Document:

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[CLIFFORD CHANCE LOGO]                             LIMITED LIABILITY PARTNERSHIP

                                                                     EXHIBIT 4.1

                                                                  CONFORMED COPY

                             MARCONI CORPORATION PLC

                                   MARCONI PLC

                                  HSBC BANK PLC

                                       AND

                                BARCLAYS BANK PLC

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                              ESOP ESCROW AGREEMENT

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                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                                   PAGE
<S>                                                                                                      <C>
1.     Interpretation.................................................................................     2

2.     Escrow Agent...................................................................................    10

3.     Creation Of The Escrow.........................................................................    11

4.     Terms Of Escrow................................................................................    12

5.     Escrow Cash Entitlement........................................................................    13

6.     Charged Escrow Cash Entitlement................................................................    13

7.     Release From Escrow............................................................................    15

8.     The Mobile Escrow Agreement....................................................................    18

9.     The Subsequently Sold Opcos Escrow Agreements..................................................    19

10.    Non-Participating ESOP Banks...................................................................    20

11.    Duties And Liability Of Escrow Agent...........................................................    20

12.    Reimbursement Of Escrow Agent..................................................................    22

13.    Acknowledgement Of Event Of Default And Undertakings...........................................    23

14.    Arbitration....................................................................................    24

15.    Costs..........................................................................................    25

16.    Termination....................................................................................    25

17.    Notices........................................................................................    25

18.    Announcements..................................................................................    26

19.    Further Assurance..............................................................................    27

20.    Remedies And Partial Invalidity................................................................    27

21.    Rights Of Third Parties........................................................................    27

22.    Assignment.....................................................................................    27

23.    Amendment......................................................................................    27

24.    Counterparts...................................................................................    28

25.    Governing Law And Jurisdiction.................................................................    28

SCHEDULE 1   Determination Of Escrow Cash Claim.......................................................    29

SCHEDULE 2   The Esop Swap Transactions...............................................................    32

SCHEDULE 3   Form Of Payment Instruction..............................................................    33

SCHEDULE 4   Sold Opcos, Mobile Opcos And Subsequently Sold Opcos.....................................    34
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<TABLE>
<S>                                                                                                       <C>
SCHEDULE 5   Participating Opcos......................................................................    39

SCHEDULE 6   Deed Of Adherence........................................................................    40

SCHEDULE 7   Form Of ESOP Bank Certificate............................................................    41
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THIS AGREEMENT is dated 13 December 2002

BETWEEN:

(1)      MARCONI CORPORATION PLC, a company incorporated in England and Wales
         (registered number 67307), whose registered office is at New Century
         Park, Box 53, Coventry, Warwickshire, CV3 1HJ (the "COMPANY");

(2)      MARCONI PLC, a company incorporated in England and Wales (registered
         number 3846429), whose registered office is at New Century Park, Box
         53, Coventry, Warwickshire, CV3 1HJ ("PLC");

(3)      HSBC BANK PLC ("HSBC") in its capacities as (i) agent for the Banks (in
         this capacity, the "AGENT"), (ii) trustee under the Security Documents
         (in this capacity, the "SECURITY TRUSTEE") and (iii) escrow agent (in
         this capacity, the "ESCROW AGENT"); and

(4)      BARCLAYS BANK PLC ("BARCLAYS").

RECITALS

(A)      The Marconi Employee Trust ("MET") was established by a trust deed
         entered into between PLC and BCT in 1999 for the purposes of, inter
         alia, operating the ESOP to provide incentive arrangements over PLC
         shares to employees of the Opcos. Arrangements have been made whereby
         employees of certain Opcos are entitled to call for PLC shares at
         specified exercise prices.

(B)      Certain financial institutions have entered into the ESOP Swap
         Transactions to hedge the exposure of BCT against an increase in the
         price of PLC shares in relation to future calls for shares by employees
         under the ESOP. PLC has guaranteed the obligations of BCT under the
         ESOP Swap Transactions (the "PLC GUARANTEES").

(C)      From December 1999, a series of letter agreements were and/or may have
         been entered into by PLC and certain of the Opcos (the "FUNDING
         LETTERS"). The terms of each Funding Letter provided that the Opco that
         was a party to it would bear the costs of its employees' participation
         in the ESOP, including without limitation (i) costs incurred through
         acquiring PLC shares on the market and holding them pending transfer to
         employees entitled to them and (ii) costs associated with a derivative
         or similar instrument enabling the MET to acquire PLC shares to satisfy
         employees' entitlements, and the relevant Opco agreed to pay to the MET
         or otherwise as PLC requested such amounts as requested by PLC from
         time to time.

(D)      The Company (acting at the request of PLC) advanced by way of limited
         recourse loans an aggregate sum of L215 million to BCT as a result of
         UBS and Salomon having made cash calls under their ESOP Swap
         Transactions.

(E)      As a result of the fall in the price of the PLC shares, the aggregate
         exposure of BCT to Barclays, Salomon and UBS (net of cash collateral
         paid to Salomon and UBS), under the ESOP Swap Transactions was stated
         to be approximately L160 million as at 31 March 2002.

(F)      In accordance with the ESOP Term Sheet, the Parties have agreed that on
         the Trigger Date, an escrow arrangement will be put in place under
         which the Escrow Cash will be set aside pending agreement

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         between the Interested Parties, or a formal determination by the Court
         or otherwise in accordance with this Agreement, of each ESOP Bank's
         entitlement (if any) to the Escrow Cash Balance.

(G)      Barclays has agreed to support the implementation of the Schemes
         pursuant to and on the basis set out in the Restructuring Undertaking
         Agreement, however, it is possible that the Company Scheme and/or the
         PLC Scheme may not be implemented if, amongst other things, the
         required levels of support for those Schemes are not obtained.

(H)      This Agreement sets out the terms on which the Escrow Cash will be held
         and creates a framework for resolving each ESOP Bank's entitlement (if
         any) to the Escrow Cash Balance.

(I)      On 13 September 2002, Highrose granted fixed charges to the Security
         Trustee for and on behalf of, respectively, the Bank Beneficiaries and
         the Bondholders over the Deposits on the terms and subject to the
         conditions of the Security Documents.

(J)      This Agreement also sets out the terms of escrow relating to any
         Charged Escrow Cash paid into escrow in accordance with clauses 5 (ESOP
         Banks) or 6 (Order of Application) of the Trust Deed and the mechanism
         by which the Charged Escrow Cash Balance may be released from the
         escrow arrangements contemplated herein.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      In this Agreement:

         "ACT" means the Companies Act 1985 (as amended);

         "BCT" means Bedell Cristin Trustees Limited;

         "CHARGED ESCROW CASH" means the aggregate of:

         (i)      the "Escrow Cash Amount" as defined in and determined in
                  accordance with the provisions of clause 5.1 (ESOP Banks'
                  Entitlement) of the Trust Deed to be paid by the Security
                  Trustee to the Escrow Agent in accordance with clause 3.2.1(b)
                  (Charged Escrow Cash Arrangements); and

         (ii)     the amount (if any) received by the Escrow Agent prior to the
                  Trigger Date pursuant to clauses 8.1.2 and 8.1.4 (PLC and the
                  Company Undertakings - Mobile Opcos);

         "CHARGED ESCROW CASH BALANCE" means, following payment of the Charged
         Escrow Cash to the Escrow Agent, the balance from time to time standing
         to the credit of the Escrow Account, including (i) all interest accrued
         and (ii) all income received from any Investments;

         "CHARGED ESCROW CASH ENTITLEMENT" has the meaning given in clause 6.4
         (Charged Escrow Cash Entitlement - Court Determination);

         "CLOSE-OUT AMOUNT" means, in relation to an ESOP Bank, the aggregate
         net liabilities owed (or deemed owing, as the case may be) by BCT to
         that ESOP Bank under the relevant ESOP Contracts in respect of the
         relevant Close-Out Date, and for these purposes:

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         (a)      all ESOP Swap Transactions between BCT and that ESOP Bank will
                  terminate (or be deemed to terminate) on the relevant
                  Close-Out Date;

         (b)      the liabilities of BCT will (subject to paragraph (c) below)
                  be calculated in accordance with the calculation provisions
                  expressly set out in the relevant ESOP Contracts; and

         (c)      if the relevant ESOP Swap Transactions are terminated
                  following agreement between BCT and that ESOP Bank or are
                  deemed to be terminated on the Effective Date, then the
                  following assumptions will apply:

                  (i)      an Event of Default (as such term is defined in the
                           relevant ESOP Contracts) has occurred and was
                           continuing under the relevant ESOP Contracts;

                  (ii)     BCT is the Defaulting Party (as such term is defined
                           in the relevant ESOP Contracts) for the purposes of
                           the relevant ESOP Contracts;

                  (iii)    the relevant Close-Out Date is the Early Termination
                           Date (as such term is defined in the relevant ESOP
                           Contracts) for the purposes of the relevant ESOP
                           Contracts; and

                  (iv)     the ESOP Swap Transactions are the Terminated
                           Transactions (as such term is defined in the relevant
                           ESOP Contracts) for the purposes of the relevant ESOP
                           Swap Master;

         "CLOSE-OUT DATE" means in relation to the relevant ESOP Swap
         Transactions between BCT and an ESOP Bank:

         (a)      if the ESOP Swap Transactions have been duly terminated in
                  accordance with their terms, the Early Termination Date (as
                  defined under the relevant ESOP Swap Master);

         (b)      if the ESOP Swap Transactions are terminated by agreement
                  between BCT and that ESOP Bank, the date that such termination
                  is effective; or

         (c)      if the ESOP Swap Transactions have not been terminated in the
                  manner described in paragraphs (a) or (b) above prior to the
                  Effective Date, the Effective Date;

         "COMPANY SCHEME" means a scheme of arrangement under Section 425 of the
         Act of certain liabilities of the Company on substantially the basis
         set out in the Restructuring Term Sheet;

         "COMPANY SECURITIES" means any New Ordinary Shares, Senior Notes,
         Junior Notes and US Notes received by an ESOP Bank under the PLC Scheme
         in respect of that ESOP Bank's claims under the relevant PLC
         Guarantees;

         "DETERMINATION" has the meaning given in paragraph 1 of Schedule 1
         (Determination of Escrow Cash Claim);

         "DETERMINATION DATE" means, as appropriate, the earlier of:

         (i)      the date a Payment Instruction is executed by all Interested
                  Parties in accordance with clause 7.1.1 (Escrow Cash Balance -
                  Payment Instruction or Final Judgment);

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         (ii)     the occurrence of a Final Judgment following an application to
                  the Court under clause 5.2 (Escrow Cash Claim- Court
                  Determination);

         (iii)    the date a Payment Instruction is executed by all Interested
                  Parties in accordance with clause 7.4.1 (Charged Escrow Cash
                  Balance - Payment Instruction or Final Judgment); or

         (iv)     the occurrence of a Final Judgment following an application to
                  the Court under clause 6.4 (Charged Escrow Cash Entitlement -
                  Court Determination);

         "EFFECTIVE DATE" means the date when an office copy of the Order of the
         High Court sanctioning the Company Scheme is delivered to the Registrar
         of Companies for registration as required by Section 425 of the Act;

         "ESCROW ACCOUNT" means the interest bearing deposit account no.:
         57548467, sort code: 40-05-15 held with HSBC Bank plc ,8 Canada Square,
         London E14 5HQ in the name of the Escrow Agent;

         "ESCROW CASH" means the aggregate of:

         (i)      the amount to be paid by the Company to the Escrow Agent as
                  calculated in accordance with clause 3.1 (Escrow Cash
                  Arrangements);

         (ii)     the amount (if any) received by the Escrow Agent in accordance
                  with clause 9.2.1 (Terms of Subsequently Sold Opco Escrow
                  Agreements); and

         (iii)    the amount (if any) received by the Escrow Agent on or after
                  the Trigger Date pursuant to clauses 8.1.2 and 8.1.4 (PLC and
                  the Company Undertakings - Mobile Opcos);

         "ESCROW CASH BALANCE" means on or after the Trigger Date, the balance
         from time to time standing to the credit of the Escrow Account
         including (i) all interest accrued in respect of the period commencing
         on 1 February 2004 and (ii) all income received from any Investments
         generated in respect of the period commencing on 1 February 2004;

         "ESCROW CASH CLAIM" has the meaning given in paragraph 1 of Schedule 1
         (Determination Of Escrow Cash Claim);

         "ESCROW CASH ENTITLEMENT" of an ESOP Bank shall be that amount
         calculated in accordance with the formula:

         (A - B) + ((A - B) x CD)

         where:

         A    =   the Escrow Cash Claim of that ESOP Bank

         B        = the aggregate value (if any) of the PLC Distribution
                  received as at the date of the relevant calculation by that
                  ESOP Bank together with the likely value of future PLC
                  Distributions (as determined by that ESOP Bank acting
                  reasonably in consultation with the other Interested Parties)
                  to be received by that ESOP Bank and which have been declared
                  pursuant to the provisions of the PLC Scheme as at the date of
                  the relevant calculation

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         C    =   the Interest Rate

         D    =   the number of days elapsed from the Record Date to the
                  Determination Date divided by 365

         "ESOP" means all employees' share schemes, stock option plans and share
         option plans relating to employees of any Opco, including the share
         plans described in the PLC listing particulars dated 11 October 1999
         and/or the Form 20-F filed in relation to PLC and the Company dated 28
         September 2001;

         "ESOP BANK" means Barclays and any of Salomon and/or UBS that becomes
         an "ESOP Bank" pursuant to clause 10 (Non-Participating ESOP Banks);

         "ESOP BANK CERTIFICATE" means a certificate substantially in the form
         set out in Schedule 7;

         "ESOP CONTRACTS" means, in relation to an ESOP Bank, the ESOP Swap
         Master and the related ESOP Swap Transactions between BCT and that ESOP
         Bank;

         "ESOP LOCK-UP" means an agreement substantially in the form of the
         Restructuring Undertaking Agreement;

         "ESOP SWAP LIABILITIES" means, in relation to an ESOP Bank, the
         Close-Out Amount due from BCT to that ESOP Bank under the relevant ESOP
         Contracts PLUS interest at the Interest Rate from the relevant
         Close-Out Date to the Record Date MINUS any benefit or recovery
         received by that ESOP Bank from BCT in respect of the liabilities owed
         to that ESOP Bank under the relevant ESOP Contracts;

         "ESOP SWAP MASTER" means the ISDA Master Agreement identified in
         Schedule 2 (The ESOP Swap Transactions) between BCT and the relevant
         ESOP Bank or Non-Participating ESOP Bank as specified in Schedule 2.
         The ESOP Swap Master includes the relevant Schedule and the relevant
         Confirmations also identified in Schedule 2 that were exchanged between
         the parties confirming the ESOP Swap Transactions;

         "ESOP SWAP TRANSACTIONS" means the derivative transactions specified in
         Schedule 2 (The ESOP Swap Transactions) and the related credit support
         arrangements, including those confirmed in the Credit Support Annex to
         the ISDA Master Agreement dated 16 June 2000 between UBS and BCT;

         "ESOP TERM SHEET" means the non-legally binding indicative ESOP term
         sheet dated 28 August 2002 and initialled by, inter alia, Barclays,
         HSBC, JPMorgan Chase Bank, PLC, the Company and Bingham McCutchen LLP;

         "FINAL JUDGMENT" means a judgment delivered by the Court and/or, where
         the provisions of clause 14 (Arbitration) apply, an award made by the
         arbitrator, which determines (or, where there is both a judgment and an
         award and/or more than one judgment and/or award, which together
         determine) each matter referred to the Court and/or the arbitrator and
         which is (or, which each are) final and in relation to which no appeal
         or judicial challenge may be made (whether by lapse of time or
         otherwise);

         "FRACTION" means, if Barclays is the only ESOP Bank, 83.49 divided by
         100 or, if either or both of Salomon and/or UBS become an ESOP Bank
         pursuant to clause 10 (Non-Participating ESOP Banks)

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         (each a "NEW ESOP BANK"), such other fraction as may be agreed by the
         Parties and each New ESOP Bank in writing;

         "FUNDING LETTERS" has the meaning given in Recital C;

         "HIGHROSE" means Highrose Limited, a company incorporated in England
         and Wales with registered number 44101334;

         "HYPOTHETICAL INSOLVENCY" has the meaning given in paragraph 1 of
         Schedule 1 (Determination of Escrow Cash Claim);

         "HYPOTHETICAL INSOLVENCY PRACTITIONER" means the administrator,
         liquidator or other office holder of (i) PLC and (ii) the Company
         assumed to have been appointed in relation to the Hypothetical
         Insolvency;

         "INTERESTED PARTIES" means:

         (a)      up to, but not including, the Trigger Date, PLC, the Company,
                  the Agent and (subject to any waiver given in accordance with
                  clause 6.1.1 (Claims against Participating Opcos)) each ESOP
                  Bank; and

         (b)      from the Trigger Date, the Company and (subject to any waiver
                  given in accordance with clause 6.1.1 (Claims against
                  Participating Opcos)) each ESOP Bank;

         "INTEREST RATE" means LIBOR plus 225 basis points (expressed as a
         percentage);

         "INVESTMENTS" means, at any time:

         (a)      cash in hand or on deposit (but if for a fixed period then
                  such period shall be no more than three months) with any
                  acceptable bank; and

         (b)      certificates of deposit, maturing no more than three months
                  after the relevant date of calculation, issued by an
                  acceptable bank,

         and an "ACCEPTABLE BANK" for this purpose is a commercial bank or trust
         company which has a rating of A or higher by Standard & Poor's or
         FitchIBCA or A2 or higher by Moody's or a comparable rating from a
         nationally recognised credit rating agency for its long-term debt
         obligations;

         "JUNIOR NOTES" means the junior secured notes to be issued to certain
         creditors under the Company Scheme;

         "LIBOR" means the rate for the date of calculation (the "RESET DATE)
         for deposits in Sterling for a period of three months or such other
         period as the Interested Parties may agree (the "DESIGNATED MATURITY")
         which appears on the Telerate Page 3750 as of 11:00 a.m., London time,
         on the Reset Date. If such rate does not appear on the Telerate Page
         3750, the rate for that date will be calculated on the basis of the
         rates at which deposits in Sterling are offered to the relevant ESOP
         Bank at approximately 11:00 a.m. on the Reset Date in the London
         interbank market for a period of the Designated Maturity commencing on
         the Reset Date and in an amount representative of a single transaction
         in the market at that time;

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         "MARCONI GROUP COMPANY" means each of PLC, the Company and all of their
         respective subsidiaries and former subsidiaries and each Opco;

         "MET" has the meaning given in Recital A;

         "MOBILE ESCROW AGENT" has the meaning given in clause 8.1 (PLC and the
         Company Undertakings - Mobile Opcos);

         "MOBILE ESCROW AGREEMENT" means the escrow agreement entered into
         between the Company, PLC, Marconi Bruton Street Limited, HSBC (on its
         own behalf and as a member of the Co-ordination Committee), Barclays,
         Salomon, UBS, BCT and Slaughter and May dated 2 August 2002;

         "MOBILE OPCOS" means those Opcos listed in Schedule 4.2 under the
         heading "Mobile Opcos";

         "MODEL" has the meaning given in paragraph 2.3 of Schedule 1
         (Determination of Escrow Cash Claim);

         "NEW ORDINARY SHARES" means new ordinary shares in the Company;

         "NON-PARTICIPATING ESOP BANK" means any of Salomon and/or UBS which is
         not an ESOP Bank;

         "OPCOS" means subsidiaries or former subsidiaries of PLC (including the
         Company and any subsidiary or former subsidiary of PLC that is dormant
         or has been dissolved or wound up) and subsidiaries or former
         subsidiaries of any partnership (wherever formed) wholly owned,
         directly or indirectly, by PLC and/or by a subsidiary or subsidiaries
         or former subsidiary or former subsidiaries of PLC;

         "ORDER" means any order, decision, injunction, judgment, decree,
         ruling, writ, assessment or arbitration award;

         "PARTICIPATING OPCOS" means the Opcos, excluding the Mobile Opcos and
         the Subsequently Sold Opcos, whose employees participated in the ESOP.
         For the purpose of information only and without limiting the generality
         of this definition or binding any of the Parties, the Opcos whose
         employees participated in the ESOP identified by PLC and the Company as
         being "Participating Opcos" as at the date of this Agreement on the
         basis described in PLC's letter to Barclays dated 12 December 2002 are
         listed in Schedule 5 (Participating Opcos);

         "PARTY" means a party to this Agreement and includes its successors,
         permitted assigns and permitted transferees;

         "PAYMENT INSTRUCTION" means a notice substantially in the form set out
         in Schedule 3 (Form of Payment Instruction);

         "PLC DISTRIBUTION" means, in relation to an ESOP Bank (in its capacity
         as such), the aggregate value of the cash (if any) and the Company
         Securities (if any) received by that ESOP Bank under the PLC Scheme in
         respect of its claims under the relevant PLC Guarantees and, for this
         purpose :

         (a)      the value of cash shall be the amount of that cash; and

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         (b)      the value of Company Securities shall be calculated by
                  reference to (i) the net proceeds received on a sale of all or
                  part of those Company Securities by that ESOP Bank (as
                  certified in the ESOP Bank Certificate) and/or (ii) in
                  relation to any of those Company Securities that are not sold
                  by that ESOP Bank on or prior to the relevant Determination
                  Date, the closing price on the Determination Date for New
                  Ordinary Shares, Junior Notes, Senior Notes or US Notes (as
                  applicable) (the "RELEVANT SECURITIES") on the relevant
                  primary stock exchange for the Relevant Securities (or, if no
                  price is quoted on that Determination Date, the last price
                  quoted for the Relevant Securities on the relevant primary
                  stock exchange) (the "LAST LISTING") as quoted in an
                  appropriate recognised journal published in the relevant
                  jurisdiction on the next Business Day following the relevant
                  Determination Date (or the date of the Last Listing, as the
                  case may be);

         "PLC GUARANTEES" has the meaning set out in Recital B;

         "PLC SCHEME" means the proposed scheme of arrangement under Section 425
         of the Act of certain liabilities of PLC on the basis set out in the
         Restructuring Term Sheet;

