Document:

<PAGE>

                                                                    EXHIBIT 4.28

                                                                  CONFORMED COPY

                             DATED 27TH MARCH, 2003

                                   MARCONI PLC

                             MARCONI CORPORATION PLC

                             E-A CONTINENTAL LIMITED

                                     ANCRANE

                            MARCONI NOMINEES LIMITED

                            MARIPOSA TECHNOLOGY, INC.

                      SYSTEMS MANAGEMENT SPECIALISTS, INC.

                      METAPATH SOFTWARE INTERNATIONAL, INC.

                             MARCONI BONDING LIMITED

                          BRITISH SEALED BEAMS LIMITED

                              MARCONI ANSTY LIMITED

                                PHOTONIQA LIMITED

                                       AND

                                YESLINK UNLIMITED

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

                           SCHEME IMPLEMENTATION DEED

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

                                 ALLEN & OVERY
                                     London

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                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                               PAGE
<S>                                                                  <C>
1.       Definitions and Interpretation........................        2
2.       Non-Voting............................................       10
3.       Ancrane...............................................       11
4.       Approvals.............................................       12
5.       BAE...................................................       13
6.       Service Contracts.....................................       13
7.       Exchange of Global Bonds..............................       14
8.       Bondholder Confirmation Letter........................       14
9.       Eurobond Trustee......................................       14
10.      Finmeccanica Guarantee................................       14
11.      Lemelson Licence......................................       14
12.      IPR SPV...............................................       14
13.      Litigation............................................       15
14.      Marconi Name..........................................       15
15.      plc Scheme Expenses...................................       16
16.      Tax...................................................       17
17.      Highrose Debt.........................................       18
18.      Vat Group.............................................       18
19.      Inter Company Balances................................       18
20.      Counter Indemnities and Waivers.......................       18
21.      ESOP Escrow Agreement Release.........................       19
22.      Security Power of Attorney............................       19
23.      plc Waivers...........................................       19
24.      plc Undertaking.......................................       19
25.      Statement and Waiver..................................       20
26.      plc Offices...........................................       20
27.      Restructuring Implementation..........................       20
28.      Representations and Warranties........................       20
29.      Costs.................................................       21
30.      Inadequacy of Damages.................................       21
31.      Notices...............................................       21
32.      Assignment............................................       23
33.      General...............................................       23
34.      Entire Agreement......................................       24
35.      Third Parties.........................................       24
36.      Governing Law and Jurisdiction........................       24
</TABLE>

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<TABLE>
<CAPTION>
SCHEDULES
<S>                                                                   <C>
1.       EA-plc Deed of Assignment.............................        25
2.       plc-Ancrane Deed of Assignment........................        35
3.       Special Resolution....................................        45
4.       BAE Deed of Novation..................................        48
5.       New Service Agreement.................................        56
6.       Bondholder Confirmation Letter........................        80
7.       Finmeccanica Guarantee Deed of Novation...............        84
8.       Lemelson Assumption Agreement and Consent.............        92
9.       Surrender of Capital Losses...........................        96
10.      Receivables Assignment Letter.........................       103
11.      plc ESOP Release Deed.................................       107
12.      Security Power of Attorney............................       108
13.      Statement and Waiver..................................       110
14.      Corp Covenant.........................................       213
15.      Ancrane Deed of Assignment............................       224
16.      Corp Side Letter......................................       235

Signatories....................................................       238
</TABLE>

<PAGE>

THIS DEED is made on 27th March, 2003 and made BETWEEN:

(1)      MARCONI PLC (registered number 3846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (plc);

(2)      MARCONI CORPORATION PLC (registered number 67307) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (CORP);

(3)      E-A CONTINENTAL LIMITED (registered number 725757) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (EA CONTINENTAL);

(4)      ANCRANE (registered number 4308188) whose registered office is at New
         Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (ANCRANE);

(5)      MARCONI NOMINEES LIMITED (registered number 3854422) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (NOMINEES);

(6)      MARIPOSA TECHNOLOGY, INC. whose principal office is c/o Marconi
         Communications, Inc. 3000 Marconi Drive, Warrendale, PA 15086 (DE corp.
         ID no: 2704420 (MARIPOSA);

(7)      SYSTEMS MANAGEMENT SPECIALISTS, INC. whose principal office is at 3
         Hutton Centre Drive, Suite 100, Santa Ana, CA 92707 (DE corp. ID no:
         2637902) (SMS);

(8)      METAPATH SOFTWARE INTERNATIONAL, INC. whose principal office is at 1755
         North Collins Street, Suite 400, Richardson, TX 75080 (CA corp. ID no:
         2120461) (METAPATH);

(9)      MARCONI BONDING LIMITED (registered number 3818628) whose registered
         office is at New Century Park, P.O. Box 53, Coventry, Warwickshire CV3
         1HJ (MARCONI BONDING);

(10)     BRITISH SEALED BEAMS LIMITED (registered number 628256) whose
         registered office is at 4 Tenterden Street, London W1A 2AY (BSB);

(11)     MARCONI ANSTY LIMITED (registered number 409365) whose registered
         office is at New Century Part, P.O. Box 53, Coventry, Warwickshire CV3
         1HJ (ANSTY);

(12)     PHOTONIQA LIMITED (registered number 332666) whose registered office is
         at New Century Park, P.O. Box 53, Coventry, Warwickshire CV3 1HJ
         (PHOTONIQA); and

(13)     YESLINK UNLIMITED (registered number 3764144) whose registered office
         is at New Century Park, P.O. Box 53, Coventry, Warwickshire CV3 1HJ
         (YESLINK).

WHEREAS:

(A)      On 29th August, 2002, Corp and, inter alios, plc concluded non-binding
         indicative heads of terms detailing the principles for the proposed
         Financial Restructuring (as defined below) of Corp and plc, amended by
         a non-binding addendum signed on 13th December, 2002.

(B)      The Financial Restructuring is, at the date of this Deed, subject to
         certain consents and approvals before it can become effective and
         binding on the Scheme Companies.

                                       1

<PAGE>

(C)      Under the Financial Restructuring it is proposed that plc will enter
         into the plc Scheme with the plc Scheme Creditors constituting a
         compromise between plc and the plc Scheme Creditors which will have the
         effect of compromising all claims of plc Scheme Creditors against plc
         as at the Record Date other than Excluded Claims in consideration for a
         distribution of plc's assets.

(D)      Under the Financial Restructuring it is proposed that Corp will enter
         into the Corp Scheme with the Corp Scheme Creditors constituting a
         compromise between Corp and the Corp Scheme Creditors which will have
         the effect of compromising all claims of Corp Scheme Creditors against
         Corp as at the Record Date other than Excluded Claims in consideration
         for a distribution of cash, new equity and new debt securities of Corp.
         In conjunction with the Corp Scheme, it is proposed to make changes to
         Corp's capital structure, including the conversion and re-designation
         of its current issued ordinary share capital into non-voting deferred
         shares and the cancellation of those shares, and a reduction of its
         share premium account to eliminate the deficit on the profit and loss
         account that would otherwise be shown in its balance sheet as at 31st
         March, 2003. This capital reduction is expected to take effect a few
         days after the Corp Scheme becomes effective.

(E)      In conjunction with the Financial Restructuring, the existing global
         Yankee Bonds and global Eurobonds will be exchanged for Yankee Bonds in
         definitive form and Eurobonds in individual global form, respectively,
         as provided in clause 7.

(F)      The parties to this Deed wish to document the understanding between
         them with regard to implementing the Financial Restructuring and their
         performance of certain obligations and undertakings on the terms, and
         subject to the conditions, set out in this Deed.

(G)      On or around the date of this Deed Corp, plc, HSBC, BCT and the ESOP
         Banks entered into the ESOP Settlement Agreement. The ESOP Settlement
         Agreement provides for the settlement of the various claims of the ESOP
         Banks that entered into swap transactions relating to the ESOP on the
         condition that the Corp Scheme becomes effective. In compliance with
         the terms of the ESOP Settlement Agreement, Corp and plc wish to
         provide releases in this Deed, subject to certain conditions being
         satisfied.

(H)      Each party to this Deed severally considers that, given the Group's
         financial position, the entry by it into this Deed and all agreements
         in relation to it including (in the case of plc), without limitation,
         the Security Power of Attorney is in the best interests of it and its
         creditors and members and that the exercise by each party of its
         respective rights and the performance of its respective obligations
         pursuant to this Deed would assist in the implementation of the
         Financial Restructuring.

(I)      It is the intention of the parties that this document be executed as a
         deed.

IT IS AGREED in consideration of the promises and the mutual covenants and
agreements set out in this Deed, as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      In this Deed (unless otherwise specified):

         ACCOUNT HOLDER LETTER means an account holder letter substantially in
         the form set out in the Scheme Document;

                                       2

<PAGE>

         AFFILIATE means, in relation to a company, a body corporate in which it
         has a direct or indirect interest as a shareholder of at least 25 per
         cent. of the issued ordinary share capital;

         ALBANY PARTNERSHIP means Albany Partnership Limited (registered number
         3049168) whose registered office is at New Century Park, P.O. Box 53,
         Coventry, Warwickshire CV3 1HJ;

         ANCRANE DEED OF ASSIGNMENT means the deed of assignment by way of
         repayment of capital in specie substantially in the form set out in
         Schedule 15;

         BAE means BAE SYSTEMS plc (registered number 1470151);

         BAE DEED OF NOVATION means the deed of novation substantially in the
         form set out in Schedule 4 under which the BAE agreements (as set out
         in the schedule to the deed of novation) will be novated by plc to Corp
         with effect from the Effective Date;

         BARCLAYS means Barclays Bank plc (registered number 1026167);

         BCT means Bedell Cristin Trustees Limited;

         BONDHOLDER means any person with the ultimate economic interest in any
         of the Bonds;

         BONDHOLDER CONFIRMATION LETTER means the letter to be entered into by
         way of a deed substantially in the form set out in Schedule 6;

         BONDS means all or any of the Eurobonds and/or the Yankee Bonds;

         BUSINESS DAY means any day on which banks are open for general business
         in both London and New York;

         CA means the Companies Act 1985;

         CLAIM means any claim or right of action of any kind whatsoever or
         howsoever arising (whether actual or contingent) whether arising under
         common law, statute or otherwise and whether arising in the United
         Kingdom or any other place (including for the avoidance of doubt any
         claim in respect of a guarantee or indemnity);

         CLAIM FORM means each or any of the claim forms to be completed by or
         on behalf of a Scheme Creditor (or its duly authorised agent(s))
         detailing its Scheme Claim(s) substantially in the form set out in the
         Scheme Document;

         CLEARSTREAM, LUXEMBOURG means Clearstream Banking, societe anonyme;

         COMMISSIONERS means the Commissioners of Customs and Excise;

         CORP COVENANT means the deed of indemnity substantially in the form set
         out in Schedule 14 to be entered into by Corp, plc and Ancrane in
         accordance with clause 16.6;

         CORP LOAN means the loans from EA Continental to Corp in the amount of
         L363,308,102;

         CORP RECEIVABLE means the inter-company loan balances of approximately
         L165,748,102 owing from plc to Corp, as evidenced by Group accounting
         records;

                                       3

<PAGE>

         CORP SCHEME means the proposed scheme of arrangement in respect of Corp
         pursuant to section 425 CA, the terms of which are set out in Part II
         of the Scheme Document including any modifications, additions or
         conditions approved or imposed by the Court;

         CORP SCHEME CREDITORS means all Scheme Creditors of Corp;

         CORP SCHEME MEETING means a meeting of a class of Corp Scheme Creditors
         convened pursuant to an order of the Court;

         CORP SPV means Regent Escrow Limited (registered number 4659445) whose
         registered address is at New Century Park, PO Box 53, Coventry,
         Warwickshire CV3 1HJ;

         CORP VAT GROUP means the Corp VAT group registered with the
         Commissioners with registered number GB239 1370 65;

         COURT means the High Court of England and Wales;

         CREDITORS' COMMITTEE means the committee of Scheme Creditors
         established and operated pursuant to the terms of the Corp Scheme or
         plc Scheme, as appropriate;

         CREDITORS' MEETING means a meeting of Scheme Creditors called pursuant
         to the terms of the relevant Scheme;

         DEFINITIVE HOLDER means any holder of a Yankee Bond in the definitive
         form or the bearer by attornment of a Eurobond in individual global
         form;

         DESIGNATED RECIPIENT means a person specified in the valid Account
         Holder Letter (or, in the case of Ancrane, in the Escrow and
         Distribution Agreement) relating to a particular principal amount of
         Bonds as being the recipient of any part of the First Initial
         Distribution and of any further Distribution in respect of those Bonds
         and includes, in the case of any cash distributed as part of any
         Distribution made in respect of the Eurobonds, each person to whom such
         cash is distributed through Euroclear or Clearstream, Luxembourg;

         DISTRIBUTION has the meaning given to it in the respective Scheme;

         DTC means Depositary Trust Company of New York;

         EA-plc DEED OF ASSIGNMENT means the deed of assignment entered into on
         or before the date of this Deed between Corp, plc and EA Continental,
         in the form set out in Schedule 1 under which EA Continental assigned
         the Corp Loan to plc and paid to plc the balance of the bank account
         held with HSBC (account number 10014230), in consideration for which
         plc released EA Continental from all obligations under the plc Loan;

         EFFECTIVE DATE means the date upon which an office copy of the order of
         the Court sanctioning the Corp Scheme shall have been delivered to the
         Registrar of Companies for registration;

         ESCROW AND DISTRIBUTION AGREEMENT means the agreement to be entered
         into between (inter alios) Corp, the Supervisors, the Escrow Trustee
         and Bank of New York (in its capacity as Yankee Bond Trustee and as
         custodian and distribution agent) in the form set out in the

                                       4

<PAGE>

         Scheme Document, a condition precedent to the effectiveness of certain
         obligations of which (insofar as it relates to the Schemes) is the
         occurrence of the Effective Date;

         ESCROW TRUSTEE means Corp Spv, who will be appointed under the terms of
         the Escrow and Distribution Agreement, and any successor from time to
         time;

         ESOP means the Marconi employee share option plan;

         ESOP BANKS means each of Barclays, Salomon Brothers International
         Limited (registered number 1763297) and UBS AG (registered number
         FC021146);

         ESOP SETTLEMENT AGREEMENT means the settlement agreement between Corp,
         plc, HSBC, BCT and the ESOP Banks dated on or around the date of this
         Deed;

         EUROBOND ISSUES means the E500,000,000 5.625 per cent. bonds due 2005
         and the E1,000,000,000 6.375 per cent. bonds due 2010, both issued by
         Corp and both guaranteed by plc;

         EUROBONDS means all or any of the bonds comprising the Eurobond Issues;

         EUROBOND TRUSTEE means The Law Debenture Trust Corporation p.l.c.
         acting in its capacity as trustee of the Eurobonds;

         EUROCLEAR means Euroclear Bank S.A./N.V. as operator of the Euroclear
         System;

         EXCLUDED CLAIMS shall in relation to the Corp Scheme have the same
         meaning as that set out in the Corp Scheme and in relation to the plc
         Scheme have the same meaning as that set out in the plc Scheme;

         FINANCIAL RESTRUCTURING means the proposed financial restructuring of
         the Scheme Companies pursuant to the Schemes as more particularly
         described in the Scheme Document;

         FINMECCANICA GUARANTEE means the guarantee in favour of Finmeccanica
         S.p.A given by plc, under subclauses 12.1 to 12.6 of the Finmeccanica
         Sale and Purchase Agreement, of the obligations of Marconi (Bruton
         Street) Limited under the Finmeccanica Sale and Purchase Agreement;

         FINMECCANICA GUARANTEE DEED OF NOVATION means the novation and
         amendment deed to be entered into between Corp, plc and Finmeccanica
         S.p.A. substantially in the form set out in Schedule 7 under which the
         Finmeccanica Guarantee and all of plc's other obligations under the
         Finmeccanica Sale and Purchase Agreement will be novated by plc to Corp
         with effect from the Effective Date;

         FINMECCANICA SALE AND PURCHASE AGREEMENT means the agreement dated 2nd
         August, 2002 between Finmeccanica S.p.A. (as purchaser), Marconi
         (Bruton Street) Limited (as seller) and plc (as guarantor) for the sale
         by Marconi (Bruton Street) Limited of all of the issued shares in
         Marconi Mobile Holdings S.p.A.;

         FIRST INITIAL DISTRIBUTION has the meaning given to it in the relevant
         Scheme;

                                       5

<PAGE>

         FUNDING LETTERS means the series of letter agreements that were, or may
         have been, entered into by plc and certain Group Companies from
         December 1999 onwards with respect to the burden of the costs of their
         employees' participation in the ESOP;

         GROUP means all the Group Companies;

         GROUP COMPANY means plc or any company which is a Subsidiary, whether
         directly or indirectly of plc or, as the context requires, of Corp;

         GROUP RELIEF means losses or other amounts eligible for surrender under
         Chapter IV of Part X of the Income and Corporation Taxes Act 1988;

         HIGHROSE DEBT means the inter company loan of L23,404,000 from Ancrane
         to Highrose;

         HIGHROSE means Highrose Limited (registered number 4410334) whose
         registered office is at New Century Park, PO Box 53, Coventry,
         Warwickshire CV3 1HJ;

         HSBC means HSBC Bank plc (registered number 14259);

         IPR ARRANGEMENTS means the assignment of Patents registered in the name
         of US IP Opcos and UK IP Opcos to three special purpose vehicles as
         more particularly set out in Part I, Section 2 (A.5) of the Scheme
         Document;

         LEMELSON AGREEMENT means the agreement between plc and Lemelson
         Foundation Partnership, dated 1st December, 1999, under which the
         Lemelson Foundation Partnership granted to plc a non-exclusive licence
         in relation to certain licensed patents as described therein;

         LEMELSON ASSUMPTION AGREEMENT AND CONSENT means the agreement to be
         entered into in accordance with clause 11 under which plc transfers the
         benefit and burden of the Lemelson Agreement to Corp substantially in
         the form set out in Schedule 8;

         LEMELSON FOUNDATION PARTNERSHIP means the Lemelson Medical, Education
         and Research Foundation Limited Partnership;

