<PAGE> 1

EXHIBIT 2.04




              ====================================================

                    MICRO FOCUS GROUP PUBLIC LIMITED COMPANY

                                       AND

                              THE BANK OF NEW YORK
                                                     As Depositary

                                       AND

               OWNERS AND HOLDERS OF AMERICAN DEPOSITARY RECEIPTS


                                Deposit Agreement


                            Dated as of March 1, 1990


                  As Amended and Restated as of March 16, 1998


              ====================================================


<PAGE> 2


                                              TABLE OF CONTENTS
<TABLE>
<CAPTION>


<S>            <C>  <C>                                                                                          <C>  
ARTICLE 1.  ..................................................................................................... 2
     SECTION 1.01. American Depositary Shares. .................................................................. 2
     SECTION 1.02. Commission. .................................................................................. 2
     SECTION 1.03. Custodian. ................................................................................... 2
     SECTION 1.04. Deposit Agreement. ........................................................................... 2
     SECTION 1.05. Depositary; Corporate Trust Office ........................................................... 3
     SECTION 1.06. Deposited Securities. ........................................................................ 3
     SECTION 1.07. Dollars; Pence; Foreign Currency ............................................................. 3
     SECTION 1.08. Foreign Registrar. ........................................................................... 3
     SECTION 1.09. Issuer. ...................................................................................... 3
     SECTION 1.10. Owner. ....................................................................................... 3
     SECTION 1.11. Receipts. .................................................................................... 4
     SECTION 1.12. Registrar. ................................................................................... 4

ARTICLE 2.  ..................................................................................................... 5
     SECTION 2.01. Form and Transferability of Receipts. ........................................................ 5
     SECTION 2.02. Deposit of Shares. ........................................................................... 6
     SECTION 2.03. Execution and Delivery of Receipts. .......................................................... 7
     SECTION 2.04. Transfer of Receipts; Combination and Split-up of Receipts. .................................. 8
     SECTION 2.05. Surrender of Receipts and Withdrawal of Shares................................................ 8
     SECTION 2.06. Limitations on Execution and Delivery, Transfer and Surrender of Receipts..................... 9
     SECTION 2.07. Lost Receipts, etc. ......................................................................... 10
     SECTION 2.08. Cancellation and Destruction of Surrendered Receipts. ....................................... 10
     SECTION 2.09. Pre-Release of Receipts. .................................................................... 11

ARTICLE 3.  .................................................................................................... 11
     SECTION 3.01. Filing Proofs, Certificates and Other Information............................................ 11
     SECTION 3.02. Liability of Owner for Taxes. ............................................................... 12
     SECTION 3.03. Warranties on Deposit of Shares. ............................................................ 12

ARTICLE 4.  .................................................................................................... 12
     SECTION 4.01. Cash Distributions. ......................................................................... 12
     SECTION 4.02. Distributions Other Than Cash or  Shares. ................................................... 13

<PAGE> 3

     SECTION 4.03. Distributions in Shares. .................................................................... 14
     SECTION 4.04. Rights. ..................................................................................... 14
     SECTION 4.05. Conversion of Foreign Currency. ............................................................. 15
     SECTION 4.06. Fixing of Record Date. ...................................................................... 16

ARTICLE 5.  .................................................................................................... 20
     SECTION 5.01. Maintenance of Office and Transfer Books by the Depositary. ................................. 20
     SECTION 5.02. Prevention or Delay in Performance by the Depositary or the Issuer. ......................... 20
     SECTION 5.03. Obligations of the Depositary, the Custodian and the Issuer. ................................ 21
     SECTION 5.04. Resignation and Removal of the Depositary.................................................... 22
     SECTION 5.05. The Custodians. ............................................................................. 22
     SECTION 5.06. Notices and Reports. ........................................................................ 23
     SECTION 5.07. Issuance of Additional Shares, etc. ......................................................... 23
     SECTION 5.08. Indemnification. ............................................................................ 24
     SECTION 5.09. Charges of Depositary. ...................................................................... 24
     SECTION 5.10. Retention of Depositary Documents. .......................................................... 25
     SECTION 5.11. Exclusivity. ................................................................................ 25
     SECTION 5.12. List of Restricted Securities Owners. ....................................................... 26

ARTICLE 6.  .................................................................................................... 26
     SECTION 6.01. Amendment. .................................................................................. 26
     SECTION 6.02. Termination. ................................................................................ 27

ARTICLE 7.  .................................................................................................... 28
     SECTION 7.01. Counterparts. ............................................................................... 28
     SECTION 7.02. No Third Party Beneficiaries. ............................................................... 28
     SECTION 7.03. Severability. ............................................................................... 28
     SECTION 7.04. Holders and Owners as Parties; Binding Effect. .............................................. 28
     SECTION 7.05. Notices. .................................................................................... 28
     SECTION 7.06. Governing Law. .............................................................................. 29
     SECTION 7.07. Assignment. ................................................................................. 29
</TABLE>

<PAGE> 4


                                DEPOSIT AGREEMENT



         AMENDED AND RESTATED DEPOSIT AGREEMENT dated as of March 16, 1998 among
MICRO FOCUS GROUP PUBLIC LIMITED COMPANY,  incorporated in England with reg. no.
1709998  (herein  called the  Issuer),  THE BANK OF NEW YORK, a New York banking
corporation (herein called the Depositary), and all Owners and holders from time
to time of American Depositary Receipts issued hereunder.


                              W I T N E S S E T H :
                              -------------------

         WHEREAS,  the Issuer desires to create a vehicle,  as  hereinafter  set
forth in this  Deposit  Agreement,  for the  deposit  of Shares  (as  defined in
Section 1.16  hereof),  of the Issuer from time to time with the  Depositary  or
with the principal London,  England office of the Depositary  (herein called the
Custodian),  as agent  of the  Depositary  for the  purposes  set  forth in this
Deposit Agreement,  for the creation of American  Depositary Shares representing
the  Shares  so  deposited  and for  the  execution  and  delivery  of  American
Depositary Receipts in respect of the American Depositary Shares; and

         WHEREAS,  the American  Depositary  Receipts are to be substantially in
the form of Exhibit A annexed hereto, with appropriate insertions, modifications
and omissions, as hereinafter provided in this Deposit Agreement;

         NOW, THEREFORE,  in consideration of the premises,  it is agreed by and
between the parties hereto as follows:


<PAGE> 5



                                   ARTICLE 1.
                                  DEFINITIONS.


         The  following  definitions  shall for all purposes,  unless  otherwise
clearly indicated, apply to the respective terms used in this Deposit Agreement:

         SECTION 1.01.   American Depositary Shares.
                         --------------------------
                  The term  "American  Depositary  Shares" shall mean the rights
represented by the Receipts issued  hereunder and the interests in the Deposited
Securities  represented thereby.  Each American Depositary Share shall represent
five  (5)  Shares,  until  there  shall  occur  a  distribution  upon  Deposited
Securities  covered by Section 4.03 or a change in Deposited  Securities covered
by Section 4.08 with respect to which  additional  Receipts are not executed and
delivered,  and thereafter  American Depositary Shares shall evidence the amount
of Shares or Deposited Securities specified in such Sections.

         SECTION 1.02.  Commission.
                        ----------
                  The term  "Commission"  shall mean the Securities and Exchange
Commission  of the United  States or any  successor  governmental  agency in the
United States.

         SECTION 1.03.  Custodian.
                        ---------
                  The term "Custodian" shall mean the principal London,  England
office of The  Depositary,  as agent of the  Depositary for the purposes of this
Deposit  Agreement,  and any other firm or  corporation  which may  hereafter be
appointed by the Depositary pursuant to the terms of Section 5.05, as substitute
or additional  custodian or custodians  hereunder,  as the context shall require
and the term "Custodians" shall mean all of them, collectively.

         SECTION 1.04.  Deposit Agreement.
                        ----------------- 
                  The term "Deposit Agreement" shall mean this Agreement, as the
same may be amended from time to time in accordance with the provisions hereof.

                                       2

<PAGE> 6


         SECTION 1.05.  Depositary; Corporate Trust Office.
                        ----------------------------------
                  The term  "Depositary"  shall mean The Bank of New York, a New
York banking  corporation.  The term  "Corporate  Trust Office",  when used with
respect to the Depositary,  shall mean the office of the Depositary which at the
date of this Agreement is 101 Barclay Street, New York, New York, 10286.

         SECTION 1.06.  Deposited Securities.
                        --------------------
                  The term  "Deposited  Securities"  as of any time  shall  mean
Shares at such time  deposited  or deemed to be  deposited  under  this  Deposit
Agreement  and any and all other  securities,  property and cash received by the
Depositary or the Custodian in respect  thereof and at such time held hereunder,
subject as to cash to the provisions of Section 4.05.