         "POST-DETERMINATION INTEREST" means interest at the Interest Rate on
         the Escrow Cash Claim of an ESOP Bank less the value (if any) of its
         PLC Distribution (including, if necessary, the likely value of future
         PLC Distributions (as determined by that ESOP Bank acting reasonably in
         consultation with the other Interested Parties)) for the period from
         the Determination Date to the date on which that amount is paid to that
         ESOP Bank pursuant to clause 7.2.1;

         "PWC MODEL" has the meaning given in paragraph 2.4 of Schedule 1
         (Determination of Escrow Cash Claim);

         "RECORD DATE" means the date falling 2 Business Days before the
         application relating to the Company Scheme is filed at the Court;

         "RECOVERY" has the meaning given in clause 6.1.3 (Claims against
         Participating Opcos);

         "RESTRUCTURING TERM SHEET" means the indicative non-binding heads of
         terms for the proposed Schemes dated 28 August 2002 (as amended or
         supplemented from time to time);

         "RESTRUCTURING UNDERTAKING AGREEMENT" means the agreement dated 13
         September 2002 entered into between PLC, the Company and Barclays (as
         amended on or about the date of this Agreement );

         "SALOMON" means Salomon Brothers International Limited;

         "SCHEMES" means both the PLC Scheme and the Company Scheme;

         "SENIOR NOTES" means the senior secured bonds to be issued to certain
         creditors under the Schemes;

         "SOLD OPCOS" means the Opcos sold by a Marconi Group Company prior to
         28 August 2002. For the purpose of information only and without
         limiting the generality of this definition or binding any of the
         Parties, Schedule 4.1 lists those Opcos which are listed in Schedule 5
         and/or in respect of which signed Funding Letters have been located and
         which the Company has identified as "Sold Opcos" as at the date of this
         Agreement;

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         "SUBSEQUENTLY SOLD OPCO ESCROW AGREEMENTS" means (i) the agreement (the
         "Israel Agreement") dated 21 October 2002 between the Company, PLC,
         HSBC (on its own behalf and as a member of the Co-ordination
         Committee), Barclays, BCT and Allen & Overy, (ii) the agreement (the
         "Singapore Agreement") dated 12 November 2002 between the Company, PLC,
         Metapath Software International Limited, HSBC (on its own behalf and on
         behalf and as a member of the Co-ordination Committee), Barclays, BCT
         and Allen & Overy and (iii) any other escrow agreements entered into
         pursuant to clause 9.1 (PLC and the Company Undertakings - Subsequently
         Sold Opcos);

         "SUBSEQUENTLY SOLD OPCO LIABILITIES" means, in relation to a
         Subsequently Sold Opco, an amount equal to all potential claims against
         that Subsequently Sold Opco relating to the costs of the participation
         of all employees of that Subsequently Sold Opco in the ESOP (including
         the claims of the ESOP Banks, BCT and the Company, irrespective of
         whether or not (i) such Subsequently Sold Opco has signed a Funding
         Letter and (ii) a Funding Letter in respect of that Subsequently Sold
         Opco can be located);

         "SUBSEQUENTLY SOLD OPCOS" means any Opcos sold by a Marconi Group
         Company (other than to another Marconi Group Company) on or after 28
         August 2002 but prior to the earlier of (i) the Enforcement Date and
         (ii) the Trigger Date (including those Opcos listed in Schedule 4.3
         under the heading "Subsequently Sold Opcos");

         "TRIGGER DATE" means the Effective Date provided:

         (a)      the Restructuring Undertaking Agreement has not been validly
                  terminated by Barclays at such time; and

         (b)      the documents setting out and/or giving effect to the Company
                  Scheme include or provide for an ESOP escrow proposal
                  substantially in accordance with the ESOP Term Sheet;

         "TRUST DEED" means the trust deed dated 13 September 2002 entered into
         between the Security Trustee, the Company and Highrose in respect of
         the Banks' Security over Cash Deed and the Bondholders' Security over
         Cash Deed (as amended and restated on or about the date of this
         Agreement );

         "UBS" means UBS AG; and

         "US NOTES" means the secured limited recourse notes to be issued to
         certain creditors under the Schemes.

1.2      In this Agreement, a reference to:

         1.2.1    a "SUBSIDIARY" is to be construed in accordance with section
                  736 of the Act but the phrase "body corporate" in section
                  736(3) of the Act shall be construed in this Agreement as
                  referring to any company, corporation or body corporate
                  incorporated in any country;

         1.2.2    any "LIABILITY" under, pursuant to or arising out of (or any
                  analogous expression) any agreement, contract, deed or other
                  instrument includes a reference to contingent liability under,
                  pursuant to or arising out of (or any analogous expression)
                  that agreement, contract, deed or other instrument;

                                      - 9 -

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         1.2.3    a "SUCCESSOR" includes a successor in title of any Party and
                  any person who under the laws of its jurisdiction of
                  incorporation or domicile has assumed the rights and
                  obligations of any Party under this Agreement or to which,
                  under such laws, any rights and obligations have been
                  transferred;

         1.2.4    a statutory provision includes a reference to the statutory
                  provision as modified or re-enacted or both from time to time
                  before the date of this Agreement and any subordinate
                  legislation made under the statutory provision (as so modified
                  or re-enacted) before the date of this Agreement;

         1.2.5    a "PERSON" includes a reference to any individual, firm,
                  company, corporation or other body corporate, government,
                  state or agency of a state or any association, trust or
                  partnership (whether or not having separate legal personality
                  of two or more of the foregoing);

         1.2.6    a clause, paragraph or Schedule, unless the context otherwise
                  requires, is a reference to a clause or paragraph of, or
                  schedule to, this Agreement;

         1.2.7    any English legal term for any action, remedy, method of
                  judicial proceeding, legal document, legal status, court,
                  official or any legal concept or thing shall in respect of any
                  jurisdiction other than England be deemed to include what most
                  nearly approximates in that jurisdiction to the English legal
                  term and to any English statute shall be construed so as to
                  include equivalent or analogous laws of any other
                  jurisdiction; and

         1.2.8    times of the day is to London time.

1.3      Words and expressions not defined in this Agreement shall, unless
         otherwise specified in this Agreement, have the meanings given in the
         Trust Deed.

1.4      Words importing the singular in this Agreement shall include the plural
         and vice versa.

1.5      Save where they incorporate definitions for application in this
         Agreement, the recitals and clause headings are for ease of reference
         only, do not affect its interpretation and are not intended to have
         binding effect and any factual or legal statements in the recitals are
         working assumptions that are not agreed by the Parties and do not
         constitute admissions for the purpose of any dispute.

1.6      Where any amount expressed in a currency other than pounds sterling is
         required to be translated into pounds sterling for any purpose in
         relation to this Agreement, it shall be translated into pounds sterling
         at the closing mid-point pound spot rate applicable to that amount of
         that non-sterling currency as shown in the Financial Times (London
         Edition) published on the date of the calculation or payment (as
         applicable) or, if the Financial Times (London Edition) is not
         published on that day, the closing middle point spot rate for the
         Business Day prior to the date of the calculation or payment (as
         applicable) quoted by Barclays for pounds sterling applicable to
         amounts of L100,000 or more.

2.       ESCROW AGENT

         The Interested Parties and the Security Trustee hereby appoint the
         Escrow Agent as escrow agent, and the Escrow Agent agrees to act as
         escrow agent, on the terms of this Agreement.

                                     - 10 -

<PAGE>

3.      CREATION OF THE ESCROW

3.1     ESCROW CASH ARRANGEMENTS

         On the Trigger Date, the Company will immediately pay to the Escrow
         Agent an amount of cash equal to L145,000,000 MINUS any amounts
         received by the Escrow Agent pursuant to the Subsequently Sold Opco
         Escrow Agreements MULTIPLIED by the Fraction.

3.2      CHARGED ESCROW CASH ARRANGEMENTS

         3.2.1    Pursuant to clause 5.3 (ESOP Banks - Release pursuant to
                  clause 4.2) and clause 6 (Order of Application) of the Trust
                  Deed, the Security Trustee shall, in the circumstances
                  specified in those clauses of the Trust Deed:

                  (a)      set aside from the Deposits an amount equal to the
                           Escrow Cash Amount; and

                  (b)      pay the Escrow Cash Amount to the Escrow Agent to be
                           held on the terms and subject to the conditions of
                           this Agreement.

         3.2.2    In circumstances where clause 3.2.1 applies:

                  (a)      no payments will be made to the Escrow Agent in
                           accordance with clause 3.1 (Escrow Cash
                           Arrangements); and

                  (b)      no ESOP Bank shall be restricted from pursuing its
                           claims in respect of the ESOP Contracts relating to
                           that ESOP Bank (whether directly or indirectly
                           through BCT or otherwise and whether in connection
                           with the Funding Letters, the PLC Guarantees or
                           otherwise). No such claims shall have been affected
                           by this Agreement, except as expressly stated in
                           clause 6 (Charged Escrow Cash Entitlement).

3.3      RELEASE OF CLAIMS

         3.3.1    Following receipt of the Escrow Cash in full by the Escrow
                  Agent in accordance with clause 3.1 (Escrow Cash
                  Arrangements): PLC shall unconditionally and irrevocably
                  release all of its claims against each Opco to the extent that
                  they relate to (a) all or any of the ESOP Contracts and/or (b)
                  the Funding Letters and shall waive all past, present or
                  future rights it may have against such company in connection
                  with the same; and

         3.3.2    each ESOP Bank shall unconditionally and irrevocably release
                  all of its claims (whether directly or indirectly through BCT
                  or otherwise) against each Opco (but, for the avoidance of
                  doubt, not against PLC) under, pursuant to or arising in
                  relation to (a) all ESOP Contracts to which it is a party
                  and/or (b) the Funding Letters and shall waive all past,
                  present or future rights it may have against such company in
                  connection with the same provided that nothing in this clause
                  3.3.2 shall affect in any way any rights or claims of (i)
                  Barclays under the Restructuring Undertaking Agreement, (ii)
                  any other ESOP Bank under its ESOP Lock-Up, (iii) any ESOP
                  Bank under or in connection with the Mobile Escrow Agreement
                  or any Subsequently Sold Opco Escrow Agreement, (iv) any ESOP
                  Bank to seek disclosure and production of documents or other
                  evidence in relation to any proceedings contemplated by

                                     - 11 -

<PAGE>

                  this Agreement or (v) (for the avoidance of doubt) any ESOP
                  Bank as against the Company in respect of the obligations of
                  the Company under this Agreement.

4.       TERMS OF ESCROW

4.1      DURATION

         4.1.1    Immediately upon receipt of any amounts constituting the
                  Escrow Cash or the Charged Escrow Cash, the Escrow Agent shall
                  deposit that amount of the Escrow Cash or the Charged Escrow
                  Cash (as applicable) into the Escrow Account.

         4.1.2    No withdrawal or release (in whole or in part) of the Escrow
                  Cash Balance or the Charged Escrow Cash Balance (as
                  applicable) from the Escrow Account shall be permitted until
                  receipt by the Escrow Agent of a Payment Instruction or a
                  notice of a Final Judgment in accordance with clause 7.1
                  (Escrow Cash Balance - Payment Instruction or Final Judgment)
                  or clause 7.4 (Charged Escrow Cash Balance - Payment
                  Instruction or Final Judgment) (as applicable), provided that
                  such a withdrawal or release shall be permitted for the
                  purpose of investing any part of the Escrow Cash Balance or
                  the Charged Escrow Cash Balance (as applicable) in Investments
                  in accordance with clause 11.1 (Investment Instructions).

4.2      RIGHTS OF THE PARTIES

         The Escrow Agent shall hold the Escrow Cash Balance or the Charged
         Escrow Cash Balance (as applicable) on trust for any person entitled to
         receive the proceeds in accordance with clauses 7.2 (Escrow Cash
         Balance - Payment Terms) or 7.5 (Charged Escrow Cash Balance - Payment
         Terms) on the terms of, and for the purposes set out in, this Agreement
         and each Party acknowledges that it has no, and undertakes that it will
         not assert any, rights of any nature (including, without limitation,
         any rights of set off) to or in respect of the Escrow Cash Balance or
         the Charged Escrow Cash Balance (as applicable) other than as expressly
         set out in this Agreement.

4.3      INTEREST ON THE ESCROW CASH

         The Company is entitled to receive, and the Escrow Agent shall pay to
         the Company, any interest that is earned on the Escrow Cash in, or any
         income received from any Investments generated in respect of, the
         period from the Trigger Date up to and including 31 January 2004 on the
         first Business Day of each month during that period with the final
         payment being made on 31 January 2004, or if that day is not a Business
         Day, the next following Business Day (or on such other basis or times
         as shall be agreed in writing between the Company and the Escrow
         Agent). Following 31 January 2004, any interest earned on, or any
         income received from any Investments generated in respect of, the
         Escrow Cash shall be added to, and form part of, the Escrow Cash
         Balance.

4.4      PAYMENT MECHANISM

         All payments of monies by the Escrow Agent pursuant to this Agreement
         shall be made by electronic transfer of funds for same day value to an
         account nominated by the receiving party.

                                     - 12 -

<PAGE>

5.       ESCROW CASH ENTITLEMENT

5.1      ESCROW CASH ENTITLEMENT - AGREEMENT

         Each Interested Party shall negotiate in good faith with a view to
         reaching agreement as to the Escrow Cash Entitlement of each ESOP Bank,
         on the terms and on the basis of the principles and assumptions set out
         in Schedule 1 (Determination of Escrow Cash Claim), within 30 Business
         Days of the Trigger Date.

5.2      ESCROW CASH CLAIM - COURT DETERMINATION

         If the Interested Parties fail to reach agreement pursuant to clause
         5.1 (Escrow Cash Entitlement - Agreement) within 30 Business Days of
         the Trigger Date, any Interested Party shall be entitled to apply to
         the Court (with a copy to the other Interested Parties) for a
         Determination in relation to each ESOP Bank.

5.3      WAIVER OF RIGHTS

         The Parties hereby waive any right to argue that a Determination shall
         be made on any terms other than as set out in Schedule 1 (Determination
         of Escrow Cash Claim) or that an Interested Party has no standing to be
         a party or to be heard on any application to the Court pursuant to
         clause 5.2 (Escrow Cash Claim - Court Determination) or to the
         arbitrator pursuant to clause 14 (Arbitration).

6.       CHARGED ESCROW CASH ENTITLEMENT

6.1      CLAIMS AGAINST PARTICIPATING OPCOS

         6.1.1    Once the Escrow Agent has received the Charged Escrow Cash in
                  accordance with clause 3.2.1, each ESOP Bank shall (unless it
                  has notified each other Party in writing that it irrevocably
                  waives any claim to any amount of the Charged Escrow Cash
                  Balance, in which case its Charged Escrow Cash Entitlement
                  shall be zero and it shall forthwith cease to be an Interested
                  Party), subject to clause 6.2 (Terms of Claims), pursue with
                  reasonable diligence, to the extent reasonably practicable,
                  any direct or indirect claims it has against the Participating
                  Opcos in respect of all ESOP Contracts to which it is a party
                  for the purposes of recovering for itself any amount payable
                  by the Participating Opcos in respect of the costs of
                  participation of all employees of such Participating Opcos in
                  the ESOP.

         6.1.2    In determining whether it is reasonably practicable for it to
                  pursue a claim against a Participating Opco for the purposes
                  of clause 6.1.1, the matters that an ESOP Bank shall be
                  entitled to take into account include, without limitation, the
                  likely costs of pursuing such claim, the number of employees
                  of such Participating Opco that participated in the ESOP, the
                  prospects of recovering any amount from such Participating
                  Opco, the likely quantum of such recovery, the information and
                  evidence that it has or that it is likely to be able to obtain
                  and is entitled to use in relation to such claim and in
                  relation to such Participating Opco and the extent to which
                  BCT is likely to assist it in pursuing any indirect claim. For
                  the avoidance of doubt the existence of the Charged Escrow
                  Cash Balance shall not be a factor that an ESOP Bank is
                  entitled to take into account for this purpose.

                                     - 13 -

<PAGE>

         6.1.3    In relation to claims pursued by an ESOP Bank in accordance
                  with clause 6.1 or abandoned, compromised or settled in
                  accordance with clause 6.2 (Terms of Claims) against a
                  Participating Opco (the "RELEVANT OPCO"), the total amount
                  actually received by an ESOP Bank from or in respect of its
                  claims against the Relevant Opco MINUS the total amount of
                  that ESOP Bank's reasonable and proper legal costs and
                  disbursements (including the costs of obtaining expert
                  accounting evidence and assistance (if reasonably required)
                  incurred (but not recovered from any other party) in relation
                  to those claims against the Relevant Opco, shall be that ESOP
                  Bank's "RECOVERY".

         6.1.4    In this Agreement no admission is made by the Company or PLC
                  that the participation of employees in the ESOP gives rise to
                  a liability to an ESOP Bank or otherwise.

6.2      TERMS OF CLAIMS

         6.2.1    Each ESOP Bank shall, at the reasonable request of the
                  Company, provide the Company with a report on the status of
                  its claims against a Participating Opco, provided that:

                  (i)      nothing in this clause shall require any ESOP Bank to
                           disclose any privileged or confidential information
                           (although, on receipt of a reasonable request from
                           the Company, any ESOP Bank shall, to the extent
                           practicable, take reasonable steps to obtain such
                           consent or releases in relation to confidential
                           information as may allow them to disclose it in such
                           report);

                  (ii)     the Company shall bear the reasonable costs of
                           preparing such report (including, if applicable, the
                           costs incurred in obtaining any consent or releases
                           in relation to confidential information pursuant to
                           sub-clause (i) above); and

                  (iii)    the Company shall keep such report confidential.

         6.2.2    Each ESOP Bank shall (unless such notification or assignment
                  could reasonably be expected to be capable of prejudicing such
                  ESOP Bank) notify the Company at least 5 Business Days prior
                  to abandoning, compromising, settling or otherwise not
                  pursuing any direct or indirect claims against a Participating
                  Opco whereupon, if requested by, and at the cost of, the
                  Company within 3 Business Days of receipt of such
                  notification, that ESOP Bank shall, to the extent that such
                  rights and claims are under applicable laws capable of
                  assignment, and on receipt by that ESOP Bank of an indemnity
                  as to reasonable costs and any other liabilities relating to
                  or arising out of the claims on terms acceptable to that ESOP
                  Bank (such indemnity to be given, or secured, by a bank or
                  other financial institution acceptable to the ESOP Bank),
                  assign to the Company all of its rights and claims against
                  that Participating Opco in respect of all ESOP Contracts to
                  which that ESOP Bank is a party in consideration of the
                  Company paying to the ESOP Bank (a) an amount equal to the
                  compromise, settlement or agreement reached between the ESOP
                  Bank and that Participating Opco in respect of that claim or
                  (b) the sum of L1 if the claim is to be abandoned or otherwise
                  not pursued, or, if not so requested by the Company within 3
                  Business Days of receipt of such notification, that ESOP Bank
                  shall be entitled to abandon, compromise, settle or otherwise
                  not pursue such claims on such terms as it reasonably
                  considers appropriate.

                                     - 14 -

<PAGE>

         6.2.3    Nothing in this clause 6.2 shall allow the Company to bring,
                  continue or otherwise conduct any proceedings in the name of
                  any ESOP Bank nor, after any assignment to the Company,
                  otherwise hold out or represent that such ESOP Bank remains
                  party to, or is otherwise involved in, any proceedings
                  relating to the claims.

6.3      ABANDONMENT, COMPROMISE, SETTLEMENT

         Any abandonment, compromise or settlement of, or failure to pursue, any
         direct or indirect claims against a Participating Opco by an ESOP Bank
         pursuant to clause 6.2 (Terms of Claims) shall not affect or prejudice
         in any way its Charged Escrow Cash Entitlement provided that ESOP Bank
         has complied with its obligations in all material respects under
         clauses 6.1 (Claims against Participating Opcos) and 6.2 (Terms of
         Claims).

6.4      CHARGED ESCROW CASH ENTITLEMENT - COURT DETERMINATION

         Once its claims against the Participating Opcos have been pursued in
         accordance with clause 6.1.1 (Claims against Participating Opcos)
         and/or abandoned, compromised, settled or otherwise not pursued in
         accordance with clause 6.2 (Terms of Claims), each ESOP Bank (other
         than an ESOP Bank that has notified a waiver of its claims in
         accordance with clause 6.1.1 (Claims against Participating Opcos)),
         shall promptly notify in writing the other Interested Parties of the
         amount of its Recovery (if any). After such notice has been given by
         each ESOP Bank (other than an ESOP Bank that has notified a waiver of
         its claims in accordance with clause 6.1.1 (Claims against
         Participating Opcos)), each Interested Party shall negotiate in good
         faith with a view to reaching agreement as to, and any Interested Party
         shall be entitled to apply to the Court (with a copy to the other
         Interested Parties) for the Court to determine, the amount (if any)
         (the "CHARGED ESCROW CASH ENTITLEMENT") to which each ESOP Bank is
         entitled (or would be entitled but for its Recovery or any abandonment,
         compromise or settlement of, or failure to pursue, any claim in
         accordance with clause 6.2 (Terms of Claims)) to recover directly
         and/or indirectly through BCT, PLC or otherwise against, or in respect
         of monies payable by, the Participating Opcos:

         6.4.1    in the actual circumstances existing at the date on which the
                  Security Trustee is obliged under the Trust Deed to pay the
                  Charged Escrow Cash to the Escrow Agent;

         6.4.2    insofar as relevant, after taking into account all relevant
                  competing claims against BCT; and

         6.4.3    assuming that the Participating Opcos are able to discharge
                  their liabilities in full.

6.5      WAIVER OF RIGHTS

         The Parties hereby waive any right to argue that an Interested Party
         has no standing to be a party or to be heard on any application to the
         Court pursuant to clause 6.4 (Charged Escrow Cash Entitlement - Court
         Determination) or to the arbitrator pursuant to clause 14
         (Arbitration).

7.       RELEASE FROM ESCROW

7.1      ESCROW CASH BALANCE - PAYMENT INSTRUCTION OR FINAL JUDGMENT

         7.1.1    Upon agreement in writing between the Interested Parties as to
                  the Escrow Cash Entitlement of each ESOP Bank, the Interested
                  Parties shall forthwith execute a Payment Instruction and

                                     - 15 -

<PAGE>

                  any Interested Party may forthwith deliver the same (together
                  with the ESOP Bank Certificate(s)) to the Escrow Agent (with a
                  copy at the same time to each other Interested Party)
                  whereupon the Escrow Agent shall release and pay the Escrow
                  Cash Entitlement of each ESOP Bank in accordance with Clause
                  7.2 (Escrow Cash Balance - Payment Terms).