         LIABILITY or LIABILITIES means any liability or obligation of a person
         whether it is present, future, prospective or contingent, whether or
         not it is fixed or undetermined, whether or not it involves the payment
         of money or performance of an act or obligation and whether it arises
         at common law, in equity or by statute, in England and Wales or in any
         other jurisdiction, or in any other manner whatsoever, but such
         expression does not include any liability which is barred by statute or
         is otherwise unenforceable under English law or arises under a contract
         which is void or, being voidable, has been duly avoided;

         LONDON STOCK EXCHANGE means the London Stock Exchange plc;

         MCL means Marconi Communications Limited (registered number 703317)
         whose registered office is at New Century Park, PO Box 53, Coventry CV3
         1HJ;

         NEW SERVICE AGREEMENT ARRANGEMENTS means the waiver letters and service
         agreements for the Senior Management Team substantially in the form set
         out in Schedule 5;

                                       6

<PAGE>

         PATENTS means all legal and beneficial ownership of patent
         registrations and pending patent applications;

         PERFORMANCE BONDING FACILITY means the L50 million committed
         multicurrency revolving bonding facility agreement made available under
         the Performance Bonding Facility Agreement;

         PERFORMANCE BONDING FACILITY AGREEMENT means the L50 million committed
         multicurrency revolving bonding facility agreement dated on or before
         the Posting Date between Marconi Bonding (as applicant), Corp, HSBC (as
         agent and security trustee), the original issuing banks named therein,
         the original banks named therein and the original indemnifying
         subsidiaries of Corp named therein;

         plc-ANCRANE DEED OF ASSIGNMENT means the deed of assignment entered
         into on or before the date of this Deed (but after the EA-plc Deed of
         Assignment had been entered into between Corp, plc and Ancrane) in the
         form set out in Schedule 2 under which plc assigned the Corp Loan to
         Ancrane in consideration for the issue by Ancrane of one share to plc
         for an amount equal to the market value of the Corp Loan on the date of
         such assignment;

         plc LOAN means the loan from plc to EA Continental in the amount of
         L219,000,000;

         plc RECEIVABLES means the aggregate amount of approximately L5,540,623
         representing the inter-company balances owing to plc (as evidenced by
         Group accounting records) as follows:

         (a)      an amount of L741,238 owed by Marconi Communications, Inc.;

         (b)      an amount of US$1,768,992 (equivalent to approximately
                  L1,101,284) owed by Marconi Software International, Inc.;

         (c)      an amount of L42,746 owed by Marconi Communications Optical
                  Networks Corp (Canada);

         (d)      an amount of L3,616,740 owed by SMS; and

         (e)      an amount of L38,615 owed by Marconi Communications Limited
                  (Canada);

         plc SCHEME means the proposed scheme of arrangement in respect of plc
         pursuant to section 425 CA, the terms of which are set out in Part III
         of the Scheme Document including any modifications, additions or
         conditions approved or imposed by the Court;

         plc SCHEME CREDITORS means all Scheme Creditors of plc;

         plc SCHEME EXPENSES has the meaning given to it in the plc Scheme;

         plc SCHEME RESTRUCTURING CONSIDERATION means the assets of plc
         distributed pursuant to the plc Scheme;

         plc SHAREHOLDER RECORD DATE means the close of dealings in the plc
         Shares on the last day of dealings in the plc Shares on the London
         Stock Exchange;

         plc SHARES means ordinary shares of 5 pence each in the capital of plc;

                                       7

<PAGE>

         plc SUBS means Ancrane, Ansty, Nominees, Photoniqa and Yeslink;

         plc SUPERVISORS means the Supervisors of the plc Scheme;

         POSTING DATE means the day the Scheme Document is posted to the Scheme
         Creditors;

         RECEIVABLES ASSIGNMENT LETTER means the letter of assignment
         substantially in the form set out in Schedule 10 to be entered into as
         a deed between Corp and plc under which plc will assign the plc
         Receivables to Corp in consideration for a reduction in the Corp
         Receivable;

         RECORD DATE has the meaning given to it in the relevant Scheme;

         REGISTRAR OF COMPANIES means the registrar or other officer performing
         under CA the duty of registration of companies in England and Wales
         including a deputy registrar;

         SCHEME means either or both of the Corp Scheme and the plc Scheme as
         appropriate including any modifications to either Scheme or both or
         additions or conditions to either Scheme or both in each case as
         approved or imposed by the Court;

         SCHEME CLAIM means any claim or right which a person is, or may in any
         circumstances become, entitled to bring or enforce against Corp or plc
         (as appropriate) in respect of any Liability of Corp or plc (as
         appropriate) in each and every case in existence as at the Record Date
         or after that date by reason of any Liability incurred before that
         date, other than Excluded Claims;

         SCHEME COMPANY means either or both of Corp and plc as appropriate;

         SCHEME CONSIDERATION means the consideration as defined under the Corp
         Scheme or the plc Scheme or both, where appropriate;

         SCHEME CREDITOR means a creditor of Corp or plc, as appropriate, in
         respect of its Scheme Claim and where the Scheme Claim is in respect of
         Bonds, should be construed in the manner set out under "Definitions and
         Interpretation" set out in Part I of the Scheme Document;

         SCHEME DOCUMENT means the scheme document (including the explanatory
         statement and all appendices, schedules and annexures to it) to be
         issued in connection with the Schemes (a draft of which has been marked
         "Draft A" and signed by the parties for the purposes of
         identification);

         SCHEME MEETING means a meeting of Scheme Creditors convened pursuant to
         the terms of the relevant Scheme;

         SECURITY POWER OF ATTORNEY means the power of attorney to be granted by
         plc to Corp and the directors and employees of Corp by way of security
         for the performance of plc's obligations under, and pursuant to, this
         Deed substantially in the form set out in Schedule 12;

         SENIOR MANAGEMENT TEAM means Michael Parton, Michael Donovan, Neil
         Sutcliffe, Geoffrey Doy, Damian Reid, David Beck, Michael Surrey,
         Patricia Dooley and Mary Skelly;

         SETTLEMENT PAYMENT means any payment to an ESOP Bank pursuant to the
         ESOP Settlement Agreement;

                                       8

<PAGE>

         SPECIAL RESOLUTION means the special resolution to be passed in
         accordance with clause 4 in the form or substantially in the form set
         out in Schedule 3;

         SUBSIDIARY has the meaning set out in section 736 CA;

         STATEMENT AND WAIVER means the statement and waiver agreement
         addressing intercompany balances to be entered into between Corp, plc
         and certain Group Companies substantially in the form set out in
         Schedule 13;

         SUPERVISORS means the persons holding office as the supervisors of the
         Corp Scheme or plc Scheme or both, as appropriate, from time to time;

         TRUST DEEDS means the two trust deeds each dated 30th March, 2000
         between Corp, plc and the Eurobond Trustee and constituting the
         Eurobonds;

         UK IP Opcos means all Marconi companies in the UK having legal or
         beneficial title to Patents;

         US IP Opcos means all Marconi companies in the US having legal or
         beneficial title to Patents;

         VAT means value added tax;

         VATA means the Value Added Tax Act 1994;

         VAT ELIGIBLE COMPANIES means each of the following companies;

         (a)      Marconi Ansty Ltd (registered number 4109365);

         (b)      Nominees (registered number 3854422);

         (c)      Photoniqa Ltd (registered number 4113791);

         (d)      Marconi (Bruton Street) Ltd (registered number 4129430);

         (e)      Marconi (DGP 1) Ltd (registered number 3545378);

         (f)      Marconi (DGP 2) Ltd (registered number 3545363);

         (g)      Marconi GM Ltd (registered number 4459061);

         (h)      Marconi (Sixty Nine) Ltd (registered number 1403641);

         (i)      Marconi (Seventy) Ltd (registered number 500918);

         (j)      Layana Ltd (registered number 3901290); and

         (k)      Highrose (registered number 4410334),

         which are eligible to be treated as members of the Corp VAT Group under
         the provisions of section 43A VATA and which are neither members of an
         existing VAT Group nor

                                       9

<PAGE>

         individually registered for VAT purposes with the Commissioners and VAT
         ELIGIBLE COMPANY means any one of the VAT Eligible Companies;

         VAT GROUP means a group of companies for VAT purposes under the
         provisions of section 43 VATA;

         YANKEE BONDS means all or any of the bonds comprising the Yankee
         Issues;

         YANKEE BOND TRUSTEE means Bank of New York, acting in its capacity as
         trustee of the Yankee Bonds; and

         YANKEE ISSUES means the US$900,000,000 7 3/4 per cent. bonds due 2010
         and the US$900,000,000 8 3/8 per cent. bonds due 2030 both issued by
         Corp and both guaranteed by plc.

1.2      In this Deed:

         (a)      references to a person include a body corporate and
                  unincorporated associations of persons; and

         (b)      references to an individual include his estate and personal
                  representatives.

1.3      In this Deed any reference, express or implied, to an enactment
         includes references to:

         (a)      that enactment as re-enacted, amended, extended or applied by
                  or under any other enactment (before or after the signature of
                  this Deed);

         (b)      any enactment which that enactment re-enacts (with or without
                  modification); and

         (c)      any subordinate legislation made (before or after the
                  signature of this Deed) under that enactment, as re-enacted,
                  amended, extended or applied as described in paragraph (a)
                  above, or under any enactment referred to in paragraph (b)
                  above,

         and "enactment" includes any legislation in any jurisdiction.

1.4      Subclauses 1.1 to 1.3 above apply unless the contrary intention
         appears.

1.5      The headings in this Deed do not affect its interpretation.

2.       NON-VOTING

2.1      Ancrane undertakes with effect from the date of this Deed that it will
         not attend or vote at any of the Scheme Meetings or use any other
         rights or powers available to it as a Corp Scheme Creditor, as a plc
         Scheme Creditor or as a Bondholder to attend or vote at any of the
         Scheme Meetings and shall not take any steps to canvass, solicit or
         entice any other person, firm or company to attend and/or vote on its
         behalf at any of the Scheme Meetings at which it is entitled to attend
         and vote.

2.2      Ancrane agrees to support the Financial Restructuring and give full
         force and effect to the Schemes and undertakes that it will not take
         any action to hinder, frustrate, delay or oppose either of the Schemes
         or make any application to the courts of any jurisdiction in order to
         seek to challenge either of the Schemes.

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2.3      For the avoidance of doubt, nothing in subclauses 2.1 and/or 2.2 shall
         prevent Ancrane:

         (a)      in its capacity as a Corp Scheme Creditor, from submitting a
                  Claim Form in respect of its Scheme Claim or Scheme Claims
                  under the Corp Scheme; or

         (b)      in its capacity as a plc Scheme Creditor from submitting a
                  Claim Form in respect of its Scheme Claim or Scheme Claims
                  under the plc Scheme.

2.4      Ancrane agrees that it shall as soon as possible and in any event on or
         before 17th April, 2003 submit duly completed Claim Form or Claim Forms
         (as applicable) in respect of all of its Scheme Claims as it may have
         against plc and Corp.

2.5      Corp undertakes with effect from the date of this Deed that it will not
         attend or vote at any of the plc Scheme Meetings or use any other
         rights or powers available to it as a plc Scheme Creditor to attend or
         vote at the plc Scheme Meeting and shall not (except for the despatch
         of the Scheme Document) take any steps to canvass, solicit or entice
         any other person, firm or company to attend and/or vote on its behalf
         at the plc Scheme Meeting at which it is entitled to attend and vote
         provided that nothing in this subclause shall prevent Corp in its
         capacity as a plc Scheme Creditor from submitting a Claim Form in
         respect of its Scheme Claim under the plc Scheme.

2.6      Corp agrees that it shall as soon as possible and in any event on or
         before 17th April, 2003 submit a duly completed Claim Form in respect
         of its Scheme Claim against plc.

2.7      plc undertakes with effect from the date of this Deed that it will not
         attend or vote at the Corp Scheme Meeting or use any other rights or
         powers available to it as a Corp Scheme Creditor to attend or vote at
         the Corp Scheme Meeting and shall not (except for the despatch of the
         Scheme Document) take any steps to canvass, solicit or entice any other
         person, firm or company to attend and/or vote on its behalf at the Corp
         Scheme Meeting at which it is entitled to attend and vote provided that
         nothing in this subclause shall prevent plc in its capacity as a Corp
         Scheme Creditor from submitting a Claim Form in respect of its Scheme
         Claim under the Corp Scheme.

2.8      Each of Mariposa, SMS, Metapath and BSB undertakes with effect from the
         date of this Deed that it will not attend or vote at any of the Scheme
         Meetings or use any other rights or powers available to it as a Corp
         Scheme Creditor or as a plc Scheme Creditor to attend or vote at any of
         the Scheme Meetings and shall not take any steps to canvass, solicit or
         entice any other person, firm or company to attend and/or vote on its
         behalf at any of the Scheme Meetings at which it is entitled to attend
         and vote.

3.       ANCRANE

3.1      On the date of this Deed:

         (a)      each of Corp, plc and EA Continental hereby confirms it has
                  entered into the EA-plc Deed of Assignment; and

         (b)      each of Corp, plc and Ancrane hereby confirms it has entered
                  into the plc-Ancrane Deed of Assignment.

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3.2      plc will procure that Ancrane will, and Ancrane shall, re-register as
         an unlimited company pursuant to, and in accordance with, section 49 CA
         before the Corp Scheme Meeting.

3.3      Subject to, and conditional upon, the re-registration of Ancrane as an
         unlimited company, Ancrane undertakes and agrees that it shall on or
         after 1st April, 2003 but before the Corp Scheme Meeting:

         (a)      effect a reduction of its existing share capital (including
                  its share premium account) to L100 to enable it to make a
                  repayment of capital in specie to plc in relation to any
                  proceeds it receives as set out in subclause 3.3(b) below; and

         (b)      make a repayment of capital in specie to plc of the beneficial
                  interest of the entirety of its rights, property and assets,
                  other than L100 and the benefit of the Corp Covenant, by way
                  of the Ancrane Deed of Assignment.

3.4      plc shall, and shall procure that any nominee holding any shares in
         Ancrane on trust for it shall:

         (a)      procure that Ancrane complies with the undertakings given by
                  it in clause 3.3 above; and

         (b)      vote in favour of all shareholder resolutions submitted to the
                  shareholders of Ancrane pursuant to this clause 3, and

         plc shall not, and shall procure that any nominee holding any shares in
         Ancrane on trust for it shall not, without the consent of Corp,
         instigate or take any action to rescind, vary, frustrate, delay or
         amend any such shareholder resolutions passed by it pursuant to this
         subclause 3.4.

4.       APPROVALS

4.1      Before the Posting Date, Corp shall procure that:

         (a)      a board meeting of Corp is held at which it is resolved that
                  the Special Resolution is (and any other shareholder
                  resolutions which are, in the reasonable opinion of the Corp
                  board, necessary or desirable to give effect to the Corp
                  Scheme are) approved for submission to the shareholders of
                  Corp for approval at an extraordinary general meeting of Corp;
                  and

         (b)      such extraordinary general meeting of Corp to consider and
                  approve the Special Resolution (and any other shareholder
                  resolutions as referred to in (a) above) is held.

4.2      plc and Nominees shall consent in writing to each and every variation
         of the rights attached to its shares in Corp which is, or may be,
         involved in the passing and implementation of the Special Resolution
         (or such other shareholder resolutions referred to in subclause 4.1).

4.3      Each of plc and Nominees shall vote in favour of the Special Resolution
         and any other shareholder resolutions which are submitted to the
         shareholders of Corp pursuant to subclause 4.1 above and shall not,
         without the consent of Corp, instigate or take any action to rescind,
         vary, frustrate, delay or amend the passing of the Special Resolution
         or the carrying out of the actions approved in it (or the passing of
         any other shareholder resolutions passed by it or the carrying out of
         the actions approved therein) pursuant to this subclause 4.3.

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<PAGE>

4.4      Neither plc nor Nominees shall instigate or take, and shall not direct
         any other person to instigate or take, any action to:

         (a)      remove or appoint any director of Corp;

         (b)      give any directions by special resolution pursuant to article
                  93 of Corp's articles of association;

         (c)      pass any additional shareholder resolutions as shareholders of
                  Corp save as may be required pursuant to the direction of Corp
                  under subclause 4.1 or which are considered, in the reasonable
                  opinion of Corp, necessary or desirable to implement a Scheme;

         (d)      allot or issue or grant any rights to call for the allotment
                  or issue of any further shares of Corp, or transfer or grant
                  any rights to call for the transfer of shares of Corp, save as
                  may be required pursuant to the Special Resolution or such
                  other shareholder resolutions which may be considered, in the
                  reasonable opinion of Corp, necessary or desirable to
                  implement the Schemes;

         (e)      alter or amend the articles of association of Corp save as may
                  be required pursuant to the direction of Corp under subclause
                  4.1 or which are considered, in the reasonable opinion of
                  Corp, necessary or desirable to implement the Schemes;

         (f)      otherwise than pursuant to subclause 4.1 requisition an
                  extraordinary general meeting of Corp pursuant to section 368
                  CA;

         (g)      make any application under section 371(1)(b) CA; or

         (h)      in any way frustrate, delay or interfere with the performance,
                  approval or implementation of this Deed and/or the Schemes.

4.5      Each of Corp, plc and Nominees severally acknowledge that the
         undertakings given by plc and Nominees are for the benefit of Corp and
         Scheme Creditors.

5.       BAE

         Corp and plc shall enter into the BAE Deed of Novation and shall each
         use all reasonable endeavours to procure that BAE enters into the BAE
         Deed of Novation on or before the Record Date.

6.       SERVICE CONTRACTS

         Corp undertakes to procure that all members of the Senior Management
         Team execute the New Service Agreement Arrangements by the Posting
         Date, so that the waiver letters will be effective immediately before
         the Effective Date and their new terms and conditions of employment
         take effect on and from the Effective Date. The New Service Agreement
         Arrangements may not contain terms relating to the individual members
         of the Senior Management Team which are substantially more favourable
         than those which apply at the date of this Deed.

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<PAGE>

7.       EXCHANGE OF GLOBAL BONDS

         Corp and plc undertake to procure the issue of Yankee Bonds in
         definitive form and Eurobonds in individual global form to the
         Definitive Holders named in duly completed Account Holder Letters
         submitted on or before 5.00pm (New York time) on 17th April, 2003. The
         issue in exchange for all or part of the existing global Bonds will be
         made at or about 9.00a.m. (London time) on 24th April, 2003.