         SECTION 1.07.  Dollars; Pence; Foreign Currency.
                        --------------------------------
                  The term "Dollars" shall mean United States dollars.  The term
"pence" or "p" shall mean United  Kingdom  pence.  The term  "Foreign  Currency"
shall mean any currency other than Dollars.

         SECTION 1.08.  Foreign Registrar.
                        -----------------
                  The term "Foreign  Registrar"  shall mean Lloyds Bank PLC, The
Causeway,  Goring-by  Sea,  Wathing,  West Sussex  BN126DA,  England,  a company
organized  under the laws of England,  which carries out the duties of registrar
for the Ordinary  Shares of the Issuer or any  successor  as  registrar  for the
Ordinary Shares of the Issuer.

          SECTION  1.09.  Issuer.  
                          ------
                  The term  "Issuer"  shall mean Micro Focus Group Public
Limited  Company  (incorporated  in  England  with  reg.  no.  1709998,  and its
successors and permitted assigns.

         SECTION 1.10.  Owner.
                        -----
                  The term "Owner" shall mean the person in whose name a Receipt
is registered on the books of the Depositary maintained for such purpose.

                                       3

<PAGE> 7


         SECTION 1.11.  Receipts.
                        --------
                  The  term  "Receipts"  shall  mean  the  American   Depositary
Receipts  issued   hereunder   representing   American   Depositary   Shares  in
substantially the form of Exhibit A hereto.

         SECTION 1.12. Registrar.
                       ---------
                  The term  "Registrar"  shall  mean  any bank or trust  company
having an office in the Borough of Manhattan,  The City of New York, which shall
be appointed to register Receipts and transfers of Receipts as herein provided.

         SECTION 1.13.  Restricted Receipts.
                        -------------------
                  The term "Restricted  Receipts" shall mean any Receipts issued
pursuant to Section 4.04 hereunder in connection  with the issuance of rights by
the Issuer as set forth in such Section.  Any such Restricted  Receipts shall be
held by such Owner and legended in accordance  with  applicable  U.S.  laws, and
shall be subject to the appropriate restrictions on sale, deposit, cancellation,
and transfer under such laws.

         SECTION 1.14.  Restricted Securities.
                        ---------------------
                  The term "Restricted  Securities" shall mean Shares as defined
below,  or Receipts  representing  such Shares,  which are acquired  directly or
indirectly  from the  Issuer or its  affiliates  (as  defined in Rule 144 to the
Securities Act of 1933) in a transaction or chain of transactions  not involving
any public offering or which are subject to resale  limitations under Regulation
D under that Act or both, or which are held by an officer,  director (or persons
performing  similar  functions) or other  affiliate of the Issuer,  or which are
subject to other  restrictions  on sale or deposit  under the laws of the United
States, England, or under a shareholder agreement or the Memorandum and Articles
of Association of the Issuer.

         SECTION 1.15.  Securities Act of 1933.
                        ----------------------
                  The term "Securities Act of 1933" shall mean the United States
Securities Act of 1933, as from time to time amended.

                                       4

<PAGE> 8

         SECTION 1.16.  Shares.
                        ------
                  The term "Shares" shall mean fully-paid  Ordinary shares of 2p
in the capital of the Issuer,  heretofore  validly  issued and  outstanding  and
fully paid,  non-assessable and free of any pre-emption rights of the holders of
outstanding  Shares or hereafter  validly issued and outstanding and fully paid,
non-assessable  and free of any pre-emption rights of the holders of outstanding
Shares or interim certificates representing such Shares.


                                   ARTICLE 2.
                 FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION
                AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS.

         SECTION 2.01. Form and Transferability of Receipts.
                       ------------------------------------
                  Definitive  Receipts  shall be  substantially  in the form set
forth  in  Exhibit  A  annexed  to  this  Deposit  Agreement,  with  appropriate
insertions,  modifications and omissions,  as hereinafter  provided.  No Receipt
shall be entitled to any benefits  under this  Deposit  Agreement or be valid or
obligatory for any purpose,  unless such Receipt shall have been executed by the
Depositary by the manual or facsimile  signature of a duly authorized  signatory
of the  Depositary  and,  if a  Registrar  for  the  Receipts  shall  have  been
appointed,  countersigned  by  the  manual  or  facsimile  signature  of a  duly
authorized  officer of the  Registrar.  The  Depositary  shall maintain books on
which each Receipt so executed and  delivered  as  hereinafter  provided and the
transfer  of each  such  Receipt  shall  be  registered.  Receipts  bearing  the
signature (manual or facsimile) of a duly authorized signatory of the Depositary
who  was at any  time a  proper  signatory  of the  Depositary  shall  bind  the
Depositary,  notwithstanding  that such signatory has ceased to hold such office
prior to the execution of such  Receipts by the Registrar and their  delivery or
did not hold such office at the date of such Receipts.

                  The Receipts may be endorsed with or have  incorporated in the
text  thereof  such  legends or recitals or changes  not  inconsistent  with the
provisions  of this Deposit  Agreement as may be required by the  Depositary  or
required to comply with any applicable law or regulations thereunder or with the
rules and  regulations  of any  securities  exchange upon which  Receipts may be

                                       5

<PAGE> 9

listed or to conform  with any usage with  respect  thereto,  or to indicate any
special limitations or restrictions to which any particular Receipts are subject
by reason of the date of  issuance of the  underlying  Deposited  Securities  or
otherwise.

                  Title to a  Receipt  (and to the  American  Depositary  Shares
evidenced thereby),  when properly endorsed or accompanied by proper instruments
of transfer,  shall be  transferable  by delivery with the same effect as in the
case  of a  negotiable  instrument;  provided,  however,  that  the  Depositary,
notwithstanding  any notice to the contrary,  may treat the Owner thereof as the
absolute  owner thereof for the purpose of  determining  the person  entitled to
distribution of dividends or other  distributions  or to any notice provided for
in this Deposit Agreement and for all other purposes.

         SECTION 2.02. Deposit of Shares.
                       -----------------
                  Subject to the terms and conditions of this Deposit Agreement,
Shares or  evidence  of rights to receive  Shares may be  deposited  by delivery
thereof to any Custodian hereunder, accompanied by any appropriate instrument or
instruments of transfer, or endorsement, in form satisfactory to the Custodians,
together with all such  certifications  as may be required by the  Depositary or
the Custodians in accordance with the provisions of this Deposit Agreement,  and
if  the  Depositary  requires  together  with  a  written  order  directing  the
Depositary  to execute and deliver to, or upon the written  order of, the person
or persons stated in such order a Receipt or Receipts for the number of American
Depositary  Shares  representing  such deposit.  If required by the  Depositary,
Shares  presented for deposit at any time,  whether or not the transfer books of
the Issuer (or the appointed  agent of the Issuer for transfer and  registration
of Shares,  which may but need not be the Foreign  Registrar) are closed,  shall
also  be  accompanied  by  an  agreement  or  assignment,  or  other  instrument
satisfactory  to the  Depositary,  which will provide for the prompt transfer to
the Custodian of any dividend, or right to subscribe for additional Shares or to
receive  other  property  which any  person in whose name the Shares are or have
been  recorded  may  thereafter  receive  upon or in respect  of such  deposited
Shares,  or in lieu thereof,  such agreement of indemnity or other  agreement as
shall be satisfactory to the Depositary.

                                       6

<PAGE> 10

                  At the request and risk and expense of any Owner,  and for the
account of such Owner, the Depositary may receive  certificates for Shares to be
deposited, together with the other instruments herein specified, for the purpose
of forwarding such Share certificates to the Custodian for deposit hereunder.

                  Upon  each  delivery  to  a  Custodian  of  a  certificate  or
certificates  for  Shares to be  deposited  hereunder,  together  with the other
documents  above  specified,  such  Custodian  shall,  as soon as  transfer  and
recordation can be accomplished, present such certificate or certificates to the
Issuer (or the appointed  agent of the Issuer for transfer and  registration  of
Shares,  which may but need not be the  Foreign  Registrar),  for  transfer  and
recordation  of the Shares being  deposited in the name of the Depositary or its
nominee or such Custodian or its nominee.
                  Deposited  Securities  shall be held by the Depositary or by a
Custodian  for the account and to the order of the  Depositary  or at such other
place or places as the Depositary shall determine.

