause,  Termination  for Good
               Reason,  any  employment  condition  is  waived  but  performance
               criteria remain for Options not then earned.

               4. In the event of a Mutual Retirement,  the employment condition
               is waived with respect to Options theretofore earned.

               5. In the event of a Change in Control of the Company  before the
               end of 2010 (if  Executive is then employed by the Company or his
               employment  had  terminated  prior  thereto on a basis covered by
               paragraph  3  above),   all   performance   criteria  are  deemed
               satisfied,  but,  if then  employed,  the  employment  obligation
               remains   until  the  annual   meeting  in  2011  or  an  earlier
               Termination  without Cause,  Termination for Good Reason,  Mutual
               Retirement, death or incurring of a Disability Termination;  also
               fully vests and the Options become  immediately  exercisable if a
               Good Reason event occurs after a Change in Control and  Executive
               agrees to waive it.

               6. All  criteria  will be adjusted  for change in GAAP,  mergers,
               acquisitions,  dispositions,  material  change  in  actual  stock
               repurchases as compared to budgeted  repurchases  for purposes of
               calculating the projected EPS or other material  corporate event,
               as determined in good faith by the Compensation Committee.

               7.  There  will be no  forfeiture  provisions  (other  than above
               forfeiture for nonvesting) and no post-employment restrictions in
               grant.

               8. Forms of grants  will be agreed by Company  and  Executive  in
               good faith.

               9. All terms  shall have the same  meaning  as in the  Employment
               Agreement.

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