8.       BONDHOLDER CONFIRMATION LETTER

         Each of Corp and plc undertake to enter into the Bondholder
         Confirmation Letter on or prior to the Record Date.

9.       EUROBOND TRUSTEE

9.1      Corp and plc confirm and agree that the arrangements relating to the
         remuneration, costs, charges, expenses and liabilities of the Eurobond
         Trustee contained in clause 11 of each of the Trust Deeds (including,
         without limitation, the indemnity in clause 11.1.6 of each Trust Deed)
         shall extend to the role of the Eurobond Trustee in the implementation
         of the Schemes (including, without limitation, under or pursuant to the
         Escrow and Distribution Agreement) and such arrangements are re-stated
         jointly and severally by both Corp and plc as though such arrangements
         were set out in full mutatis mutandis in this Deed. In addition, Corp
         and plc shall pay to the Eurobond Trustee all reasonable additional
         fees charged by the Eurobond Trustee in relation to its functions under
         the Schemes, including all matters contemplated under the Escrow and
         Distribution Agreement.

9.2      The other parties to this Deed acknowledge that the Eurobond Trustee
         shall have no liability or any obligations whatsoever to any person
         under or pursuant to this Deed.

10.      FINMECCANICA GUARANTEE

         Corp and plc shall enter into the Finmeccanica Guarantee Deed of
         Novation and plc shall use all reasonable endeavours to procure that
         Finmeccanica S.p.A. enters into the Finmeccanica Guarantee Deed of
         Novation on or before the Record Date.

11.      LEMELSON LICENCE

         Corp and plc shall enter into, and shall use all reasonable endeavours
         to procure that the Lemelson Foundation Partnership enters into, the
         Lemelson Assumption Agreement and Consent on or before the Record Date.

12.      IPR SPV

         plc shall as soon as reasonably practicable provide all reasonable
         assistance and information and undertake all reasonable acts and deeds
         (including, without limitation, the execution of all necessary
         documents) requested by Corp in preparing the IPR Arrangements before
         the Effective Date. plc shall procure that the IPR Arrangements are
         entered into by the relevant US IP Opco or UK IP Opco on or immediately
         before the Effective Date.

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<PAGE>

13.      LITIGATION

13.1     Should Corp or plc become aware of anything which, in its reasonable
         opinion, is likely to give rise to a claim or threat of litigation
         against either Corp or plc that may affect the other entity or require
         the other entity's assistance, it should inform the other entity in
         writing of all relevant information as soon as reasonably practicable.

13.2     In the event that Corp or plc is threatened with litigation of the kind
         described in subclause 13.1 above by a third party, both Corp and plc
         will do everything reasonably practicable to assist the other to
         investigate and defend the claim threatened. Without limitation, such
         assistance shall include giving access to relevant documentation and
         records in any form, making relevant staff available for interview and
         giving explanations of information where appropriate. The party giving
         such assistance shall be reimbursed all costs and expenses reasonably
         incurred in providing such assistance.

13.3     Corp shall be entitled, by giving notice in writing to plc, to require
         plc to take all such reasonable steps and proceedings as Corp may
         reasonably consider necessary to defend or compromise any claim or
         threat of litigation made by a third party against plc of the kind
         described in subclause 13.1, or obtain any payment or relief in respect
         of, or in connection with, any matter giving rise to a right of action
         by plc against a third party. plc shall not admit liability or agree to
         any compromise of a claim without the prior written consent of Corp,
         such consent not to be unreasonably withheld or delayed.

14.      MARCONI NAME

14.1     plc acknowledges that Corp is the legal and beneficial owner of the
         "Marconi" name and it shall, and it shall procure that the plc Subs
         shall, on or before the Effective Date assign to Corp such right, title
         or interest which each of them has in or to the name "Marconi" and any
         other corporate name that incorporates the name "Marconi" used by plc
         and/or the plc Subs, together with any "Marconi" logo, trade mark, or
         business or trade name or any derivation thereof (the RIGHTS). plc
         shall from the date of such assignment, cease to use any corporate name
         of the Corp Group (other than "Marconi plc") pursuant to the terms of
         the Licence (as defined in clause 14.2)) and shall not thereafter use
         any names, trade marks or logos that are confusing or similar to
         Marconi or any other corporate name of the Corp Group (other than
         "Marconi plc" pursuant to the terms of the Licence (as defined in
         clause 14.2)).

14.2     Subject to subclauses 14.3 and 14.4, Corp grants to plc with effect
         from the Effective Date a non-exclusive, non-transferable, royalty-free
         licence to use the "Marconi" name in the form "Marconi plc" (the
         LICENCE). plc covenants to use such name solely as its corporate name
         and for no other purpose whatsoever save where such name is required to
         be disclosed pursuant to the Business Names Act, 1985.

14.3     The Licence granted by Corp to plc pursuant to subclause 14.2 shall be
         for an initial period of 12 months from the Effective Date and shall
         continue thereafter until terminated in accordance with subclause 14.4
         (the LICENCE TERM). plc shall have no right to sell, sub-license or
         otherwise deal with the Rights with regard to any third party or any
         Subsidiaries, Affiliates or any other connected parties of plc. Within
         the Licence Term plc undertakes to propose a special resolution to
         change its corporate name from Marconi plc at each and every general
         meeting convened for the transaction of business until such resolution
         is passed and to forthwith upon the passing of such resolution register
         such resolution with the Registrar of Companies. plc shall in any event
         on the expiry or termination of the Licence Term cease to

                                       15

<PAGE>

         use the "Marconi plc" name. plc shall keep Corp informed as to progress
         with regard to changing its corporate name.

14.4     The Licence shall automatically terminate immediately upon the
         occurrence of the earlier of:

         (a)      the registration with the Registrar of Companies of a
                  shareholders' resolution changing plc's company name as
                  required by, and in accordance with, subclause 14.3;

         (b)      the breach by plc or any plc Sub of any material term of this
                  Deed or the Licence;

         (c)      an order for plc's winding-up, administration or dissolution
                  being made; any liquidator, trustee in bankruptcy, judicial
                  custodian, compulsory manager, receiver, administrative
                  receiver, administrator or similar officer being appointed in
                  respect of plc or any of plc's assets; plc's directors or
                  other officers requesting the appointment of a liquidator,
                  trustee in bankruptcy, judicial custodian, compulsory manager,
                  receiver, administrative receiver, administrator or similar
                  officer; or any other analogous step or procedure being taken
                  in any jurisdiction; and

         (d)      save in connection with the plc Scheme, an acquisition of all
                  or substantially all of the assets of plc or a sale of all or
                  substantially all of its shares or a change of control of plc
                  where "control" means the ability to direct the affairs of
                  another whether by means of voting or contractual rights or
                  otherwise and whether directly or indirectly.

14.5     Any goodwill in the "Marconi" name that accrues after the Effective
         Date shall accrue to, and for the benefit of, Corp.

15.      PLC SCHEME EXPENSES

15.1     Corp and Marconi Bonding shall use commercially reasonable endeavours
         to procure the issue by HSBC, by no later than 10 Business Days after
         the Effective Date, of a letter of credit in favour of the plc
         Supervisors for their drawing in relation to the plc Scheme Expenses
         (the LETTER OF CREDIT) substantially in the form attached to the
         Performance Bonding Facility Agreement.

15.2     The Letter of Credit shall:

         (a)      be issued by HSBC in its capacity as an issuing bank under,
                  and subject to the terms of, the Performance Bonding Facility;

         (b)      be in an amount of L2,000,000 or such lesser amount as
                  notified to Corp by the plc Supervisors in accordance with
                  subclause 15.4 below;

         (c)      have an initial expiry date no later than 15 months after the
                  Effective Date but, subject to the terms of the Performance
                  Bonding Facility, may be extended for any period of time up to
                  five years beyond the Effective Date upon written notice by
                  the plc Supervisors to HSBC; and

         (d)      have as a condition to any drawing that the plc Supervisors
                  certify to HSBC that they have consulted with the Creditors'
                  Committees and they consider the drawing to be necessary to
                  meet actual or potential plc Scheme Expenses and Excluded
                  Claims and

                                       16

<PAGE>

                  that all other sources of funding available to them are
                  insufficient to meet the plc Scheme Expenses when they fall
                  due.

15.3     Corp and Marconi Bonding each agree to waive any right to reimbursement
         or indemnification against plc or the plc Supervisors arising as a
         result of any payment being made by Corp or Marconi Bonding (including
         through any offset being made against any cash collateral provided for
         the Letter of Credit) as a result of any drawings by the plc
         Supervisors under the Letter of Credit or any sums provided by Corp
         pursuant to subclause 15.5.

15.4     The plc Supervisors shall notify Corp immediately if before, on or
         after the date upon which the Letter of Credit is issued, they are of
         the view (acting reasonably) that the Letter of Credit is no longer
         required or is required in a lesser amount. If any such notification is
         made before the Letter of Credit has been issued, the amount of the
         Letter of Credit to be issued shall be reduced accordingly. If any such
         notification is made on or after the Letter of Credit has been issued,
         the plc Supervisors and Corp shall notify HSBC accordingly and request
         that the amount of the Letter of Credit in issue be reduced
         accordingly.

15.5     In the event that Corp is unable to procure the issue of the Letter of
         Credit, it undertakes to enter into a side letter with the plc
         Supervisors within 20 Business Days after the Effective Date
         substantially in the form set out in Schedule 16.

16.      TAX

16.1     To the extent permitted by law, Corp agrees to surrender, or to procure
         that one of its Subsidiaries surrenders, to Ancrane and plc Group
         Relief required by Ancrane and plc for their accounting periods
         beginning on or after 1st April, 2001 but before the Effective Date
         subject to a maximum amount of L200,000,000 of Group Relief in
         aggregate.

16.2     In relation to the surrender of capital losses between plc and Corp
         Schedule 9 shall apply.

16.3     Pursuant to subclause 16.1, Corp will, and will procure that its
         relevant Subsidiaries will, authorise, sign and submit to the Inland
         Revenue all such notices of consent to the surrender of Group Relief
         and all such other documents and returns, including any revised
         notices, documents and returns, as may be necessary to secure that full
         effect is given to such surrenders and comply with all procedural
         requirements in respect of the giving of such consents.

16.4     Pursuant to subclause 16.1, plc and Ancrane will:

         (a)      authorise, sign and submit to the Inland Revenue all such
                  notices of claims for the surrender of Group Relief and all
                  such other documents and returns, including any revised
                  notices, documents and returns, as may be necessary to secure
                  that full effect is given to such surrenders and comply with
                  all procedural requirements in respect of the making of such
                  claims; and

         (b)      take such steps as Corp may reasonably require in order to
                  minimise the amount of Group Relief which Corp and its
                  subsidiaries are required to surrender to plc and Ancrane,
                  provided that Corp may not require plc and Ancrane to take any
                  step which would result in either of them having a liability
                  to corporation tax other than one in respect of which Corp is
                  liable to make a payment on their behalf to the Inland

                                       17

<PAGE>

                  Revenue pursuant to the Corp Covenant and after taking account
                  of any steps which Corp may require them to take under the
                  Corp Covenant.

16.5     Corp and plc shall give each other such assistance and access to
         information as is reasonably required in order to agree the tax affairs
         for any period beginning on or before the Effective Date of Corp, plc
         and any company which at or before the Effective Date is, or was, a
         Subsidiary of Corp or plc.

16.6     Corp, plc and Ancrane undertake to enter into the Corp Covenant
         substantially in the form set out in Schedule 14 after the Record Date
         and on or before 1st April, 2003.

17.      HIGHROSE DEBT

         Ancrane and, to the extent that any rights in respect of the Highrose
         Debt are transferred to it by Ancrane, plc hereby, with effect from the
         Effective Date, release all of their claims, causes or rights of action
         or proceedings whether at law or in equity in any jurisdiction
         whatsoever, whether known or unknown to the parties, whether or not
         presently known to the law and whether arising before, on or after the
         date of this Deed against Highrose to the extent that they relate to
         Highrose's obligations under the Highrose Debt, including the
         obligation to repay the Highrose Debt (including accrued interest) and
         shall waive all past, present or future rights it may have against
         Highrose in connection with the same.

18.      VAT GROUP

         plc and Corp shall each procure that an application to the
         Commissioners under section 43B VATA is made prior to the Record Date
         for each VAT Eligible Company to become a member of the Corp VAT Group
         with effect from the earliest date permitted by the Commissioners.

19.      INTER COMPANY BALANCES

         Corp and plc shall enter into the Receivables Assignment Letter before
         the Record Date.

20.      COUNTER INDEMNITIES AND WAIVERS

20.1     Corp shall indemnify plc on an after tax basis for any claims
         (including related costs) against plc from MCL arising as a result of
         any payment made by MCL with respect to the settlement of plc's
         obligations under the contracts and termination of employment of Robert
         Meakin and Stephen Hare. In the event that Corp makes a payment under
         the provisions of this subclause, it irrevocably and unconditionally
         waives any right of counter indemnity or right of reimbursement or
         other claims it may have against plc in respect of such payment,
         whether arising under contract, operation of law or otherwise.

20.2     Corp and plc agree that invoices from various professional advisers
         relating to the Financial Restructuring addressed and delivered to plc,
         for work undertaken at the instruction and for the benefit of Corp,
         were erroneously addressed to plc. Corp undertakes to meet the costs
         and expenses specified in such invoices from certain of the parties
         listed at Category 5 to Part III of Appendix 9 of the Scheme Document
         and irrevocably and unconditionally waives any right of counter
         indemnity or right of reimbursement or other claims it may have against
         plc in respect of such payments, whether arising under contract,
         operation of law or otherwise.

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<PAGE>

20.3     Ancrane irrevocably and unconditionally waives any right of counter
         indemnity, right of reimbursement or other claim it may have against
         MCL arising as a result of it having paid L150,000 of professional
         advisers' fees on behalf of MCL, whether arising under contract,
         operation of law or otherwise.

21.      ESOP ESCROW AGREEMENT RELEASE

21.1     Capitalised terms used but not defined in this clause 21 shall have the
         same meaning as those set out and adopted in the ESOP Settlement
         Agreement.

21.2     Immediately following payment by Corp to each Settling ESOP Bank of its
         respective Settlement Payment in accordance with clause 2.1 of the ESOP
         Settlement Agreement plc shall, by execution of a deed substantially in
         the form set out in Schedule 11, unconditionally and irrevocably
         release all of its claims, causes or rights of action or proceedings
         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 each Opco in
         connection with the same.

21.3     With effect from the date on which Corp releases its claims against BCT
         under clause 3.2.1 of the ESOP Settlement Agreement, Corp hereby
         unconditionally and irrevocably, releases any claim that it has against
         plc arising from the funding of BCT in respect of the cash collateral
         calls from UBS AG and Salomon Brothers International Limited and waives
         all past, present or future rights it may have against plc in
         connection with the same.

22.      SECURITY POWER OF ATTORNEY

         plc hereby undertakes to execute the Security Power of Attorney in the
         form set out in Schedule 12 immediately after the execution of this
         Deed.

23.      plc WAIVERS

23.1     plc and the plc Subs irrevocably and unconditionally waive and release
         each Corp Group Company from any Claim it may have against that Corp
         Group Company and which arises out of, or is in relation to, any matter
         or circumstance existing on or before the Effective Date other than any
         Claim set out in the Statement and Waiver, that is expressed to
         continue in existence, notwithstanding the terms of the Statement and
         Waiver and any other Claim intended to be excluded by the terms of
         either Scheme or contemplated by this Deed or the transactions
         contemplated by this Deed (including for the avoidance of doubt any
         Claim of Ancrane or plc against Corp arising out of the transactions
         contemplated at Schedules 1, 2 and 15 hereto and Ancrane's holding of
         Bonds).

23.2     plc agrees that the distribution of plc Scheme Consideration to plc
         Scheme Creditors in respect of any guarantee or indemnity given by plc
         of any other Group Company will not give rise, and no other payment by
         plc in respect of a guarantee given by it will give rise, to any
         counter indemnity or right of reimbursement or other claim by plc
         against the relevant Group Company.

24.      plc UNDERTAKING

         plc will use reasonable endeavours to procure that any share options
         issued by plc to employees of Metapath, Mariposa, Albany Partnership
         Limited and SMS and their respective

                                       19

<PAGE>

         subsidiaries (the SHARE OPTIONS OR SHARE AWARDS) that are exercised (in
         the case of Share Options) or which vest (in the case of Share Awards)
         before the plc Shareholder Record Date will be satisfied from plc
         shares held either by BCT as trustee of the Marconi Employee Trust or
         held by Mourant & Co. Trustees Limited as trustee of the GEC Employee
         Share Trust.

25.      STATEMENT AND WAIVER

         Corp and plc shall enter into the Statement and Waiver on or before the
         Record Date and certain identified Group Companies shall accede to the
         Statement and Waiver on or before the Effective Date.

26.      PLC OFFICES

         Corp consents to plc maintaining its registered office address as New
         Century Park, PO Box 53, Coventry, Warwickshire CV3 1HJ for a period of
         up to 12 months from the date of this Deed. In addition Corp grants
         (and undertakes to procure that its subsidiaries will grant, where
         appropriate) plc a right to share such of Corp's office space at 338
         Euston Road, London NW1 3BT as plc may reasonably require, upon giving
         Corp reasonable notice, for its day-to-day business and for its general
         meetings as a bare licensee only for 36 months from the Effective Date.

27.      RESTRUCTURING IMPLEMENTATION

         Save as otherwise determined, from time to time by notice in writing
         given by Corp to plc, Corp and plc hereby agree to, and will procure
         that their direct and indirect Subsidiaries will (i) take all actions
         and execute and deliver all such deeds or other documents as may from
         time to time be either necessary or, in the determination of Corp
         (acting reasonably), desirable, to implement and give effect to this
         Deed and/or the Financial Restructuring in accordance with the
         timetable set out in the Scheme Document or this Deed, including
         (without limitation) the convening of meetings of creditors and/or
         members, in accordance with the timetable set out in the Scheme
         Document, or as soon as reasonably practicable thereafter, and (ii) not
         in any way attempt to frustrate, delay or interfere with the
         performance, approval or implementation of this Deed or the Schemes.