         7.1.2    Upon the occurrence of a Final Judgment following an
                  application to the Court under clause 5.2 (Escrow Cash Claim -
                  Court Determination), any Interested Party may notify the
                  Escrow Agent in writing (with a copy at the same time to each
                  other Interested Party) that such Final Judgment has been made
                  and of the terms thereof and shall attach to the notice a
                  certified copy of the Final Judgment (where available)
                  (together with the ESOP Bank Certificate(s) where the Court or
                  an arbitrator finds in favour of all or part of the claims of
                  an ESOP Bank), whereupon the Escrow Agent shall release and
                  pay the Escrow Cash Entitlement of each ESOP Bank in
                  accordance with Clause 7.2 (Escrow Cash Balance - Payment
                  Terms).

         7.1.3    Each ESOP Bank undertakes that promptly upon agreement or
                  determination pursuant to clauses 5.1 (Escrow Cash Entitlement
                  - Agreement) or 5.2 (Escrow Cash Claim - Court Determination)
                  respectively, it shall complete and deliver an ESOP Bank
                  Certificate to each of the Interested Parties and the Escrow
                  Agent.

7.2      ESCROW CASH BALANCE - PAYMENT TERMS

         Following receipt of a Payment Instruction and an ESOP Bank Certificate
         pursuant to clause 7.1.1 or a notice of a Final Judgment pursuant to
         clause 7.1.2 and, if applicable, an ESOP Bank Certificate (either date
         being the "RECEIPT DATE"), the Escrow Agent shall immediately notify
         each Interested Party in writing that it has received such Payment
         Instruction or notice and an ESOP Bank Certificate (as applicable), and
         shall, and is hereby irrevocably authorised by the Interested Parties
         to, release from the Escrow Account ten clear Business Days after the
         Receipt Date and pay from the Escrow Cash Balance the amounts, and in
         the order of priority, specified below:

         7.2.1    firstly, to the bank account specified in each ESOP Bank
                  Certificate, an amount equal to the Escrow Cash Entitlement
                  specified in the relevant ESOP Bank Certificate (subject to
                  any adjustments required to be made pursuant to clause 7.3
                  (Aggregate Recoveries by each ESOP Bank)) together with
                  Post-Determination Interest; and

         7.2.2    secondly, to the Junior/Senior Mandatory Redemption Escrow
                  Account (as such term is defined in the Junior Notes) the
                  Escrow Cash Balance following payment (in full) to each ESOP
                  Bank of the amounts specified in clause 7.2.1.

7.3      AGGREGATE RECOVERIES BY EACH ESOP BANK

         For the avoidance of doubt, the Parties agree that in no circumstances
         shall the aggregate benefit received by an ESOP Bank (excluding any
         costs awarded to such ESOP Bank by the Court or arbitrator) in respect
         of (i) its Escrow Cash Entitlement and (ii) any monies received under
         the Mobile Escrow Agreement exceed the ESOP Swap Liabilities of that
         ESOP Bank.

7.4      CHARGED ESCROW CASH BALANCE - PAYMENT INSTRUCTION OR FINAL JUDGMENT

                                     - 16 -

<PAGE>

         7.4.1    Upon agreement in writing between the Interested Parties as to
                  the Charged Escrow Cash Entitlement of each ESOP Bank, the
                  Interested Parties shall forthwith execute a Payment
                  Instruction and any Interested Party may forthwith deliver the
                  same (together with the ESOP Bank Certificate(s)) to the
                  Escrow Agent (with a copy at the same time to each other
                  Interested Party and the Security Trustee) whereupon the
                  Escrow Agent shall release and pay the Charged Escrow Cash
                  Entitlement of each ESOP Bank in accordance with clause 7.5
                  (Charged Escrow Cash Balance - Payment Terms).

         7.4.2    Upon the occurrence of a Final Judgment following an
                  application to Court under clause 6.4 (Charged Escrow Cash
                  Entitlement - Court Determination), any Interested Party may
                  notify the Escrow Agent in writing (with a copy at the same
                  time to each other Interested Party and the Security Trustee)
                  that such Final Judgment has been made and of the terms
                  thereof and shall attach to the notice a certified copy of the
                  Final Judgment (where available) (together with the ESOP Bank
                  Certificate(s) where the Court or an arbitrator finds in
                  favour of all or part of the claims of an ESOP Bank),
                  whereupon the Escrow Agent shall release and pay the Charged
                  Escrow Cash Entitlement of each ESOP Bank in accordance with
                  Clause 7.5 (Charged Escrow Cash Balance - Payment Terms).

         7.4.3    Each ESOP Bank undertakes that promptly upon agreement or
                  determination pursuant to clause 6.4 (Charged Escrow Cash
                  Entitlement - Court Determination), it shall complete and
                  deliver an ESOP Bank Certificate to each of the Interested
                  Parties and the Escrow Agent.

7.5      CHARGED ESCROW CASH BALANCE - PAYMENT TERMS

         Following receipt of a Payment Instruction and an ESOP Bank Certificate
         pursuant to clause 7.4.1 or a notice of a Final Judgment pursuant to
         clause 7.4.2 and, if applicable, an ESOP Bank Certificate (either date
         being the "CHARGED RECEIPT DATE"), the Escrow Agent shall immediately
         notify each Interested Party and the Security Trustee in writing that
         it has received such Payment Instruction or notice and an ESOP Bank
         Certificate (as applicable), and shall and is hereby irrevocably
         authorised by the Interested Parties to, release from the Escrow
         Account ten clear Business Days after the Charged Receipt Date and pay
         from the Charged Escrow Cash Balance the amounts, and in the order of
         priority, specified below:

         7.5.1

         (a)      firstly, to the bank account specified in each ESOP Bank
                  Certificate an amount equal to the Charged Escrow Cash
                  Entitlement specified in the relevant ESOP Bank Certificate
                  (subject to any adjustments required to be made pursuant to
                  clause 7.6 (Aggregate Charged Escrow Cash Recoveries by each
                  ESOP Bank) together with any interest accruing on that amount
                  (at the applicable rate on the Escrow Account), or income
                  received from any Investments generated in respect of the
                  period, from the Determination Date to the date on which
                  payment in full is made pursuant to this clause 7.5.1(a); and

         (b)      secondly:

                                     - 17 -

<PAGE>

                  (i)      if the Charged Escrow Cash was deposited in the
                           Escrow Account following an enforcement of the
                           security constituted by the Security Documents, to
                           the Security Trustee by transfer to a Lockbox Account
                           (as defined in the Security Deeds), the Charged
                           Escrow Cash Balance following payment (in full) to
                           each ESOP Bank of the amounts specified in clause
                           7.5.1(a); or

                  (ii)     if the Security has been released pursuant to clause
                           4.3 of the Trust Deed, to the Company, the Charged
                           Escrow Cash Balance following payment in full to each
                           ESOP Bank of the amounts specified in clause
                           7.5.1(a).

         7.5.2    Pending payment of the Charged Escrow Cash Balance to the
                  Lockbox Account in accordance with clause 7.5.1(b)(i), the
                  Charged Escrow Cash Balance shall be held on trust by the
                  Escrow Agent for the Security Trustee, and upon deposit into
                  the Lockbox Account, the Charged Escrow Cash Balance shall be
                  subject to the security constituted by the Security Deeds and
                  shall be held by the Security Trustee on the terms and subject
                  to the conditions of the Trust Deed.

7.6      AGGREGATE CHARGED ESCROW CASH RECOVERIES BY EACH ESOP BANK

         For the avoidance of doubt, the Parties agree that in no circumstances
         shall the aggregate benefit received by an ESOP Bank (excluding any
         costs awarded to such ESOP Bank by the Court or arbitrator) in respect
         of (i) its Charged Escrow Cash Entitlement and (ii) any monies received
         under the Mobile Escrow Agreement, exceed the ESOP Swap Liabilities of
         that ESOP Bank.

8.       THE MOBILE ESCROW AGREEMENT

8.1      PLC AND THE COMPANY UNDERTAKINGS - MOBILE OPCOS

         PLC and the Company each undertake:

         8.1.1    to ensure that the Mobile Escrow Agreement will continue to
                  apply separately from the arrangements described in this
                  Agreement;

         8.1.2    to direct the escrow agent appointed under the Mobile Escrow
                  Agreement (the "MOBILE ESCROW AGENT") to pay and distribute
                  any monies released and/or to be released in accordance with
                  the Mobile Escrow Agreement from the escrow established
                  thereunder (the "MOBILE ESCROW") (other than monies released
                  from the Mobile Escrow to an ESOP Bank or to a
                  Non-Participating ESOP Bank) multiplied by the Fraction to the
                  Escrow Agent;

         8.1.3    that any money they receive from the Mobile Escrow Agent will
                  be held by them on trust for the express purpose of paying
                  such amounts to the Escrow Agent; and

         8.1.4    to forthwith pay any money held on trust pursuant to clause
                  8.1.3 to the Escrow Agent for distribution by the Escrow Agent
                  in accordance with this Agreement.

                                     - 18 -

<PAGE>

8.2      DISTRIBUTION OF MOBILE ESCROW MONIES

         8.2.1    Any money received by the Escrow Agent pursuant to clauses
                  8.1.2 or 8.1.4 (PLC and the Company Undertakings - Mobile
                  Opcos) will form part of the Escrow Cash Balance or the
                  Charged Escrow Cash Balance (as applicable).

         8.2.2    If, prior to the receipt of any money by the Escrow Agent
                  pursuant to clauses 8.1.2 or 8.1.4 (PLC and the Company
                  Undertakings - Mobile Opcos), the Escrow Cash Balance or the
                  Charged Escrow Balance (as applicable) is released and paid in
                  full in accordance with clauses 7.2 or 7.5 (as applicable),
                  then on receipt of any such money the Escrow Agent shall, and
                  is hereby irrevocably authorised by the Parties to, release
                  from the Escrow Account ten clear Business Days after it has
                  notified each Interested Party and, in respect of the Charged
                  Escrow Cash Balance only, the Security Trustee in writing of
                  its intention to do so and pay from the Escrow Cash Balance or
                  the Charged Escrow Cash Balance (as applicable) the amounts
                  (including any unpaid amount of an ESOP Bank's Escrow Cash
                  Entitlement or Charged Escrow Cash Entitlement), and in the
                  order of priority, specified in clauses 7.2. (Escrow Cash
                  Balance - Payment Terms) or 7.5 (Charged Escrow Cash Balance -
                  Payment Terms) (as applicable).

8.3      MOBILE OPCOS

         The Determination (pursuant to the terms and on the basis of the
         assumptions set out in Schedule 1) or the determination to be made
         pursuant to clause 6.4 (Charged Escrow Cash Entitlement - Court
         Determination) will not apply to, or be made in respect of, the Mobile
         Opcos.

8.4      NO AMENDMENT

         Nothing contained in this Agreement shall affect, vary or amend the
         terms of the Mobile Escrow Agreement and that agreement shall continue
         to apply in accordance with its terms.

9.       THE SUBSEQUENTLY SOLD OPCOS ESCROW AGREEMENTS

9.1      PLC AND THE COMPANY UNDERTAKINGS - SUBSEQUENTLY SOLD OPCOS

         9.1.1    Upon a Marconi Group Company selling a Subsequently Sold Opco,
                  PLC and the Company shall direct and procure that the selling
                  Marconi Group Company pay that amount of the sale proceeds
                  that is equal to the Subsequently Sold Opco Liabilities of
                  that Subsequently Sold Opco into the escrow account detailed
                  in a Subsequently Sold Opco Escrow Agreement on substantially
                  similar terms as the Israel Agreement (where a Funding Letter
                  is located in relation to that Subsequently Sold Opco) or the
                  Singapore Agreement (where no Funding Letter is located in
                  relation to that Subsequently Sold Opco) which shall be
                  entered into prior to the sale of the Subsequently Sold Opco
                  by PLC, the Company, the Marconi Group Company that is selling
                  the Subsequently Sold Opco, the Agent, each ESOP Bank and an
                  escrow agent.

         9.1.2    PLC and the Company shall, where practicable, give BCT, the
                  Agent and each ESOP Bank at least 14 Business Days notice in
                  writing prior to the sale by a Marconi Group Company of a
                  Subsequently Sold Opco of the intention to sell such company.

                                     - 19 -

<PAGE>

9.2      TERMS OF SUBSEQUENTLY SOLD OPCO ESCROW AGREEMENTS

         The Parties that are obliged pursuant to clause 9.1.1 to enter into
         Subsequently Sold Opco Escrow Agreements shall ensure that each
         Subsequently Sold Opco Escrow Agreement provides that on the Trigger
         Date (if it occurs on or before the date specified in clause 4.2(a) of
         the Restructuring Undertaking Agreement):

         9.2.1    the monies held on escrow pursuant to each Subsequently Sold
                  Opco Escrow Agreement will, unless they have previously been
                  released in accordance with that Subsequently Sold Opco Escrow
                  Agreement, be released and paid to the Escrow Agent; and

         9.2.2    each Subsequently Sold Opco Escrow Agreement will terminate
                  immediately following the payment stated in clause 9.2.1
                  having been made.

10.      NON-PARTICIPATING ESOP BANKS

         A Non-Participating ESOP Bank may become an ESOP Bank, if (i) each
         Interested Party consents in writing to that Non-Participating ESOP
         Bank becoming an ESOP Bank (and, for the avoidance of doubt, such
         consent may be given or refused at the sole and absolute discretion of
         each Interested Party) and (ii) that Non-Participating ESOP Bank
         executes an ESOP Lock-Up and a deed of adherence (in substantially the
         form set out at Schedule 6) agreeing to be bound by the terms of this
         Agreement as if that Non-Participating ESOP Bank was an original party
         to this Agreement, following which such Non-Participating ESOP Bank
         shall be treated as an ESOP Bank in all respects under this Agreement.

11.      DUTIES AND LIABILITY OF ESCROW AGENT

11.1     INVESTMENT INSTRUCTIONS

         The Interested Parties may jointly instruct the Escrow Agent on the
         investment of the Escrow Cash Balance or Charged Escrow Cash Balance
         (as applicable) and the Escrow Agent shall be entitled to act on such
         instructions. The Interested Parties may only instruct the Escrow Agent
         to invest the Escrow Cash Balance or the Charged Escrow Cash Balance
         (as applicable) in Investments and the Escrow Agent shall only invest
         the Escrow Cash Balance or the Charged Escrow Cash Balance (as
         applicable) in Investments. The Escrow Agent shall have the right to
         liquidate any Investments held in order to provide funds necessary to
         make required payments under this Agreement. The Escrow Agent shall
         have no liability for any loss sustained as a result of any Investment
         made pursuant to the joint instructions of the Interested Parties or as
         a result of any liquidation of any Investment prior to its maturity or
         for the failure of the Interested Parties to give the Escrow Agent
         instructions to invest or reinvest the Escrow Cash Balance or the
         Charged Escrow Cash Balance (as applicable).

11.2     DUTIES OF THE ESCROW AGENT

         The Escrow Agent undertakes to perform only such duties as are
         expressly set out in this Agreement and no duties shall be implied. The
         Escrow Agent shall have no liability under and no duty to inquire as to
         the provisions of any agreement other than this Agreement. The Escrow
         Agent may rely upon and shall not be liable for acting or refraining
         from acting upon any written notice, instruction or request furnished
         to it hereunder and believed by it to be genuine and to have been
         signed or

                                     - 20 -

<PAGE>

         presented by the proper party or parties. The Escrow Agent shall be
         under no duty to inquire into or investigate the validity, accuracy or
         content of any such document. The Escrow Agent shall not be liable for
         any action taken or omitted by it in good faith. The Escrow Agent may
         execute any of its powers and perform any of its duties hereunder
         directly or through agents (and shall be liable only for the careful
         selection of any such agent) and may consult with counsel, accountants
         and other skilled persons to be selected and retained by it. The Escrow
         Agent shall not be liable for anything done, suffered or omitted in
         good faith by it in accordance with the advice or opinion of any such
         counsel, accountants or other skilled persons. In the event that the
         Escrow Agent shall be uncertain as to its duties or rights hereunder or
         shall receive instructions, claims or demands from any party hereto
         which, in its opinion, conflict with any of the provisions of this
         Agreement, it shall be entitled to refrain from taking any action and
         its sole obligation shall be to keep safely all property held in escrow
         until it shall be directed otherwise in writing by all of the
         Interested Parties hereto in accordance with the terms of this
         Agreement or by an Order of the Court. Anything in this Agreement to
         the contrary notwithstanding, in no event shall the Escrow Agent be
         liable for special, indirect or consequential loss or damage of any
         kind whatsoever (including but not limited to lost profits), even if
         the Escrow Agent has been advised of the likelihood of such loss or
         damage and regardless of the form of action.

11.3     RESIGNATION OF THE ESCROW AGENT

         11.3.1   The Escrow Agent may resign and be discharged from its duties
                  or obligations hereunder by giving 45 Business Days prior
                  notice in writing of such resignation to the Interested
                  Parties hereto specifying a date when such resignation is
                  intended to take effect, in which case the Interested Parties
                  may by agreement between themselves forthwith appoint a
                  successor Escrow Agent, which Escrow Agent shall be entitled
                  to request and receive reasonable remuneration for accepting
                  such appointment.

         11.3.2   If within 45 Business Days days after notice of resignation,
                  the Interested Parties have not appointed a successor Escrow
                  Agent which accepts the appointment, the retiring Escrow Agent
                  may appoint a successor Escrow Agent which Escrow Agent shall
                  be entitled to request and receive reasonable remuneration for
                  accepting such appointment.

         11.3.3   The resignation of the retiring Escrow Agent and the
                  appointment of any successor Escrow Agent will both become
                  effective only upon the successor Escrow Agent notifying all
                  the Parties that it accepts the appointment (the "ESCROW AGENT
                  EFFECTIVE DATE"). On giving the notification, the successor
                  Escrow Agent will succeed to the position of the retiring
                  Escrow Agent and the term "ESCROW AGENT" will mean the
                  successor Escrow Agent.

         11.3.4   On the Escrow Agent Effective Date, the retiring Escrow Agent
                  shall transfer to the successor Escrow Agent the Escrow Cash
                  Balance or the Charged Escrow Cash Balance (as applicable) and
                  any Investments relating to the Escrow Cash Balance or the
                  Charged Escrow Cash Balance (as applicable).

         11.3.5   The retiring Escrow Agent shall make available to the
                  successor Escrow Agent such documents and records and provide
                  such assistance as the successor Escrow Agent may reasonably
                  request for the purposes of performing its functions as the
                  Escrow Agent under this Agreement.

                                     - 21 -

<PAGE>

         11.3.6   The Escrow Agent shall have the right to withdraw from the
                  Escrow Account an amount equal to any amount due and owing to
                  the Escrow Agent at the time of its retirement as Escrow
                  Agent, plus any costs and expenses the Escrow Agent shall
                  reasonably believe may be incurred by the Escrow Agent in
                  connection with its retirement as Escrow Agent and apply such
                  amount in payment of the amounts due and owing provided that,
                  the Escrow Agent shall forward to the Interested Parties a
                  copy of the relevant receipt or invoice evidencing such fees
                  and expenses or documentation evidencing the loss or liability
                  amount 5 Business Days prior to such withdrawal.

11.4     COMPANY INDEMNITY

         11.4.1   Subject to clause 11.5 below, the Company shall indemnify and
                  hold harmless the Escrow Agent and its officers, staff and
                  agents from all loss, liability or expense (including the fees
                  and expenses of in house or outside counsel) arising out of or
                  in connection with (i) the Escrow Agent's execution and
                  performance of this Agreement, or (ii) its following any joint
                  instructions or other joint directions from the Interested
                  Parties in accordance with the terms hereof save as caused by
                  gross negligence or wilful misconduct by the Escrow Agent (the
                  "INDEMNIFIED AMOUNT").

         11.4.2   In the event that the Company is unable to pay the Indemnified
                  Amount in whole or in part, and to the extent that the Escrow
                  Account has a credit balance, the Escrow Agent shall withdraw
                  an amount equal to the balance of the Indemnified Amount that
                  the Escrow Agent is unable to recover from the Company from
                  the Escrow Account and apply the amount withdrawn in payment
                  of the Indemnified Amount provided that the Escrow Agent shall
                  forward to the Interested Parties a copy of the relevant
                  receipt or invoice or liability amount of at least five
                  Business Days prior to such withdrawal.

         11.4.3   The Parties acknowledge that the foregoing indemnities shall
                  survive the resignation or removal of the Escrow Agent or the
                  termination of this Agreement.

11.5     TAXATION

         The Escrow Agent shall report and, as required, withhold any taxes
         which it determines may be required by any law or regulation in effect
         from time to time.

12.      REIMBURSEMENT OF ESCROW AGENT

12.1     The Company shall pay to and indemnify the Escrow Agent in respect of
         any and all reasonable out-of-pocket expenses and shall pay the fees of
         the Escrow Agent in respect of any time spent by its officers or staff
         or agents in connection with the performance of its duties under this
         Agreement within 14 days of receipt of an invoice.

12.2     The Company will pay to the Escrow Agent its fees on the basis of the
         fee letter entered into between the Company and the Escrow Agent on or
         about the date of this Agreement.

                                     - 22 -

<PAGE>

13.      ACKNOWLEDGEMENT OF EVENT OF DEFAULT AND UNDERTAKINGS

13.1     PLC AND THE COMPANY ACKNOWLEDGEMENT

         With effect from the Effective Date but without affecting any rights an
         ESOP Bank may have prior to the Effective Date and without prejudice to
         any defence PLC or the Company may have prior to the Effective Date,
         PLC and the Company acknowledge, solely for the purposes of admission
         of each ESOP Bank's claims to the PLC Scheme, that:

         13.1.1   a default, a Termination Event and/or an Event of Default has
                  occurred under the ESOP Swap Transactions and that a valid
                  claim has been made under the PLC Guarantees for the full
                  amount of BCT's liabilities to each ESOP Bank pursuant to the
                  ESOP Swap Transactions and the PLC Guarantees as at the
                  Effective Date; and

         13.1.2   they waive any right to argue otherwise.