         SECTION 2.03.  Execution and Delivery of Receipts.
                        ----------------------------------
                  Upon  receipt by any  Custodian  of any  deposit  pursuant  to
Section 2.02 hereunder (and in addition, if the transfer books of the Issuer [or
the appointed  agent of the Issuer for the transfer and  registration of Shares,
which may but need not be the Foreign  Registrar]  are open,  the Depositary may
require a proper  acknowledgment or other evidence from the Issuer  satisfactory
to the  Depositary  that any  Deposited  Securities  have been recorded upon the
books of the Issuer [or the  appointed  agent of the Issuer for the transfer and
registration of Shares,  which may but need not be the Foreign Registrar] in the
name of the  Depositary  or its  nominee  or  such  Custodian  or its  nominee),
together with the other documents  required as above  specified,  such Custodian
shall notify the Depositary of such deposit and the person or persons to whom or
upon  whose  written  order a Receipt or  Receipts  are  deliverable  in respect
thereof and the number of American Depositary Shares to be represented  thereby.
Such  notification  shall be made by letter  sent first  class  airmail  postage
prepaid  or, at the  request  and risk and  expense  of the  person  making  the
deposit, by cable, telex or facsimile  transmission.  Upon receiving such notice
from such  Custodian,  or upon the  receipt  of Shares  by the  Depositary,  the
Depositary, subject to the terms and conditions of this Deposit Agreement, shall

                                       7

<PAGE> 11

execute and deliver at its Corporate  Trust Office,  to or upon the order of the
person or persons  entitled  thereto,  a Receipt or Receipts,  registered in the
name or names and  representing  any  authorized  number of American  Depositary
Shares  requested  by such  person  or  persons,  but only upon  payment  to the
Depositary of the fee of the  Depositary  for the execution and delivery of such
Receipt or Receipts,  and of all taxes and governmental charges and fees payable
in connection with such deposit and the transfer of the Deposited Securities.

      SECTION 2.04. Transfer of Receipts; Combination and Split-up of Receipts.
                      --------------------------------------------------------
                  The  Depositary,  subject to the terms and  conditions of this
Deposit  Agreement,  shall register transfers on its transfer books from time to
time of Receipts,  upon any surrender of a Receipt, by the Owner in person or by
duly authorized attorney, properly endorsed or accompanied by proper instruments
of transfer, and duly stamped as may be required by the laws of the State of New
York and of the United States of America. Thereupon the Depositary shall execute
a new  Receipt  or  Receipts  and  deliver  the same to or upon the order of the
person entitled thereto.

                  The  Depositary,  subject to the terms and  conditions of this
Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose
of effecting a split-up or combination of such Receipt or Receipts,  execute and
deliver  a new  Receipt  or  Receipts  for any  authorized  number  of  American
Depositary Shares requested,  representing the same aggregate number of American
Depositary Shares as the Receipt or Receipts surrendered.

                  The Depositary may, with the Issuer's approval, appoint one or
more co-transfer agents for the purpose of effecting transfers, combinations and
split-ups  of  Receipts  at  designated   transfer  offices  on  behalf  of  the
Depositary.  In carrying  out its  functions,  a  co-transfer  agent may require
evidence of authority and compliance with applicable laws and other requirements
by  holders  or Owners or  persons  entitled  thereto  and will be  entitled  to
protection and indemnity to the same extent as the Depositary.

                                       8

<PAGE> 12


         SECTION 2.05. Surrender of Receipts and Withdrawal of Shares.
                       ----------------------------------------------
                  Upon surrender at the Corporate Trust Office of the Depositary
of a  Receipt  for  the  purpose  of  withdrawal  of  the  Deposited  Securities
represented  thereby,  and upon  payment  of the fee of the  Depositary  for the
surrender of Receipts,  and subject to the terms and  conditions of this Deposit
Agreement,  the Owner of such Receipt  shall be entitled to delivery,  to him or
upon his order, of the amount of Deposited Securities at the time represented by
such Receipt.  Delivery of such Deposited Securities may be made by the delivery
of certificates to such Owner or as ordered by him. Such delivery shall be made,
as hereinafter provided, without unreasonable delay.

                  A Receipt surrendered for such purposes may be required by the
Depositary to be properly endorsed in blank or accompanied by proper instruments
of transfer in blank,  and if the Depositary  requires,  the Owner thereof shall
execute and deliver to the  Depositary a written order  directing the Depositary
to cause the Deposited Securities being withdrawn to be delivered to or upon the
written  order of a person or persons  designated  in such order.  Thereupon the
Depositary  shall  direct  one (or more) of the  Custodians  to  deliver  at the
principal  London,  England office of such Custodian,  subject to Sections 2.06,
3.01 and 3.02, and to the other terms and conditions of this Deposit  Agreement,
to or upon the written  order of the person or persons  designated  in the order
delivered  to the  Depositary  if so  required  by the  Depositary  and as above
provided, the amount of Deposited Securities represented by such Receipt, except
that the Depositary may make delivery to such person or persons at the Corporate
Trust Office of the Depositary of any dividends or distributions with respect to
the Deposited Securities represented by such Receipt, or of any proceeds of sale
of any dividends,  distributions or rights, which may at the time be held by the
Depositary.

                  At the request,  risk and expense of any Owner so surrendering
a Receipt,  and for the account of such Owner,  the Depositary  shall direct the
Custodian to forward a certificate or certificates and other proper documents of
title for the Deposited Securities represented by such Receipt to the Depositary
for delivery at the Corporate  Trust Office of the  Depositary.  Such  direction
shall be given by letter sent first  class  airmail  postage  prepaid or, at the
request,  risk  and  expense  of  such  Owner,  by  cable,  telex  or  facsimile
transmission.

                                       9

<PAGE> 13

     SECTION 2.06. Limitations on Execution and Delivery, Transfer and Surrender
                   of  Receipts.
                   -------------------------------------------------------------
                As  a  condition   precedent  to  the  execution  and  delivery,
registration of transfer,  split-up,  combination or surrender of any Receipt or
withdrawal  of any  Deposited  Securities,  the  Depositary or the Custodian may
require  payment from the depositor of Shares or the presentor of the Receipt of
a sum  sufficient to reimburse it for any tax or other  governmental  charge and
any stock transfer or registration fee with respect thereto  (including any such
tax or charge and fee with respect to Shares being  deposited or withdrawn)  and
payment of any applicable fees as herein provided, may require the production of
proof satisfactory to it as to the identity and genuineness of any signature and
may also require compliance with such regulations, if any, as the Depositary may
establish consistent with the provisions of this Deposit Agreement.

     The delivery of Receipts  against  deposits of Shares  generally or against
deposits of particular  Shares may be suspended,  or the transfer of Receipts in
particular  instances  may  be  refused,  or the  registration  of  transfer  of
outstanding  Receipts  generally  may be  suspended,  during any period when the
transfer  books of the  Depositary  are closed,  or if any such action is deemed
necessary or advisable by the  Depositary or the Issuer at any time or from time
to time because of any  requirement of law or of any government or  governmental
body or commission, or under any provision of this Deposit Agreement, or for any
other reason. The surrender of outstanding  Receipts and withdrawal of Deposited
Securities may not be suspended  subject only to (i) temporary  delays caused by
closing the  transfer  books of the  Depositary  or the Issuer or the deposit of
Shares in connection with voting at a shareholders'  meeting,  or the payment of
dividends,  (ii) the  payment  of fees,  taxes and  similar  charges,  and (iii)
compliance with any U.S. or foreign laws or governmental regulations relating to
the Receipts or to the  withdrawal of the Deposited  Securities.  The Depositary
may retain for its own account  any  compensation  for the  issuance of Receipts
against evidence of rights to receive Shares,  including without  limitation out
of earnings on the collateral  securing such rights.  Without  limitation of the
foregoing,  neither the Depositary nor the Custodian shall knowingly  accept for
deposit under this Deposit  Agreement any Shares required to be registered under

                                       10

<PAGE> 14

the provisions of the Securities Act of 1933, unless a registration statement is
in effect as to such Shares.

         SECTION 2.07.  Lost Receipts, etc.
                        -------------------
                  In case any Receipt  shall be  mutilated,  destroyed,  lost or
stolen, the Depositary shall execute and deliver a new Receipt of like tenor, in
exchange and substitution for such mutilated Receipt upon cancellation  thereof,
or in lieu of and in substitution  for such destroyed or lost or stolen Receipt,
upon the  Owner  thereof  filing  with the  Depositary  (a) a  request  for such
execution  and delivery  before the  Depositary  has notice that the Receipt has
been acquired by a bona fide  purchaser and (b) a sufficient  indemnity bond and
satisfying any other reasonable requirements imposed by the Depositary.

         SECTION 2.08.   Cancellation and Destruction of Surrendered Receipts.
                         -----------------------------------------------------
                  All Receipts  surrendered to the Depositary shall be cancelled
by  the  Depositary.  The  Depositary  is  authorized  to  destroy  Receipts  so
cancelled.