28.      REPRESENTATIONS AND WARRANTIES

28.1     Each party to this Deed severally represents and warrants to the other
         parties that:

         (a)      it has all requisite power and authority to execute and
                  deliver this Deed and to carry out the transactions
                  contemplated by, and perform its obligations under, this Deed,
                  including entering into any ancillary agreements pursuant to
                  this Deed and that it has taken all action necessary to
                  authorise such execution and delivery and the performance of
                  such obligations;

         (b)      the execution and delivery by it of this Deed, and the
                  performance by it of its obligations under it does not and
                  will not violate or conflict with any law, rule or regulation
                  applicable to it, any provisions of constitutional documents,
                  any order or judgement of any court or other agency or
                  government applicable to it nor require any registration,
                  filing, consent, approval, notice or other action to, with or
                  by, any governmental or other authority, court or regulatory
                  body, except as expressly provided in this Deed; and

                                       20

<PAGE>

         (c)      this Deed constitutes legal, valid and binding obligations,
                  enforceable against it in accordance with its terms, except to
                  the extent that enforcement may be limited by bankruptcy,
                  insolvency, reorganisation, moratorium or other similar laws
                  relating to or limiting creditors' rights generally.

28.2     Each party severally represents and warrants to the other parties that
         the entering into and performance of this Deed on its terms has been
         approved and resolved at a duly constituted meeting of its board of
         directors (which meeting also considered the entry into, and
         performance of, this Deed on its terms) to be in the best interests of
         it and its members, creditors and Bondholders (if any).

29.      COSTS

         Each party will be solely responsible for all costs and expenses
         incurred by it in connection with the negotiation, preparation and
         execution of this Deed and for its compliance with the terms of this
         Deed.

30.      INADEQUACY OF DAMAGES

         Each of the parties acknowledges that Corp may be irreparably harmed by
         any breach of the terms of this Deed and agrees that damages alone may
         not be an adequate remedy for Corp for any breach of any provision of
         this Deed. Accordingly if Corp requires either of the remedies of
         injunction or specific performance or any combination thereof to
         protect or enforce its rights under this Deed, it shall be entitled to
         apply to the Court for such remedies without delay.

31.      NOTICES

31.1     Any notice or other formal communication given under this Deed must be
         in writing (which includes fax, but not email) and may be delivered or
         sent by post or fax to the party to be served at its address appearing
         in this Deed as follows:

         Corp:                                    plc:
         New Century Park                         New Century Park
         PO Box 53                                PO Box 53
         Coventry                                 Coventry
         Warwickshire CV3 1HJ                     Warwickshire CV3 1HJ
         Fax: 020 7306 1395                       Fax: 020 7306 1395
         Attn: Company Secretary                  Attn: Company Secretary

         Ancrane:                                 Nominees:
         New Century Park                         New Century Park
         PO Box 53                                PO Box 53
         Coventry                                 Coventry
         Warwickshire CV3 1HJ                     Warwickshire CV3 1HJ
         Fax: 020 7306 1395                       Fax: 020 7306 1395
         Attn: Company Secretary                  Attn: Company Secretary

                                       21

<PAGE>

         E-A Continental                          Mariposa
         New Century Park                         3000 Marconi Drive
         PO Box 53                                Warrendale, PA 15086
         Coventry                                 United States
         Warwickshire CV3 1HJ                     Fax: +1 724 742 7688
         Fax: 020 7306 1395                       Attn: Steve Barto
         Attn: Company Secretary

         SMS                                      Metapath
         3 Hutton Centre Drive                    1755 North Collins Street
         Suite 100                                Suite 400
         Santa Ana, CA 92707                      Richardson TX 75080
         United States                            United States
         Fax: Simon Evans                         Fax: Chip Wagner
         Attn: +1 714 986 8463                    Attn: +1 972 669 6363

         Marconi Bonding                          BSB
         New Century Park                         4 Tenterden Street
         P.O. Box 53                              London W1A 2AY
         Coventry
         Warwickshire CV3 1HJ
         Fax: 020 7306 1395                       Fax: 020 7306 1395
         Attn: Company Secretary                  Attn: Company Secretary

         Ansty                                    Photoniqa
         New Century Park                         New Century Park
         P.O. Box 53                              P.O. Box 53
         Coventry                                 Coventry
         Warwickshire CV3 1HJ                     Warwickshire CV3 1HJ
         Fax: 020 7306 1395                       Fax: 020 7306 1395
         Attn: Company Secretary                  Attn: Company Secretary

         Yeslink
         New Century Park
         P.O. Box 53
         Coventry
         Warwickshire CV3 1HJ
         Fax: 020 7306 1395
         Attn: Company Secretary

         or at such other address or fax number as it may have notified to the
         other parties in accordance with this clause. Any notice or other
         document sent by post shall be sent by prepaid first class post (if
         within the United Kingdom) or by prepaid airmail (if elsewhere).

31.2     Any notice or other formal communication shall be deemed to have been
         given:

         (a)      if delivered, at the time of delivery; or

                                       22

<PAGE>

         (b)      if posted, at 10.00 a.m. on the second Business Day after it
                  was put into the post; or

         (c)      if sent by fax, on the date of transmission, if transmitted
                  before 3.00 p.m. on any Business Day, and in any other case on
                  the Business Day following the date of transmission.

31.3     In proving service of a notice or other formal communication, it shall
         be sufficient to prove that delivery was made or that the envelope
         containing the communication was properly addressed and posted by
         prepaid first class post or that the fax was properly addressed and
         transmitted, as the case may be.

32.      ASSIGNMENT

         None of the parties to this Deed may assign any of their respective
         rights or obligations under this Deed. This Deed is intended to bind
         and inure to the benefit of the parties and their respective
         successors, permitted assignees, administrators and representatives.

33.      GENERAL

33.1     This Deed may be executed in one or more counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same Deed and any party may enter into this Deed by executing a
         counterpart.

33.2     The agreements, representations, warranties and obligations of each of
         the parties to this Deed are, in all respects, several and not joint.

33.3     For the sole benefit of Corp, time is of the essence in relation to any
         obligation of plc, the plc Subs and EA Continental under this Deed.

33.4     The rights of each party under this Deed:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of rights and remedies
                  provided by law; and

         (c)      may be waived only in writing and specifically.

33.5     A waiver (whether express or implied) by one of the parties of any of
         the provisions of this Deed or of any breach of or default by the other
         party in performing any of those provisions shall not constitute a
         continuing waiver and that waiver shall not prevent the waiving party
         from subsequently enforcing any of the provisions of this Deed not
         waived or from acting on any subsequent breach of or default by the
         other party under any of the provisions of this Deed.

33.6     In the event that any provision of this Deed is void and unenforceable
         by reason of any applicable law, it shall be deleted and the remaining
         provisions of this Deed shall continue in full force and effect, and if
         required be so amended as necessary to give effect to the spirit of
         this Deed so far as possible.

                                       23

<PAGE>

34.      ENTIRE AGREEMENT

34.1     This Deed contains the whole agreement between the parties relating to
         the transactions contemplated by this Deed and supersedes all previous
         agreements between the parties relating to these arrangements and
         transactions.

34.2     Each party acknowledges that in agreeing to enter into this Deed it has
         not relied on any representation, warranty, collateral contract or
         other assurance (except those set out in this Deed) made by or on
         behalf of any other party before the signature of this Deed. Each party
         waives all rights and remedies which, but for this subclause, might
         otherwise be available to it in respect of any such representation,
         warranty, collateral contract or other assurance.

34.3     Nothing in the preceding subclause limits or excludes any liability for
         fraud.

35.      THIRD PARTIES

         With the exception of the rights of:

         (a)      the Scheme Creditors, Bondholders and Designated Recipients to
                  enforce the terms of clauses 2, 3, 4, 5, 6, 7, 8, 12, 17, 19,
                  21, 22, 23, 25 and 27;

         (b)      the Eurobond Trustee to enforce the terms of clause 9;

         (c)      the plc Supervisors to enforce the terms of clause 15 against
                  Corp and Marconi Bonding only; and

         (d)      MCL to enforce the terms of clause 20,

         the benefit of which is hereby conferred upon them, no term of this
         Deed is enforceable by a person who is not a party to this Deed under
         the Contracts (Rights of Third Parties) Act 1999 or otherwise.

36.      GOVERNING LAW AND JURISDICTION

         This Deed will be governed by, and construed in accordance with,
         English law. Each party irrevocably submits to the jurisdiction of the
         English courts for all purposes relating to this Deed.

IN WITNESS of which this Deed has been executed as a deed and has been delivered
on the date which appears first on page 1.

                                       24

<PAGE>

                                   SCHEDULE 1

                            EA-plc DEED OF ASSIGNMENT

                            DATED [     ] MARCH, 2003

                             E-A CONTINENTAL LIMITED

                             MARCONI CORPORATION PLC

                                       AND

                                   MARCONI PLC

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

                               DEED OF ASSIGNMENT

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

                                  ALLEN & OVERY
                                     London

                                       25

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                             PAGE
<S>                                                                <C>
1.       Interpretation......................................       27
2.       Assignment and Payment..............................       29
3.       Consideration.......................................       30
4.       Further Assurance...................................       30
5.       Set-off and Counterclaim............................       30
6.       Representations and Warranties......................       30
7.       Assignor's Responsibility...........................       31
8.       Indemnity...........................................       31
9.       Changes to the Parties..............................       31
10.      Waivers and Remedies Cumulative.....................       31
11.      Severability........................................       31
12.      Counterparts........................................       32
13.      Notices.............................................       32
14.      Expenses............................................       33
15.      Stamp Duty..........................................       33
16.      Jurisdiction........................................       33
17.      Governing Law.......................................       33

Signatories..................................................       34
</TABLE>

                                       26

<PAGE>

THIS DEED is dated [     ] March, 2003

BETWEEN:

(1)      E-A CONTINENTAL LIMITED (registered number 00725757) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (the ASSIGNOR);

(2)      MARCONI CORPORATION PLC (registered number 00067307) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (CORP); and

(3)      MARCONI PLC (registered number 03846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (the
         ASSIGNEE).

BACKGROUND:

(A)      This Deed of Assignment has been entered into by the aforementioned
         parties as part of the proposed financial restructuring of the Assignee
         and Corp (the FINANCIAL RESTRUCTURING).

(B)      As part of the Financial Restructuring, the Assignor has agreed to
         assign the Assigned Rights to the Assignee and pay the balance of the
         Assignor's Account to the Assignee, these assets being all the assets
         of the Assignor, in consideration for which the Assignee has agreed to
         release the Assignor from all obligations under the plc Loan.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         ASSIGNED RIGHTS means all rights, title, interest, benefits and
         obligations accruing to the Assignor under the Corp Loan, including,
         without limitation, any right or entitlement of the Assignor to receive
         cash, loan notes, shares or other consideration or payment as a
         creditor of Corp as a result of the Financial Restructuring;

         ASSIGNMENT means the assignment of the Assigned Rights under this Deed;

         ASSIGNOR'S ACCOUNT means the balance of the account the Assignor has
         with HSBC Bank plc, account number 10014230, which as at or about the
         date of this Deed is in the amount of approximately L2,000,000;

         BUSINESS DAY means any day other than Saturday, Sunday or any other day
         which is a public holiday in England and Wales;

         COMPLETION means the execution of this Deed by the parties set out
         herein;

         CORP LOAN means the loans from the Assignor to Corp in the amount of
         L363,308,000;

                                       27

<PAGE>

         CORP SCHEME means the proposed scheme of arrangement with the Corp
         Scheme Creditors in respect of Corp pursuant to section 425 Companies
         Act 1985 (including any modifications, additions or conditions approved
         or imposed by the Court);

         CORP SCHEME CREDITOR means a scheme creditor of Corp in respect of its
         Scheme Claim;

         EXCLUDED CLAIMS shall in relation to the Corp Scheme have the same
         meaning as that set out in the Corp Scheme and, in relation to the plc
         Scheme have the same meaning as that set out in the plc Scheme;

         LIABILITY or LIABILITIES means any liability or obligation of a person
         whether it is present, future, prospective or contingent, whether or
         not it is fixed or undetermined, whether or not it involves the payment
         of money or performance of an act or obligation and whether it arises
         at common law, in equity or by statute, in England and Wales or in any
         other jurisdiction, or in any other manner whatsoever, but such
         expression does not include any liability which is barred by statute or
         is otherwise unenforceable under English law or arises under a contract
         which is void or, being voidable, has been duly avoided;

         plc LOAN means the loan in the amount of L219,000,000 from the Assignee
         to the Assignor;

         plc SCHEME means the proposed scheme of arrangement in respect of plc
         pursuant to section 425 Companies Act 1985, the terms of which are set
         out in Part III of the Scheme Document (including any modifications,
         additions or conditions approved or imposed by the Court);

         RECORD DATE has the meaning given to it in the Corp Scheme or the plc
         Scheme, as appropriate; and

         SCHEME CLAIM means any claim or right which a person is, or may in any
         circumstances become, entitled to bring or enforce against Corp or plc
         (as appropriate) in respect of any Liability of Corp or plc (as
         appropriate) in each and every case in existence as at the Record Date
         or after that date by reason of any Liability incurred before that
         date, other than Excluded Claims.

1.2      CONSTRUCTION

         (a)      In this Deed:

                  (i)      references to a person include a body corporate and
                           unincorporated associations of persons;

                  (ii)     references to an individual include his estate and
                           personal representatives; and

                  (iii)    references to a party to this Deed include references
                           to the successors or assigns (immediate or
                           otherwise), of that party.

         (b)      In this Deed any reference, express or implied, to an
                  enactment includes references to:

                  (i)      that enactment as re-enacted, amended, extended or
                           applied by or under any other enactment (before or
                           after the signature of this Deed);

                                       28

<PAGE>

                  (ii)     any enactment which that enactment re-enacts (with or
                           without modification); and

                  (iii)    any subordinate legislation made (before or after the
                           signature of this Deed) under that enactment, as
                           re-enacted, amended, extended or applied as described
                           in paragraph (a) above, or under any enactment
                           referred to in paragraph (b) above,

                  and "enactment" includes any legislation in any jurisdiction.

         (c)      In this Deed, unless the contrary intention appears, a
                  reference to a clause, subclause or schedule is a reference to
                  a clause, subclause or schedule to this Deed. The schedules
                  form part of this Deed.

         (d)      Subclauses 1.1 to 1.2(c) above apply unless the contrary
                  intention appears.

         (e)      The headings in this Deed do not affect its interpretation.

2.       ASSIGNMENT AND PAYMENT

2.1      ASSIGNMENT

         With effect from Completion and subject to the terms of this Deed, the
         Assignor, with full title guarantee (in accordance with the Law of
         Property (Miscellaneous Provisions) Act 1994), assigns to the Assignee
         the Assigned Rights.

2.2      NOTICE AND ACKNOWLEDGEMENTS

         (a)      The Assignor notifies the Assignee, and the Assignee
                  acknowledges, that the Assignor shall not:

                  (i)      be required to reimburse the Assignee for, or
                           otherwise be responsible for or assure the Assignee
                           against, any loss suffered by the Assignee in
                           consequence of the matters provided for in this Deed
                           (other than loss caused by the negligent or wilful
                           failure of the Assignor to perform or observe the
                           terms of this Deed); or

                  (ii)     have any obligation to reacquire the Assigned Rights
                           or any part of the Assigned Rights.

         (b)      The Assignee agrees with effect from Completion to accept the
                  Assignment without recourse and to benefit from the
                  consideration the Assignor would have received (as original
                  lender) as a result of the Financial Restructuring.

         (c)      Corp acknowledges notice of the Assignment constituted by this
                  Deed and expressly consents to the Assignment.

2.3      PAYMENT

         The Assignor will pay to the Assignee on Completion the balance of the
         Assignor's Account.

                                       29

<PAGE>

3.       CONSIDERATION

         In consideration of the Assignment by the Assignor to the Assignee and
         the payment provided for in Clause 2.3 of this Deed, the Assignee
         releases the Assignor from all of its obligations under or in respect
         of the plc Loan with effect from Completion.

4.       FURTHER ASSURANCE

         The Parties shall each take whatever action may be necessary:

         (a)      so that the Assignee may assume, to the fullest extent
                  permitted by the Corp Loan and in accordance with the
                  provisions of this Deed, all of the Assigned Rights with
                  effect from Completion;

         (b)      for the Assignor to be released from all obligations arising
                  after Completion under the Corp Loan in relation to the
                  Assigned Rights; and

         (c)      otherwise to implement the terms of this Deed,

         including the execution of any further documents and the giving of any
         notice, order or direction and the making of any registration which in
         each case may be required.

5.       SET-OFF AND COUNTERCLAIM

         All payments shall be made without set-off or counterclaim on amounts
         which are not due under this Deed.

6.       REPRESENTATIONS AND WARRANTIES

6.1      Each party severally represents and warrants to the other parties that:

         (a)      it has all requisite power and authority to enter into and
                  perform, and has taken all necessary action to authorise the
                  entry into, performance and delivery of, this Deed and the
                  transactions contemplated by this Deed;

         (b)      this Deed constitutes legal, valid and binding obligations
                  enforceable against it in accordance with its terms; and

         (c)      all authorisations required or desirable in connection with
                  the entry into, performance, validity and enforceability of
                  this Deed and the transactions contemplated by this Deed have
                  been obtained or effected and are in full force and effect.

6.2      The Assignor represents to the Assignee that:

         (a)      OBLIGATIONS: At the date of this Deed it will, to the best of
                  its knowledge and belief, have performed and complied with all
                  obligations required to be performed or complied with by it in
                  relation to the Assigned Rights under the Corp Loan up to
                  Completion, and no rights, including rights of set-off, will
                  have arisen in respect of the Assigned Rights in favour of
                  Corp;

         (b)      RIGHTS ASSIGNABLE: The rights in respect of the Assigned
                  Rights are assignable in accordance with the provisions of
                  this Deed and the Corp Loan; and

                                       30

<PAGE>

         (c)      INDEBTEDNESS UNDER THE CORP LOAN: Corp is indebted to the
                  Assignor under the Corp Loan in the outstanding principal
                  amount of L365,308,000.