13.2     For the purposes of clause 13.1 (PLC and the Company Acknowledgement),
         "DEFAULT", "TERMINATION EVENT" and "EVENT OF DEFAULT" shall have the
         meanings as stated in the relevant ESOP Contracts and/or the PLC
         Guarantees (as appropriate).

13.3     Documents

         13.3.1   The Company and PLC each undertake to disclose to each ESOP
                  Bank (on the basis set out in the letter agreement dated 4
                  October 2002 between PLC, the Company, JP Morgan Chase Bank,
                  HSBC, Barclays and Bingham McCutchen LLP (the "PROTOCOL
                  AGREEMENT")) on a without prejudice basis all documents in
                  their possession or control (as opposed to the possession or
                  control of the Opcos), that they identify from an appropriate
                  and reasonable search, that are relevant to or evidence (i)
                  the legal relationship between all parties in connection with
                  the ESOP or (ii) the intention of any parties in relation to
                  the funding of the ESOP.

         13.3.2   The Company and PLC each agree that each ESOP Bank may treat
                  as open and not confidential (notwithstanding the terms of the
                  Protocol Agreement) and, if so requested by any ESOP Bank,
                  undertake to provide on an open basis to each ESOP Bank, all
                  documents disclosed by them to each ESOP Bank on a without
                  prejudice basis (whether in accordance with clause 13.3.1 or
                  otherwise):

                           (a)      30 days after the Trigger Date; or

                           (b)      immediately once the Escrow Agent has
                                    received the Charged Escrow Cash in
                                    accordance with clause 3.2.1.

         13.3.3   The Company and PLC each undertake to use their reasonable
                  endeavours to procure that the Opcos provide to each ESOP
                  Bank, 30 days after the Trigger Date, on an open basis all
                  documents that have by then been disclosed by the Opcos
                  directly or indirectly to each ESOP Bank on a without
                  prejudice basis.

         13.3.4   The Company and PLC each undertake, following disclosure on an
                  open basis in accordance with clause 13.3.2(a) of the
                  documents already disclosed on a without prejudice basis, to

                                     - 23 -

<PAGE>

                  disclose on an open basis to each ESOP Bank any documents not
                  already disclosed in their possession or control (as opposed
                  to the possession or control of the Opcos), that they identify
                  from an appropriate and reasonable search, that are relevant
                  to or evidence (i) the legal relationship between all parties
                  in connection with the ESOP or (ii) the intention of any
                  parties in relation to the funding of the ESOP.

         13.3.5   After service of a notice in writing by an Interested Party on
                  the other Interested Parties stating that the Interested Party
                  serving the notice believes that negotiations as to the Escrow
                  Cash Entitlement of each ESOP Bank have irretrievably broken
                  down (which notice may only be served subject to clause 5.1),
                  the costs incurred by the Company in complying with the
                  obligations set out in clause 13.3.4 shall form part of the
                  costs incurred by the Company in relation to the Determination
                  for the purpose of clause 15 (Costs).

         13.3.6   Nothing in this clause 13.3 shall require the Company or PLC
                  to disclose any documents in respect of which they are
                  entitled to assert legal professional privilege.

14.      ARBITRATION

14.1     NO COURT DETERMINATION

         In the event the Court has decided that (i) it is unable or unwilling
         (for any reason) to make any determination or (ii) it does not have
         jurisdiction to determine all or part of an application, in each case,
         in relation to any matter or matters referred to it for determination
         in accordance with clauses 5.2 (Escrow Cash Claim - Court
         Determination) or 6.4 (Charged Escrow Cash Entitlement - Court
         Determination), any Interested Party is entitled to refer that matter
         or those matters to be finally resolved by arbitration in accordance
         with clauses 14.2 (LCIA Rules) and 14.3 (Other Matters Relating To
         Arbitration).

14.2     LCIA RULES

         The matter or matters to be determined pursuant to clause 14.1 (No
         Court Determination) shall be resolved by arbitration under the London
         Court of International Arbitration ("LCIA") Rules, which Rules are
         deemed to be incorporated by reference into this clause 14.2, save that
         Articles 22.2 and 30.1 (but, in relation to Article 30.1, only insofar
         as disclosure in relation to the arbitration is required for a purpose
         contemplated by this Agreement) of the LCIA Rules shall not be so
         incorporated and shall not apply to any arbitral proceedings pursuant
         to clause 14 (Arbitration).

14.3     OTHER MATTERS RELATING TO ARBITRATION

         For the purpose of the arbitration:

         14.3.1   the number of arbitrators shall be one. In the event the
                  Interested Parties cannot agree on the sole arbitrator within
                  30 days of an Interested Party calling upon the others to do
                  so, he shall be appointed by the Court of the LCIA;

         14.3.2   the arbitrator shall be and remain independent and impartial
                  of each Interested Party;

         14.3.3   the language to be used in the arbitral proceedings shall be
                  English;

                                     - 24 -

<PAGE>

         14.3.4   the seat, or legal place, of arbitration shall be London;

         14.3.5   the governing law of the arbitration shall be English law;

         14.3.6   the "parties" to the arbitral proceedings for the purpose of
                  the LCIA Rules shall be the Interested Parties.

15.      COSTS

         Liability for the costs incurred by each Interested Party in relation
         to the Determination or the determination pursuant to clause 6.4
         (Charged Escrow Cash Entitlement - Court Determination), shall be
         determined by the Court or arbitrator (as applicable). For the
         avoidance of doubt, such costs (including the costs of any arbitration
         as determined by the LCIA Court or the arbitrator) shall not be paid
         out of the Escrow Cash Balance or the Charged Escrow Cash Balance (as
         applicable).

16.      TERMINATION

16.1     Provided that each Interested Party that is a party to the Mobile
         Escrow Agreement has confirmed to the Escrow Agent in writing that no
         further monies will or may subsequently be received by the Escrow Agent
         pursuant to clauses 8.1.2 or 8.1.4 (PLC and the Company Undertakings -
         Mobile Opcos), this Agreement shall terminate upon the release and
         payment in full of the Escrow Cash Balance or the Charged Escrow Cash
         Balance (as applicable) by the Escrow Agent in accordance with this
         Agreement.

16.2     The termination of this Agreement shall be without prejudice to any
         accrued rights or causes of action of any Party and in the event that
         this Agreement terminates clauses 11.2, 11.4, 13.1 and 13.2 shall
         remain in full force and effect.

17.      NOTICES

17.1     COMMUNICATION IN WRITING AND DELIVERY

         All notices or other communications under or in connection with this
         Agreement shall be given in writing and, unless otherwise stated, may
         be made by letter or facsimile. Any such notice will be deemed to be
         given as follows:

         17.1.1   if by letter, when delivered personally or on actual receipt;
                  and

         17.1.2   if by facsimile, when transmitted.

         However, a notice given in accordance with the above but received on
         any day other than a Business Day or after business hours in the place
         of receipt will only be deemed to be given on the next Business Day in
         that place.

17.2     ADDRESSES

         The address and facsimile number of each Party (other than the Escrow
         Agent, the Company and PLC) for all notices under or in connection with
         this Agreement are:

                                     - 25 -

<PAGE>

         17.2.1   those notified by that Party for this purpose to the Escrow
                  Agent on or before it becomes a Party; or

         17.2.2   any other address or facsimile number notified by that Party
                  for this purpose to the Escrow Agent by not less than five
                  Business Days' notice.

17.3     The address and facsimile numbers of the Escrow Agent are:

         HSBC Bank plc
         Level 17
         8 Canada Square
         London E14 5HQ

         Contact:           Chris Merrett/Khalid Raja

         Facsimile:         020 7991 4351

         or such other address or facsimile number as the Escrow Agent may
         notify to the other Parties by not less than five Business Days'
         notice.

17.4     The address and facsimile numbers of the Company and PLC are:

         New Century Park
         Box 53
         Coventry
         Warwickshire
         CV3 1HJ

         Contact:           Charlie Shepherd

         Facsimile:         020 7409 7748

         or such other address or facsimile number as the Company or PLC as the
         case may be may notify to the other Parties by not less than five
         Business Days' notice.

17.5     NOTIFICATION OF ADDRESS AND FAX NUMBER

         The Escrow Agent shall, promptly upon request from any Party, give to
         that Party the address or facsimile number of any other Party
         applicable at the time for the purposes of this clause.

18.      ANNOUNCEMENTS

18.1     NO ANNOUNCEMENTS

         Subject to clause 18.2 (Permitted Announcements), no Party may, during
         the term of this Agreement, make or send a public announcement,
         communication or circular concerning the terms of, or the transactions
         referred to in, this Agreement unless it has first obtained each other
         Parties' written consent (not to be unreasonably withheld or delayed).

                                     - 26 -

<PAGE>

18.2     PERMITTED ANNOUNCEMENTS

         Clause 18.1 (No Announcements) does not apply to a public announcement,
         communication or circular if it is required by law, a regulation of a
         stock exchange or the Panel on Takeovers and Mergers.

19.      FURTHER ASSURANCE

         Each Party shall do and execute, or arrange for the doing and executing
         of, each necessary act, document and thing which is of a mechanical or
         administrative nature and which is reasonably within its power to
         implement this Agreement.

20.      REMEDIES AND PARTIAL INVALIDITY

20.1     REMEDIES AND WAIVERS

         No failure to exercise, or any delay in exercising, on the part of any
         Party, any right or remedy under this Agreement shall operate as a
         waiver, nor shall any single or partial exercise of any right or remedy
         prevent any further or other exercise thereof or the exercise of any
         other right or remedy.

20.2     CUMULATIVE RIGHTS

         The rights and remedies provided in this Agreement are cumulative and
         not exclusive of any rights or remedies provided by law.

20.3     PARTIAL INVALIDITY

         If, at any time, any provision of this Agreement is or becomes illegal,
         invalid or unenforceable in any respect under any law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions nor the legality, validity or enforceability of
         the provision under the law of any other jurisdiction will in any way
         be affected or impaired.

21.      RIGHTS OF THIRD PARTIES

         A person who is not a party to this Agreement has no right under the
         Contracts (Rights of Third Parties) Act 1999 to enforce any term of
         this Agreement save that the Opcos have the benefit of the release in
         clause 3.3.2 (Release of Claims).

22.      ASSIGNMENT

         No Party shall assign, transfer, declare a trust of the benefit of or
         in any other way alienate any of its rights under this Agreement
         whether in whole or in part.

23.      AMENDMENT

         This Agreement may be amended or modified from time to time but only by
         written agreement signed by:

23.1     each Party if such agreement is entered into before the Trigger Date;
         or

                                     - 27 -

<PAGE>

23.2     the Company (acting with the approval of the trustee to be appointed
         under the terms of the Junior Notes) and the ESOP Banks if such
         agreement is entered into on or after the Trigger Date.

24.      COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
         which shall be deemed an original, but all of which together shall be
         one and the same instrument.

25.      GOVERNING LAW AND JURISDICTION

25.1     GOVERNING LAW

         This Agreement is governed by, and shall be construed in accordance
         with, English law.

25.2     JURISDICTION OF THE ENGLISH COURTS

         Without prejudice to clause 14 (Arbitration), the courts of England
         have exclusive jurisdiction to settle any dispute between any of the
         Parties arising out of, or in connection with, this Agreement
         (including a dispute regarding the existence, validity or termination
         of this Agreement or the consequences of its nullity) (a "DISPUTE").

25.3     ACKNOWLEDGEMENT OF ENGLISH COURTS

         Without prejudice to clause 14 (Arbitration), the Parties agree that
         the courts of England are the most appropriate and convenient courts to
         settle Disputes and, accordingly, no Party will argue to the contrary.

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

                                     - 28 -

<PAGE>

                                   SCHEDULE 1

                       DETERMINATION OF ESCROW CASH CLAIM

1.       THE ESCROW CASH CLAIM

1.1      The "ESCROW CASH CLAIM" of an ESOP Bank shall be that amount which is
         equal to the amount which that ESOP Bank would have received in respect
         of the ESOP Swap Liabilities relating to that ESOP Bank (whether
         directly or indirectly through BCT or otherwise and whether in
         connection with the Funding Letters, the PLC Guarantees or otherwise)
         as determined by the Court following a hypothetical insolvency of PLC
         and the Company (the "HYPOTHETICAL INSOLVENCY") as if such procedure
         had commenced on 28 August 2002 based on the insolvency procedure which
         would most likely have been adopted (whether it be an administration,
         liquidation or otherwise) and applying, amongst others, the assumptions
         and principles set out in paragraphs 2 to 5 (inclusive) (the
         "DETERMINATION").

1.2      For the avoidance of doubt, the Escrow Cash Claim shall include,
         without limitation, that amount which that ESOP Bank would have
         received in connection with a claim under the PLC Guarantees in the
         Hypothetical Insolvency of PLC.

1.3      In making the Determination (unless specifically stated in paragraphs 2
         to 5 (inclusive)), no factual or legal matters will be assumed and all
         matters will be open to be determined by reference to what would have
         happened in the Hypothetical Insolvency and clause 1.5 (Interpretation)
         will apply in this regard.

2.       MODELLING THE HYPOTHETICAL INSOLVENCY

         The following principles and/or assumptions will apply for the purposes
         of making the Determination:

2.1      without assuming that the ESOP Swap Transactions exist or create valid,
         binding and enforceable obligations, the ESOP Swap Transactions have,
         to the extent possible thereunder, been terminated and the ESOP Swap
         Liabilities that exist as at the date of the Determination existed as
         at 28 August 2002;

2.2      to the extent possible under the PLC Guarantees and to the extent that
         they are held to constitute enforceable obligations, proper demands
         have been made under the PLC Guarantees;

2.3      the Court may need to construct or determine a model of the likely
         outcome of the Hypothetical Insolvency (the "MODEL");

2.4      an appropriate starting point for constructing or determining the Model
         is the model constructed by PricewaterhouseCoopers entitled "2002.09.23
         Insolvency Analysis Model" (the "PwC MODEL");

2.5      any or all of the assumptions and calculations contained in the PwC
         Model:

         (a)      may no longer be relevant or continue to apply;

         (b)      may be varied to produce a different result (whether
                  favourable or otherwise); or

         (c)      may be replaced by alternative assumptions or calculations;

                                     - 29 -

<PAGE>

2.6      without prejudice to paragraph 3 of this Schedule 1 (Sold Opcos), the
         Court will need to make certain estimates or assumptions concerning the
         realisation values of assets of the Opcos (including, in so far as the
         Court determines relevant, any Sold Opcos or Subsequently Sold Opcos or
         Opcos that are dormant or have been dissolved or wound up, in each case
         whether or not such Opcos have signed a Funding Letter and whether or
         not a signed Funding Letter is located, but excluding the Mobile Opcos)
         and the amount of intra-group and other assets and liabilities of the
         Marconi Group Companies in the Hypothetical Insolvency;

2.7      any determination made in accordance with paragraph 2.6 of this
         Schedule 1 shall be made by reference to values as at, and on the basis
         of the facts in existence (whether or not known to be in existence) at
         28 August 2002;

2.8      the realisation value of the assets of an Opco may or may not exceed
         the liabilities of that Opco including any liabilities pursuant to a
         Funding Letter and thus it will be possible for the Court to determine
         that a claim that it determines to be valid under a Funding Letter
         would, or alternatively, would not have been discharged in full, in
         part or at all;

2.9      to the extent it deems relevant, the Court has the discretion to
         determine how, in the Hypothetical Insolvency, the Hypothetical
         Insolvency Practitioner of PLC would have exercised, or would have been
         required to exercise, his discretion in relation to the Funding Letters
         including whether the Hypothetical Insolvency Practitioner of PLC may
         have been entitled to accept any inducement that a Hypothetical
         Insolvency Practitioner of the Company may have decided to offer a
         Hypothetical Insolvency Practitioner of PLC to exercise that discretion
         in a particular manner or to release liabilities under the Funding
         Letters; and

2.10     expert evidence will be available to the Court (whether commissioned by
         the Court for its own purposes or volunteered by the Interested Parties
         (or any of them)) to assist the Court in determining all matters and in
         particular:

         (a)      the construction of the Model;

         (b)      the matters referred to in paragraph 2.6 of this Schedule 1;
                  and

         (c)      the approach the Hypothetical Insolvency Practitioner of each
                  of the Company and PLC would take in the Hypothetical
                  Insolvency.

3.       SOLD OPCOS

         The following principles and/or assumptions relating to the Sold Opcos
         will apply for the purposes of making the Determination:

3.1      it will be absolutely assumed that, except where publicly known formal
         insolvency proceedings had been initiated in respect of a Sold Opco at
         28 August 2002, the Sold Opcos were solvent and able to satisfy all
         their liabilities (including all their liabilities, if any, under the
         Funding Letters) in full and, therefore, will satisfy all of the
         entitlement of each ESOP Bank (whether as a direct claim or as an
         indirect claim, through BCT or otherwise). If formal insolvency
         proceedings in respect of a Sold Opco had been initiated at 28 August
         2002 which were publicly known at that date, then such assumption will
         not be made in relation to that Opco and the Determination will take
         into account the

                                     - 30 -

<PAGE>

         extent to which the Sold Opco concerned could have discharged its
         obligations (if any) under the Funding Letter;

3.2      it will be rebuttably assumed that each Sold Opco has signed a Funding
         Letter but no assumption will be made as to the interpretation of the
         Funding Letter or as to whether or not it constituted an enforceable
         obligation;

3.3      it will be rebuttably assumed that any Funding Letter signed by a Sold
         Opco has not been released, remains in full force and effect and has
         not been amended or varied; and

3.4      the value of any indemnity claim or warranty which a Sold Opco or the
         relevant purchaser of that Sold Opco has against PLC, the Company or
         any other Marconi Group Company shall not be deducted from, or be
         relevant to a determination of, the amount which the ESOP Banks would
         have recovered in accordance with this Schedule 1 in relation to that
         Sold Opco and any other right of set-off exercisable by a Sold Opco or
         the relevant purchaser of that Sold Opco shall be disregarded.

4.       COMPETING CLAIMS

         The Determination will be made after taking account of all competing
         claims against BCT, including without limitation any claims or
         entitlements of the Company to be reimbursed in respect of monies lent
         by the Company to BCT in connection with the ESOP, subject to any
         subordination (by whatever means) of such claims to the claims of the
         ESOP Banks.

5.       NO RELEASE

         For the purpose of the Determination, the releases referred to in
         clause 3.3 (Release of Claims) and, for the avoidance of doubt, a
         release referred to in any Subsequently Sold Opco Escrow Agreement,
         shall be ignored.

6.       ARBITRATION

         References in this Schedule 1 to the Court shall be deemed to be
         references to the arbitrator in relation to the determination of any
         matters by the arbitrator pursuant to clause 14 (Arbitration).

                                     - 31 -

<PAGE>

                                   SCHEDULE 2

                           THE ESOP SWAP TRANSACTIONS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                          DATE OF ISDA       DATE OF SCHEDULE TO
                               TRADE        EFFECTIVE        MASTER              ISDA MASTER              DATE OF
PARTY A       PARTY B           DATE          DATE         AGREEMENT              AGREEMENT            CONFIRMATION
-------------------------------------------------------------------------------------------------------------------
<S>           <C>             <C>          <C>            <C>                <C>                       <C>
-------------------------------------------------------------------------------------------------------------------
Salomon         BCT           13/01/00      21/01/00        15/12/99               21/12/99               13/01/00
-------------------------------------------------------------------------------------------------------------------
Salomon         BCT           26/01/00      31/01/00        15/12/99               21/12/99               26/01/00
-------------------------------------------------------------------------------------------------------------------
Salomon         BCT           02/02/00      16/02/00        15/12/99               21/12/99               02/02/00
-------------------------------------------------------------------------------------------------------------------
Barclays        BCT           16/03/00      24/03/00        16/03/00               21/3/00                04/07/00
-------------------------------------------------------------------------------------------------------------------
Barclays        BCT           17/03/00      24/03/00        16/03/00               21/3/00                05/07/00
-------------------------------------------------------------------------------------------------------------------
Barclays        BCT           22/05/00      30/05/00        16/03/00               21/3/00                05/07/00
-------------------------------------------------------------------------------------------------------------------
UBS             BCT           15/06/00      23/06/00        16/06/00               17/07/00               19/06/00
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 32 -

<PAGE>

                                   SCHEDULE 3

                           FORM OF PAYMENT INSTRUCTION

[Date]

To:     [          ] (as Escrow Agent)

Dear Sirs,

ESOP ESCROW AGREEMENT DATED [       ], 2002 BETWEEN MARCONI CORPORATION plc,
MARCONI plc, HSBC BANK plc AND BARCLAYS BANK (THE "ESCROW AGREEMENT").

Terms used in this Payment Instruction shall have the same meaning as set forth
in the Escrow Agreement.