         SECTION 2.09. Pre-Release of Receipts.
                       -----------------------
                  Notwithstanding   Section  2.03  hereof,  the  Depositary  may
execute and deliver  Receipts prior to the receipt of Shares pursuant to Section
2.02  ("Pre-Release").  The Depositary  may,  pursuant to Section 2.05,  deliver
Shares  upon  the  receipt  and   cancellation   of  Receipts  which  have  been
Pre-Released,  whether or not such  cancellation  is prior to the termination of
such   Pre-Release  or  the   Depositary   knows  that  such  Receipt  has  been
Pre-Released.  The  Depositary  may  receive  Receipts  in  lieu  of  Shares  in
satisfaction  of a  Pre-Release.  Each  Pre-Release  will  be  (a)  preceded  or
accompanied by a written  representation from the person to whom Receipts are to
be delivered that such person,  or its customer,  owns the Shares or Receipts to
be remitted, as the case may be, (b) at all times fully collateralized with cash
or such other collateral as the Depositary deems appropriate,  (c) terminable by
the  Depositary on not more than five (5) business days notice,  and (d) subject
to such further  indemnities  and credit  regulations  as the  Depositary  deems
appropriate.  The number of American  Depositary Shares which are outstanding at
any time as a result of  Pre-Releases  will not normally  exceed thirty  percent
(30%) of the Shares deposited hereunder;  provided, however, that the Depositary

                                       11

<PAGE> 15

reserves  the right to change or  disregard  such  limit from time to time as it
deems appropriate.

                  The Depositary may retain for its own account any compensation
received by it in connection with the foregoing.

                                   ARTICLE 3.
                   CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS.


         SECTION 3.01 Filing Proofs, Certificates and Other Information.
                      -------------------------------------------------
                  Any person  presenting  Shares  for  deposit or any Owner of a
Receipt may be required from time to time to file such proof of  citizenship  or
residence,  exchange  control  approval,  evidence of the number of Receipts and
Deposited  Securities legally or beneficially owned or such information relating
to the  registration  on the books of the Issuer (or the appointed  agent of the
Issuer for transfer and  registration  of Shares,  which may but need not be the
Foreign Registrar) of the Shares presented for deposit or other information,  to
execute such certificates and to make such  representations  and warranties,  as
the Depositary may reasonably deem necessary or proper.  The Depositary may, and
if requested by the Issuer  shall,  withhold,  the delivery or  registration  of
transfer of any  Receipt or the  distribution  or sale of any  dividend or other
distribution  or  rights  or of the  proceeds  thereof  or the  delivery  of any
Deposited  Securities  until  such proof or other  information  is filed or such
certificates are executed.

         SECTION 3.02 Liability of Owner for Taxes.
                      ----------------------------
                  If any tax or other  governmental  charge shall become payable
with  respect to any  Receipt or any  Deposited  Securities  represented  by any
Receipt,  such tax or other governmental charge shall be payable by the Owner of
such Receipt to the Depositary. The Depositary may refuse to effect any transfer
of such Receipt or any withdrawal of Deposited  Securities  represented  thereby
until  such  payment  is  made,   and  may  withhold  any   dividends  or  other
distributions,  or may sell for the account of the Owner thereof any part or all
of the Deposited  Securities  represented  by such  Receipt,  and may apply such
dividends or other  distributions or the proceeds of any such sale in payment of

                                       12

<PAGE> 16

such tax or other  governmental  charge,  the  Owner of such  Receipt  remaining
liable for any deficiency.

         SECTION 3.03.  Warranties on Deposit of Shares.
                        -------------------------------
                  Every person  depositing  Shares under this Deposit  Agreement
shall be deemed  thereby to  represent  and  warrant  that such  Shares and each
certificate therefor are validly issued, fully paid,  non-assessable and free of
any pre-emption  rights of the holders of outstanding Shares and that the person
making such deposit is duly authorized so to do. Every such person shall also be
deemed to  represent  that the  deposit  of Shares or sale of  Receipts  by that
person is not restricted under the Securities Act of 1933. Such  representations
and warranties shall survive the deposit of Shares and issuance of Receipts. Any
shares  delivered  to the  Custodian  for deposit  bearing a legend shall not be
accepted for deposit without first obtaining Issuer's consent.

                                   ARTICLE 4.
                            THE DEPOSITED SECURITIES.


         SECTION 4.01.  Cash Distributions.
                        ------------------
                  Whenever the  Depositary  shall  receive any cash  dividend or
other  cash  distribution  by  the  Issuer  on  any  Deposited  Securities,  the
Depositary  shall,  subject to the  provisions  of Section  4.05,  convert  such
dividend  or  distribution  into  Dollars and shall  distribute  the amount thus
received to the Owners as of the record date fixed  pursuant to Section 4.06, in
proportion  to the  number  of  American  Depositary  Shares  representing  such
Deposited Securities held by them respectively;  provided,  however, that in the
event that the Issuer or the  Depositary  shall be required to withhold and does
withhold  from any cash  dividend or other cash  distribution  in respect of any
Deposited  Securities an amount on account of taxes,  the amount  distributed to
the Owner of Receipts for American Depositary Shares representing such Deposited
Securities  shall be reduced  accordingly.  The Depositary shall distribute only
such amount,  however, as can be distributed without attributing to any Owner of
a Receipt a fraction of one cent. Any such  fractional  amounts shall be rounded
to the nearest whole cent and so distributed  to Owners  entitled  thereto.  The

                                       13

<PAGE> 17

Issuer or its agent will  remit to the  appropriate  governmental  agency in the
England all amounts  withheld  and owing to such  agency.  The  Depositary  will
forward  to the  Issuer or its agent such  information  from its  records as the
Issuer  may  reasonably  request  to  enable  the  Issuer  or its  agent to file
necessary reports with governmental  agencies,  and either the Depositary or the
Issuer or its agent may file any such reports necessary to obtain benefits under
the applicable tax treaties for the Owners.

         SECTION 4.02.  Distributions Other Than Cash or Shares.
                        ---------------------------------------
                  Whenever the Depositary shall receive any  distribution  other
than cash or Shares upon any Deposited  Securities,  the Depositary  shall cause
the securities or property  received by it to be distributed to the Owners as of
the record date fixed  pursuant to Section  4.06, in proportion to the number of
American Depositary Shares  representing such Deposited  Securities held by them
respectively,  in  any  manner  that  the  Depositary  may  deem  equitable  and
practicable for accomplishing such distribution;  provided,  however, that if in
the opinion of the Depositary such distribution  cannot be made  proportionately
among such Owners as of the record date fixed  pursuant to Section  4.06,  or if
for  any  other  reason  (including  any  requirement  that  the  Issuer  or the
Depositary  withhold  an amount on account of taxes) the  Depositary  deems such
distribution not to be feasible,  the Depositary may adopt such method as it may
deem equitable and practicable  for the purpose of effecting such  distribution,
including  the sale (at public or private  sale) of the  securities  or property
thus received,  or any part thereof, and the net proceeds of any such sale shall
be distributed by the Depositary to such Owners.

         SECTION 4.03. Distributions in Shares.
                       -----------------------
                  If any distribution upon any Deposited  Securities consists of
a dividend in, or free distribution of, Shares, the Depositary may, and shall if
the Issuer  shall so request,  distribute  to the Owners,  as of the record date
fixed  pursuant  to  Section  4.06,  in  proportion  to the  number of  American
Depositary  Shares   representing   such  Deposited   Securities  held  by  them
respectively, additional Receipts for an aggregate number of American Depositary
Shares  representing  the amount of Shares  received  as such  dividend  or free
distribution.  In lieu of delivering Receipts for fractional American Depositary
Shares  in any such  case,  the  Depositary  shall  sell the  amount  of  Shares
represented  by the aggregate of such fractions and distribute the net proceeds,

                                       14

<PAGE> 18

all in the manner and subject to the  conditions  described in Section  4.02. If
additional Receipts are not so distributed, each American Depositary Share shall
thenceforth also represent the additional Shares  distributed upon the Deposited
Securities represented thereby.

         SECTION 4.04.  Rights.
                        ------
                  In the  event  that  the  Issuer  shall  offer  or cause to be
offered to the holders of any Deposited  Securities  any rights to subscribe for
additional  Shares or any rights of any other nature,  the Depositary shall have
discretion as to the procedure to be followed in making such rights available to
any Owners or in disposing of such rights on behalf of any Owners and making the
net  proceeds  available  in Dollars to such  Owners or, if by the terms of such
rights  offering or, for any other reason,  the  Depositary  may not either make
such rights  available  to any Owners or dispose of such rights and make the net
proceeds available to such Owners, then the Depositary shall allow the rights to
lapse;  provided,  however,  if at the time of the  offering  of any  rights the
Depositary  reasonably  determines  that it is lawful and  feasible to make such
rights available to all Owners or to certain Owners but not to other Owners, the
Depositary shall distribute, to any Owner to whom it determines the distribution
to be lawful and feasible,  in  proportion to the number of American  Depositary
Shares held by such Owner,  warrants or other instruments  therefor in such form
as it deems  appropriate  to facilitate  the exercise,  sale or transfer of such
rights by such Owner.  If the Depositary  reasonably  determines  that it is not
lawful and feasible to make such rights  available  to certain  Owners or if the
rights  represented by such warrants or other  instruments are not exercised and
appear about to lapse,  it may sell the rights or warrants or other  instruments
in proportion to the number of American  Depositary Shares held by the Owners to
whom it has  determined  it may not  lawfully  or  feasibly  to make such rights
available,  and  allocate the net proceeds of such sales for the account of such
Owners otherwise entitled to such rights, warrants or other instruments, upon an
averaged or other practical basis without regard to any distinctions  among such
Owners because of exchange  restrictions  or the date of delivery of any Receipt
or Receipts, or otherwise.