7.       ASSIGNOR'S RESPONSIBILITY

         Save as expressly provided in Clause 6 (Representations and Warranties)
         the Assignor has not made and does not by this Deed make, and the
         Assignee has not relied upon, any representation, warranty or condition
         (expressed or implied) about, and the Assignor will have no
         responsibility to the Assignee for, the effectiveness, validity or
         enforceability of, the Corp Loan or other documentation delivered by
         the Assignor to the Assignee or any of the terms, covenants or
         conditions contained in the Corp Loan or other documentation or any
         non-performance by any party to it or the financial condition of Corp
         or any other person liable with respect to the Assigned Rights.

8.       INDEMNITY

         The Assignee agrees to indemnify the Assignor and the Assignor agrees
         to indemnify the Assignee against any liabilities, obligations, losses,
         damages, penalties, judgments, costs, expenses or disbursements of any
         kind or nature which may be imposed on or incurred by the other party
         as a consequence of failure by it duly and punctually to perform its
         obligations, or breach by it of any of the representations and
         warranties made by it, in this Deed.

9.       CHANGES TO THE PARTIES

         No party may assign, transfer, novate, encumber or dispose of any of
         its interest in, its rights and/or obligations under this Deed without
         the prior written consent of the other parties. However, after the
         Assignee has performed its obligations in Clause 3 (Consideration) in
         respect of the Assigned Rights, this Clause 9 shall not restrict the
         Assignee from assigning, charging or pledging the whole or any part of
         its rights, title and interest in the Assigned Rights to any third
         party.

10.      WAIVERS AND REMEDIES CUMULATIVE

         The rights of each party under this Deed:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any such right is not a waiver
         of that right.

11.      SEVERABILITY

         If a provision of this Deed is or becomes illegal invalid or
         unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of this Deed; or

                                       31

<PAGE>

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of this Deed.

12.      COUNTERPARTS

         This Deed may be executed in any number of counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same Deed and any party may enter into this Deed by executing a
         counterpart.

13.      NOTICES

13.1     GIVING OF NOTICES

         Subject to Clause 2.3 (Notice and acknowledgements), all notices or
         other communications under or in connection with this Deed shall be
         given in writing and, unless otherwise stated may be made by facsimile.
         Any such notice will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile, when received in legible form.

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

13.2     ADDRESSES FOR NOTICES

         The address and facsimile number of each party for all notices under or
         in connection with this Deed are:

         (a)      in relation to the Assignee:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number: 020 7306 1395

         (b)      in relation to Corp:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number: 020 7306 1395

         (c)      in relation to the Assignor:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                                       32

<PAGE>

                  Fax Number: 020 7306 1395

         or any other notified by that Party for this purpose to the other party
         by not less than five Business Days' notice.

14.      EXPENSES

         Each party shall pay its own costs and expenses in connection with the
         preparation, negotiation and execution of this Deed.

15.      STAMP DUTY

         The Assignee shall pay, and forthwith on demand indemnify each of the
         other parties to this Deed against any liability it incurs in respect
         of, any stamp, registration and similar tax which is or becomes payable
         in connection with the entry into and performance of this Deed.

16.      JURISDICTION

         Each party to this Deed agrees, for the benefit of the Assignor, that
         the courts of England shall have jurisdiction to settle any disputes in
         connection with this Deed and, accordingly, submits to the jurisdiction
         of the English courts.

17.      GOVERNING LAW

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

IN WITNESS of which this Deed has been executed as a deed and has been delivered
on the date which it appears first on page 1.

                                       33

<PAGE>

                                   SIGNATORIES

EXECUTED as a Deed         )      _________________________________
by MARCONI PLC             )      Director
acting by [      ] and     )
[                        ] )      _________________________________
                                  Director/Secretary

EXECUTED as a Deed         )      _________________________________
by MARCONI CORPORATION     )      Director
PLC acting by [     ] and  )
[                        ] )      _________________________________
                                  Director/Secretary

EXECUTED as a Deed         )      _________________________________
by E-A CONTINENTAL         )      Director
LIMITED acting by [      ] )
and [                    ] )      _________________________________
                                  Director/Secretary

                                       34

<PAGE>

                                   SCHEDULE 2

                         plc-ANCRANE DEED OF ASSIGNMENT

                            DATED [     ] MARCH, 2003

                                   MARCONI PLC

                             MARCONI CORPORATION PLC

                                       AND

                                     ANCRANE

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

                               DEED OF ASSIGNMENT

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

                                  ALLEN & OVERY
                                     London

                                       35

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                  PAGE
<S>                                                     <C>
1.       Interpretation...........................       37
2.       Assignment and Payment...................       39
3.       Consideration............................       39
4.       Further Assurance........................       39
5.       Set-off and Counterclaim.................       40
6.       Representations and Warranties...........       40
7.       Assignor's Responsibility................       40
8.       Indemnity................................       40
9.       Changes to the Parties...................       41
10.      Waivers and Remedies Cumulative..........       41
11.      Severability.............................       41
12.      Counterparts.............................       41
13.      Notices..................................       41
14.      Expenses.................................       42
15.      Stamp Duty...............................       42
16.      Jurisdiction.............................       42
17.      Governing Law............................       43

Signatories.......................................       44
</TABLE>

                                       36

<PAGE>

THIS DEED is dated [     ] March, 2003

BETWEEN:

(1)      MARCONI PLC (registered number 03846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (the
         ASSIGNOR);

(2)      MARCONI CORPORATION PLC (registered number 00067307) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (CORP); and

(3)      ANCRANE (registered number 04308188) whose registered office is at New
         Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (the
         ASSIGNEE).

BACKGROUND:

(A)      This Deed of Assignment has been entered into by the aforementioned
         parties as part of the proposed financial restructuring of the Assignor
         and Corp (the FINANCIAL RESTRUCTURING).

(B)      As part of the Financial Restructuring, the Assignor has agreed to
         assign the Assigned Rights to the Assignee, in consideration for which
         the Assignee has agreed to allot and issue the Ancrane Share to the
         Assignor for an amount equal to the market value of the Corp Loan at
         the date of such assignment.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         ANCRANE SHARE means one ordinary share of L1.00 in the capital of the
         Assignee;

         ASSIGNED RIGHTS means all rights, title, interest, benefits and
         obligations accruing to the Assignor under the Corp Loan, including,
         without limitation, any right or entitlement of the Assignor to receive
         cash, loan notes, shares or other consideration or payment as a
         creditor of Corp as a result of the Financial Restructuring;

         ASSIGNMENT means the assignment of the Assigned Rights under this Deed;

         BUSINESS DAY means any day other than Saturday, Sunday or any other day
         which is a public holiday in England and Wales;

         COMPLETION means the execution of this Deed by the parties set out
         herein;

         CORP LOAN means the loans from the Assignor to Corp in the amount of
         L363,308,000;

         CORP SCHEME means the proposed scheme of arrangement with the Corp
         Scheme Creditors in respect of Corp pursuant to section 425 Companies
         Act 1985 (including any modifications, additions or conditions approved
         or imposed by the court);

         CORP SCHEME CREDITOR means a scheme creditor of Corp in respect of its
         Scheme Claim;

                                       37

<PAGE>

         EXCLUDED CLAIMS shall in relation to the Corp Scheme have the same
         meaning as that set out in the Corp Scheme and, in relation to the plc
         Scheme have the same meaning as that set out in the plc Scheme;

         LIABILITY or LIABILITIES means any liability or obligation of a person
         whether it is present, future, prospective or contingent, whether or
         not it is fixed or undetermined, whether or not it involves the payment
         of money or performance of an act or obligation and whether it arises
         at common law, in equity or by statute, in England and Wales or in any
         other jurisdiction, or in any other manner whatsoever, but such
         expression does not include any liability which is barred by statute or
         is otherwise unenforceable under English law or arises under a contract
         which is void or, being voidable, has been duly avoided;

         plc SCHEME means the proposed scheme of arrangement in respect of plc
         pursuant to section 425 Companies Act 1985, the terms of which are set
         out in Part III of the Scheme Document (including any modifications,
         additions or conditions approved or imposed by the Court);

         RECORD DATE has the meaning given to it in the Corp Scheme or the plc
         Scheme, as appropriate; and

         SCHEME CLAIM means any claim or right which a person is, or may in any
         circumstances become, entitled to bring or enforce against Corp or plc
         (as appropriate) in respect of any Liability of Corp or plc (as
         appropriate) in each and every case in existence as at the Record Date
         or after that date by reason of any Liability incurred before that
         date, other than Excluded Claims.

1.2      CONSTRUCTION

(a)      In this Deed:

         (i)      references to a person include a body corporate and
                  unincorporated associations of persons;

         (ii)     references to an individual include his estate and personal
                  representatives; and

         (iii)    references to a party to this Deed include references to the
                  successors or assigns (immediate or otherwise), of that party.

(b)      In this Deed any reference, express or implied, to an enactment
         includes references to:

         (i)      that enactment as re-enacted, amended, extended or applied by
                  or under any other enactment (before or after the signature of
                  this Deed);

         (ii)     any enactment which that enactment re-enacts (with or without
                  modification); and

         (iii)    any subordinate legislation made (before or after the
                  signature of this Deed) under that enactment, as re-enacted,
                  amended, extended or applied as described in paragraph (a)
                  above, or under any enactment referred to in paragraph (b)
                  above,

         and "enactment" includes any legislation in any jurisdiction.

(c)      In this Deed, unless the contrary intention appears, a reference to a
         clause, subclause or schedule is a reference to a clause, subclause or
         schedule to this Deed. The schedules form part of this Deed.

                                       38

<PAGE>

(d)      Subclauses 1.1 to 1.2(c) above apply unless the contrary intention
         appears.

(e)      The headings in this Deed do not affect its interpretation.

2.       ASSIGNMENT AND PAYMENT

2.1      ASSIGNMENT

         With effect from Completion and subject to the terms of this Deed, the
         Assignor, with full title guarantee (in accordance with the Law of
         Property (Miscellaneous Provisions) Act 1994), assigns to the Assignee
         the Assigned Rights.

2.2      NOTICE AND ACKNOWLEDGEMENTS

(a)      The Assignor notifies the Assignee, and the Assignee acknowledges, that
         the Assignor shall not:

         (i)      be required to reimburse the Assignee for, or otherwise be
                  responsible for or assure the Assignee against, any loss
                  suffered by the Assignee in consequence of the matters
                  provided for in this Deed (other than loss caused by the
                  negligent or wilful failure of the Assignor to perform or
                  observe the terms of this Deed); or

         (ii)     have any obligation to reacquire the Assigned Rights or any
                  part of the Assigned Rights.

(b)      The Assignee agrees with effect from Completion to accept the
         Assignment without recourse and to benefit from the consideration the
         Assignor would have received (as original lender) as a result of the
         Financial Restructuring.

(c)      Corp acknowledges notice of the Assignment constituted by this Deed and
         expressly consents to the Assignment.

3.       CONSIDERATION

         In consideration of the Assignment by the Assignor to the Assignee, the
         Assignee will on Completion allot and issue the Ancrane Share to the
         Assignor credited as fully paid with a share premium equal to the
         market value of the Corp Loan as at Completion (less L1.00), such
         Ancrane Share to rank pari passu in all respects with the ordinary
         shares in the capital of the Assignee in issue at the date of the
         allotment.

4.       FURTHER ASSURANCE

         The Parties shall each take whatever action may be necessary:

         (a)      so that the Assignee may assume, to the fullest extent
                  permitted by the Corp Loan and in accordance with the
                  provisions of this Deed, all of the Assigned Rights with
                  effect from Completion;

         (b)      for the Assignor to be released from all obligations arising
                  after Completion under the Corp Loan in relation to the
                  Assigned Rights; and

         (c)      otherwise to implement the terms of this Deed,

                                       39

<PAGE>

         including the execution of any further documents and the giving of any
         notice, order or direction and the making of any registration which in
         each case may be required.

5.       SET-OFF AND COUNTERCLAIM

         All payments shall be made without set-off or counterclaim on amounts
         which are not due under this Deed.

6.       REPRESENTATIONS AND WARRANTIES

6.1      Each party severally represents and warrants to the other parties that:

         (a)      it has all requisite power and authority to enter into and
                  perform, and has taken all necessary action to authorise the
                  entry into, performance and delivery of, this Deed and the
                  transactions contemplated by this Deed.

         (b)      this Deed constitutes legal, valid and binding obligations
                  enforceable against it in accordance with its terms; and

         (c)      all authorisations required or desirable in connection with
                  the entry into, performance, validity and enforceability of
                  this Deed and the transactions contemplated by this Deed have
                  been obtained or effected and are in full force and effect.

6.2      The Assignor represents to the Assignee that:

         (a)      OBLIGATIONS: At the date of this Deed it will, to the best of
                  its knowledge and belief, have performed and complied with all
                  obligations required to be performed or complied with by it in
                  relation to the Assigned Rights under the Corp Loan up to
                  Completion, and no rights, including rights of set-off, will
                  have arisen in respect of the Assigned Rights in favour of
                  Corp; and

         (b)      RIGHTS ASSIGNABLE: The rights in respect of the Assigned
                  Rights are assignable in accordance with the provisions of
                  this Deed and the Corp Loan.

         (c)      INDEBTEDNESS UNDER THE CORP LOAN: Corp is indebted to the
                  Assignor under the Corp Loan in the outstanding principal
                  amount of L363,308,000.

7.       ASSIGNOR'S RESPONSIBILITY

         Save as expressly provided in Clause 6 (Representations and Warranties)
         the Assignor has not made and does not by this Deed make, and the
         Assignee has not relied upon, any representation, warranty or condition
         (expressed or implied) about, and the Assignor will have no
         responsibility to the Assignee for, the effectiveness, validity or
         enforceability of, the Corp Loan or other documentation delivered by
         the Assignor to the Assignee or any of the terms, covenants or
         conditions contained in the Corp Loan or other documentation or any
         non-performance by any party to it or the financial condition of Corp
         or any other person liable with respect to the Assigned Rights.

8.       INDEMNITY

         The Assignee agrees to indemnify the Assignor and the Assignor agrees
         to indemnify the Assignee against any liabilities, obligations, losses,
         damages, penalties, judgments, costs, expenses or disbursements of any
         kind or nature which may be imposed on or incurred by the

                                       40

<PAGE>

         other party as a consequence of failure by it duly and punctually to
         perform its obligations, or breach by it of any of the representations
         and warranties made by it, in this Deed.

9.       CHANGES TO THE PARTIES

         No party may assign, transfer, novate, encumber or dispose of any of
         its interest in, its rights and/or obligations under this Deed without
         the prior written consent of the other parties. However, after the
         Assignee has performed its obligations in Clause 3 (Consideration) in
         respect of the Assigned Rights, this Clause 9 shall not restrict the
         Assignee from assigning, charging or pledging the whole or any part of
         its rights, title and interest in the Assigned Rights to any third
         party.

10.      WAIVERS AND REMEDIES CUMULATIVE

         The rights of each party under this Deed:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any such right is not a waiver
         of that right.

11.      SEVERABILITY

         If a provision of this Deed is or becomes illegal invalid or
         unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of this Deed; or

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of this Deed.

12.      COUNTERPARTS

         This Deed may be executed in any number of counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same Deed and any party may enter into this Deed by executing a
         counterpart.

13.      NOTICES

13.1     GIVING OF NOTICES

         Subject to Clause 2.2 (Notice and acknowledgements), all notices or
         other communications under or in connection with this Deed shall be
         given in writing and, unless otherwise stated may be made by facsimile.
         Any such notice will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile, when received in legible form.

                                       41

<PAGE>

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

13.2     ADDRESSES FOR NOTICES

         The address and facsimile number of each party for all notices under or
         in connection with this Deed are:

         (a)      in relation to the Assignor:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number: 020 7306 1395

         (b)      in relation to Corp:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number: 020 7306 1395

         (c)      in relation to the Assignee:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number: 020 7306 1395

         or any other notified by that Party for this purpose to the other party
         by not less than five Business Days' notice.

14.      EXPENSES

         Each party shall pay its own costs and expenses in connection with the
         preparation, negotiation and execution of this Deed.

15.      STAMP DUTY

         The Assignee shall pay, and forthwith on demand indemnify each of the
         other parties to this Deed against any liability it incurs in respect
         of, any stamp, registration and similar tax which is or becomes payable
         in connection with the entry into and performance of this Deed.

16.      JURISDICTION

         Each party to this Deed agrees, for the benefit of the Assignor, that
         the courts of England shall have jurisdiction to settle any disputes in
         connection with this Deed and, accordingly, submits to the jurisdiction
         of the English courts.

                                       42

<PAGE>

17.      GOVERNING LAW

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

IN WITNESS of which this Deed has been executed as a deed and has been delivered
on the date which it appears first on page 1.

                                       43

<PAGE>

                                   SIGNATORIES

EXECUTED as a Deed         )      _________________________________
by MARCONI PLC             )      Director
acting by [     ] and      )
[                       ]  )      _________________________________
Director/Secretary

EXECUTED as a Deed         )      _________________________________
by MARCONI CORPORATION     )      Director
PLC acting by [     ] and  )
[                       ]  )      _________________________________
Director/Secretary

EXECUTED as a Deed         )      _________________________________
by ANCRANE                 )      Director
acting by [     ] and      )
[                       ]  )      _________________________________
                                  Director/Secretary

                                       44

<PAGE>

                                   SCHEDULE 3

                               SPECIAL RESOLUTION

Company number
67307

                             THE COMPANIES ACT 1985

                        PUBLIC COMPANY LIMITED BY SHARES

                            RESOLUTION OF THE MEMBERS

                                       OF

                             MARCONI CORPORATION PLC

                            (passed on - March, 2003)

At an extraordinary general meeting of the Company duly convened and held at
Allen & Overy, One New Change, London EC4M 9QQ on - March, 2003 the following
resolution was duly passed as a special resolution of the Company:

                               SPECIAL RESOLUTION

THAT :

(A)      for the purpose of giving effect to the scheme of arrangement between
         the Company and its Scheme Creditors (as defined in the said scheme of
         arrangement) pursuant to section 425 of the Companies Act 1985 in
         respect of which on 24th March, 2003 the Court directed that the
         Company convene a meeting of its Scheme Creditors pursuant to the said
         section and for the purpose of giving effect thereto in the form of
         such scheme as circulated to Scheme Creditors pursuant to section 426
         of the said Act or with or subject to any modification, addition or
         condition approved or imposed by the Court (the SCHEME) and forthwith
         and conditionally upon the Court making an order sanctioning the
         Scheme:

         (1)      (a)      the directors be generally and unconditionally
                           authorised, in accordance with section 80 of the
                           Companies Act 1985, to exercise all powers of the
                           Company to allot relevant securities (as defined for
                           the purposes of that section) up to a maximum nominal
                           amount of L69,100,000(1);

                  (b)      this authority shall expire on the day five years
                           after the passing of this resolution;

                  (c)      the Company may, before this authority expires, make
                           an offer or agreement which would or might require
                           relevant securities to be allotted after it expires;
                           and

                  (d)      all previous authorities under section 80 of the
                           Companies Act 1985 shall cease

------------------------------------
(1)      This should not be greater than the aggregate of (i) the nominal value
         of the shares to be issued pursuant to the Scheme, (ii) the nominal
         value of the shares to be issued under the warrants to be issued
         pursuant to the Scheme, and (iii) the lesser of a sum equal to the
         unissued equity share capital of the Company post-Scheme and a sum
         equal to one third of the issued equity capital of the Company
         post-Scheme.