In accordance with clause [o] of the Escrow Agreement, the Interested Parties
hereby authorise the Escrow Agent, subject to clause [7.2/7.5] of the Escrow
Agreement, to release and pay the [Escrow Cash Balance/Charged Escrow Cash
Balance] in accordance with the details set out below (the "PAYMENTS"):

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
RECIPIENT PARTY                AMOUNT                          PAYMENT DETAILS
-------------------------------------------------------------------------------
<S>                            <C>                             <C>
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
</TABLE>

Yours faithfully

[Signatures of all Interested Parties to the Escrow Agreement]

                                     - 33 -

<PAGE>

                                   SCHEDULE 4

              SOLD OPCOS, MOBILE OPCOS AND SUBSEQUENTLY SOLD OPCOS

                                  SCHEDULE 4.1

                                   SOLD OPCOS

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------
                 COMPANY NAME                                               DATE OF DISPOSAL
--------------------------------------------------------------------------------------------
<S>                                                                         <C>
--------------------------------------------------------------------------------------------
Woods Air Movement Limited                                                      31.01.01
--------------------------------------------------------------------------------------------
ipsaris Limited (92%)                                                           26.07.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems, Inc.                                                   19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Belgium N.V.                                            19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems EMO Limited                                             19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Espana, S.L.                                            19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems France S.A.S.                                           19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Hong Kong Limited                                       19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems U.K. Limited                                            19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems South Africa (Pty) Limited                              19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Canada Inc.                                             19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Czech Republic sro                                      19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Finland Oy                                              19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems GmbH                                                    19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Italia SpA                                              19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Puerto Rico Inc.                                        19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Slovakia sro                                            19.10.01
--------------------------------------------------------------------------------------------
Marconi Medizintechnik Deutschland GmbH                                         19.10.01
--------------------------------------------------------------------------------------------
Marconi do Brasil Imagens Medicas Ltda                                          19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Colombia Ltda                                           19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Australia Pty. Limited                                  19.10.01
--------------------------------------------------------------------------------------------
Picker International Del Caribe Inc                                             19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems International Limited                                   19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Asia Pacific, Inc.                                      19.10.01
--------------------------------------------------------------------------------------------
</TABLE>

                                     - 34 -

<PAGE>

<TABLE>
<S>                                                                             <C>
--------------------------------------------------------------------------------------------
Marconi Medical Systems Hungary Kft.                                            19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Poland Sp. zoo                                          19.10.01
--------------------------------------------------------------------------------------------
Marconi Medical Systems Sales Corporation                                       19.10.01
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Limited                                                01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems SpA                                                    01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Latin America S.A.                                     01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Srl                                                    01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems (NZ) Limited                                           01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Inc.                                                   01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Verwaltungs GmbH                                       01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems GmbH & Co. KG                                          01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Technology GmbH                                        01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Australia Limited                                      01.02.02
--------------------------------------------------------------------------------------------
Gilbert & Barker Aust. Pty. Limited                                             01.02.02
--------------------------------------------------------------------------------------------
Gilbert & Barker New Zealand Limited                                            01.02.02
--------------------------------------------------------------------------------------------
Marconi Commerce Systems Canada Limited                                         01.02.02
--------------------------------------------------------------------------------------------
Gilbarco International Inc.                                                     01.02.02
--------------------------------------------------------------------------------------------
Beijing Chang Gi Service Station Equipment Company, Limited                     01.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems Inc.                                                       05.02.02
--------------------------------------------------------------------------------------------
Videojet Japan Inc.                                                             05.02.02
--------------------------------------------------------------------------------------------
Videojet Canada Limited.                                                        05.02.02
--------------------------------------------------------------------------------------------
Marconi Information Systems Limited                                             05.02.02
--------------------------------------------------------------------------------------------
Marsh Stencil Machine Company                                                   05.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems B.V.                                                       05.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems GmbH                                                       05.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems Iberica S.L.                                               05.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems Limited                                                    05.02.02
--------------------------------------------------------------------------------------------
Marconi Data Systems CP Limited                                                 05.02.02
--------------------------------------------------------------------------------------------
Videojet Europe B.V.                                                            05.02.02
--------------------------------------------------------------------------------------------
Videojet S.A.                                                                   05.02.02
--------------------------------------------------------------------------------------------
Marconi Applied Technologies Limited                                            12.07.02
--------------------------------------------------------------------------------------------
</TABLE>

                                     - 35 -

<PAGE>

<TABLE>
<S>                                                                             <C>
--------------------------------------------------------------------------------------------
Marconi Applied Technologies Inc                                                12.07.02
--------------------------------------------------------------------------------------------
Marconi Mobile Holdings SpA                                                     02.08.02
--------------------------------------------------------------------------------------------
Marconi Mobile SpA                                                              02.08.02
--------------------------------------------------------------------------------------------
Marconi Kominikasyon AS                                                         02.08.02
--------------------------------------------------------------------------------------------
Sirio Panel SpA                                                                 02.08.02
--------------------------------------------------------------------------------------------
AMTEC SpA                                                                       02.08.02
--------------------------------------------------------------------------------------------
Larimart SpA                                                                    02.08.02
--------------------------------------------------------------------------------------------
PROD-EL SpA                                                                     02.08.02
--------------------------------------------------------------------------------------------
Teleavio-Consorzio Telecomunicazioni Avionica S.r.L                             02.08.02
--------------------------------------------------------------------------------------------
Marconi Mobile Holdings Limited                                                 02.08.02
--------------------------------------------------------------------------------------------
Marconi Mobile Limited                                                          02.08.02
--------------------------------------------------------------------------------------------
Marconi Mobile (International) Limited                                          02.08.02
--------------------------------------------------------------------------------------------
Marconi Secure Systems Limited                                                  02.08.02
--------------------------------------------------------------------------------------------
</TABLE>

                                     - 36 -

<PAGE>

                                  SCHEDULE 4.2

                                  MOBILE OPCOS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                COMPANY NAME                                          DATE OF DISPOSAL
--------------------------------------------------------------------------------------
<S>                                                                   <C>
--------------------------------------------------------------------------------------
Marconi Mobile SpA                                                        02.08.02
--------------------------------------------------------------------------------------
Sirio Panel SpA                                                           02.08.02
--------------------------------------------------------------------------------------
AMTEC SpA                                                                 02.08.02
--------------------------------------------------------------------------------------
Larimart SpA                                                              02.08.02
--------------------------------------------------------------------------------------
PROD-EL SpA                                                               02.08.02
--------------------------------------------------------------------------------------
Marconi Mobile Holdings Limited                                           02.08.02
--------------------------------------------------------------------------------------
Marconi Mobile (International) Limited                                    02.08.02
--------------------------------------------------------------------------------------
Marconi Mobile Limited                                                    02.08.02
--------------------------------------------------------------------------------------
Teleavio-Consorzio Telecomunicazioni Avconica S.r.L.                      02.08.02
--------------------------------------------------------------------------------------
</TABLE>

                                     - 37 -

<PAGE>

                                  SCHEDULE 4.3

                             SUBSEQUENTLY SOLD OPCOS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                      COMPANY NAME                                    DATE OF DISPOSAL
--------------------------------------------------------------------------------------
<S>                                                                   <C>
Marconi Communications Israel Limited                                     04.10.02
--------------------------------------------------------------------------------------
Metapath Software International (Singapore) Pte Limited                   09.10.02
--------------------------------------------------------------------------------------
Metapath Software International (Malaysia) Sdn Bhd                        09.10.02
--------------------------------------------------------------------------------------
Metapath Software International Philippines, Inc                          09.10.02
--------------------------------------------------------------------------------------
Metapath Software International (Thailand) Limited                        09.10.02
--------------------------------------------------------------------------------------
</TABLE>

                                     - 38 -

<PAGE>

                                   SCHEDULE 5

                               PARTICIPATING OPCOS

                                     - 39 -

<PAGE>

                                   SCHEDULE 6

                                DEED OF ADHERENCE

THIS DEED dated [ - ], is supplemental to the ESOP Escrow Agreement dated [ - ]
and entered into between Marconi Corporation Plc, Marconi Plc, HSBC Bank plc and
Barclays Bank plc as amended supplemented or restated from time to time (the
"AGREEMENT").

Words and expressions defined in the Agreement have the same meaning when used
in this Deed.

[Institution] (the "ACCEDING INSTITUTION") confirms that it has been supplied
with a copy of the Agreement and hereby agrees with each other party to the
Agreement that with effect from the date hereof and in accordance with the
provisions of Clause 10 (Non Participating ESOP Banks) of the Agreement, the
Acceding Institution will become a party to, and be bound by and benefit from
and of the terms of the Agreement as an ESOP Bank and shall assume such
obligations under the Agreement as are specified therein.

The address and facsimile number for notices to the [Acceding Institution] for
the purposes of Clause 16 (Notices) of the Agreement is:

[                        ]

Contact:

Facsimile:

This Deed is governed by and shall be construed in accordance with English law.

IN WITNESS WHEREOF this Deed has been executed by the parties hereto as a Deed
on the day and year first above written.

Signed as a Deed on behalf of

[name of Acceding Institution]

Director

Director/Secretary

* Delete as appropriate

                                     - 40 -

<PAGE>

                                   SCHEDULE 7

                          FORM OF ESOP BANK CERTIFICATE

[Date]

To:     [              ] (as Escrow Agent)

Dear Sirs,

ESOP ESCROW AGREEMENT DATED [      ], 2002 BETWEEN MARCONI CORPORATION plc,
MARCONI plc, HSBC BANK Plc, BARCLAYS BANK PLC (THE "ESCROW AGREEMENT")

Terms used in this certificate shall have the same meaning as set forth in the
Escrow Agreement.

In accordance with clause [7.1/7.2/7.4/7.5] of the Escrow Agreement, we [ESOP
BANK] hereby request that in your capacity as Escrow Agent you pay to [account
number] at [bank], [sort code] the amount of [ - ].

This amount is calculated on the basis of:

1.Our [Escrow Cash Entitlement/Charged Escrow Cash Entitlement] of [ - ];

[Our Escrow Cash Entitlement is calculated as follows:

(i)      Our Escrow Cash Claim is L[ - ];

(ii)     The aggregate value of our PLC Distribution together with the likely
         value of future PLC Distributions to be received by us is L [ - ]
         [(including net proceeds received on the sale of Company Securities of
         [ ])];

(iii)    Interest from the Record Date to the Determination Date is L[ - ]];

2. We confirm that our aggregate recoveries [do not exceed the limits specified
in clause 7.3 or 7.6 (as applicable)]/[exceed the limits specified in clause 7.3
or clause 7.6 (as applicable) and the following adjustment is required:

        [                                                    ]

3. In addition to the amount specified in paragraph 1 above, we are entitled to
interest on such amount at the rate and for the period specified in clause 7.2.1
or as the case may be clause 7.5.1 (a).

Yours faithfully

[Signed by [ - ] for and on behalf of [ - ] [ESOP BANK]]

                                     - 41 -

<PAGE>

EXECUTED by the Parties

Signed on behalf of
MARCONI CORPORATION PLC

Name:                  M.SKELLY

Signed on behalf of
MARCONI PLC

Name:                  M.SKELLY

Signed on behalf of
HSBC BANK PLC

Name:                  IAN MCMILLAN

Signed on behalf of
BARCLAYS BANK PLC

Name:                  BARRY COLE

                                     - 42 -<PAGE>

C L I F F O R D
C H A N C E                                                 [CHINESE CHARACTERS]

                                                                  CONFORMED COPY

                                                                     EXHIBIT 4.2

                                DATED 19 MAY 2003

                       MARCONI COMMUNICATIONS ASIA LIMITED
                                   AS COMPANY

                                  IN FAVOUR OF

                   THE LAW DEBENTURE TRUST CORPORATION P.L.C.
                               AS SECURITY TRUSTEE

                ------------------------------------------------------

                                    DEBENTURE

                ------------------------------------------------------

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                                   PAGE
<S>    <C>                                                                                               <C>
 1.    DEFINITIONS AND INTERPRETATION.................................................................     1

 2.    PAYMENT OF SECURED OBLIGATIONS.................................................................     5

 3.    FIXED CHARGES, ASSIGNMENTS AND FLOATING CHARGE.................................................     6

 4.    CRYSTALLISATION OF FLOATING CHARGE.............................................................     7

 5.    PERFECTION OF SECURITY.........................................................................     8

 6.    FURTHER ASSURANCE..............................................................................    10

 7.    NEGATIVE PLEDGE AND DISPOSALS..................................................................    11

 8.    SHARES.........................................................................................    11

 9.    ACCOUNTS.......................................................................................    12

10.    MONETARY CLAIMS................................................................................    13

11.    REAL PROPERTY..................................................................................    13

12.    INVESTMENTS: DELIVERY OF DOCUMENTS OF TITLE....................................................    14

13.    INTRA-GROUP LOAN CONTRACTS.....................................................................    14

14.    ENFORCEMENT OF SECURITY........................................................................    14

15.    EXTENSION AND VARIATION OF CONVEYANCING AND PROPERTY ORDINANCE.................................    15

16.    APPOINTMENT OF RECEIVER........................................................................    15

17.    POWERS OF RECEIVER.............................................................................    16

18.    APPLICATION OF MONEYS..........................................................................    17

19.    PROTECTION OF PURCHASERS.......................................................................    17

20.    POWER OF ATTORNEY..............................................................................    17

21.    EFFECTIVENESS OF SECURITY......................................................................    18

22.    RELEASE OF SECURITY............................................................................    19

23.    SET-OFF........................................................................................    20

24.    SUBSEQUENT SECURITY INTERESTS..................................................................    20

25.    CURRENCY INDEMNITY.............................................................................    20

26.    ASSIGNMENT.....................................................................................    20

27.    NOTICES........................................................................................    21

28.    EXPENSES, COSTS AND TAXES......................................................................    21

29.    PAYMENTS FREE OF DEDUCTION.....................................................................    21

30.    DISCRETION AND DELEGATION......................................................................    22

31.    PERPETUITY PERIOD..............................................................................    22
</TABLE>

<PAGE>

<TABLE>
<S>    <C>                                                                                                <C>
32.    GOVERNING LAW..................................................................................    22

33.    JURISDICTION...................................................................................    22

34.    COUNTERPARTS...................................................................................    23

SCHEDULE 1 FORM OF NOTICE OF ASSIGNMENT OF INTRA-GROUP LOAN...........................................    24

SCHEDULE 2............................................................................................    27

       Part A Form of Notice of Charge to Landlords...................................................    27

       Part B Form of Notice of Charge Over Account...................................................    29

       Part C Form of Notice of Charge over Monetary Claims...........................................    32

SCHEDULE 3 ADDITIONAL POWERS OF RECEIVER..............................................................    35

SCHEDULE 4 DETAILS OF SHARES..........................................................................    38
</TABLE>

<PAGE>

THIS DEBENTURE is made on 19 May 2003

BY

(1)      MARCONI COMMUNICATIONS ASIA LIMITED registered in Hong Kong with
         company number 021763 (the "COMPANY") in favour of

(2)      THE LAW DEBENTURE TRUST CORPORATION P.L.C. as security trustee for the
         Secured Creditors on the terms and conditions set out in the Security
         Trust and Intercreditor Deed (the "SECURITY TRUSTEE" which expression
         shall include any person for the time being appointed as trustee or as
         an additional trustee for the purpose of, and in accordance with, the
         Security Trust and Intercreditor Deed).

IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         Terms defined in the Security Trust and Intercreditor Deed shall,
         unless otherwise defined in this Debenture, have the same meaning when
         used in this Debenture and in addition:

         "ACCOUNTS" means any credit balance from time to time on any account
         opened or maintained by the Company with any financial institution and
         all Related Rights.

         "CHARGED PROPERTY" means all the assets of the Company which from time
         to time are the subject of the security created or expressed to be
         created in favour of the Security Trustee by or pursuant to this
         Debenture.

         "COLLATERAL RIGHTS" means all rights, powers and remedies of the
         Security Trustee provided by or pursuant to this Debenture or by law.

         "ENFORCEMENT EVENT" has the meaning given to such term in the Security
         Trust and Intercreditor Deed.

         "EXISTING PERFORMANCE BONDS" means surety bonds, appeal bonds, bid
         bonds, performance bonds, letters of credit, bank guarantees or other
         obligations of a like nature issued by a bank, insurance company or
         other financial institution on behalf of Marconi Corporation or any of
         its Subsidiaries in existence on the Issue Date and not issued pursuant
         to an Interim Bonding Facility until such bonds, letters of credit,
         guarantees or obligations expire, terminate or are cancelled.

         "GROUP" means Marconi Corporation and its Subsidiaries for the time
         being.

         "INSOLVENCY EVENT OF DEFAULT" means any Insolvency Event which is also
         an Event of Default.

         "INSURANCE POLICY" means any policy of insurance in which the Company
         may from time to time have an interest and all Related Rights.

         "INTELLECTUAL PROPERTY" means all industrial and intellectual property
         rights whether registered or not including pending applications for
         registration of such rights and the

                                      - 1 -

<PAGE>

         right to apply for registration of such rights including but not
         limited to Patents (as defined in the Indentures), utility models,
         design patents, registered designs, design rights, trade and service
         marks, copyrights (including copyright and equivalent rights in
         computer software), rights in inventions, technical information, rights
         in know-how, business names, database rights, processes, models,
         formulae and experiments and all rights of equivalent or similar effect
         to any of those which may subsist anywhere in the world and all Related
         Rights.

         "INTERIM BONDING FACILITY DOCUMENTS" means the Bonding Documents
         referred to in the Interim Bonding Facility Letter.

         "INTERIM BONDING FACILITY LETTER" means the facility letter dated 10
         May 2002, as amended on 24 October 2002, between HSBC Bank plc,
         Barclays Bank PLC, JPMorgan Chase Bank and Marconi Bonding Limited in
         an amount up to L150,000,000 (or the equivalent in other currencies)
         for the issuance of bonds, guarantees, letters of credit, indemnities
         and similar instruments.

         "INTRA-GROUP LOAN CONTRACTS" means any contracts between the Company
         and any member of the Group pursuant to which the Company makes
         available intra-Group loans to such member of the Group and all Related
         Rights.

         "INVESTMENTS" means:

         (a)      any stocks, shares, debentures, securities and certificates of
                  deposit (but not including the Shares);

         (b)      all interests in collective investment schemes; and

         (c)      all warrants, options and other rights to subscribe or acquire
                  any of the investments described in (a) and (b),

         in each case whether held directly by or to the order of the Company or
         by any trustee, nominee, fiduciary or clearance system on its behalf
         and all Related Rights (including all rights against any such trustee,
         nominee, fiduciary or clearance system).

         "MARCONI CORPORATION" means Marconi Corporation plc (registered in
         England and Wales with company number 00067307).

         "MONETARY CLAIMS" means any book and other debts and monetary claims
         owing to the Company and any proceeds thereof including, without
         limitation, any claims or sums of money deriving from or in relation to
         any Intellectual Property, the proceeds of any Insurance Policy, any
         court order or judgment, any contract or agreement to which the Company
         is a party and any other assets, property, rights or undertaking of the
         Company and all Related Rights.

         "NEW BONDING FACILITY AGREEMENT" means the L50 million committed
         revolving bonding facility agreement dated 27 March 2003 among Marconi
         Corporation, Marconi Bonding Limited, HSBC Bank plc as agent and
         security trustee, the lenders described thereunder and certain other
         Subsidiaries providing for the issuance of surety bonds, appeal bonds,
         bid bonds, performance bonds, letters of credit, bank guarantees or
         other obligations of a

                                     - 2 -

<PAGE>

         like nature on behalf of Marconi Corporation and/or any Subsidiary, as
         such agreement may be amended, extended, supplemented or otherwise
         modified from time to time (including, without limitation, any
         successive amendments, extensions, supplements or other modifications
         of the foregoing).

         "NOTICE OF ASSIGNMENT" means a notice of assignment in substantially
         the form set out in Schedule 1.

         "NOTICE OF CHARGE" means a notice of charge in substantially a form set
         out in Schedule 2.

         "REAL PROPERTY" means:

         (a)      any real or immovable property;

         (b)      any buildings, fixtures, fittings, fixed plant or machinery
                  from time to time situated on or forming part of such real or
                  immovable property; and

         (c)      any present or future real or immovable property in which the
                  Company has an interest,

         and includes all Related Rights.

         "RECEIVER" means a receiver or receiver and manager of the whole or any
         part of the Charged Property.

         "RELATED RIGHTS" means, in relation to any asset:

         (a)      the proceeds of sale or assignment of all or any part of that
                  asset;

         (b)      all rights under any licence, agreement for sale or agreement
                  for lease in respect of that asset;

         (c)      all rights, benefits, claims, contracts, warranties, remedies,
                  security, indemnities or covenants for title in respect of
                  that asset; and

         (d)      any moneys and proceeds paid or payable in respect of that
                  asset including, but not limited to royalties, licence
                  payments, awards of damages and payments made pursuant to
                  settlement agreements in respect of that asset.

         "SECURED OBLIGATIONS" means all present and future indebtedness,
         liabilities and obligations (for the avoidance of doubt, including any
         liabilities and obligations which have been cash-collateralised by the
         Company) at any time of the Company under the Relevant Documents, both
         actual and contingent and whether incurred solely or jointly or in any
         other capacity together with any of the following matters relating to
         or arising in respect of those liabilities and obligations:

         (a)      any refinancing, novation, deferral or extension;

         (b)      any obligation relating to any increase in the amount of such
                  obligations;

         (c)      any claim for damages or restitution; and

                                      - 3 -

<PAGE>

         (d)      any claim as a result of any recovery by the Company of a
                  payment or discharge, or non-allowability, on the grounds of
                  preference,

         and any amounts that would be included in any of the above but for any
         discharge, non-provability or unenforceability of those amounts in any
         insolvency or other proceedings (including interest accruing after the
         commencement of any insolvency or other proceedings).

         "SECURITY TRUST AND INTERCREDITOR DEED" means the security trust and
         intercreditor deed dated on or about the date hereof between, amongst
         others, the Security Trustee, Marconi Corporation and other obligors,
         Law Debenture Trust Company of New York as senior note trustee and
         JPMorgan Chase Bank as junior note trustee.

         "SHARES" means all of the shares in the companies set out in Schedule 4
         (Details of Shares) held by, to the order or on behalf of the Company
         at any time and all Related Rights.

         "SUBSIDIARY" means a subsidiary within the meaning of Section 736 of
         the Companies Act 1985 of the United Kingdom, as amended by Section 144
         of the Companies Act 1989 of the United Kingdom.

         "TANGIBLE MOVEABLE PROPERTY" means any plant, machinery, office
         equipment, computers, vehicles and other chattels (excluding any for
         the time being forming part of the Company's stock in trade or work in
         progress) and all Related Rights.

         "TEMPORARY BONDING FACILITY DOCUMENTS" means the Bonding Documents
         referred to in the Temporary Bonding Facility Letter.

         "TEMPORARY BONDING FACILITY LETTER" means the facility letter dated 8
         February 2002 between HSBC Bank plc, Barclays Bank PLC and Marconi
         Bonding Limited in an amount up to L50,000,000 (or equivalent in other
         currencies) for the issuance of bonds, guarantees, letters of credit,
         indemnities and similar instruments.