                  If an Owner of Receipts  requests the distribution of warrants
or other  instruments in order to exercise the rights  allocable to the American
Depositary Shares of such Owner hereunder,  the Depositary will make such rights

                                       15

<PAGE> 19

available  to such Owner upon written  notice from the Issuer to the  Depositary
that (a) the Issuer has elected in its sole  discretion to permit such rights to
be exercised  and (b) such Owner has executed  such  documents as the Issuer has
determined in its sole discretion are reasonably  required under applicable law.
Upon  instruction  pursuant  to  such  warrants  or  other  instruments  to  the
Depositary  from such Owner to exercise such rights,  upon payment by such Owner
to the  Depositary  for the  account  of such  Owner of an  amount  equal to the
purchase price of the Shares to be received in exercise of the rights,  and upon
payment of the fees of the  Depositary  as set forth in such  warrants  or other
instruments,  the Depositary shall, on behalf of such Owner, exercise the rights
and purchase  the Shares,  and the Issuer shall cause the Shares so purchased to
be delivered to the Depositary on behalf of such Owner. As agent for such Owner,
the  Depositary  will cause the Shares so purchased to be deposited  pursuant to
Section 2.02 of this Deposit Agreement,  and shall,  pursuant to Section 2.03 of
this Deposit Agreement, execute and deliver to such Owner Restricted Receipts.

                  If  registration  under  the  Securities  Act of  1933  of the
securities  to which any rights  relate is  required  in order for the Issuer to
offer such rights to Owners and sell the securities  represented by such rights,
the Issuer or the  Depositary  shall not be  required  to offer  such  rights to
Owners of Receipts under any circumstances  unless and until such a registration
statement is in effect,  or unless the offering and sale of such  securities  to
the Owners of such Receipts are exempt from registration under the provisions of
such Act.

         SECTION 4.05.   Conversion of Foreign Currency.
                         ------------------------------
                  Whenever the Depositary shall receive Foreign Currency, by way
of  dividends  or  other  distributions  or the net  proceeds  from  the sale of
securities,  property or rights,  and if at the time of the receipt  thereof the
Foreign  Currency so received can in the judgment of the Depositary be converted
on a reasonable basis into Dollars and the resulting Dollars  transferred to the
United States, the Depositary shall convert or cause to be converted, by sale or
in any other manner that it may determine,  such Foreign  Currency into Dollars,
and such Dollars shall be distributed to the Owners entitled  thereto or, if the
Depositary  shall have  distributed  any  warrants  or other  instruments  which
entitle  the  holders  thereof  to such  Dollars,  then to the  holders  of such
warrants  and/or  instruments  upon  surrender  thereof for  cancellation.  Such

                                       16

<PAGE> 20

distribution  may be made upon an averaged or other  practicable  basis  without
regard to any distinctions  among Owners on account of exchange  restrictions or
otherwise.

                  If such conversion or  distribution  can be effected only with
the approval or license of any  government  or agency  thereof,  the  Depositary
shall file such  application  for  approval or  license,  if any, as it may deem
desirable.

                  If at any  time the  Depositary  shall  determine  that in its
judgment any Foreign Currency received by the Depositary is not convertible on a
reasonable  basis into  Dollars  transferable  to the United  States,  or if any
approval or license of any  government  or agency  thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the Foreign Currency
(or an  appropriate  document  evidencing  the  right to  receive  such  Foreign
Currency)  received by the  Depositary  to, or in its  discretion  may hold such
Foreign Currency for the respective  accounts of, the Owners entitled to receive
the same.

                  If any such  conversion  of Foreign  Currency,  in whole or in
part,  cannot  be  effected  for  distribution  to some of the  Owners  entitled
thereto,  the  Depositary  may  in  its  discretion  make  such  conversion  and
distribution  in  Dollars to the extent  permissible  to the Owners of  Receipts
entitled thereto and may distribute the balance of the Foreign Currency received
by the Depositary  to, or hold such balance for the respective  accounts of, the
Owners entitled thereto.

         SECTION 4.06 Fixing of Record Date.
                      ---------------------
                  Whenever the Depositary  shall receive notice of the fixing of
a record date by the Issuer for the  determination  of the holders of  Deposited
Securities entitled to receive any cash dividend or other cash distribution, any
distribution  other than cash,  or any rights to be issued  with  respect to the
Deposited Securities,  or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each American  Depositary Share,
or whenever the  Depositary  shall receive notice of the fixing of a record date

                                       17

<PAGE> 21

by the Issuer for the  determination  of the  holders  of  Deposited  Securities
entitled  to vote at any  meeting  of  holders  of  Shares  or  other  Deposited
Securities,  the Depositary, in consultation with the Issuer, shall fix a record
date for the  determination  of the Owners of Receipts  who shall be entitled to
receive such dividend,  distribution or rights,  or the net proceeds of the sale
thereof,  or to give  instructions for the exercise of voting rights at any such
meeting, or for fixing the date on or after which each American Depositary Share
will  represent  the  changed  number of Shares.  Subject to the  provisions  of
Sections 4.01 through 4.05 and to the other terms and conditions of this Deposit
Agreement,  the Owners on such  record  date shall be  entitled  to receive  the
amount  distributable  by the Depositary  with respect to such dividend or other
distribution or such rights or the net proceeds of sale thereof in proportion to
the number of American Depositary Shares held by them respectively.

         SECTION 4.07.  Voting of Deposited Securities.
                        ------------------------------
                  (i) As soon as  practicable  after  receipt  of  notice of any
meeting or  solicitation  of  consents  or proxies of holders of Shares or other
Deposited  Securities,  the  Depositary  shall  mail  to  the  Owners  a  notice
containing (a) such  information  as is contained in the notice  received by the
Depositary,  (b) a  statement  that  each  Owner at the close of  business  on a
specified  record  date will be  entitled,  subject  to  applicable  law and the
provisions of the  Memorandum  and the Articles of Association of the Issuer and
the provisions of or governing Deposited Securities,  to instruct the Depositary
in  writing as to the  exercise  of voting  rights,  if any,  pertaining  to the
Deposited Securities  represented by the American Depositary Shares evidenced by
such  Owner's  Receipts  and (c) a  statement  as to the  manner  in which  such
instructions  may  be  given,  including,  when  applicable,   deemed  given  in
accordance  with  paragraph  (ii) of this Section if no instruction is received.
Upon the written request of an Owner on such record date,  received on or before
the date  established  by the  Depositary  for such  purpose  (the  "Instruction
Date"), the Depositary shall endeavor insofar as practicable and permitted under
applicable  law  and the  provisions  of the  Memorandum  and  the  Articles  of
Association  of  the  Issuer  and  the  provisions  of  or  governing  Deposited
Securities to vote or cause to be voted the Deposited Securities  represented by
the American  Depositary Shares evidenced by such Owner's Receipts in accordance
with any  nondiscretionary  proxy  to a person  designated  by the  Issuer.  The
Depositary  shall not itself  exercise any voting  discretion over any Deposited
Securities.

                                       18

<PAGE> 22

                  (ii) If after  complying with the procedures set forth in this
Section the Depositary does not receive instructions from the Owner of a Receipt
on or before the Instruction  Date, the Depositary shall deliver a discretionary
proxy for the Shares  evidenced  by such Receipt in such form as provided by the
Issuer to a person designated by the Issuer;  provided, that no such proxy shall
be  given  with  respect  to any  matter  as to which  the  Issuer  informs  the
Depositary  (and the Issuer  agrees to provide such  information  as promptly as
practicable in writing) that (x) the Issuer does not wish such proxy given,  (y)
substantial  opposition  exists  or (z) such  matter  materially  and  adversely
affects the rights of holders of Shares.

                  There can be no assurance  that Owners  generally or any Owner
in particular will receive the notice described in paragraph (i) of this Section
sufficiently  prior to the  Instruction  Date to ensure that the Depositary will
vote the Shares or Deposited  Securities in accordance  with the  provisions set
forth in such paragraph.