                                       45

<PAGE>

                           to have effect; and

         (2)      (a)      the directors be given power to allot for cash equity
                           securities (as defined for the purposes of section 89
                           of the Companies Act 1985) pursuant to the general
                           authority conferred on them by (1) above as if
                           section 89(1) of that Act did not apply to the
                           allotment but this power shall be limited to:

                           (i)      the allotment of equity securities pursuant
                                    to the terms of the Scheme;

                           (ii)     the allotment of equity securities in
                                    connection with an offer or issue to or in
                                    favour of ordinary shareholders on the
                                    register on a date fixed by the directors
                                    where the equity securities respectively
                                    attributable to the interests of all those
                                    shareholders are proportionate (as nearly as
                                    practicable) to the respective numbers of
                                    ordinary shares held by them on that date
                                    but the directors may make such exclusions
                                    or other arrangements as they consider
                                    expedient in relation to fractional
                                    entitlements, shares represented by
                                    depositary receipts, legal or practical
                                    problems under the laws in any territory or
                                    the requirements of any relevant regulatory
                                    body or stock exchange; and

                           (iii)    the allotment (other than under (i) or (ii)
                                    above) of equity securities having a nominal
                                    amount not exceeding in aggregate
                                    L2,500,000;

                  (b)      this power shall expire on the day five years after
                           the passing of this resolution;

                  (c)      all previous authorities under section 95 of the
                           Companies Act 1985 shall cease to have effect;

                  (d)      the Company may, before this power expires, make an
                           offer or agreement which would or might require
                           equity securities to be allotted after it expires;

(B)      forthwith and conditionally upon the allotment of the new
         ordinary shares to be allotted pursuant to the Scheme:

         (1)      clause 4 in the memorandum of association of the
                  Company be altered by the insertion immediately after
                  subclause 22 of the following new subclause 23:

                  "To establish, contribute to, maintain, advise or
                  assist schemes for the acquisition of shares in the
                  Company or its holding company to be held by or for
                  the benefit of employees, former employees and
                  directors of the Company or its holding company or
                  any subsidiary of the Company or any parent or
                  subsidiary undertaking of the Company (as defined in
                  the Companies Act 1985) and to set up trusts to
                  operate for and in accordance with such schemes"

                  and existing subclauses 23 and 24 be re-numbered as
                  subclauses 24 and 25 respectively;

         (2)      the regulations set out in the printed document
                  marked "A" submitted to the meeting and for the
                  purpose of identification initialled by the chairman
                  be adopted as the articles of association of the
                  Company in substitution for all existing articles of
                  association of the Company; and

                                       46

<PAGE>

         (3)      the 2,866,250,734 ordinary shares of 5 pence each in
                  the capital of the Company held by Marconi plc and
                  the existing ordinary share of 5 pence in the capital
                  of the Company held by Marconi Nominees Limited be
                  converted into and re-designated as non-voting
                  deferred shares of 5 pence each (NON-VOTING DEFERRED
                  SHARES), such shares having the following rights and
                  being subject to the following restrictions. A
                  Non-Voting Deferred Share:

                  (a)      does not entitle its holder to receive any
                           dividend or other distribution;

                  (b)      does not entitle its holder to receive
                           notice of or to attend or vote at any
                           general meeting of the Company;

                  (c)      entitles its holder on a return of capital
                           on a winding-up (but not otherwise) only to
                           repayment of the amounts paid up on that
                           share after payment in respect of each
                           ordinary share of the capital paid up on it
                           and the further payment of L10,000,000 on
                           each ordinary share; and

                  (d)      does not entitle its holder to any further
                           participation in the capital of the Company;
                           and.

(C)      forthwith and conditionally upon the conversion into and redesignation
         of the existing ordinary shares as Non-Voting Deferred Shares under
         paragraph (B)(3) of this resolution and the entry in the register of
         members of the Company of the names of the persons to whom the new
         ordinary shares to be allotted pursuant to the Scheme have been
         allotted:

         (1)      the share capital of the Company be reduced by the
                  cancellation of the 2,866,250,735 Non-Voting Deferred Shares
                  referred to in paragraph (B)(3) of this resolution; and

         (2)      the share premium account of the Company (including the share
                  premium account, arising on the issue of the new ordinary
                  shares to be allotted pursuant to the Scheme) be cancelled.

                                               ____________________________
                                               [                         ]
                                               Chairman

                                       47

<PAGE>

                                   SCHEDULE 4

                              BAE DEED OF NOVATION

                                DATED MARCH, 2003

                                   MARCONI PLC

                                       AND

                             MARCONI CORPORATION PLC

                                       AND

                                 BAE SYSTEMS PLC

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

                         DEED OF NOVATION AND AMENDMENT

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

                                  ALLEN & OVERY
                                     London

                                       48

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
                                                              PAGE
<S>                                                           <C>
CLAUSE
1.       Interpretation................................        50
2.       Effect........................................        51
3.       Novation......................................        51
4.       amendments....................................        52
5.       Compromise of Existing Tax Arrangements.......        52
6.       Indemnity.....................................        53
7.       General.......................................        53

SCHEDULE

1.       The Agreements................................        55
</TABLE>

                                       49

<PAGE>

THIS DEED is made on [     ] March, 2003

BETWEEN:

(1)      Marconi plc (registered number 3846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (MARCONI);

(2)      Marconi Corporation plc (formerly known as The General Electric
         Company, p.l.c.) (registered number 67307) whose registered office is
         at New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ
         (CORPORATION); and

(3)      BAE SYSTEMS plc (formerly known as British Aerospace Public Limited
         Company) (registered number 1470151) whose registered office is at 6
         Carlton Gardens, London, SW1Y 5AD (BAE).

WHEREAS:

(A)      In 1999 Corporation and BAE entered into a series of agreements
         relating to the merger of the Marconi Group's defence businesses with
         BAE. Subsequently these agreements were novated from Corporation to
         Marconi. Marconi entered into all other agreements in connection with
         the merger.

(B)      On 28th August 2002 Corporation and, inter alios, Marconi concluded
         indicative non-binding heads of terms, subsequently amended by an
         addendum dated 13 December 2002, setting out the principles for a
         proposed restructuring of Corporation and Marconi (the RESTRUCTURING).

(C)      Corporation wishes to assume all the rights, obligations, liabilities
         and duties of Marconi in relation to the agreements set out in schedule
         1 to this deed and all other agreements entered into between BAE and
         Marconi which contain a reference to a "GEC Sub Potential Compensation
         Amount" or a "BAE Sub Potential Compensation Amount" to be recognised
         under the Payment Deed (the AGREEMENTS), insofar as any of the rights
         exist, and the obligations and duties remain undischarged or
         unfulfilled and, subject thereto, BAE wishes to release Marconi from
         all such obligations, liabilities and duties.

This deed is supplemental to the Agreements.

THIS DEED WITNESSES as follows:

1.       INTERPRETATION

1.1      Unless otherwise defined in this deed, words and expressions defined in
         the Transactions Agreement or the Payment Deed (each as defined in
         schedule 1) shall have the same meaning wherever used in this deed.

1.2      The following expressions shall mean:

         EFFECTIVE DATE means the date on which an office copy of the Order of
         Court sanctioning the scheme of arrangement under section 425 of the
         Companies Act 1985 between Corporation and its scheme creditors (the
         principal commercial terms of which are not materially different to
         those set out in the draft of the Chairman's letter in the explanatory
         statement initialled for

                                       50

<PAGE>

         the purpose of identification by Allen & Overy and Linklaters) shall
         have been delivered to the Registrar of Companies for registration.

         OUTSTANDING REDUCTION AMOUNT means:

         (i)      in respect of the first Calculation Date falling after 29th
                  November 2002 an amount equal to US$18,600,000, and

         (ii)     in respect of any subsequent Calculation Date, the Outstanding
                  Reduction Amount for the immediately preceding Calculation

                  Date less the amount, if any, by which the GEC Sub Total for
                  the immediately preceding Calculation Date was reduced under
                  clause 5.1(b) of this deed.

         NON-CONSOLIDATION ASSUMPTION has the meaning given to it in the Tax
         Deed (as defined in schedule 1).

2.       EFFECT

2.1      This deed shall take effect on the Effective Date.

3.       NOVATION

3.1      Corporation undertakes to BAE and to Marconi to assume, satisfy,
         discharge, perform or fulfil each obligation, liability and duty of
         Marconi, whether present or future, actual or contingent, ascertained
         or unascertained, as provided for in the Agreements to the extent that
         any such obligation, liability or duty remains undischarged or
         unfulfilled as if Corporation were named in the Agreements as a party
         in place of Marconi.

3.2      BAE hereby agrees to release Marconi from each such obligation,
         liability and duty referred to in clause 3.1 above.

3.3      BAE confirms and agrees that Corporation shall be entitled to all
         rights and benefits of Marconi as provided for in the Agreements as if
         Corporation were named in the Agreements as a party in place of Marconi
         provided that BAE shall not have any greater obligation or liability
         under any of the Agreements than it would have had if the Agreements
         had not been novated pursuant to this clause 3 except to the extent
         that such obligation or liability is greater than the obligation or
         liability that it would have had only by reason of the scheme of
         arrangement under section 425 of the Companies Act 1985 between Marconi
         and its scheme creditors (the SCHEME).

3.4      Marconi confirms and agrees that it waives, and shall not make any
         claim or commence any proceedings or take any other action in respect
         of, any such rights or benefits as are referred to in clause 3.3 above
         and agrees to release BAE from each obligation, liability and duty of
         BAE to Marconi as provided for in the Agreements provided that nothing
         in this deed shall operate as a release or discharge of any obligation,
         liability or duty of BAE in respect of any act or default on the part
         of BAE before the Effective Date.

3.5      Other than as amended by this deed, the Agreements shall continue in
         full force and effect.

                                       51

<PAGE>

4.       AMENDMENTS

4.1      BAE and Corporation also agree that, in addition to the novation of the
         Agreements as set out in clause 3 above:

         (i)      the definition of "GEC Sub" in clause 1.2 of the Payment Deed
                  (as amended by the Amendment to the Transactions Agreement (as
                  defined in schedule 1)) shall be amended by deleting the words
                  "Marconi Ansty Limited (incorporated in England and Wales with
                  number 4109365)" and replacing them with the words "Marconi
                  Communications Limited (incorporated in England and Wales with
                  number 703317)"; and

         (ii)     clause 27.11 of the Transactions Agreement shall be amended by
                  deleting the words "Marconi Ansty Limited (incorporated in
                  England and Wales with number 4109365)" and replacing them
                  with the words "Marconi Communications Limited (incorporated
                  in England and Wales with number 703317)".

5.       COMPROMISE OF EXISTING TAX ARRANGEMENTS

5.1      BAE and Corporation further agree that:

         (a)      no amount should be recognised, in respect of any Calculation
                  Date on or after 30th November, 2001 as a GEC Sub Potential
                  Compensation Amount or a BAE Sub Potential Compensation Amount
                  to the extent that such amount has been taken account of in
                  the GEC Sub Potential Compensation Amounts in Marconi's
                  notices dated 18th October, 2002 and 26th November, 2002 or in
                  the BAE Sub Total in BAE's notice dated 6th December, 2002
                  (each of which are set out in schedule 2); and

         (b)      the amount of the GEC Sub Total for the first Calculation Date
                  falling after 29th November, 2002 and any subsequent
                  Calculation Date shall be reduced by the lower of:

                  (i)      the Outstanding Reduction Amount; and

                  (ii)     the aggregate of:

                           (A)      any GEC Sub Potential Compensation Amounts
                                    recognised at any time during the period to
                                    which the relevant Calculation Date falling
                                    after 29th November, 2002 relates, to the
                                    extent that such GEC Sub Potential
                                    Compensation Amounts: (1) are recognised
                                    pursuant to clause 4 of the Tax Deed and
                                    relate to US Federal tax in respect of the
                                    year to 31st March, 2000; or (2) are
                                    recognised pursuant to clause 3 of the Tax
                                    Deed (under the Non-Consolidation Assumption
                                    set out in the Tax Deed) and relate to US
                                    Federal tax in respect of the eight months
                                    to 29th November, 1999; and

                           (B)      any amounts calculated pursuant to the
                                    Payment Deed as if there were interest in
                                    respect of any of the GEC Sub Potential
                                    Compensation Amounts referred to in (A)
                                    above.

                                       52

<PAGE>

5.2      The parties agree that the provisions of clause 5.1 above shall be in
         full and final settlement of any claims the parties may have under the
         Payment Deed in respect of any Calculation Date which occurred at any
         time between 30th November, 2001 and 29th November, 2002 (inclusive)
         and, for the avoidance of doubt, the provisions of clause 27.10 of the
         Transactions Agreement, as incorporated into the Payment Deed by clause
         9.1 of the Payment Deed shall not apply to this deed.

6.       INDEMNITY

6.1      Subject to clauses 5 and 6.2 Corporation agrees to indemnify and keep
         indemnified BAE and each member of the BAE group against all losses,
         liabilities, costs and expenses (LOSSES) to the extent that they are
         greater than the Losses which would have been incurred by BAE and each
         member of the BAE group if clauses 3 and 4 of this deed had not been
         entered into.

6.2      No indemnity is, or shall be, given by Corporation under clause 6.1 in
         respect of any Losses incurred by BAE or any member of the BAE group to
         the extent that they are only greater than the Losses which would have
         been incurred by BAE or any member of the BAE group by reason of the
         Scheme had clauses 3 and 4 of this deed not been entered into.

7.       GENERAL

7.1      This deed may be executed in any number of counterparts, all of which
         taken together shall constitute one and the same deed and any party may
         enter into this deed by executing a counterpart.

7.2      A person who is not a party to this deed has no right under the
         Contracts (Rights of Third Parties) Act 1999 to enforce any term of
         this deed, nor of any of the Agreements (as novated and amended by this
         deed).

7.3      Notices to Corporation in relation to the Agreements and this deed
         shall be sent to The Company Secretary at New Century Park, PO Box 53,
         Coventry, Warwickshire, CV1 1HJ in the same manner as under the
         provisions of the Transactions Agreement.

7.4      This deed is governed by, and shall be construed in accordance with,
         English law. Each party submits to the jurisdiction of the English
         courts for all purposes relating to this deed.

                                       53

<PAGE>

IN WITNESS of which this Deed has been executed and has been delivered on the
date which appears first on page 1.

EXECUTED as a Deed by      )   ______________________________________
MARCONI PLC                )   Director
acting by                  )   ______________________________________
and                        )   Director/Secretary

EXECUTED as a Deed by      )   ______________________________________
MARCONI CORPORATION PLC    )   Director
acting by                  )   ______________________________________
and                        )   Director/Secretary

EXECUTED as a Deed by      )   ______________________________________
BAE SYSTEMS PLC            )   Director
acting by                  )   ______________________________________
and                        )   Director/Secretary

                                       54

<PAGE>

                                   SCHEDULE 1

                                 THE AGREEMENTS

1.       Transactions Agreement between The General Electric Company, p.l.c. and
         British Aerospace Public Limited Company dated 27th April, 1999 (as
         supplemented by a supplementary agreement entered into between The
         General Electric Company, p.l.c. and British Aerospace Public Limited
         Company dated 7th October, 1999) (the TRANSACTIONS AGREEMENT).

2.       Payment Deed between The General Electric Company, p.l.c. and British
         Aerospace Public Limited Company dated 27th April, 1999 (the PAYMENT
         DEED).

3.       Letter Agreement dated 2nd November, 2001 entered into between Marconi
         plc and BAE SYSTEMS plc, amending the terms of the Transactions
         Agreement and the Payment Deed (the AMENDMENT TO THE TRANSACTIONS
         AGREEMENT).

4.       General Deed of Covenant between Marconi plc and British Aerospace
         Public Limited Company dated 29th November, 1999.

5.       Deed of Undertaking and Guarantee between Marconi plc, The General
         Electric Company plc and British Aerospace Public Limited Company dated
         29th November, 1999.

6.       Tax Deed of Covenant between Marconi plc and British Aerospace Public
         Limited Company dated 29th November, 1999 (the TAX DEED).

7.       EASAMS Agreement between Marconi plc and British Aerospace Public
         Limited Company dated 29th November, 1999.

8.       Services Agreement between Marconi plc and British Aerospace Public
         Limited Company dated 29th November, 1999.

9.       Technology Access Agreement between Marconi plc and British Aerospace
         Public Limited Company dated 29th November, 1999.

10.      Completion Accounts Agreement dated 11th February, 2000 between Marconi
         plc and British Aerospace Public Limited Company.

11.      Agreement dated 11th February, 2000 between Marconi plc and British
         Aerospace Public Limited Company relating to the JORN Project.

                                       55

<PAGE>

                                   SCHEDULE 5

                              NEW SERVICE AGREEMENT

                              FORM OF COVER LETTER
                           FOR NEW SERVICE AGREEMENTS

                                                             [     ] March, 2003

Dear [     ],

NEW SERVICE AGREEMENT WITH MARCONI CORPORATION plc (THE COMPANY)] [MARCONI
COMMUNICATIONS INC]

As part of the restructuring of the group and in particular the listing of [the
Company] [Marconi Corporation plc (the COMPANY)] on the stock exchanges in
London and New York, senior leaders are being provided with new employment
packages consisting of:

(i)      a revised service agreement; and

(ii)     an award over shares in the Company under the new Senior Management
         Share Plan (the MANAGEMENT PLAN).