1.2      INTERPRETATION

         In this Debenture:

         1.2.1    the rules of interpretation contained in clause 1.2
                  (Interpretation) of the Security Trust and Intercreditor Deed
                  shall apply to the construction of this Debenture;

         1.2.2    "continuing" in relation to an Enforcement Event, shall be
                  construed as a reference to an acceleration of any Secured
                  Obligation (other than Secured Obligations arising under the
                  New Bonding Facility Agreement) where such acceleration has
                  not been rescinded in writing or a declaration that the
                  Secured Obligations (other than Secured Obligations arising
                  under the New Bonding Facility Agreement) are prematurely due
                  and payable (other than solely as a result of it becoming
                  unlawful for a Secured Creditor to perform its obligations
                  under the Relevant Documents) where such declaration has not
                  been revoked in writing or any failure by an Obligor to pay
                  any principal amount in respect of any Secured Obligations
                  (other than Secured Obligations arising under the New Bonding
                  Facility Agreement) whether on maturity or otherwise which has
                  not

                                      - 4 -

<PAGE>

                  been remedied or waived in writing. For the purposes of this
                  sub-clause 1.2.2, the definition of "Secured Obligation" shall
                  have the same meaning as in the Security Trust and
                  Intercreditor Deed.

         1.2.3    any reference to the "SECURITY TRUSTEE", the "COMPANY" or the
                  "SECURED CREDITORS" shall be construed so as to include its or
                  their (and any subsequent) successors in title and any
                  permitted assignees and transferees in accordance with their
                  respective interests; and

         1.2.4    references in this Debenture to any Clause or Schedule shall
                  be to a clause or schedule contained in this Debenture.

1.3      HONG KONG

         In this Debenture, "Hong Kong" means the Hong Kong Special
         Administrative Region of the People's Republic of China.

1.4      SECURITY TRUST AND INTERCREDITOR DEED

         The parties hereto each acknowledge that the Security Trustee, when
         acting hereunder, shall be acting in accordance with and subject to the
         terms of the Security Trust and Intercreditor Deed.

1.5      CONFLICT

         Notwithstanding any provision to the contrary contained herein, the
         parties agree that this Debenture is subject in all respects to the
         terms of the Security Trust and Intercreditor Deed and for the
         avoidance of doubt, in the event of any inconsistency, the provisions
         of the Security Trust and Intercreditor Deed shall prevail.

2.       PAYMENT OF SECURED OBLIGATIONS

2.1      COVENANT TO PAY

         The Company hereby covenants with the Security Trustee as trustee for
         the Secured Creditors that it shall on demand of the Security Trustee
         discharge all the Secured Obligations and the Company shall pay to the
         Security Trustee when due and payable every sum at any time owing, due
         or incurred by the Company to the Security Trustee (whether for its own
         account or as trustee for the Secured Creditors) or any of the other
         Secured Creditors in respect of any such liabilities PROVIDED THAT,
         notwithstanding any provision to the contrary contained herein, neither
         such covenant nor the security constituted by this Debenture nor any
         other provisions of this Debenture shall extend to or include or be
         taken as creating security for nor shall the security constituted by
         this Debenture extend to secure any liability or sum which would, but
         for this proviso, cause such covenant, security or provision to be
         unlawful or prohibited by or otherwise to contravene any applicable law
         (including, without limitation, Section 47A of the Companies Ordinance
         (Cap.32)).

2.2      INTEREST ON DEMANDS

         If the Company fails to pay any sum on the due date for payment of that
         sum the Company shall pay interest on such sum (before and after any
         judgment and to the extent interest at a default rate is not otherwise
         being paid on such sum) from the date of demand until the date of
         payment calculated on a daily basis at the rate determined in

                                      - 5 -

<PAGE>

         accordance with the provisions of Clause 18.4 (Interest on Demands) of
         the Security Trust and Intercreditor Deed.

3.       FIXED CHARGES, ASSIGNMENTS AND FLOATING CHARGE

3.1      FIXED CHARGES

         The Company as beneficial owner hereby charges in favour of the
         Security Trustee as trustee for the Secured Creditors as security for
         the payment and discharge of the Secured Obligations, by way of first
         fixed charge all of the Company's right, title and interest from time
         to time in and to each of the following assets:

         3.1.1    the Tangible Moveable Property;

         3.1.2    any goodwill;

         3.1.3    all rights in relation to the uncalled capital of the Company;

         3.1.4    the Shares, all dividends, interest and other monies payable
                  in respect of the Shares and all Related Rights (whether
                  derived by way of redemption, bonus, preference, option,
                  substitution, conversion or otherwise); and

         3.1.5    all Monetary Claims deriving from or in relation to any
                  Intellectual Property,

         provided that, where any contract, instrument or agreement in respect
         of any such asset or, where appropriate, any consent obtained
         thereunder contains an effective prohibition against or restriction on
         the granting of a first fixed charge over such asset, the first fixed
         charge hereby created shall take effect only to the greatest extent
         thereby permitted. The Company undertakes to use commercially
         reasonable efforts to ensure that any asset of any of the categories
         described in sub clauses 3.1.1 to 3.1.5 which is or is to be the
         subject of any contract, instrument or agreement which comes into being
         on or after the date of this Debenture shall be capable of being the
         subject of a first fixed charge in favour of the Security Trustee.

3.2      ASSIGNMENTS

         The Company as beneficial owner hereby assigns to the Security Trustee
         as trustee for the Secured Creditors as security for the payment and
         discharge of the Secured Obligations all the Company's right, title and
         interest from time to time in and to each of the Intra-Group Loan
         Contracts (having already obtained any necessary consent to such
         assignment from any third party).

3.3      FLOATING CHARGE

         The Company as beneficial owner hereby charges in favour of the
         Security Trustee as trustee for the Secured Creditors as security for
         the payment and discharge of the Secured Obligations by way of first
         floating charge the whole of the Company's undertaking and assets
         (including, but not limited to the Real Property, the Accounts, the
         Insurance Policies, the Intellectual Property, the Monetary Claims and
         the Investments), present and future, other than any assets validly and
         effectively charged or assigned (whether at law or in equity) by way of
         fixed security under the laws of Hong Kong, or of the jurisdiction in
         which that asset is situated, in favour of the Security Trustee as
         security for the Secured Obligations, provided that, where any
         contract, instrument or

                                      - 6 -

<PAGE>

         agreement in respect of any such undertaking or asset or, where
         appropriate, any consent obtained thereunder contains an effective
         prohibition against or restriction on the granting of a first floating
         charge over such undertaking or asset, the first floating charge hereby
         created shall take effect only to the greatest extent thereby
         permitted. The Company undertakes to use commercially reasonable
         efforts to ensure that any of the Company's undertaking and assets
         described in this Clause 3.3 which is or is to be the subject of any
         contract, instrument or agreement which comes into being on or after
         the date of this Debenture shall be capable of being the subject of a
         first floating charge in favour of the Security Trustee.

3.4      CASH COLLATERAL

         The security created by Clause 3.3 (Floating Charge) over the Accounts
         shall take effect subject to, and shall not restrict the ability of the
         Company to create, any (a) security or (b) other arrangement under
         which money or claims to, or the benefit of, a bank or other account
         may be applied, set-off, made subject to a combination of accounts or
         otherwise subject to time deposit arrangements or other flawed asset
         rights (whether or not such security is or is to be created on, before
         or after the date of this Debenture) which secures obligations under
         and/or in respect of:

         3.4.1    the Interim Bonding Facility Documents;

         3.4.2    the Temporary Bonding Facility Documents;

         3.4.3    the New Bonding Facility Agreement;

         3.4.4    the Existing Performance Bonds; and

         3.4.5    any other bonding facility expressly permitted pursuant to
                  Section 4.07 (Limitations on Indebtedness and Preferred Stock)
                  of the Senior Note Indenture and Section 4.06 (Limitations on
                  Indebtedness and Preferred Stock) of the Junior Note
                  Indenture,

         in each case as a result of the provision of cash collateral as
         permitted pursuant to the terms of the Indentures or any of them, the
         Escrow Agreement or the Security Trust and Intercreditor Deed.

4.       CRYSTALLISATION OF FLOATING CHARGE

4.1      CRYSTALLISATION: BY NOTICE

         By notice in writing to Marconi Corporation and the Company, the
         Security Trustee may and shall, if so instructed pursuant to the
         Security Trust and Intercreditor Deed, convert the floating charge
         created by Clause 3.3 (Floating Charge) with immediate effect into a
         fixed charge as regards any property or assets specified in the notice
         if:

         4.1.1    an Event of Default has occurred and is continuing; or

         4.1.2    any person attempts to levy any distress, execution, diligence
                  or other similar process against or to appoint a Receiver over
                  any of the Charged Property; or

         4.1.3    the Security Trustee considers that any of the Charged
                  Property may be in jeopardy or in danger of being seized or
                  sold pursuant to any form of legal

                                      - 7 -

<PAGE>

                  process, other than a voluntary sale of Charged Property
                  entered into by the Company and permitted by the Indentures
                  PROVIDED THAT the Security Trustee shall not be under any duty
                  to monitor the Charged Property.

4.2      CRYSTALLISATION: AUTOMATIC

         Notwithstanding Clause 4.1 (Crystallisation: By Notice) and without
         prejudice to any law which may have a similar effect, the floating
         charge will automatically be converted (without notice) with immediate
         effect into a fixed charge as regards all the assets subject to the
         floating charge if:

         4.2.1    any person levies any distress, execution, diligence or other
                  similar process against, or appoints a Receiver over, any of
                  the Charged Property; or

         4.2.2    a resolution is passed or an order is made for the winding-up,
                  dissolution or re-organisation of the Company other than in
                  connection with a solvent reconstruction of the Company
                  permitted under the Indentures.

4.3      DE-CRYSTALLISATION:

         4.3.1    Where an asset has become subject to a fixed charge under
                  Clause 4.1 (Crystallisation: By Notice) or Clause 4.2
                  (Crystallisation: Automatic) the Security Trustee shall, if so
                  requested by the Company and if instructed to do so in
                  accordance with the Security Trust and Intercreditor Deed,
                  release the asset from that fixed charge by notice in writing
                  to Marconi Corporation and the Company.

         4.3.2    When an asset is released from the fixed charge under
                  sub-clause 4.3.1 above, the asset will again be subject to:

                  (a)      the floating charge under Clause 3.3 (Floating
                           Charge); and

                  (b)      the further operation of Clause 4.1 (Crystallisation:
                           By Notice) or Clause 4.2 (Crystallisation:
                           Automatic).

5.       PERFECTION OF SECURITY

5.1      NOTICES OF ASSIGNMENT

         Pursuant to Clause 20 (Power of Attorney), the Security Trustee may,
         upon the occurrence of an Insolvency Event of Default and shall, if so
         instructed pursuant to the Security Trust and Intercreditor Deed upon
         or at any time after the occurrence of any Event of Default which is
         continuing, deliver to relevant persons Notices of Assignment duly
         executed by the Security Trustee on behalf of the Company in respect of
         the Intra-Group Loan Contracts.

5.2      NOTICES OF CHARGE

         5.2.1    If so required by the Security Trustee from time to time,
                  within 10 Business Days after the Company enters into any
                  lease falling within the ambit of the security created
                  pursuant to Clause 3 (Fixed Charges, Assignments and Floating
                  Charge), the Company will join the Security Trustee in giving
                  a Notice of Charge to all such landlords and other persons
                  which are parties under such lease of the security constituted
                  under this Debenture in respect of such lease

                                      - 8 -

<PAGE>

                  and will use all commercially reasonable endeavours to procure
                  from each of such landlords and persons an acknowledgement in
                  the form attached thereto.

         5.2.2    The Company shall within 10 Business Days after the date of
                  this Debenture, provide the Security Trustee with details of
                  all Accounts and Monetary Claims falling within the ambit of
                  the security created pursuant to Clause 3 (Fixed Charges,
                  Assignments and Floating Charge) deriving from or relating to
                  any Intellectual Property and in relation to all other
                  Accounts and Monetary Claims falling within the ambit of the
                  security created pursuant to Clause 3 (Fixed Charges,
                  Assignments and Floating Charge), immediately upon the
                  occurrence of an Insolvency Event of Default or upon request
                  by the Security Trustee if instructed pursuant to the Security
                  Trust and Intercreditor Deed upon or after the occurrence of
                  any Event of Default which is continuing, to enable the
                  Security Trustee to deliver a Notice of Charge in accordance
                  with sub-clause 5.2.3 and/or sub-clause 5.2.4 below.

         5.2.3    Pursuant to Clause 20 (Power of Attorney), the Security
                  Trustee may, upon the occurrence of an Insolvency Event of
                  Default and shall, if so instructed pursuant to the Security
                  Trust and Intercreditor Deed upon or at any time after the
                  occurrence of any Event of Default which is continuing,
                  deliver to relevant persons, Notices of Charge duly executed
                  by the Security Trustee on behalf of the Company in respect of
                  any Monetary Claims falling within the ambit of the security
                  created pursuant to Clause 3 (Fixed Charges, Assignments and
                  Floating Charge).

         5.2.4    Pursuant to Clause 20 (Power of Attorney), the Security
                  Trustee may, upon the occurrence of an Insolvency Event of
                  Default and shall, if so instructed pursuant to the Security
                  Trust and Intercreditor Deed upon or at any time after the
                  occurrence of any Event of Default which is continuing,
                  deliver to relevant persons Notices of Charge duly executed by
                  the Security Trustee on behalf of the Company in respect of
                  any Accounts falling within the ambit of the security created
                  pursuant to Clause 3 (Fixed Charges, Assignments and Floating
                  Charge).

5.3      REAL PROPERTY: DELIVERY OF DOCUMENTS OF TITLE

         The Company shall, upon the acquisition by it of any interest in any
         Real Property to the extent requested by the Security Trustee, deliver
         (or procure delivery) to or to the order of the Security Trustee of,
         and the Security Trustee shall be entitled to hold and retain, all
         deeds, certificates and other documents of title relating to such
         property.

5.4      FURTHER ADVANCES

         Subject to the terms of the Relevant Documents certain Secured
         Creditors are under an obligation to make further advances to the
         Company and that obligation will be deemed to be incorporated into this
         Debenture as if set out in this Debenture.

                                      - 9 -

<PAGE>

5.5      DELIVERY OF SHARE CERTIFICATES

         The Company shall:

         5.5.1    within 10 Business Days of the date of this Debenture, deposit
                  (or procure the deposit of) with or to the order of the
                  Security Trustee or with such Delegate as the Security Trustee
                  may appoint for this purpose all certificates or other
                  documents of title to the Shares, and stock transfer forms or
                  other instruments of transfer in respect thereof (executed in
                  blank by or on behalf of the Company); and

         5.5.2    promptly upon the accrual, offer or issue of any stocks,
                  shares, warrants or other securities in respect of or derived
                  from the Shares, notify the Security Trustee of that
                  occurrence and procure the delivery to the Security Trustee or
                  to the order of the Security Trustee of (a) all certificates
                  or other documents of title representing such items and (b)
                  such stock transfer forms or other instruments of transfer
                  (executed in blank by or on behalf of the Company) in respect
                  thereof.

6.       FURTHER ASSURANCE

6.1      FURTHER ASSURANCE: GENERAL

         The Company shall promptly do all such acts or execute all such
         documents (including assignments, transfers, mortgages, charges,
         notices and instructions) as the Security Trustee may specify (and in
         such form as the Security Trustee may require in favour of the Security
         Trustee or its nominee(s)):

         6.1.1    to perfect the Security created or intended to be created in
                  respect of the Charged Property (which may include the
                  execution by the Company of a mortgage, charge or assignment
                  over all or any of the assets constituting, or intended to
                  constitute, Charged Property) or for the exercise of the
                  Collateral Rights;

         6.1.2    to confer on the Security Trustee Security over any property
                  and assets of the Company located in any jurisdiction outside
                  Hong Kong equivalent or similar to the Security intended to be
                  conferred by or pursuant to this Debenture;

         6.1.3    to confer on the Security Trustee Security and to create,
                  perfect, protect or maintain Security (which in so far as it
                  relates to Real Property (other than fittings, plant and
                  machinery) in Hong Kong shall be a legal charge) over all its
                  right, title and interest from time to time in any Real
                  Property including using commercially reasonable efforts to
                  ensure that any such Real Property which is or is to be the
                  subject of any contract, instrument or agreement which comes
                  into being on or after the date of this Debenture shall be
                  capable of being the subject of such security in favour of the
                  Security Trustee; and/or

         6.1.4    to facilitate the realisation of the Charged Property.

6.2      NECESSARY ACTION

         If so requested by the Security Trustee the Company shall take all such
         action as is available to it (including making all filings and
         registrations) as may be necessary for the

                                     - 10 -

<PAGE>

         purpose of the creation, perfection, protection or maintenance of any
         Security conferred or intended to be conferred on the Security Trustee
         by or pursuant to this Debenture.

7.       NEGATIVE PLEDGE AND DISPOSALS

7.1      NEGATIVE PLEDGE

         The Company undertakes that it shall not, at any time during the
         subsistence of this Debenture, create or permit to subsist any Security
         over all or any part of the Charged Property except as not expressly
         prohibited under the terms of the Indentures.

7.2      NO DISPOSAL OF INTERESTS

         The Company undertakes that it shall not (and shall not agree to) at
         any time during the subsistence of this Debenture, except as not
         expressly prohibited under the terms of the Indentures:

         7.2.1    execute any conveyance, disposition, transfer, lease,
                  assignment or assignation of, or other right to use or occupy,
                  all or any part of the Charged Property;

         7.2.2    create any legal or equitable estate or heritable interest or
                  other interest in, or over, or otherwise relating to, all or
                  any part of the Charged Property; or

         7.2.3    (a) grant or vary, or accept any surrender, or cancellation or
                  renunciation or disposal of, any lease, tenancy, licence,
                  consent or other right to use or occupy in relation to any of
                  the Charged Property or (b) allow any person any right to use
                  or occupy or to become entitled to assert any proprietary
                  interest in, or right over, the Charged Property, which may,
                  in each case, adversely affect the ability of the Security
                  Trustee to exercise any of the Collateral Rights.

8.       SHARES

8.1      SHARES: BEFORE ENFORCEMENT EVENT

         Prior to the occurrence of an Enforcement Event and at any time when no
         Enforcement Event is continuing, the Company shall:

         8.1.1    be entitled to retain all dividends, interest and other monies
                  arising from the Shares; and

         8.1.2    exercise all voting rights in relation to the Shares PROVIDED
                  THAT the Company shall not exercise such voting rights in any
                  manner which would constitute a Default or an Event of Default
                  under the Indentures (as such terms are defined in the
                  Indentures).

8.2      SHARES: AFTER ENFORCEMENT EVENT

         The Security Trustee may, upon the occurrence of an Enforcement Event
         and at any time thereafter whilst such Enforcement Event is continuing
         (in the name of the Company or otherwise and without any further
         consent or authority from the Company):

         8.2.1    exercise (or refrain from exercising) any voting rights in
                  respect of any of the Shares;

                                     - 11 -

<PAGE>

         8.2.2    apply all dividends, interest and other monies arising from
                  any of the Shares in accordance with Clause 18 (Application of
                  Moneys);

         8.2.3    transfer any of the Shares into the name of such nominee(s) of
                  the Security Trustee as it shall require; and

         8.2.4    exercise (or refrain from exercising) the powers and rights
                  conferred on or exercisable by the legal or beneficial owner
                  of any of the Shares, including the right, in relation to any
                  company whose shares or other securities are included in the
                  Charged Property, to concur or participate in:

                  (a)      the reconstruction, amalgamation, sale or other
                           disposal of such company or any of its assets or
                           undertaking (including the exchange, conversion or
                           reissue of any shares or securities as a consequence
                           thereof),

                  (b)      the release, modification or variation of any rights
                           or liabilities attaching to such shares or
                           securities, and

                  (c)      the exercise, renunciation or assignment of any right
                           to subscribe for any shares or securities,

                  in each case in such manner and on such terms as the Security
                  Trustee may think fit, and the proceeds of any such action
                  shall form part of the Charged Property.

9.       ACCOUNTS

9.1      ACCOUNTS: OPERATION BEFORE ENFORCEMENT EVENT

         The Company shall, prior to the delivery of a Notice of Charge pursuant
         to Clause 5.2 (Notices of Charge) or the occurrence of an Enforcement
         Event and at any time thereafter when no Enforcement Event is
         continuing (provided that at such time no Notice of Charge has been
         delivered pursuant to Clause 5.2 (Notices of Charge), be entitled to
         receive, withdraw or otherwise transfer any credit balance from time to
         time on any Account.

9.2      ACCOUNTS: OPERATION AFTER ENFORCEMENT EVENT

         After the delivery of a Notice of Charge pursuant to Clause 5.2
         (Notices of Charge) or the occurrence of an Enforcement Event and at
         any time thereafter while such Enforcement Event is continuing, the
         Company shall not be entitled to receive, withdraw or otherwise
         transfer any credit balance from time to time on any Account except
         with the prior consent of the Security Trustee.

9.3      ACCOUNTS: APPLICATION OF MONIES

         The Security Trustee shall, upon the occurrence of an Enforcement Event
         and at any time thereafter whilst such Enforcement Event is continuing,
         be entitled without notice to apply, transfer or set-off any or all of
         the credit balances from time to time on any Account in or towards the
         payment or other satisfaction of all or part of the Secured Obligations
         in accordance with Clause 18 (Application of Moneys).

                                     - 12 -

<PAGE>

10.      MONETARY CLAIMS

10.1     DEALING WITH MONETARY CLAIMS

         The Company shall not at any time during the subsistence of the
         Debenture, without the prior written consent of the Security Trustee or
         except as not expressly prohibited under the terms of the Indentures:

         10.1.1   deal with the Monetary Claims referred to in sub-clause 3.1.5
                  of Clause 3.1 (Fixed Charges) except by getting in and
                  realising them in a prudent manner (on behalf of the Security
                  Trustee) and paying the proceeds of those Monetary Claims
                  referred to in sub-clause 3.1.5 of Clause 3.1 (Fixed Charges)
                  into the Accounts or as the Security Trustee may require (and
                  such proceeds shall be held upon trust by the Company for the
                  Security Trustee on behalf of the Secured Creditors prior to
                  such payment in);

         10.1.2   factor or discount any of the Monetary Claims referred to in
                  sub-clause 3.1.5 of Clause 3.1 (Fixed Charges) or enter into
                  any agreement for such factoring or discounting; or

         10.1.3   (other than as provided in Clause 10.2 (Release of Monetary
                  Claims: Before Enforcement Event) be entitled to withdraw or
                  otherwise transfer the proceeds of the realisation of any
                  Monetary Claims standing to the credit of any Account.