         SECTION 4.08.  Changes Affecting Deposited Securities.
                        --------------------------------------
                  Upon  any  change  in  nominal  value,  par  value,  split-up,
consolidation or any other reclassification of Deposited Securities, or upon any
recapitalization,  reorganization,  merger  or  consolidation  or sale of assets
affecting the Issuer or to which it is a party,  any  securities  which shall be
received by the Depositary or a Custodian in exchange for or in conversion of or
in respect of Deposited  Securities shall be treated as new Deposited Securities
under this Deposit Agreement,  and American  Depositary Shares shall thenceforth
represent  the new Deposited  Securities so received in exchange or  conversion,
unless additional Receipts are delivered pursuant to the following sentence.  In
any such case the Depositary may, upon consultation  with the Issuer,  and shall
if the Issuer shall so request,  execute and deliver  additional  Receipts as in
the case of a dividend on the Shares,  or call for the surrender of  outstanding
Receipts to be  exchanged  for new  Receipts  specifically  describing  such new
Deposited Securities.

                                       19

<PAGE> 23


         SECTION 4.09.  Reports.
                        -------
                  The  Depositary  shall make available for inspection by Owners
at its  Corporate  Trust Office any reports and  communications,  including  any
proxy soliciting material,  received from the Issuer which are both (a) received
by the  Depositary  as the  holder  of the  Deposited  Securities  and (b)  made
generally  available to the holders of such Deposited  Securities by the Issuer.
The  Depositary  shall  also  send to the  Owners  copies of such  reports  when
furnished by the Issuer pursuant to Section 5.06.

                  In addition, upon notice that the Issuer has not furnished the
Commission with any public reports,  documents or other  information as required
by foreign law or otherwise under Rule 12g3-2(b)  under the Securities  Exchange
Act of 1934, as from time to time amended, the Depositary shall furnish promptly
to the  Commission  copies of all  annual or other  periodic  reports  and other
notices  or  communications  which  the  Depositary  receives  as  holder of the
Deposited  Securities from the Issuer and which are not so furnished to or filed
with the Commission  pursuant to any other requirement of the Commission and the
Depositary is hereby authorized by the Issuer so to do on its behalf.

         SECTION 4.10. Lists of Receipt Owners.
                       -----------------------
                  Promptly upon request by the Issuer,  the Depositary shall, at
the expense of the Issuer,  furnish to it a list,  as of a recent  date,  of the
names,  addresses and holdings of American  Depositary  Shares by all persons in
whose names Receipts are registered on the books of the Depositary.

         SECTION 4.11. Withholding.
                       -----------
                  In  the  event  that  the  Depositary   determines   that  any
distribution in property  (including Shares and rights to subscribe therefor) is
subject to any tax which the Depositary is obligated to withhold, the Depositary
may dispose of all or a portion of such property (including Shares and rights to
subscribe  therefor) in such amounts and in such manner as the Depositary  deems
necessary and  practicable to pay any such taxes, by public or private sale, and
the  Depositary  shall  distribute  the net  proceeds  of any  such  sale  after

                                       20

<PAGE> 24

deduction  of such taxes to the Owners  entitled  thereto in  proportion  to the
number of American Depositary Shares held by them respectively.

                                   ARTICLE 5.
                 THE DEPOSITARY, THE CUSTODIANS AND THE ISSUER.


      SECTION 5.01. Maintenance of Office and Transfer Books by the Depositary.
                      --------------------------------------------------------
                  Until termination of this Deposit Agreement in accordance with
its terms, the Depositary  shall maintain in the Borough of Manhattan,  The City
of  New  York,   facilities  for  the  execution  and  delivery,   registration,
registration  of  transfers  and  surrender of Receipts in  accordance  with the
provisions  of this Deposit  Agreement.  The  Depositary  or its agent agrees to
register as a foreign  nominee for the  purposes of this  Agreement  pursuant to
English Law.

                  The  Depositary  shall  keep  books  for the  registration  of
Receipts and transfers of Receipts which at all  reasonable  times shall be open
for inspection by the Owners, provided that such inspection shall not be for the
purpose of  communicating  with  Owners in the  interest of a business or object
other  than the  business  of the  Issuer or a matter  related  to this  Deposit
Agreement or the Receipts.

                  The  Depositary may close the transfer  books,  at any time or
from  time  to  time,  when  deemed  expedient  by it  in  connection  with  the
performance of its duties hereunder.

                  If any Receipts or the American  Depositary Shares represented
thereby  are listed on one or more stock  exchanges  in the United  States,  the
Depositary  shall  act as  Registrar  or  appoint  a  Registrar  or one or  more
co-registrars  for registry of such Receipts in accordance with any requirements
of such exchange or exchanges.

          SECTION 5.02.  Prevention or Delay in Performance by the Depositary or
                         -------------------------------------------------------
the Issuer.  
----------
             Neither the  Depositary nor the Issuer shall incur any liability to
any Owner of any Receipt, if by reason of any provision of any present or future

                                       21

<PAGE> 25

law of the  United  States  or any  other country, or of any other governmental
authority,  or by reason of any provision,  present or future, of the Memorandum
and Articles of Association of the Issuer, or by reason of any act of God or war
or other circumstances beyond its control, the Depositary or the Issuer shall be
prevented or forbidden from, or be subjected to any civil or criminal penalty on
account  of,  doing or  performing  any act or thing  which by the terms of this
Deposit  Agreement  it is  provided  shall be done or  performed;  nor shall the
Depositary or the Issuer incur any liability to any Owner of a Receipt by reason
of any non-performance or delay, caused as aforesaid,  in the performance of any
act or thing which by the terms of this Deposit  Agreement it is provided  shall
or may be done or  performed,  or by reason of any  exercise  of, or  failure to
exercise,  any discretion provided for in this Deposit Agreement.  Where, by the
terms of a distribution pursuant to Sections 4.01, 4.02, or 4.03 of this Deposit
Agreement,  or an offering  or  distribution  pursuant  to Section  4.04 of this
Deposit  Agreement,  or for any other reason,  such distribution or offering may
not be made  available  to Owners,  and the  Depositary  may not dispose of such
distribution  or  offering  on behalf of such  Owners and make the net  proceeds
available to such Owners,  then the Depositary shall not make such  distribution
or offering, and shall allow any rights, if applicable, to lapse.

      SECTION 5.03. Obligations of the Depositary, the Custodian and the Issuer.
                     -----------------------------------------------------------
                  The Issuer  assumes no  obligation  nor shall it be subject to
any  liability  under this  Deposit  Agreement to Owners or holders of Receipts,
except  that it agrees to  perform  its  obligations  set forth in this  Deposit
Agreement without negligence or bad faith.

                  The  Depositary  assumes no obligation nor shall it be subject
to any liability under this Deposit Agreement to any Owners (including,  without
limitation,  liability  with respect to the  validity or worth of the  Deposited
Securities),  except that it agrees to perform its obligations  specifically set
forth in this Deposit Agreement without negligence or bad faith.

                  Neither  the  Depositary  nor the  Issuer  shall be under  any
obligation  to  appear  in,  prosecute  or  defend  any  action,  suit or  other
proceeding in respect of any Deposited Securities or in respect of the Receipts,
which in its opinion may involve it in expense or  liability,  unless  indemnity
satisfactory  to it against all expense and  liability  be furnished as often as

                                       22

<PAGE> 26

may be required,  and the Custodian shall not be under any obligation whatsoever
with respect to such  proceedings,  the  responsibility  of the Custodian  being
solely to the Depositary.

                  Neither the  Depositary nor the Issuer shall be liable for any
action or nonaction  by it in reliance  upon the advice of or  information  from
legal counsel, accountants, any person presenting Shares for deposit, any Owner,
or any other  person  believed by it in good faith to be  competent to give such
advice or information.

                  The  Depositary  shall not be  responsible  for any failure to
carry out any instructions to vote any of the Deposited  Securities,  or for the
manner in which any such vote is cast or effect of any such vote,  provided that
any  such  action  or  nonaction  is in  good  faith  and  not  as a  result  of
Depositary's negligence.

                  The  Depositary may own and deal in any class of securities of
the Issuer and its affiliates and in Receipts.

                  No disclaimer of liability under the Securities Act of 1933 is
intended by any provision of this Deposit Agreement.

            SECTION 5.04.  Resignation and Removal of the Depositary.
                           -----------------------------------------
                  The Depositary may at any time resign as Depositary  hereunder
by  written  notice  of its  election  so to do  delivered  to the  Issuer.  The
Depositary  may at any time be removed  by the Issuer by written  notice of such
removal.  In case at any time the Depositary acting hereunder shall resign or be
removed,  it shall  continue to act as Depositary for the purpose of terminating
this Deposit Agreement pursuant to Section 6.02.

                  Any  corporation  into or with  which  the  Depositary  may be
merged or  consolidated  shall be the  successor of the  Depositary  without the
execution or filing of any document or any further act.