The purposes of the new package are to provide

-        terms and conditions of employment appropriate to the new, more stable
         situation in which the Company will be post restructuring; and

-        a significant level of incentive and reward for delivering value to the
         Company's new shareholders (currently its creditors).

I am, therefore, pleased to provide you, as one of [the Company's] [the Marconi
group's] key executives, with a revised service agreement and details of the
Management Plan. The service agreement is very closely based on your existing
one. [Your employer will not change and] there will be no effect on the existing
start date for your period of continuous employment.

Although signed at this stage, your new service agreement will only become
effective on the Effective Date (defined at the end of this letter) and any
award or entitlement under the Management Plan will be granted on the later of
the Effective Date (defined below) and the First Initial Distribution.

You should read both the new service agreement and the enclosed summary of the
Management Plan carefully. I have also set out in this letter some of the more
important revisions to your terms and conditions of employment, together with
details of your award under the Management Plan.

                                       56

<PAGE>

1.       AWARD UNDER THE MANAGEMENT PLAN

         As mentioned above, you will be granted an option over [     ] shares
         in the Company under the Management Plan. These will vest in five
         tranches, subject to the achievement of the milestones described in the
         attached summary. The proportion vesting at each milestone will be as
         follows:

<TABLE>
<S>                        <C>
Milestone 1                20%
Milestone 2                10%
Milestone 3                20%
Milestone 4                20%
Milestone 5                30% or 20% - R&E
</TABLE>

         This vesting schedule has been enhanced in consideration of your
         waiving the final payment due under the Retention and Emergence Plan
         (see paragraph 2 below).

2.       PAYMENTS UNDER THE RETENTION AND EMERGENCE PLAN (the R&E PLAN)

         (i)      As consideration for the new arrangements, you agree that the
                  final payment due to be made to you under the R&E Plan is
                  waived.

         (ii)     If:

                  (a)      within the period of eighteen months commencing on
                           the Effective Date, [the Company] [Marconi
                           Communications Inc] elects (with or without notice)
                           to terminate your employment by making a payment to
                           you in lieu of notice (under clause 16.2(a) or (b) of
                           the new service agreement) or (within the same
                           period) [the Company] [Marconi Communications Inc]
                           gives you notice to terminate your employment (under
                           clause 2.4(a) of the new service agreement); and

                  (b)      on the expiry of your notice period (or the notice
                           period which would have applied if the Company had
                           not made a payment in lieu of notice) no rights have
                           vested to you under the Management Plan and none are
                           due to vest subject only to time-based vesting
                           conditions under the Management Plan,

                  then a payment of [ ] per cent. of your basic salary will be
                  paid to you on the later of the date of termination of your
                  employment or, if that date occurs prior to the end of the
                  notice to which you would have been entitled under clause
                  2.4(a) of the new service agreement, if a payment in lieu had
                  not been made (the NOTIONAL NOTICE PERIOD), the end of the
                  Notional Notice Period.

         (iii)    You agree that the penultimate payment under the R&E Plan will
                  not be made to you until seven working days after the
                  Effective Date (provided that your employment has not been
                  terminated under clause 16.4 (termination for cause).

         (iv)     Nothing in this letter will oblige [the Company] [Marconi
                  Communications Inc] to make any payment to you under paragraph
                  (ii) if [the Company] [Marconi Communications Inc] terminates
                  your employment under clause 16.4 (termination for cause).

                                       57

<PAGE>

3.       BONUS ARRANGEMENTS

         (i)      By agreeing to the new arrangements, you will also waive your
                  entitlement to payments earned in the first two quarters under
                  the 2002/03 Senior Management Incentive Plan.

         (ii)     The provisions of this paragraph (ii) will last for eighteen
                  months starting on the Effective Date. As mentioned above, in
                  addition to any entitlement under clause 16.2 of the service
                  agreement (which relates to the Company making a payment in
                  lieu of contractual notice), if:

                  (a)      within eighteen months commencing on the Effective
                           Date[the Company][Miranda Communications Inc.] elects
                           (with or without notice) to terminate your employment
                           by making a payment to you in lieu of notice (under
                           clause 16.2(a) or (b) of the new service agreement)
                           or (within the same period) [the Company][Miranda
                           Corporation Inc.] terminates your employment by
                           giving notice (under clause 2.4(a) of the new service
                           agreement); and

                  (b)      on the expiry of the notice period or the Notional
                           Notice Period (each being on EXPIRY DATE), no rights
                           have vested to you under the Management Plan and none
                           are due to vest subject to purely time-based vesting
                           conditions.

                  then within seven working days after the Expiry Date [the
                  Company] will pay you an amount equal to the entitlement to
                  payments earned in the first two quarters under the 2002/2003
                  Senior Management Incentive Plan (in total [ ] of your basic
                  salary) which you waived under paragraph (i) above. For your
                  rights under the Management Plan on termination of employment,
                  you should refer to the enclosed rules of the Management Plan.

         Nothing in this letter will oblige [the Company] [Marconi
         Communications Inc.] to make any payment to you under this paragraph
         (ii) if [the Company] [Marconi Commincations Inc.] terminates your
         employment under clause 16.4 (termination for cause).

         You should also be aware that your award under the Management Plan is
         intended to provide your total variable compensation during the life of
         the Management Plan; it is not therefore currently anticipated that you
         will participate in any cash bonus plan operated within the new group
         until there are no outstanding but unvested option under the Management
         Plan. Clause 5 of the service agreement has been amended to reflect
         these arrangements.

4.       PAYMENT IN LIEU OF NOTICE CLAUSE

         As it is intended that your variable compensation for at least the next
         three years will be provided by the Management Plan, the terms of the
         payment in lieu of notice clause have been changed by the removal of
         any element relating to bonus from that payment.

         You should, of course, also review the terms of the Management Plan for
         your rights under it on termination of employment.

                                       58

<PAGE>

5.       CHANGE OF CONTROL PROTECTION

         Clause 16.6 of the new service agreement, sets out a new entitlement
         following a change of control. In summary the amendments are:

         (i)      the restructuring does not constitute a change of control;

         (ii)     the definition of change of control has been shortened;

         (iii)    for the same reasons as relate to the payment in lieu of
                  notice (see paragraph 5 above), any payment made under this
                  clause will no longer include any element relating to bonus;
                  and

         (iv)     there is no longer a reference to share scheme rights, as
                  these are dealt with in the Management Plan itself.

         Again, you should review the terms of the Management Plan for your
         rights under it in the event of change of control and/or the
         termination of your employment.

         The summary of the change of control provision set out above should not
         be relied upon in place of reading clause 16 of your service agreement
         in full.

[6.      MARCONI COMMUNICATIONS LIMITED'S GUARANTEE

         Owing to the uncertainty as to how the restructuring would operate,
         Marconi Communications Limited (MCL) was included as a guarantor of
         your employer's obligations under your current service agreement.
         Following the restructuring, the reason for that guarantee will no
         longer exist and MCL will not, therefore, be a party to the new
         contract.

         As the new service agreement will preserve your continuity of
         employment, the Company will accept responsibility for obligations to
         you both before and after the restructuring. You are, therefore, being
         asked to release MCL from any liability (past, present or future) under
         your service agreement, although such release would only operate once
         the new service agreement becomes effective.]

By reference to the Contract (Rights of Third Parties) Act 1999, it is intended
that the changes made to the R&E Plan shall be made for the benefit of Marconi
plc and Marconi Communications Limited.

Andrew Hodge of Wragge & Co. (solicitors) has been a party to the negotiation of
the arrangements described in this letter. His role has been to represent the
interests of the recipients of the new arrangements, independently of the
Company. Attached is a letter from Andrew advising you of his views on the new
arrangements. Should you wish to take personal advice from Andrew (at the
Company's expense), he can be contacted on 0121 213 2341. Alternatively, you may
choose to take advice from your own legal advisor. The Company will meet the
cost of you so doing, up to a maximum contribution of L400 (including VAT).

Finally, following the restructuring, Marconi plc will cease to be a group
company. You may nevertheless be asked to provide services in relation to that
company, as part of your job, until it is wound up. I mention this because the
new contract refers to your obligations to "Group Companies" and I wish to make
it clear that Marconi plc will still be treated as a group company,
notwithstanding its separation from the group, for some time after the
restructuring has been completed.

                                       59

<PAGE>

I should be grateful if you would sign the enclosed agreement on its last page
and return it to Pete Harris (undated) at New Century Park, Coventry. At the
same time as you return the signed agreement, please also return a signed and
dated counterpart of this letter also to Pete Harris to confirm your agreement
to its terms.

Please let me know if you have any questions.

Yours sincerely,

JOHN DEVANEY
FOR AND ON BEHALF OF [MARCONI CORPORATION plc] [MARCONI COMMUNICATIONS INC]

The EFFECTIVE DATE is the date on which the Company files the Court order the
scheme of arrangement between the Company and its major creditors with the
Registrar of Companies (such scheme being made under section 425 of the
Companies Act 1985).

[On counterpart]

To: The Company, [Marconi plc, Marconi Corporation Limited, Marconi
    Communications Inc.]

I have read and understood the above letter and agree to its terms and in
particular agree that:

(i)      Marconi Communications Limited is released from its liabilities as
         guarantor under my existing service agreement (but only when the new
         service agreement becomes effective); and

(ii)     I waive the final payment under the R&E Plan (but subject to paragraph
         2 above) and agree to the timing of the payment of the penultimate
         payment under the R&E Plan as described in paragraph 2;

(iii)    the change of control provisions of clause 16 of my current service
         agreement shall not be triggered by the Effective Date, as the terms of
         my new service agreement (which expressly excludes the events leading
         to the Effective Date from the definition of change of control) will
         replace my current service agreement simultaneously with the occurrence
         of the Effective Date; and

(iv)     I agree to the substitution of my current service agreement by the new
         service agreement attached to this letter (which I have also signed),
         which I understand shall take effect immediately on the Effective Date.
         Until such time, I agree that my employment shall continue to be
         governed by my current service agreement (as amended by paragraph (ii)
         above).

Signed: _________________________________

Print name: _____________________________

Date: ___________________________________

                                       60

<PAGE>

                            DATED [     ] MARCH, 2003

                           MARCONI CORPORATION PLC (1)

                                       AND

                                   [     ] (2)

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

                                SERVICE AGREEMENT

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

                                  ALLEN & OVERY
                                     London

                                       61

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                          PAGE
<S>                                                             <C>
1.       Definitions.......................................      63
2.       Term and Job Description..........................      64
3.       Duties............................................      64
4.       Salary............................................      65
5.       Share Based Incentives............................      65
6.       Expenses..........................................      65
7.       Company Care......................................      65
8.       Pension...........................................      66
9.       Insurance.........................................      66
10.      Holiday...........................................      66
11.      Sickness and Other Incapacity.....................      67
12.      Other Interests...................................      67
13.      Share Dealing and Other Codes of Conduct..........      67
14.      Intellectual Property.............................      68
15.      Disciplinary and Grievance Procedures.............      69
16.      Termination.......................................      69
17.      Suspension and Gardening Leave....................      75
18.      Confidentiality...................................      76
19.      Post-Termination Covenants........................      76
20.      Employee's Position as Director...................      78
21.      Waiver of Rights..................................      78
22.      Data Protection...................................      78
23.      Email and Internet Use............................      79
24.      Miscellaneous.....................................      79
</TABLE>

                                       62

<PAGE>

                                SERVICE AGREEMENT

THIS AGREEMENT is made on      March, 2003

BETWEEN

(1)      MARCONI CORPORATION PLC (company registration number 67307) which has
         its registered office at New Century Park, PO Box 53, Coventry, West
         Midlands CV3 1HJ (the COMPANY); and

(2)      [     ] of [     ] (the EMPLOYEE).

IT IS AGREED as follows:-

1.       DEFINITIONS

1.1      In this Agreement the following expressions shall have the following
         meanings:

         BOARD means the board of directors of the Company or a duly constituted
         committee of the board of directors of the Company;

         EFFECTIVE DATE means the date on which the Company files the Court
         order (under which the scheme of arrangement between the Company and
         its major creditors has been made) with the Registrar of Companies
         (such scheme being made under section 425 of the Companies Act 1985);

         EMPLOYMENT means the Employee's employment in accordance with the terms
         and conditions of this Agreement;

         GROUP COMPANY means the Company and any holding company or subsidiary
         of the Company, or any subsidiary of any such holding company or
         subsidiary, with holding company and subsidiary having the meanings
         given to them by section 736 Companies Act 1985;

         PENSION PLAN means the GEC 1972 pension plan;

         RECOGNISED INVESTMENT EXCHANGE has the meaning given to it by section
         285 of the Financial Services and Markets Act 2000;

         RESTRUCTURING shall mean the schemes of arrangement for the Company and
         for Marconi plc under section 425 of the Companies Act 1985 and the
         listing of the Company's shares on the London and New York Stock
         Exchanges; and

         WORKING HOURS has the meaning given to it by clause 3.2.

                                       63

<PAGE>

2.       TERM AND JOB DESCRIPTION

2.1      The Employee shall be employed by the Company as [     ], or in such
         other capacity, consistent with his status and seniority, to which he
         may be lawfully assigned by the Company from time to time (his
         POSITION).

2.2      The Employee will be assigned the usual and customary duties, executive
         power and authority consistent with and as is necessary to discharge
         the duties relevant to his Position. The Employee shall also perform
         such other duties, not inconsistent with the duties of his Position, as
         may be assigned to him by the Company from time to time.

2.3      The Employment shall begin on the Effective Date. For statutory
         purposes, the Employee's period of continuous employment commenced on
         [     ].

2.4      Subject to clauses 2.5 and 16, the Employment will continue until
         terminated by either:

         (a)      the Company giving [     ] months' written notice to the
                  Employee; or

         (b)      the Employee giving [     ] months' written notice to the
                  Company.

2.5      The Employment will terminate automatically on the Employee's
         [60th/62nd/65th] birthday.

3.       DUTIES

3.1      During the Employment, the Employee will:

         (a)      diligently perform all such duties and exercise all such
                  powers as are usual, customary and consistent with and as are
                  necessary to discharge the duties of his Position, or are
                  lawfully and properly assigned to him from time to time by the
                  Company, whether such duties or powers relate to the Company
                  or any other Group Company;

         (b)      comply with all policies and procedures of, and all directions
                  lawfully and properly given to him by the Company;

         (c)      unless prevented by sickness, injury or other incapacity,
                  devote the whole of his time, attention and abilities during
                  his Working Hours to the business of the Company or any other
                  Group Company for which he is required to perform duties and
                  shall utilise his best efforts, skills and abilities in the
                  performance of the duties of his Position in a manner which
                  will faithfully and diligently further the business and
                  interests of the Company and any other Group Company;

         (d)      promptly provide the Company or any other Group Company, as
                  appropriate, with all such information as it may require in
                  connection with the business or affairs of the Company and of
                  any other Group Company for which he is required to perform
                  duties.

3.2      The Employee's Working Hours shall be the Company's normal business
         hours for his normal place of work, together with such additional hours
         as are required in the proper performance of his duties. The Employee
         acknowledges that he has no entitlement to

                                       64

<PAGE>

         additional remuneration for such further hours in excess of the
         Company's normal business hours as the Employee may be required to work
         in accordance with this clause 3.2.

3.3      The Employee agrees, in accordance with Regulation 5 of the Working
         Time Regulations 1998 (the REGULATIONS), that the provisions of
         Regulation 4(1) do not apply to the Employee, and that the Employee
         shall give the Company three months' notice in writing if he wishes
         Regulation 4(1) to apply to him.

3.4      The Employee's normal place of work is the Company's offices in [    ],
         currently located at [     ] or such other location within a radius of
         25 miles of [     ] as the Company may from time to time, upon
         reasonable notice to the Employee, require the Employee to base
         himself.

         If the Company requests and the Employee agrees to change his normal
         place of work by more than 25 miles, and it is necessary for the
         Employee to relocate, the Company will reimburse, in accordance with
         its Relocation Policy, expenses properly and reasonably incurred by the
         Employee as a result of such relocation.

3.5      The Employee agrees to travel (both within and outside the United
         Kingdom) as may reasonably be required for the proper performance of
         his duties under the Employment.

4.       SALARY

4.1      The Employee's current basic salary is L[     ] ([     ] thousand
         pounds) (less any required statutory deductions). The salary will be
         reviewed annually during the Employment with the first scheduled review
         taking place on 1st July 2004. No salary review will be undertaken
         after notice has been given by either party to terminate the
         Employment. The Company is under no obligation to increase the
         Employee's salary following a salary review, but will not decrease it
         without the Employee's consent.

4.2      The Employee's salary will be inclusive of all fees and other
         remuneration to which he may be or become entitled as an officer of the
         Company or of any other Group Company.

5.       SHARE BASED INCENTIVES

5.1      The Employee will be eligible to participate in the Marconi Corporation
         Senior Management Share Option Plan subject to the rules of that plan
         from time to time in force. All payments and awards under such plan are
         non-pensionable.

6.       EXPENSES

6.1      The Company will promptly reimburse (or procure the reimbursement of)
         all out-of-pocket expenses properly and reasonably incurred by the
         Employee in the course of his Employment subject to production of
         receipts or other appropriate evidence of payment.

7.       COMPANY CARE

7.1      During the Employment, the Employee will be eligible to participate in
         the Marconi Car Scheme in accordance with the rules of the Marconi Car
         Scheme from time to time in force. Subject to and in accordance with
         the rules of the Marconi Car Scheme the Employee will be allocated a
         monthly car allowance, currently L[     ]. The car allowance is
         non-pensionable.

                                       65

<PAGE>

8.       PENSION

8.1      The Employee will be eligible to participate in the Pension Plan
         (subject to the trust deed and rules of the Pension Plan from time to
         time in force). Full details of the Pension Plan are provided in the
         booklet of the Pension Plan.

8.2      The Company has not applied for a contracting out certificate (as
         referred to in section 7(1) of the Pension Schemes Act 1993).

8.3      The Employee will contribute 3% of basic annual salary up to a maximum
         of 15% of the Earnings Cap to the Pension Plan.