10.2     RELEASE OF MONETARY CLAIMS: BEFORE ENFORCEMENT EVENT

         Prior to the delivery of a Notice of Charge pursuant to Clause 5.2
         (Notices of Charge) or the occurrence of an Enforcement Event and at
         any time when no Enforcement Event is continuing (provided that at such
         time no Notice of Charge has been delivered pursuant to Clause 5.2
         (Notices of Charge)), the proceeds of the realisation of any Monetary
         Claims deriving from or in relation to any Intellectual Property shall
         (subject to any restriction on the application of such proceeds
         contained in this Debenture, the Indentures or in the Security Trust
         and Intercreditor Deed), upon such proceeds being credited to an
         Account, be released from the fixed charge created pursuant to Clause
         3.1 (Fixed Charges) and the Company shall be entitled to withdraw such
         proceeds from such Account provided that such proceeds shall continue
         to be subject to the floating charge created pursuant to Clause 3.3
         (Floating Charge) and the terms of this Debenture.

11.      REAL PROPERTY

11.1     PROPERTY: NOTIFICATION

         The Company shall promptly notify the Security Trustee of any contract,
         conveyance, transfer or other disposition for the acquisition by the
         Company (or its nominee(s)) of any Real Property and shall promptly
         enter into a further document or deed in respect of such Real Property
         if so required by the Security Trustee.

11.2     ENTITLEMENT TO REMEDY

         If the Company fails to comply with any of the undertakings contained
         in this Clause 11, the Security Trustee shall be entitled (with such
         agents, contractors and others as it sees fit) to do such things as may
         in the opinion of the Security Trustee be required to remedy such
         failure and all moneys spent by the Security Trustee in doing so shall
         be reimbursed

                                     - 13 -

<PAGE>

         by the Company on demand with interest from the date of payment by the
         Security Trustee until reimbursed in accordance with Clause 2.2
         (Interest on Demands).

12.      INVESTMENTS: DELIVERY OF DOCUMENTS OF TITLE

         After the occurrence of an Enforcement Event, the Company shall
         promptly deliver (or procure delivery) to the Security Trustee, and the
         Security Trustee shall be entitled to retain, all of the Investments
         and any certificates and other documents of title representing the
         Investments to which the Company (or its nominee(s)) is or becomes
         entitled together with any other document which the Security Trustee
         may request (in such form and executed as the Security Trustee may
         require) with a view to perfecting or improving its security over the
         Investments or to registering any Investment in its name or the name of
         any nominee(s).

13.      INTRA-GROUP LOAN CONTRACTS

         Prior to the delivery of a Notice of Assignment pursuant to Clause 5.1
         (Notices of Assignment) or the occurrence of an Enforcement Event, the
         Company shall be entitled to deal with the Intra-Group Loan Contracts
         except as expressly prohibited under the Indentures or the Security
         Trust and Intercreditor Deed.

14.      ENFORCEMENT OF SECURITY

14.1     ENFORCEMENT

         At any time after the occurrence of an Enforcement Event and the
         Security Trustee (acting on the instructions received pursuant to the
         terms of the Security Trust and Intercreditor Deed) giving notice to
         Marconi Corporation and the Company thereof, the security created by or
         pursuant to this Debenture is immediately enforceable and the Security
         Trustee may, in its absolute discretion:

         14.1.1   enforce all or any part of that security (at the times, in the
                  manner and on the terms it thinks fit) and take possession of
                  and hold or dispose of all or any part of the Charged
                  Property; and

         14.1.2   whether or not it has appointed a Receiver, exercise all or
                  any of the powers, authorities and discretions conferred by
                  the Conveyancing and Property Ordinance (Cap.219) (as varied
                  or extended by this Debenture) insofar as applicable on
                  mortgagees and by this Debenture on any Receiver or otherwise
                  conferred by law on mortgagees or Receivers.

14.2     NO LIABILITY AS MORTGAGEE IN POSSESSION

         Neither the Security Trustee nor any Receiver shall be liable to
         account as a mortgagee or heritable creditor in possession in respect
         of all or any part of the Charged Property or be liable for any loss
         upon realisation or for any neglect, default or omission in connection
         with the Charged Property to which a mortgagee in possession or
         heritable creditor might otherwise be liable.

                                     - 14 -

<PAGE>

15.      EXTENSION AND VARIATION OF CONVEYANCING AND PROPERTY ORDINANCE

15.1     EXTENSION OF POWERS

         Insofar as applicable the power of sale or other disposal conferred on
         the Security Trustee and on any Receiver by this Debenture shall
         operate as a variation and extension of the statutory power of sale
         under Sections 51 and 53 of the Conveyancing and Property Ordinance
         (Cap.219) and such power shall arise (and the Secured Obligations shall
         be deemed due and payable for that purpose) on execution of this
         Debenture.

15.2     RESTRICTIONS

         The restrictions contained in paragraph 11 of the Fourth Schedule to
         the Conveyancing and Property Ordinance (Cap.219) shall not apply to
         this Debenture or to the exercise by the Security Trustee of its right
         to consolidate all or any of the security created by or pursuant to
         this Debenture with any other security in existence at any time or to
         its power of sale, which powers may be exercised by the Security
         Trustee without notice to the Company on or at any time after the
         occurrence of an Enforcement Event.

15.3     POWER OF LEASING

         The statutory powers of leasing, surrendering leases and accepting
         surrenders of leases conferred by the Fourth Schedule to the
         Conveyancing and Property Ordinance (Cap.219) may be exercised by the
         Security Trustee at any time on or after the occurrence of an
         Enforcement Event and, without prejudice to the foregoing, the Security
         Trustee and any Receiver may, whether or not the Security Trustee and
         such Receiver shall then be in possession of the relevant property,
         make any lease or agreement for lease, accept surrenders of leases and
         grant options on such terms (including without limitation as to premium
         and length of term) as it or he shall think fit, without the need to
         comply with any requirement or restriction imposed by the Fourth
         Schedule to the Conveyancing and Property Ordinance (Cap.219).

16.      APPOINTMENT OF RECEIVER

16.1     APPOINTMENT AND REMOVAL

         After the occurrence of an Enforcement Event or if requested to do so
         by the Company, the Security Trustee may by deed or otherwise (acting
         through an authorised officer of the Security Trustee), without prior
         notice to the Company:

         16.1.1   appoint one or more persons to be a Receiver of the whole or
                  any part of the Charged Property;

         16.1.2   remove (so far as it is lawfully able) any Receiver so
                  appointed; and

         16.1.3   appoint another person(s) as an additional or replacement
                  Receiver(s).

16.2     CAPACITY OF RECEIVERS

         Each person appointed to be a Receiver pursuant to Clause 16.1
         (Appointment and Removal) shall be:

         16.2.1   entitled to act individually or together with any other person
                  appointed or substituted as Receiver;

                                     - 15 -

<PAGE>

         16.2.2   for all purposes shall be deemed to be the agent of the
                  Company, who shall be solely responsible for his acts,
                  defaults and liabilities and for the payment of his
                  remuneration and no Receiver shall at any time act as agent
                  for the Security Trustee; and

         16.2.3   entitled to remuneration for his services at a rate to be
                  fixed by the Security Trustee from time to time.

16.3     STATUTORY POWERS OF APPOINTMENT

         The powers of appointment of a Receiver shall be in addition to all
         statutory and other powers of appointment of the Security Trustee under
         the Conveyancing and Property Ordinance (Cap.219) (as extended by this
         Debenture) or otherwise and such powers shall remain exercisable from
         time to time by the Security Trustee in respect of any part of the
         Charged Property.

17.      POWERS OF RECEIVER

17.1     POWERS OF RECEIVER

         Every Receiver shall (subject to any restrictions in the instrument
         appointing him but notwithstanding any winding-up or dissolution of the
         Company) have and be entitled to exercise, in relation to the Charged
         Property (and any assets of the Company which, when got in, would be
         Charged Property) in respect of which he was appointed, and as varied
         and extended by the provisions of this Debenture (in the name of or on
         behalf of the Company or in his own name and, in each case, at the cost
         of the Company):

         17.1.1   insofar as applicable all the powers conferred by the
                  Conveyancing and Property Ordinance (Cap.219) on mortgagors
                  and on mortgagees in possession and on receivers appointed
                  under that Ordinance;

         17.1.2   all the powers and rights of an absolute owner and power to do
                  or omit to do anything which the Company itself could do or
                  omit to do; and

         17.1.3   the power to do all things (including bringing or defending
                  proceedings in the name or on behalf of the Company) which
                  seem to the Receiver to be incidental or conducive to (a) any
                  of the functions, powers, authorities or discretions conferred
                  on or vested in him or (b) the exercise of the Collateral
                  Rights (including realisation of all or any part of the
                  Charged Property) or (c) bringing to his hands any assets of
                  the Company forming part of, or which when got in would be,
                  Charged Property.

17.2     ADDITIONAL POWERS OF RECEIVER

         In addition to and without prejudice to the generality of the
         foregoing, every Receiver shall (subject to any limitations or
         restrictions expressed in the instrument appointing him but
         notwithstanding any winding-up or dissolution of the Company) have the
         powers set out in Schedule 3 (Additional Powers of Receiver) in
         relation to the Charged Property (and any assets of the Company which,
         when got in, would be part of the Charged Property), in respect of
         which he was appointed (and every reference in Schedule 3 (Additional
         Powers of Receiver) to the "Charged Property" shall be read as a
         reference to that part of the Charged Property in respect of which such
         Receiver was appointed).

                                     - 16 -

<PAGE>

17.3     MANNER OF EXERCISING POWERS

         In making any sale or other disposal of all or any part of the Charged
         Property or any acquisition in the exercise of their respective powers
         (including without limitation a disposal by a Receiver to any
         subsidiary of the Company or other body corporate) any Receiver or the
         Security Trustee may accept or dispose of as, and by way of
         consideration for, such sale or other disposal or acquisition, cash,
         shares, loan capital or other obligations, including without limitation
         consideration fluctuating according to or dependent upon profit or
         turnover and consideration the amount whereof is to be determined by a
         third party. Any such consideration may, if thought expedient by such
         Receiver or the Security Trustee, be nil or may be payable or
         receivable in a lump sum or by instalments. Any contract for any such
         sale, disposal or acquisition by such Receiver or the Security Trustee
         may contain conditions excluding or restricting the personal liability
         of such Receiver or the Security Trustee.

18.      APPLICATION OF MONEYS

         All moneys received or recovered by the Security Trustee or any
         Receiver pursuant to this Debenture or the powers conferred by it shall
         (subject to the claims of any person having prior rights thereto and by
         way of variation of the provisions of the Conveyancing and Property
         Ordinance (Cap.219)) be applied first in the payment of the costs,
         charges and expenses incurred and payments made by the Receiver, the
         payment of his remuneration and the discharge of any liabilities
         incurred by the Receiver in, or incidental to, the exercise of any of
         his powers, and thereafter shall be applied by the Security Trustee
         (notwithstanding any purported appropriation by the Company) in
         accordance with the Security Trust and Intercreditor Deed.

19.      PROTECTION OF PURCHASERS

19.1     CONSIDERATION

         The receipt of the Security Trustee or any Receiver shall be conclusive
         discharge to a purchaser and, in making any sale or disposal of any of
         the Charged Property or making any acquisition, the Security Trustee or
         any Receiver may do so for such consideration, in such manner and on
         such terms as it thinks fit.

19.2     PROTECTION OF PURCHASERS

         No purchaser or other person dealing with the Security Trustee or any
         Receiver shall be bound to inquire whether the right of the Security
         Trustee or such Receiver to exercise any of its powers has arisen or
         become exercisable or be concerned with any propriety or regularity on
         the part of the Security Trustee or such Receiver in such dealings.

20.      POWER OF ATTORNEY

20.1     APPOINTMENT AND POWERS

         The Company by way of security irrevocably (within the meaning of
         Section 4 of the Powers of Attorney Ordinance (Cap.31)) appoints the
         Security Trustee, each Delegate and any Receiver severally to be its
         attorney (the "Attorney") and in its name, on its behalf and as its act
         and deed to execute, deliver and perfect all documents and do all
         things which the Attorney may consider to be required or desirable for:

                                     - 17 -

<PAGE>

         20.1.1   carrying out any obligation imposed on the Company by this
                  Debenture (including the execution and delivery of any
                  notices, deeds, charges, assignments or other security and any
                  transfers of the Charged Property); and

         20.1.2   enabling the Security Trustee, each Delegate and any Receiver
                  to exercise, or delegate the exercise of, any of the rights,
                  powers and authorities conferred on them by or pursuant to
                  this Debenture or by law (including, after the occurrence of
                  an Enforcement Event, the exercise of any right of a legal or
                  beneficial owner of the Charged Property).

20.2     RATIFICATION

         The Company shall ratify and confirm all things done and all documents
         executed by any Attorney in the exercise or purported exercise of all
         or any of his powers.

20.3     INDEMNITY

         The Company shall indemnify the Attorney and keep the Attorney
         indemnified against any and all costs, claims and liabilities which the
         Attorney may incur as a result of anything done by the Attorney in the
         proper exercise of any of the powers conferred, or purported to be
         conferred, on him or her by this Debenture unless such cost, claim or
         liability arises as a result of the negligence or wilful misconduct of
         the Attorney.

21.      EFFECTIVENESS OF SECURITY

21.1     CONTINUING SECURITY

         The security created by or pursuant to this Debenture shall remain in
         full force and effect as a continuing security for the Secured
         Obligations unless and until discharged by the Security Trustee.

21.2     CUMULATIVE RIGHTS

         The security created by or pursuant to this Debenture and the
         Collateral Rights shall be cumulative, in addition to and independent
         of every other security which the Security Trustee or any Secured
         Creditor may at any time hold for the Secured Obligations or any other
         obligations or any rights, powers and remedies provided by law. No
         prior security held by the Security Trustee (whether in its capacity as
         trustee or otherwise) or any of the other Secured Creditors over the
         whole or any part of the Charged Property shall merge into the security
         constituted by this Debenture.

21.3     NO PREJUDICE

         The security created by or pursuant to this Debenture and the
         Collateral Rights shall not be prejudiced by any unenforceability or
         invalidity of any other agreement or document or by any time or
         indulgence granted to the Company or any other person, or the Security
         Trustee (whether in its capacity as trustee or otherwise) or any of the
         other Secured Creditors or by any variation of the terms of the trust
         upon which the Security Trustee holds the security or by any other
         thing which might otherwise prejudice that security or any Collateral
         Right.

21.4     REMEDIES AND WAIVERS

         No failure on the part of the Security Trustee to exercise, or any
         delay on its part in exercising, any Collateral Right shall operate as
         a waiver thereof, nor shall any single or

                                     - 18 -

<PAGE>

         partial exercise of any Collateral Right preclude any further or other
         exercise of that or any other Collateral Right.

21.5     NO LIABILITY

         None of the Security Trustee, each Delegate, any Attorney or any
         Receiver shall be liable by reason of (a) taking any action permitted
         by this Debenture or (b) any neglect or default in connection with the
         Charged Property or (c) taking possession of or realising all or any
         part of the Charged Property, except in the case of negligence or
         wilful misconduct upon its part.

21.6     PARTIAL INVALIDITY

         If, at any time, any provision of this Debenture is or becomes illegal,
         invalid or unenforceable in any respect under the law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions of this Debenture nor of such provision under the
         laws of any other jurisdiction shall in any way be affected or impaired
         thereby and, if any part of the security intended to be created by or
         pursuant to this Debenture is invalid, unenforceable or ineffective for
         any reason, that shall not affect or impair any other part of the
         security.

21.7     COMPANY'S OBLIGATIONS

         The obligations of the Company and the Collateral Rights shall not be
         discharged, impaired or otherwise affected by:

         21.7.1   any winding-up, dissolution, administration or re-organisation
                  of or other change in any Obligor or any other person;

         21.7.2   any of the Secured Obligations being at any time illegal,
                  invalid, unenforceable or ineffective;

         21.7.3   any time or other indulgence being granted to any Obligor or
                  any other person;

         21.7.4   any amendment, variation, waiver or release of any of the
                  Secured Obligations;

         21.7.5   any failure to take or failure to realise the value of any
                  other collateral in respect of the Secured Obligations or any
                  release, discharge, exchange or substitution of any such
                  collateral;

         21.7.6   any other act, event or omission which but for this provision
                  would or might operate to impair, discharge or otherwise
                  affect the obligations of the Company hereunder.

22.      RELEASE OF SECURITY

         The Security Trustee shall, at the cost of the Company, release and
         cancel the security constituted by this Debenture and procure the
         reassignment to the Company of the property and assets assigned to the
         Security Trustee pursuant to this Debenture in accordance with the
         terms and subject to the conditions and circumstances set out in the
         Security Trust and Intercreditor Deed and without recourse to, or any
         representation or warranty by, the Security Trustee or any of its
         nominees.

                                     - 19 -

<PAGE>

23.      SET-OFF

         The Company authorises the Security Trustee (but the Security Trustee
         shall not be obliged to exercise such right), after the occurrence of
         an Enforcement Event which is continuing, to set off against the
         Secured Obligations any amount or other obligation (contingent or
         otherwise) owing by the Security Trustee to the Company.

24.      SUBSEQUENT SECURITY INTERESTS

         If the Security Trustee (acting in its capacity as trustee or
         otherwise) or any of the other Secured Creditors at any time receives
         or is deemed to have received notice of any subsequent Security
         affecting all or any part of the Charged Property or any assignment or
         transfer of the Charged Property which is prohibited by the terms of
         this Debenture or the Indentures, all payments thereafter by or on
         behalf of the Company to (or on behalf of) the Security Trustee
         (whether in its capacity as trustee or otherwise) or any of the other
         Secured Creditors shall be treated as having been credited to a new
         account of the Company and not as having been applied in reduction of
         the Secured Obligations as at the time when the Security Trustee
         received such notice.

25.      CURRENCY INDEMNITY

         If any sum (a "SUM") owing by the Company under this Debenture or any
         order or judgment given or made in relation to this Debenture has to be
         converted from the currency (the "FIRST CURRENCY") in which such Sum is
         payable into another currency (the "SECOND CURRENCY") for the purpose
         of:

         25.1.1   making or filing a claim or proof against the Company;

         25.1.2   obtaining an order or judgment in any court or other tribunal;

         25.1.3   enforcing any order or judgment given or made in relation to
                  this Debenture; or

         25.1.4   applying the Sum in satisfaction of any of the Secured
                  Obligations,

         the Company shall indemnify the Security Trustee from and against any
         loss suffered or incurred as a result of any discrepancy between (a)
         the rate of exchange used for such purpose to convert such Sum from the
         First Currency into the Second Currency and (b) the rate or rates of
         exchange available to the Security Trustee at the time of such receipt
         of such Sum.

26.      ASSIGNMENT

         The Security Trustee may assign and transfer all or any of its rights
         and obligations under this Debenture in accordance with the Security
         Trust and Intercreditor Deed. The Security Trustee shall be entitled to
         disclose such information concerning the Company and this Debenture as
         the Security Trustee considers appropriate to any actual or proposed
         direct or indirect successor or to any person to whom information may
         be required to be disclosed by any applicable law.

                                     - 20 -

<PAGE>

27.      NOTICES

         Each communication to be made under this Debenture shall be made and
         delivered in accordance with the provisions of the Security Trust and
         Intercreditor Deed.

28.      EXPENSES, COSTS AND TAXES

28.1     EXPENSES

         The Company shall, from time to time and promptly on demand by the
         Security Trustee, reimburse to the Security Trustee all costs and
         expenses (including legal fees) on a full indemnity basis together with
         any applicable value-added tax incurred by the Security Trustee and any
         Delegate (PROVIDED THAT in relation to sub-clause 28.1.1 of this Clause
         28.1, such costs and expenses must be properly incurred) in connection
         with:

         28.1.1   the execution, release and discharge of this Debenture and the
                  Security created or intended to be created in respect of the
                  Charged Property and the perfection of the Security
                  contemplated in this Debenture or in any such documents or
                  forming part of the Security created or intended to be created
                  in respect of the Charged Property;

         28.1.2   the actual or contemplated exercise, preservation and/or
                  enforcement of any of the rights, powers and remedies of, or
                  the performance of the duties and obligations of, the Security
                  Trustee or any Delegate, or any amendment or waiver in respect
                  of this Debenture;

         28.1.3   the foreclosure of any Charged Property; and

         28.1.4   the preservation and/or enforcement of the Security created or
                  intended to be created in respect of the Charged Property,

         which shall carry interest from the date of such demand until so
         reimbursed at the rate and on the basis as mentioned in Clause 2.2
         (Interest on Demands).

28.2     STAMP TAXES

         The Company shall pay promptly on demand of the Security Trustee all
         stamp, registration, notarial and other similar Taxes or fees paid or
         payable by the Security Trustee in connection with any action taken or
         contemplated by or on behalf of the Security Trustee for perfecting,
         enforcing, releasing, cancelling, reassigning or resolving any doubt
         concerning, or for any other purpose in relation to this Debenture, any
         amendment thereto, any transfer and/or assignment of the rights and/or
         obligations under the same or the Security created or intended to be
         created in respect of the Charged Property and shall, from time to
         time, indemnify the Security Trustee promptly on demand against any
         liabilities, costs, claims and expenses resulting from any failure to
         pay by the Company or any delay by the Company in paying any such Taxes
         or fees.

29.      PAYMENTS FREE OF DEDUCTION

         All payments to be made to the Security Trustee, any Delegate and/or
         any Receiver under this Debenture shall be made free and clear of and
         without set-off or deduction for or on account of tax unless the
         Company is required to make such payment subject to the deduction or
         withholding of tax, in which case the sum payable by the Company in

                                     - 21 -

<PAGE>

         respect of which such deduction or withholding is required to be made
         shall be increased to the extent necessary to ensure that, after the
         making of such deduction or withholding, the person on account of whose
         liability to tax such deduction or withholding has been made receives
         and retains (free from any liability in respect of any such deduction
         or withholding) a net sum equal to the sum which it would have received
         and so retained had no such deduction or withholding been made or
         required to be made.