                                       23

<PAGE> 27

         SECTION 5.05 The Custodians.
                      --------------
                  The  Depositary  has appointed the principal  London,  England
office  of the  Depositary  as  custodian  and agent of the  Depositary  for the
purposes of this Deposit  Agreement.  The Custodian or its  successors in acting
hereunder shall be subject at all times and in all respects to the directions of
the Depositary  and shall be responsible  solely to it. Any Custodian may resign
and be  discharged  from its  duties  hereunder  by notice  of such  resignation
delivered  to the  Depositary  at least 30 days  prior to the date on which such
resignation is to become  effective.  If upon such resignation there shall be no
Custodian acting hereunder,  the Depositary shall, promptly after receiving such
notice,  appoint a  substitute  custodian  or  custodians,  each of which  shall
thereafter be a Custodian  hereunder.  Whenever the Depositary in its discretion
determines  that it is in the  best  interest  of the  Owners  to do so,  it may
appoint  a  substitute  or  additional  custodian  or  custodians,  which  shall
thereafter be one of the Custodians hereunder. Upon demand of the Depositary any
Custodian  shall  deliver  such of the  Deposited  Securities  held by it as are
requested  of it to  any  other  Custodian  or  such  substitute  or  additional
custodian or  custodians.  Each such  substitute or additional  custodian  shall
deliver to the Depositary, forthwith upon its appointment, an acceptance of such
appointment satisfactory in form and substance to the Depositary.

         SECTION 5.06.   Notices and Reports.
                         -------------------
                  On or before the first date on which the Issuer gives  notice,
by  publication  or  otherwise,  of any  meeting  of  holders of Shares or other
Deposited  Securities,  or of any adjourned  meeting of such holders,  or of the
taking  of any  action  in  respect  of any cash or other  distributions  or the
offering of any rights,  the Issuer agrees to transmit to the Depositary and the
Custodians  a copy of the  notice  thereof  in the form  given or to be given to
holders of Shares or other Deposited Securities.

                  The Issuer  will  arrange  for the prompt  transmittal  by the
Issuer to the Depositary and the Custodian of such notices and any other reports
and communications  which are made generally  available by the Issuer to holders
of its Shares.  If  requested  in writing by the  Issuer,  the  Depositary  will
arrange for the mailing,  at the Issuer's  expense,  of copies of such  notices,

                                       24

<PAGE> 28

reports and  communications  to all Owners.  The Issuer will timely  provide the
Depositary with the quantity of such notices,  reports,  and communications,  as
requested by the  Depositary  from time to time, in order for the  Depositary to
effect such mailings.

         SECTION 5.07. Issuance of Additional Shares, etc.
                       ----------------------------------
                  The Issuer  agrees  that in the event of any  issuance  of (1)
additional   Shares,   (2)  rights  to  subscribe  for  Shares,  (3)  securities
convertible  into Shares,  or (4) rights to subscribe for such  securities,  the
Issuer will promptly  furnish to the  Depositary a written  opinion from counsel
for the Issuer in the United States,  which counsel shall be satisfactory to the
Depositary,  stating whether or not the  circumstances of such issue are such as
to make it necessary for a  Registration  Statement  under the Securities Act of
1933 to be in  effect  prior to the  delivery  of the  Receipts  to be issued in
connection  with such  securities  or the  issuance  of such  rights.  If in the
opinion of such counsel a Registration Statement is required, such counsel shall
furnish  to the  Depositary  a written  opinion  as to whether or not there is a
Registration Statement in effect which will cover such issuance of securities or
rights.

                  The Issuer agrees with the Depositary  that neither the Issuer
nor any company  controlled  by the Issuer will at any time  deposit any Shares,
either upon  original  issuance or upon a sale of Shares  previously  issued and
reacquired  by  the  Issuer  or by any  company  under  its  control,  unless  a
Registration  Statement  is in effect or an  exemption  is  available as to such
Shares under the Securities Act of 1933.

         SECTION 5.08.  Indemnification.
                        ---------------
                  The  Issuer  agrees  to  indemnify  the   Depositary  and  any
Custodian against, and hold each of them harmless from, any liability or expense
(including  but not limited to the fees and expenses of counsel) which may arise
out of acts  performed or omitted,  in  accordance  with the  provisions of this
Deposit Agreement and of the Receipts,  as the same may be amended,  modified or
supplemented  from time to time,  (i) by either the  Depositary  or a Custodian,
except for any liability or expense  arising out of the  negligence or bad faith
of either of them, or (ii) by the Issuer or any of its agents.

                                       25

<PAGE> 29

                  The  Depositary  agrees to  indemnify  the  Issuer and hold it
harmless  from any liability or expense  (including  but not limited to the fees
and  expenses of counsel),  which may arise out of acts  performed or omitted by
the Depositary or its Custodian due to their negligence or bad faith.

         SECTION 5.09.  Charges of Depositary.
                        ---------------------
                  The Issuer agrees to pay the fees and  reasonable  expenses of
the Depositary  and those of any  Registrar,  but the Issuer shall not pay or be
liable for (1) the fees of the  Depositary  for the  execution  and  delivery of
Receipts  pursuant to Section  2.03,  transfers  pursuant to Section  2.04,  the
surrender  of  Receipts  pursuant  to  Section  2.05,  and  the  making  of  any
distribution  pursuant to this Deposit Agreement,  including but not limited to,
Sections 4.01 through 4.04 hereof, (2) taxes and other governmental charges, (3)
such  registration  fees  as  may  from  time  to  time  be in  effect  for  the
registration  of  transfers  of Shares  generally  on the share  register of the
Issuer (or the appointed  agent of the Issuer for transfer and  registration  of
Shares  which  may  but  need  not be the  Foreign  Registrar)  and  accordingly
applicable  to transfers of Shares to the name of the  Depositary or its nominee
or Custodian or its nominee on the making of deposits or withdrawals  hereunder,
(4) such cable,  telex and  facsimile  transmission  expenses  as are  expressly
provided in this Deposit  Agreement  to be at the expense of persons  depositing
Shares or Owners, and (5) such expenses as are incurred by the Depositary in the
conversion of Foreign  Currency  pursuant to Section 4.05.  Any other charges of
the  Depositary  hereunder  will be paid by the Issuer  after  consultation  and
agreement  between the  Depositary and the Issuer as to the amount and nature of
such  charges.  Such charges may at any time and from time to time be changed by
agreement  between the Issuer and the Depositary.  The Depositary  shall present
its  statement  for such  charges  and  expenses  to the Issuer once every three
months.  The charges and expenses of the  Custodian  are for the sole account of
the  Depositary.  The  Depositary  shall  charge any party to whom  Receipts are
issued (including, without limitation,  issuance pursuant to a stock dividend or
stock  split  declared  by the  Issuer or an  exchange  of stock  regarding  the
Receipts or  Deposited  Securities  or a  distribution  of Receipts  pursuant to
Section 4.03 hereof) or who  surrenders  Receipts a fee of $5.00 or less per 100
American  Depositary  Shares (or portion thereof) for the issuance or surrender,
respectively,  of a Receipt. In addition, the Depositary shall charge the Owners
and holders of Receipts a fee for, and deduct such fee from, the distribution of

                                       26

<PAGE> 30

proceeds  pursuant to Section 4.04, such fee being in an amount equal to the fee
for the  issuance of American  Depositary  Shares  referred to above which would
have been  charged as a result of the  deposit by Owners of Shares  received  in
exercise  of rights  distributed  to them  pursuant to Section  4.04,  but which
rights are instead sold by the Depositary, and the net proceeds distributed.

         SECTION 5.10.  Retention of Depositary Documents.
                        ---------------------------------
                  The  Depositary  is  authorized  to destroy  those  documents,
records, bills and other data compiled during the term of this Deposit Agreement
at the times permitted by the governing statutes unless the Issuer requests that
such papers be retained for a longer period or turned over to the Issuer or to a
successor depositary.

         SECTION 5.11.   Exclusivity.
                         -----------
                  The  Issuer  agrees not to appoint  any other  depositary  for
issuance  of  American  Depositary  Receipts  so long as The Bank of New York is
acting as Depositary hereunder; provided, however, that the Depositary agrees to
use its best  efforts  to assist  and  cooperate  with the  Issuer in making the
transition from Depositary to another  depositary in the event this Agreement is
terminated  by either party and the Issuer  decides to continue to make American
Depositary Receipts available to holders of Ordinary shares.

         SECTION 5.12.  List of Restricted Securities Owners.
                        ------------------------------------
                  From time to time,  the Issuer shall provide the  Depositary a
list setting  forth,  to the actual  knowledge of the Issuer,  those  persons or
entities who beneficially own Restricted  Securities and the Issuer shall update
that list on a regular basis. The Issuer agrees to advise in writing each of the
persons or entities so listed that such Restricted Securities are ineligible for
deposit  hereunder.  The  Depositary may rely on such a list or update but shall
not be liable for any action or omission made in reliance thereon.

                                       27

<PAGE> 31

                                   ARTICLE 6.
                           AMENDMENT AND TERMINATION.


         SECTION 6.01.  Amendment.
                        ---------
                  The form of the  Receipts and any  provisions  of this Deposit
Agreement may at any time and from time to time be amended by written  agreement
between  the  Issuer  and the  Depositary  in any  respect  which  they may deem
necessary or desirable. Any amendment which shall impose or increase any fees or
charges (other than taxes and other  governmental  charges,  registration  fees,
cable,  telex or  facsimile  transmission  costs,  delivery  costs or other such
expenses),  or which shall otherwise prejudice any substantial existing right of
Owners of Receipts,  shall,  however,  not become  effective  as to  outstanding
Receipts  until the  expiration  of three months after notice of such  amendment
shall have been given to the Owners of outstanding Receipts.  Every Owner at the
time any amendment so becomes  effective shall be deemed,  by continuing to hold
such  Receipt,  to consent  and agree to such  amendment  and to be bound by the
Deposit Agreement as amended thereby. In no event shall any amendment impair the
right of the Owner of any Receipt to surrender such Receipt and receive therefor
the Deposited Securities represented thereby.

         SECTION 6.02.  Termination.
                        -----------
               
               Upon the resignation or removal of the Depositary  pursuant to
Section  5.04,  or at any time at the  direction of the Issuer,  the  Depositary
shall terminate this Deposit  Agreement by mailing notice of such termination to
the Owners of all Receipts then  outstanding  at least 30 days prior to the date
fixed in such notice for such termination. On and after the date of termination,
the Owner of a Receipt  will,  upon  surrender of such Receipt at the  Corporate
Trust Office of the  Depositary,  upon the payment of the fee of the  Depositary
for the surrender of Receipts  referred to in Section 2.05,  and upon payment of
any applicable taxes or governmental charges, be entitled to delivery, to him or
upon his  order,  of the  amount of  Deposited  Securities  represented  by such
Receipt. If any Receipts shall remain outstanding after the date of termination,
the Depositary  thereafter  shall  discontinue the  registration of transfers of
Receipts, shall suspend the distribution of dividends to the Owners thereof, and
shall not give any  further  notices  or  perform  any  further  acts under this

                                       28

<PAGE> 32

Deposit  Agreement,  except  that  the  Depositary  shall  continue  to  collect
dividends and other distributions pertaining to Deposited Securities, shall sell
rights as  provided in this  Deposit  Agreement,  and shall  continue to deliver
Deposited  Securities,  together  with  any  dividends  or  other  distributions
received with respect  thereto and the net proceeds of the sale of any rights or
other property,  in exchange for Receipts  surrendered to the Depositary  (after
deducting,  in each  case,  the fee of the  Depositary  for the  surrender  of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and  conditions  of this Deposit  Agreement,  and any  applicable
taxes or  governmental  charges).  At any time after the  expiration of one year
from the date of termination,  the Depositary may sell the Deposited  Securities
then held hereunder and may thereafter  hold  uninvested the net proceeds of any
such sale, together with any other cash then held by it hereunder,  unsegregated
and without liability for interest, for the pro rata benefit of the Owners which
have not theretofore been  surrendered,  such Owners thereupon  becoming general
creditors of the Depositary with respect to such net proceeds. After making such
sale, the Depositary shall be discharged from all obligations under this Deposit
Agreement,  except  to  account  for such net  proceeds  and other  cash  (after
deducting,  in each  case,  the fee of the  Depositary  for the  surrender  of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and  conditions  of this Deposit  Agreement,  and any  applicable
taxes or governmental charges).  Upon the termination of this Deposit Agreement,
the Issuer shall be discharged from all obligations under this Deposit Agreement
except  for its  obligations  to the  Depositary  under  Sections  5.08 and 5.09
hereof.
                                   ARTICLE 7.
                                 MISCELLANEOUS.

         SECTION 7.01.  Counterparts.
                        ------------
                  This  Deposit  Agreement  may be  executed  in any  number  of
counterparts,  each  of  which  shall  be  deemed  an  original  and all of such
counterparts  shall  constitute  one and the  same  instrument.  Copies  of this
Deposit  Agreement  shall be filed with the  Depositary  and the  Custodians and
shall be open to inspection by any holder or Owner of a Receipt during  business
hours.

                                       29

<PAGE> 33

         SECTION 7.02.   No Third Party Beneficiaries.
                         ----------------------------
                  This  Deposit  Agreement is for the  exclusive  benefit of the
parties  hereto  and shall not be deemed to give any legal or  equitable  right,
remedy or claim whatsoever to any other person.

         SECTION 7.03.   Severability.
                         ------------
                  In case any one or more of the  provisions  contained  in this
Deposit  Agreement or in the Receipts  should be or become  invalid,  illegal or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein or therein shall in no way be affected,
prejudiced or disturbed thereby.

         SECTION 7.04.   Holders and Owners as Parties; Binding  Effect.
                         ----------------------------------------------
                  The holders and Owners of Receipts  from time to time shall be
parties  to this  Deposit  Agreement  and shall be bound by all of the terms and
conditions hereof and of the Receipts by acceptance thereof.

         SECTION 7.05.  Notices.
                        -------
                  Any and all notices to be given to the Issuer  shall be deemed
to have been duly given if  personally  delivered or sent by first class airmail
postage prepaid,  cable,  telex or facsimile  transmission  confirmed by letter,
addressed to Micro Focus Limited,  Attention:  Legal Department, 26 West Street,
Newbury  Berkshire,  RG 131 1JT,  England or any other place to which the Issuer
may have transferred its principal office.

                  Any and all  notices  to be given to the  Depositary  shall be
deemed to have been duly given if  personally  delivered  or sent by first class
airmail postage prepaid or cable, telex or facsimile  transmission  confirmed by
letter,  addressed to The Bank of New York, Attention:  ADR Administration,  101
Barclay  Street,  New York,  New York  10286,  or any  other  place to which the
Depositary may have transferred its Corporate Trust Office.

                  Any and all  notices  to be  given to any  Owner of a  Receipt
shall be deemed to have been duly given if personally delivered or sent by first
class  airmail  postage  prepaid  or  cable,  telex  or  facsimile  transmission

                                       30

<PAGE> 34

confirmed by letter,  addressed to such Owner at the address of such Owner as it
appears on the transfer books for Receipts of the Depositary,  or, if such Owner
shall have filed with the Depositary a written request that notices intended for
such Owner be mailed to some other  address,  at the address  designated in such
request.

                  Delivery of a notice sent by mail or cable, telex or facsimile
transmission  shall be deemed to be effected  at the time when a duly  addressed
letter  containing the same (or a  confirmation  thereof in the case of a cable,
telex or facsimile transmission) is deposited, postage prepaid, in a post-office
letter box. The Depositary or the Issuer may, however, act upon any cable, telex
or facsimile  transmission  received by it from the other or from any Owner of a
Receipt,  notwithstanding that such cable, telex or facsimile transmission shall
not subsequently be confirmed by letter as aforesaid.

         SECTION 7.06.   Governing Law.
                         -------------
                  This Deposit  Agreement and the Receipts  shall be interpreted
and all rights hereunder and thereunder and provisions  hereof and thereof shall
be governed by the laws of the State of New York.

         SECTION 7.07.  Assignment.
                        ----------
                  This  Deposit  Agreement  may not be  assigned  by either  the
Issuer or the  Depositary,  except  that the  Issuer  may  assign  this  Deposit
Agreement  to the  surviving  entity  in a merger or  consolidation  in which it
participates or to a purchaser of all or substantially all of its assets.

         SECTION 7.08.  Compliance With U.S. Securities Laws.
                        ------------------------------------
                  Notwithstanding  anything  in this  Deposit  Agreement  to the
contrary,  the Issuer and the  Depositary  each agrees that it will not exercise
any rights it has under the Deposit  Agreement in a manner  which would  violate
the United  States  securities  laws to prevent  the  withdrawal  or delivery of
Deposited  Securities,  including,  but not  limited  to,  Section  IA(1) of the
General Instructions to the Form F-6 Registration Statement under the Securities
Act of 1933, as amended from time to time.

                                       31

<PAGE> 35


         IN WITNESS  WHEREOF,  MICRO FOCUS GROUP PUBLIC LIMITED  COMPANY and THE
BANK OF NEW YORK have duly executed this  agreement as of the day and year first
set forth above and all Owners shall become  parties  hereto upon  acceptance by
them of Receipts issued in accordance with the terms hereof.


                                    MICRO FOCUS GROUP PUBLIC LIMITED COMPANY


                                    By: /s/ Loren E. Hillberg 
                                       -----------------------------------
                                            LOREN E. HILLBERG 
                                            DIRECTOR 

                                    THE BANK OF NEW YORK



                                    By: /s/  Joanne F. DiGiovanni 
                                       -----------------------------------
                                             JOANNE F. DIGIOVANNI
                                             VICE PRESIDENT 

                                       32