30.      DISCRETION AND DELEGATION

30.1     DISCRETION

         Any liberty or power which may be exercised or any determination which
         may be made hereunder by the Security Trustee or any Receiver may,
         subject to the terms and conditions of this Debenture and the Security
         Trust and Intercreditor Deed, be exercised or made in its absolute and
         unfettered discretion without any obligation to give reasons.

30.2     DELEGATION

         Each of the Security Trustee and any Receiver shall have full power to
         delegate (either generally or specifically) the powers, authorities and
         discretions conferred on it by this Debenture (including the power of
         attorney) on such terms and conditions as it shall see fit which
         delegation shall not preclude either the subsequent exercise of such
         power, authority or discretion by the Security Trustee or the Receiver
         itself or any subsequent delegation or revocation thereof.

31.      PERPETUITY PERIOD

         The perpetuity period under the rule against perpetuities, if
         applicable to this Debenture, shall be the period of eighty years from
         the date of the Security Trust and Intercreditor Deed.

32.      GOVERNING LAW

         This Debenture and all matters arising from or connected with it are
         governed by the laws of Hong Kong.

33.      JURISDICTION

33.1     HONG KONG COURTS

         The courts of Hong Kong have exclusive jurisdiction to settle any
         disputes (a "DISPUTE") arising out of, or connected with this Debenture
         (including a dispute regarding the existence, validity or termination
         of this Debenture or the consequences of its nullity).

33.2     CONVENIENT FORUM

         The parties agree that the courts of Hong Kong are the most appropriate
         and convenient courts to settle Disputes between them and, accordingly,
         that they will not argue to the contrary.

33.3     EXCLUSIVE JURISDICTION

         This Clause 33 is for the benefit of the Security Trustee only. As a
         result and notwithstanding Clause 33.1 (Hong Kong Courts), it does not
         prevent the Security Trustee from taking proceedings relating to a
         Dispute in any other courts with

                                     - 22 -

<PAGE>

         jurisdiction. To the extent allowed by law the Security Trustee may
         take concurrent proceedings in any number of jurisdictions.

34.      COUNTERPARTS

         This Debenture may be executed in any number of counterparts, each of
         which shall be deemed an original and this has the same effect as if
         the signatures on the counterparts were on a single copy of this
         Debenture. Any party may enter into this Debenture by signing any such
         counterpart.

THIS DEBENTURE has been signed on behalf of the Security Trustee and executed as
a deed by the Company and is delivered by it on the date specified above.

                                     - 23 -

<PAGE>

                                   SCHEDULE 1

                FORM OF NOTICE OF ASSIGNMENT OF INTRA-GROUP LOAN

To:      [          ]

                                                              Date: [          ]

Dear Sirs,

DEBENTURE DATED [       ] BY MARCONI COMMUNICATIONS ASIA LIMITED (THE "COMPANY")
AND THE LAW DEBENTURE TRUST CORPORATION P.L.C. (THE "SECURITY TRUSTEE") (THE
"DEBENTURE")

We hereby give you notice, as attorney for and on behalf of the Company, that
the Company has, pursuant to the Debenture, assigned to us as Security Trustee
all their right, title and interest in and to [details of contract] (the
"CONTRACT") including all moneys which may be payable in respect of the
Contract.

With effect from your receipt of this notice:

1.       all payments by you to the Company under or arising from the Contract
         should be made to us or to our order as we may specify in writing from
         time to time [details of the account into which sums are to be paid may
         be included];

2.       all remedies provided for in the Contract or available at law or in
         equity are exercisable by us;

3.       all rights to compel performance of the Contract are exercisable by us
         although the Company shall remain liable to perform all the obligations
         assumed by it under the Contract;

4.       all rights, interests and benefits whatsoever accruing to or for the
         benefit of the Company arising from the Contract belong to us and no
         changes may be made to the terms of the Contract nor may the Contract
         be terminated without our consent; and

5.       you are authorised and instructed, without requiring further approval
         from the Company, to provide us with such information relating to the
         Contract as we may from time to time request and to send us copies of
         all notices issued by you under the Contract to us as well as to the
         Company.

These instructions may not be revoked, nor may the terms of the Contract be
amended, varied or waived without our prior written consent.

We confirm that pursuant to Clause 5.1 (Notices of Assignment) and Clause 20
(Power of Attorney) of the Debenture, we are empowered and authorised to deliver
this Notice of Assignment for and on behalf of the Company.

This letter is governed by Hong Kong law.

                                     - 24 -

<PAGE>

Please acknowledge receipt of this notice by signing the acknowledgement on the
enclosed copy letter and returning it to us at [   ] marked for the attention
of [   ].

Yours faithfully,

.......................

by THE LAW DEBENTURE TRUST CORPORATION p.l.c.

as attorney for and on behalf of

MARCONI COMMUNICATIONS ASIA LIMITED

                                     - 25 -

<PAGE>

[On copy only:

To:      [THE LAW DEBENTURE TRUST CORPORATION P.L.C.] AS SECURITY TRUSTEE

We acknowledge receipt of a notice in the terms set out above and confirm that
we have not received notice of any previous assignments or charges of or over
any of the rights, interests and benefits in and to the Contract and that we
will comply with the terms of that notice.

We further confirm that:

(a)      no amendment, waiver or release of any of such rights, interests and
         benefits shall be effective without your prior written consent;

(b)      no termination of such rights, interests or benefits shall be effective
         unless we have given you thirty days written notice of the proposed
         termination, specifying the action necessary to avoid such termination;
         and

(c)      no breach or default on the part of the Company of any of the terms of
         the Contract shall be deemed to have occurred unless we have given you
         notice of such breach specifying how to make good such breach.

For and on behalf of [      ]

By:      ........................

Dated:

                                     - 26 -

<PAGE>

                                   SCHEDULE 2

                                     PART A
                      FORM OF NOTICE OF CHARGE TO LANDLORDS

To:               [Landlord]

Date:             [       ]

Dear Sirs,

We give you notice that, by a Debenture dated [  ] (the "DEBENTURE") we charged
to The Law Debenture Trust Corporation p.l.c. (the "SECURITY TRUSTEE") as
security trustee for the Secured Creditors referred to in the Debenture all our
right, interests and benefits in, to and under the [describe Lease] dated [    ]
between [         ] relating to [          ] (including all monies payable
thereunder and the proceeds of all claims and judgments for breach of covenant)
(the "LEASE").

We will remain liable to perform all our obligations under the Lease and the
Security Trustee is under no obligation of any kind whatsoever under the Lease
nor under any liability whatsoever in the event of any failure by us to perform
our obligations under the Lease.

Please note that:

1.       all remedies provided for under the Lease or available at law or in
         equity are exercisable by the Security Trustee;

2.       all rights to compel performance of the Lease are exercisable by the
         Security Trustee; and

3.       all rights, interests and benefits whatsoever accruing to or for the
         benefit of ourselves arising under the Lease belong to the Security
         Trustee.

This letter is governed by and will be construed in accordance with the laws of
Hong Kong. Would you acknowledge receipt of this notice by sending the enclosed
acknowledgement to the Security Trustee with a copy to ourselves.

Yours faithfully

[               ]

MARCONI COMMUNICATIONS ASIA LIMITED

                                     - 27 -

<PAGE>

                            ACKNOWLEDGEMENT OF CHARGE

To:               The Law Debenture Trust Corporation p.l.c.
                  as Security Trustee

Date:             [       ]

Dear Sirs

We confirm receipt from Marconi Communications Asia Limited (the "COMPANY") of a
notice dated [   ] of a charge upon the terms of a Debenture dated [    ] (the
"DEBENTURE") to The Law Debenture Trust Corporation p.l.c. (the "SECURITY
TRUSTEE") as security trustee for the Secured Creditors of all the Company's
right, interest and benefit in, to and under the Lease (as specified in that
notice) to which we are a party.

We confirm that we have not received notice of any assignment or charge of or
over any of the rights, interests and benefits specified in such notice.

We further confirm that:

1.       no amendment, waiver or release of any such rights, interests and
         benefits will be effective without the prior written consent of the
         Security Trustee;

2.       no termination of such rights, interests or benefits will be effective
         unless we have given the Security Trustee at least 21 days' written
         notice of the proposed termination and specifying the action necessary
         to avoid such termination;

3.       the Company will remain liable to perform all its obligations under the
         Lease and the Security Trustee is under no obligation of any kind
         whatsoever under the Lease nor under any liability whatsoever in the
         event of any failure by the Company to perform our obligations under
         the Lease; and

4.       no breach or default on the part of the Company of any of the terms of
         such Lease will be deemed to have occurred unless we have given notice
         of such breach to the Security Trustee specifying how to make good such
         breach.

We unconditionally and irrevocably waive all rights of set-off, lien,
combination of accounts and similar rights (however described) which we may have
now or in the future to the extent that such rights relate to amounts owed to us
by the Company (and the proceeds thereof) and we will send you copies of all
statements, orders and notices given by us relating to such debt.

This letter is governed by and will be construed in accordance with the laws of
Hong Kong.

Yours faithfully

[Landlord]

                                     - 28 -

<PAGE>

                                     PART B
                      FORM OF NOTICE OF CHARGE OVER ACCOUNT

To: [Account Bank]

Dear Sirs,

We hereby give you notice, as attorney for and on behalf of Marconi
Communications Asia Limited (the "COMPANY"), that the Company has, pursuant to a
debenture dated [ ] (the "DEBENTURE"), charged to us as Security Trustee for and
on behalf of the Secured Creditors referred to therein, all their rights, title
and interest in and to all sums of money which may now or in the future be held
by the Company with you in any accounts at any of your branches (the
"ACCOUNTS"), together with all interest from time to time earned thereon and the
debts represented by such sums and interest, as well as all book and other debts
owed to the Company.

We hereby irrevocably authorise and instruct you:

(a)      to disclose to us without any reference to or further authority from
         the Company and without any enquiry by you as to the justification of
         such disclosure, such information relating to the Accounts and the sums
         therein as we may at any time and from time to time request;

(b)      to hold all sums from time to time standing to the credit of the
         Accounts to our order;

(c)      to pay or release all or any part of the sums from time to time
         standing to the credit of the Accounts in accordance with our written
         instructions at any time or times;

(d)      to comply with the terms of any written notice or instructions in any
         way relating to, or purporting to relate to, the Debenture, the sums
         standing to the credit of the Accounts from time to time or the debts
         represented thereby which you receive at any time from us without any
         reference to or further authority from the Company and without any
         enquiry by you as to the justification for or validity of such notice
         or instruction; and

(e)      to pay all monies received by you for the Accounts to (and only to) the
         credit of those Accounts.

Please note that the Company is not permitted to withdraw any amount from any of
the Accounts without our prior written consent.

Please also note that these instructions are not to be revoked or varied without
our prior written consent.

We confirm that pursuant to Clause 5.2 (Notices of Charge) and Clause 20 (Power
of Attorney) of the Debenture, we are empowered and authorised to deliver this
Notice of Charge for and on behalf of the Company.

This letter is governed by Hong Kong law.

                                     - 29 -

<PAGE>

Please acknowledge receipt of this notice by sending the attached
acknowledgement to us with a copy to the Company.

Yours faithfully,

.....................................
by The Law Debenture Trust Corporation p.l.c.
as attorney for and on behalf of Marconi Communications Asia Limited

                                     - 30 -

<PAGE>

                             FORM OF ACKNOWLEDGEMENT

To:      The Law Debenture Trust Corporation p.l.c.

Dear Sirs,

We confirm receipt from The Law Debenture Trust Corporation p.l.c. as attorney
for and on behalf of Marconi Communications Asia Limited (the "COMPANY") of a
notice dated [    ] relating to certain accounts (the "ACCOUNTS") of the Company
with the Bank.

We confirm that:

(i)      we accept the instructions and authorisations contained in that notice
         and we undertake to act in accordance with the terms of that notice;

(ii)     we have not received notice of the interest of any third party in the
         Accounts;

(iii)    we have neither claimed or exercised nor will claim or exercise any
         security interest, set-off, counter-claim or other rights in respect of
         the Accounts, the sums therein or the debts represented thereby without
         your prior written consent;

(iv)     we shall pay all monies received by us for the account of the Company
         to (and only to) the credit of the Account(s) in the name of the
         Company unless otherwise consented to by you; and

(v)      we shall not permit any amount to be withdrawn from any of the Accounts
         without your prior written consent.

Nothing contained in any of our arrangements with you shall commit us to
providing any facilities or making advances available to the Company.

This letter is governed by Hong Kong Law.

Yours faithfully,

................................
On behalf of [Bank]

                                     - 31 -

<PAGE>

                                     PART C
                  FORM OF NOTICE OF CHARGE OVER MONETARY CLAIMS

To:      [            ]

                                                              Date: [          ]

Dear Sirs,

DEBENTURE DATED [      ] BY MARCONI COMMUNICATIONS ASIA LIMITED (THE "COMPANY")
AND OTHERS AND THE LAW DEBENTURE TRUST CORPORATION P.L.C. (THE "SECURITY
TRUSTEE") (THE "DEBENTURE")

We hereby give you notice, as attorney for and on behalf of the Company, that
the Company has, pursuant to the Debenture, charged to us as Security Trustee
for and on behalf of the Secured Creditors referred to therein all their right,
title and interest in and to [details of Monetary Claim] (the "MONETARY CLAIM")
including all moneys which may be payable in respect of the Claim.

With effect from your receipt of this notice:

1.       all payments by you to the Company under or arising from the Monetary
         Claim should be made to us or to our order as we may specify in writing
         from time to time [details of the account into which sums are to be
         paid may be included];

2.       all remedies available at law or in equity in relation to the Monetary
         Claim are exercisable by us;

3.       all rights to compel performance of the underlying contract in respect
         of the Monetary Claim (the "UNDERLYING CONTRACT") between you and the
         Company are exercisable by us although the Company shall remain liable
         to perform all the obligations assumed by it thereunder;

4.       all rights, interests and benefits whatsoever accruing to or for the
         benefit of the Company arising from the Monetary Claim belong to us and
         no changes may be made to the terms of the Underlying Contract nor may
         the Underlying Contract be terminated without our consent; and

5.       you are authorised and instructed, without requiring further approval
         from the Company, to provide us with such information relating to the
         Monetary Claim as we may from time to time request and to send copies
         of all notices issued by you under the Underlying Contract to us as
         well as to the Company.

These instructions may not be revoked, nor amended, varied or waived without our
prior written consent.

                                     - 32 -

<PAGE>

We confirm that pursuant to Clause 5.2 (Notices of Charge) and Clause 20 (Power
of Attorney) of the Debenture, we are empowered and authorised to deliver this
Notice of Charge for and on behalf of the Company.

This letter is governed by Hong Kong law.

Please acknowledge receipt of this notice by signing the acknowledgement on the
enclosed copy letter and returning it to us at [    ] marked for the attention
of [    ].

Yours faithfully,

.......................

by THE LAW DEBENTURE TRUST CORPORATION P.L.C.
as attorney for and on behalf of
Marconi Communications Asia Limited

                                     - 33 -

<PAGE>

[On copy only:

To:      THE LAW DEBENTURE TRUST CORPORATION P.L.C. AS SECURITY TRUSTEE

We acknowledge receipt of a notice in the terms set out above and confirm that
we have not received notice of any previous charges of or over any of the
rights, interests and benefits in and to the Monetary Claim and that we will
comply with the terms of that notice.

We further confirm that:

(i)      no amendment, waiver or release of any of such rights, interests and
         benefits shall be effective without your prior written consent;

(ii)     no termination of such rights, interests or benefits shall be effective
         unless we have given you thirty days written notice of the proposed
         termination, specifying the action necessary to avoid such termination.

For and on behalf of [      ]

By:  ........................

Dated:

                                     - 34 -

<PAGE>

                                   SCHEDULE 3

                          ADDITIONAL POWERS OF RECEIVER

1.       Take Possession

         Power to enter upon, take immediate possession of, collect and get in
         the Charged Property including without limitation rents and other
         income whether accrued before or after the date of his appointment and
         for that purpose to make, or to require the directors of the Company to
         make, calls conditionally or unconditionally upon the holders of the
         Company's share capital in respect of any such capital of the Company
         which remains uncalled and to enforce payment of calls so made and any
         previous unpaid calls by taking proceedings in the name of the Company
         or in his own name.

2.       Proceedings and Claims

         Power to bring, prosecute, enforce, defend and abandon applications,
         claims, disputes, actions, suits and proceedings in connection with the
         business of the Company or all or any part of the Charged Property or
         this Debenture in the name of the Company or in his own name and to
         submit to arbitration, negotiate, compromise and settle any such
         applications, claims, disputes, actions, suits or proceedings and in
         addition to take or defend proceedings for the compulsory winding-up of
         the Company and proceedings for directions under Section 255 of the
         Companies Ordinance (Cap.32) of the laws of Hong Kong.

3.       Carry on Business

         Power to carry on and manage, or concur in the carrying on and
         management of or to appoint a manager of, the whole or any part of the
         Company's business in such manner as he shall in his absolute
         discretion think fit including without limitation the power to enter
         into any contract or arrangement and to perform, repudiate, rescind or
         vary any contract to which the Company is a party and power to
         supervise, control and finance any subsidiary of the Company or any
         other body corporate (including without limitation any referred to in
         Clause 6 below) and its business and the conduct thereof and to change
         the situation of the registered office of the Company or any such
         subsidiary or other body corporate.

4.       Deal with Charged Property

         Without the need to observe the restrictions imposed by paragraph 11 of
         the Fourth Schedule to the Conveyancing and Property Ordinance
         (Cap.219), power, in relation to the Charged Property and each and
         every part thereof, to sell, transfer, convey, grant or accept
         surrenders of leases, vary, terminate or surrender leases, grant, vary
         or terminate licences or rights of user (in each case with or without
         consideration) or concur in any of the foregoing by the Company or any
         other receiver or manager of the Company (including without limitation
         to or in relation to the Security Trustee or any of the other Secured
         Creditors) in such manner and generally on such terms as he thinks fit
         including without limitation, without the consent of the Company, the
         severing and separate

                                     - 35 -

<PAGE>

         disposal from the premises to which they were affixed of fixtures and
         plant and machinery.

5.       Acquisitions

         Power to purchase, lease, hire or otherwise acquire any assets or
         rights of any description which he shall in his absolute discretion
         consider necessary or desirable for the carrying on, improvement or
         realisation of the whole or any part of the Charged Property or the
         business of the Company or otherwise for the benefit of the whole or
         any part of the Charged Property.

6.       New Subsidiary

         Power to promote, procure the formation or otherwise acquire the share
         capital of, any body corporate with a view to such body corporate
         becoming a subsidiary of the Company or otherwise and purchasing,
         leasing or otherwise acquiring an interest in the whole or any part of
         the Charged Property or carrying on any business in succession to the
         Company or any subsidiary of the Company.

7.       Landlord and Tenant

         Power to make allowances to and re-arrangements with any lessees,
         tenants or other persons from whom any rents and profits may be
         receivable (including granting any licences and operating any rent
         reviews) and to exercise any powers and discretions conferred on a
         landlord or a tenant by any statutory provision or by general law from
         time to time in force in relation to all or any part of the Charged
         Property.

8.       Repairs etc

         Power to undertake, effect or complete any work of repair,
         refurbishment, decoration, modification, building, improvement or
         development of all or any part of the Charged Property as he may think
         expedient and to apply for and obtain any planning permissions,
         building regulation approvals and any other permissions, consents or
         licences in each case as he may in his absolute discretion think fit
         and to acquire (or acquire an interest in) any such property as he may
         think expedient.

9.       Insurance

         Power to effect, maintain or renew indemnity and other insurances and
         to obtain bonds and performance guarantees.

10.      Employment

         Power to employ, engage, dismiss or vary the terms of employment or
         engagement of such employees, workmen, servants, officers, managers,
         agents and advisers on such terms as to remuneration and otherwise as
         he shall think fit including without limitation power to engage his own
         firm in the conduct of the receivership.

                                     - 36 -

<PAGE>

11.      Borrowing

         Power to raise or borrow money from any of the Secured Creditors or any
         other person and with or without a mortgage or charge on the Charged
         Property or any part of it on such terms as he shall in his absolute
         discretion think fit (and no person lending such money shall be
         concerned to see or enquire as to the propriety or purpose of the
         exercise of such power or the application of money so raised or
         borrowed).

12.      Redemption of Security

         Power to redeem, discharge or compromise any security whether or not
         having priority to the security constituted by this Debenture or any
         part of it.

13.      Covenants, Guarantees and Indemnities

         Power to enter into bonds, covenants, guarantees, commitments,
         indemnities and other obligations or liabilities as he shall think fit,
         to make all payments needed to effect, maintain or satisfy such
         obligations or liabilities and to use the company seal of the Company.

14.      Exercise of Powers in Company's Name

         Power to exercise any or all of the above powers on behalf of and in
         the name of the Company (notwithstanding any winding-up or dissolution
         of the Company) or on his own behalf.

                                     - 37 -

<PAGE>

                                   SCHEDULE 4

                                DETAILS OF SHARES

<TABLE>
<CAPTION>
                                           Description and
                                           Number of Shares    Share Certificate
Name of Company    Issued Share Capital        Held                Number(s)
<S>                <C>                     <C>                 <C>
</TABLE>

__________________________________  NIL______________________________________

                                     - 38 -

<PAGE>

THE COMPANY

THE COMMON SEAL of                                   )
MARCONI COMMUNICATIONS ASIA LIMITED                  )                      SEAL
was hereunto affixed                                 )
in the presence of:                                  )

JOHN SHUM    Director

K F WONG     Director

Address:     29/F, 1063 KING'S ROAD, QUARRY BAY, HONG KNOG

Fax:         (852) 22507008

Attention:   JOHN SHUM

<PAGE>

THE SECURITY TRUSTEE

THE LAW DEBENTURE TRUST CORPORATION P.L.C.

By:               R D RANCE

Address:          THE LAW DEBENTURE TRUST CORPORATION P.L.C.

                  FIFTH FLOOR, 100 WOOD STREET, LONDON EC2V 7EX

Fax:

Attention:        MANAGER, TRUST ADMINISTRATION

Witnessed by:     KINNARI BHATT

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