8.4      Provided the Employee remains an active member of the Pension Plan, the
         Company will contribute to a funded unapproved retirement benefits
         scheme (FURBS) such that aggregate annual contributions (gross) will
         equal [     ]% of the Employee's basic salary.]

8.5      The Company will provide the Employee with a death in service benefit
         of a lump sum equal to four times' basic annual salary and a widow's
         pension (as such benefits are set out in the explanatory letter dated
         [     ].]

         NB 8.4 AND 8.5 ARE FOR DC FURBS MEMBERS ONLY. THE ORIGINAL FURBS
         WORDING FOR EACH EMPLOYEE WHO HAS A FURBS (AND IN PARTICULAR MESSRS
         DONOVAN AND PARTON) IS TO BE REINSTATED.

9.       INSURANCE

9.1      During the Employment, the Employee will be eligible to participate in
         the Company's private medical healthcare scheme for the benefit of
         himself, spouse and dependants under the age of 21 subject to the rules
         of the scheme from time to time in force.

9.2      The Company will provide the Employee with the facility to undergo
         annual health screening at the Company's expense.

10.      HOLIDAY

10.1     In the first year of the Employment the Employee will accrue holiday at
         the rate of two days for each completed calendar month of service until
         the end of the calendar year. Thereafter the Employee will be entitled
         to [25] days' paid holiday each calendar year (plus bank and public
         holidays in England).

10.2     Any untaken holiday entitlement may not be carried forward to a future
         calendar year without the express permission of the Company. Subject to
         clause 10.3 the Employee has no entitlement to be paid in lieu of
         accrued but untaken holiday.

10.3     On termination of the Employment, the Employee's entitlement to accrued
         holiday pay shall be calculated at two days per completed month of
         service, commencing on 1 January that year. The balance of holiday not
         taken will be paid in lieu on the basis that each day of paid holiday
         is equivalent to 1/260 of the Employee's basic salary. If the Employee
         has taken more working days' paid holiday than his accrued entitlement,
         the Company is authorised to deduct the appropriate amount from his
         final salary instalment (which deduction shall be

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         made on the basis that each day of paid holiday is equivalent to 1/260
         of the Employee's basic salary).

11.      SICKNESS AND OTHER INCAPACITY

11.1     Subject to the Employee's compliance with the Company's policy on
         notification and certification of periods of absence from work, the
         Employee will be entitled to payment under the Company's sickness
         payment policy from time to time in force, a copy of which may be
         obtained from the Company's human resources department.

11.2     The Employee will not be paid during any period of absence from work
         (other than due to holiday, sickness, injury or other incapacity)
         without the prior permission of the Company.

11.3     The Employee will undergo a medical examination by a doctor appointed
         by the Company at any time (provided that the costs of all such
         examinations are paid by the Company). The Company will be entitled to
         receive a copy of any report produced in connection with all such
         examinations and to discuss the contents of the report with the doctor
         who produced it.

12.      OTHER INTERESTS

12.1     Subject to clause 12.2, during the Employment the Employee will not
         (without the Company's prior written consent) be directly or indirectly
         engaged, concerned or interested in any other business activity, trade
         or occupation. The Employee may engage in charitable and community
         affairs outside the Employee's Working Hours provided that such
         activities do not interfere with his duties and responsibilities under
         this Agreement. Notwithstanding clause 3.1, the Employee may serve as a
         non-executive director of a company other than a Group Company provided
         that any such non-executive directorship is approved in advance by the
         Chief Executive Officer of the Company or by the Chairman of the Board
         and must be in accordance with the Company's policies and procedures
         relating to serving as a non-executive director of a non-Group Company
         as may be in effect from time to time.

12.2     Notwithstanding clause 12.1, the Employee may hold for investment
         purposes an interest (as defined by Schedule 13 Companies Act 1985) of
         up to five percent (5%) in any class of Securities whether or not
         listed or dealt on a Recognised Investment Exchange, provided that the
         Employee may not hold any class of Securities if the company that
         issued the Securities carries on a business that is similar to or
         competitive with any business for the time being carried on by the
         Company or any Group Company unless the Employee obtains the prior
         agreement of the Chairman of the Board or unless the Securities are
         held through a collective investment vehicle (including, without
         limitation, a personal equity plan, a unit investment trust or a mutual
         fund) or constitute a direct holding in an investment club in the U.S.
         in which the Securities constitute less than five percent (5%) of the
         value of the vehicle or investment club or such holding does not or is
         not likely or intended to conflict with or damage the commercial
         interests of the Group or otherwise breach clause 12.1. For the
         purposes of this clause 12.2, SECURITIES shall mean shares, stock,
         debenture stock, loan stock, bonds, units of a collective investment
         scheme and other securities of any description issued by a company.

13.      SHARE DEALING AND OTHER CODES OF CONDUCT

13.1     The Employee will comply with all codes of conduct adopted from time to
         time by the Company and any relevant Group Company and with all
         applicable rules and regulations of

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         the UK Listing Authority and any other relevant regulatory bodies,
         including the Model Code on dealings in securities, all of which are
         available upon request from the company secretary of the Company.

14.      INTELLECTUAL PROPERTY

14.1     In this clause INTELLECTUAL PROPERTY means inventions (whether
         patentable or not, and whether or not patent protection has been
         applied for or granted), improvements, developments, discoveries,
         proprietary information, trade marks, trade names, logos, art work,
         slogans, know-how, processes, designs (whether or not registrable and
         whether or not design rights subsist in them), utility models, work in
         which copyright may subsist (including computer software and
         preparatory and design materials therefor), and all works protected by
         rights or forms of protection of a similar nature or having equivalent
         effect anywhere in the world.

14.2     Subject to the provisions of the Patents Act 1977 (PA 1977), the
         Registered Designs Act 1949 and the Copyright Designs and Patents Act
         1988 (CDPA 1988), if at any time in the course of or in connection with
         the Employment the Employee makes or discovers or participates in the
         making or discovery of any Intellectual Property relating to the
         business of the Company or any Group Company, full details of the
         Intellectual Property shall immediately be disclosed in writing by him
         to the Company or the relevant Group Company, as applicable, and the
         Intellectual Property shall be the absolute property of the Company or
         the relevant Group Company, as applicable. For the avoidance of doubt,
         the above requirement shall not apply to Intellectual Property made or
         discovered by the Employee entirely in his own time without using the
         equipment, supplies, facilities or trade secret information of the
         Company or any Group Company, except for any Intellectual Property that
         either (i) relates, at the time of making or discovery, to the business
         of the Company or any Group Company, or actual or demonstrably
         anticipated research and development of the Company or any Group
         Company; or (ii) results from any work performed by the Employee for
         the Company or any Group Company. At the request and expense of the
         Company, the Employee shall give and supply all such information, data,
         drawings and assistance as may be necessary or in the opinion of the
         Company desirable to enable the Company to exploit the Intellectual
         Property to the best advantage, and shall execute all documents and do
         all things which may be necessary or in the opinion of the Company
         desirable for obtaining patent or other protection for the Intellectual
         Property in such parts of the world as may be specified by the Company
         and for vesting the same in the Company or as it may direct.

14.3     In relation to the discovery or creation of Intellectual Property in
         the course of his duties under this Agreement, the Employee irrevocably
         appoints the Company to be his attorney in his name and on his behalf
         to sign, execute or do any such instrument or thing and generally to
         use his name for the purpose of giving to the Company (or its nominee)
         the full benefit of the provisions of this clause, and in favour of any
         third party a certificate in writing signed by any director or the
         company secretary of the Company that any instrument or act falls
         within the authority conferred by this clause shall be conclusive
         evidence that such is the case.

14.4     If the Employee shall at any time make or discover or participate in
         the making or discovery of any Intellectual Property which belongs to
         the Company, the Employee shall not without the written consent of the
         Company apply for patent or other protection for such Intellectual
         Property either in the United Kingdom or elsewhere, and shall not do
         anything which might adversely affect the Company's right to obtain
         patent or other protection therefor.

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14.5     The Employee hereby assigns to the Company or the relevant Group
         Company as applicable by way of prospective assignment the copyright
         and rights in designs (whether registered or unregistered) and any
         other proprietary rights for the full terms thereof throughout the
         world in respect of all copyright works and designs originated,
         conceived or made by the Employee (except only those copyright works
         and designs wholly unrelated, both directly and indirectly, to the
         activities of the Company or any Group Company and those written,
         originated, conceived or made wholly outside the Employment). The
         Employee hereby expressly waives any and all of his moral rights and
         rights of a similar nature (including the rights conferred by Sections
         77, 80 and 84 of the CDPA 1988) in respect of all copyright works
         created by the Employee and owned by the Company or the relevant Group
         Company as applicable.

14.6     For the purposes of Section 39(1)(a) of the PA 1977, the course of the
         normal duties of the Employee shall include the use of the equipment,
         supplies, facilities, research, know-how, technology, trade secrets and
         confidential information of the Company and any Group Company and the
         Employee has a duty to use the same for the sole benefit of the Company
         or Group Company (as appropriate) so that any invention made by the
         Employee which in any way depends upon or was made or facilitated by
         the use of the equipment, supplies, facilities, research, know-how,
         technology, trade secrets or confidential information of the Company or
         any Group Company shall belong to the Company or the relevant Group
         Company as applicable. The Company and the Employee agree that the
         nature of the duties and responsibilities of the Employee are and are
         expected to continue to be such that the Employee has a special
         obligation to further the interests of the Company's undertaking within
         the meaning of Section 39(1)(b) of the PA 1977, and that all inventions
         made by the Employee in the course of his duties do and shall belong to
         the Company or the relevant Group Company as applicable.

14.7     Rights and obligations under this clause shall continue in force after
         termination of this Agreement in respect of Intellectual Property made
         or discovered during the Employee's Employment and shall be binding
         upon the Employee's heirs, successors, assigns and representatives.

15.      DISCIPLINARY AND GRIEVANCE PROCEDURES

15.1     There are currently no explicit disciplinary rules in force in relation
         to the Employee, who is expected at all times to conduct himself in a
         manner consistent with his senior status. The Employee will, however,
         be subject to such disciplinary rules as the Company may from time to
         time adopt.

15.2     If the Employee has any grievance in relation to the Employment
         (including in relation to any disciplinary decision relating to the
         Employee) he may raise it with his next in line manager, whose decision
         shall be final.

16.      TERMINATION

16.1     Either party may terminate the Employment in accordance with clause
         2.4.

16.2     The Company may, in its sole discretion, also terminate the Employment
         at any time by paying a sum in lieu of notice (the PAYMENT IN LIEU OF
         NOTICE) which will be equal to the aggregate of the sums referred to in
         clause 16.3 below which would be payable:

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         (a)      (if no notice to terminate the Employment has been given under
                  clause 2.4(a)), for the period of notice to be given by the
                  Company under clause 2.4(a));

         (b)      (if notice to terminate has been given by the Company under
                  clause 2.4(a)), for the period which would constitute the
                  remainder of that notice period; or

         (c)      (if notice to terminate has been given by the Employee under
                  clause 2.4(b)), for the period which would constitute the
                  remainder of that notice period,

         but in each case (if the expiry date of the period of notice occurs
         after the Employee's date of retirement under clause 2.5) the period of
         notice shall be reduced so that it is the remaining period of the
         Employment until that retirement date. In each case, the period in
         respect of which the Payment in Lieu of Notice is to be calculated
         shall be the RELEVANT PERIOD.

16.3     The sums referred to in clause 16.2 shall be:

         (a)      the basic salary (calculated by reference to the Employee's
                  basic salary at the date of termination) which the Employee
                  would have been entitled to receive under this Agreement
                  during the Relevant Period; plus

         (b)      in relation to loss of pension benefits under the Pension
                  Plan, an amount equal to 166% of the amount certified by the
                  actuary to the Pension Plan as being equal to the cash
                  equivalent transfer value (calculated using actuarial methods
                  and assumptions consistent with those specified in Actuarial
                  Guidance Note GN11) of the additional pension benefits net of
                  any income tax payable by the Employee at his marginal rate,
                  which the Employee would have accrued if the Employment had
                  continued throughout the Relevant Period; [plus]

         (c)      [in relation to loss of pension benefits under the FURBS, an
                  amount equal to 100% of the aggregate contributions (gross)
                  which would have been paid by the Company in respect of the
                  FURBS in respect of the Employee during the Relevant Period.
                  For the avoidance of doubt, the Company's obligations under
                  this sub-clause shall be in addition to the Company's
                  obligations to make such contributions to unapproved pension
                  arrangements as are required under the explanatory letter
                  dated [     ] in respect of past service as at the leaving
                  date. ] [plus]]

                  For the purposes of [this sub-paragraph] [sub-paragraphs]
                  [(b)] [(c)], PENSION BENEFITS includes life assurance,
                  ill-health, early retirement and spouse pension benefits;
                  [plus]

         (d)      the cost to the Company of providing all the other benefits
                  (excluding pension, bonus and any amounts payable and shares
                  receivable under any share option or other incentive plan)
                  that the Employee would have been entitled to receive during
                  the Relevant Period or, if the Company in its absolute
                  discretion decides, a sum based on an estimated cost to the
                  Company of providing those benefits for that period which is
                  agreed to be 10% of the Employee's basic salary (calculated by
                  reference to the Employee's basic salary at the date of
                  termination) for the Relevant Period.

         The Payment in Lieu of Notice shall be subject to such deductions as
         may be required by law and shall be made in full and final settlement
         of any claims the Employee may have against the Company or any Group
         Company arising from the Employment or the termination thereof. As an
         alternative to the Payment in Lieu of Notice being paid in a lump sum,
         the

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         Company may pay the Payment in Lieu of Notice in equal monthly
         instalments from the date on which the Employment terminates until the
         end of the Relevant Period (the PAYMENT PERIOD) provided that if the
         Employee commences full time employment with the expectation of
         permanence during the Payment Period, the Company shall deduct from
         instalments of the Payment in Lieu of Notice a sum equal to the salary
         actually received by the Employee from such full time, permanent
         employment attributable to the relevant month of the Payment Period.
         The Employee is under a duty to inform the Company of any such
         employment undertaken during the Payment Period. Any entitlement that
         the Employee has or may have under any plan referred to under clause 5
         and any future stock or other incentive plan shall be determined in
         accordance with the rules of the relevant plan and shall not be
         affected by the Employee's receipt of the Payment in Lieu of Notice.

16.4     The Company may terminate the Employment immediately and with no
         liability to make any further payment to the Employee (other than in
         respect of amounts accrued due at the date of termination) if the
         Employee:

         (a)      commits any serious or repeated breach of his obligations
                  under this Agreement or his Employment;

         (b)      is guilty of gross misconduct;

         (c)      is guilty of wilful misconduct which brings or is likely to
                  bring himself or any Group Company into disrepute or which has
                  damaged the business or affairs of any Group Company; [or]

         (d)      is convicted of a criminal offence (other than a road traffic
                  offence not subject to a custodial sentence);

                  [WHERE APPROPRIATE......]

         (e)      [is disqualified from acting as a director of a company by
                  order of a competent court; or]

         (f)      [resigns the directorship of the Company or any Group Company
                  (other than with the explicit agreement of the Company).]

         This clause shall not restrict any other right the Company may have
         (whether at common law or otherwise) to terminate the Employment
         summarily. Any delay by the Company in exercising its rights under this
         clause shall not constitute a waiver of those rights.

16.5     The Company may terminate the Employment by giving [six][twelve]
         months' notice to the Employee if the Employee is unable (whether due
         to illness or otherwise) properly and effectively to perform his duties
         under this Agreement for a period or periods totalling 130 working days
         or more in any consecutive period of 12 months.

16.6     For the purposes of this clause 16.6:

         CONTROL shall mean the power of any person whether alone or together
         with any person acting in concert with him to control the composition
         of the Board of the Company or otherwise to secure whether by means of
         the holding of shares or the possession of a voting power in relation
         to the Company or any other body corporate or by virtue of any powers
         conferred by

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         the articles of association or any other document or agreement
         regulating the Company or any other body corporate that the affairs of
         the Company are conducted in accordance with the wishes of that person;
         and

         CHANGE OF CONTROL shall mean the acquisition by any person whether
         alone or together with any person acting in concert with him of Control
         of the Company but shall not mean an acquisition of Control of the
         Company by another company the shares of which, immediately following
         such an acquisition, are all held by the holders of the shares of the
         Company immediately prior to such an acquisition in materially the same
         proportion as they held shares in the Company immediately prior to such
         an acquisition. For the avoidance of doubt, the Company and the
         Employee shall continue to be bound by the terms of this Agreement
         following a Change of Control; and

         GOOD REASON means the occurrence of one or more of the following
         events:

         (i)      failure to maintain the Employee in the Position, or a
                  substantially equivalent position, with the Company or any
                  Group Company (or any successor thereto by operation of law or
                  otherwise), as the case may be, which the Employee held
                  immediately prior to a Change of Control;

         (ii)     an adverse change of material consequence in the nature or
                  scope of the authorities, powers, functions, responsibilities
                  or duties attached to the Position which the Employee held
                  immediately prior to the Change of Control, or a reduction in
                  the aggregate of the Employee's basic annual salary and share
                  based incentives and other benefits received from the Company
                  or any Group Company, or the termination or denial of the
                  Employee's rights to employee benefits or a substantial
                  reduction in the scope or value thereof where such reduction
                  is not applied to other employees of a similar status and
                  seniority to the Employee.

         (iii)    a change in the scope of the business or other activities for
                  which the Employee was responsible immediately prior to the
                  Change of Control, which has rendered the Employee
                  substantially unable to carry out, has substantially hindered
                  the Employee's performance of, or has caused the Employee to
                  suffer a substantial reduction in, any of the authorities
                  powers, functions, responsibilities or duties attached to the
                  Position held by the Employee immediately prior to the Change
                  of Control;

         (iv)     the Company requiring the Employee to have his principal
                  location of work changed to any location that is in excess of
                  25 miles from the location thereof immediately prior to the
                  Change of Control without [his][her] prior written consent; or

         (v)      without limiting the generality or effect of the foregoing,
                  any material breach of this Agreement by the Company or any
                  successor thereto

         in each case where the Employee has first notified the Company of any
         such determination, act or failure to act, such notice to be in writing
         and to describe in reasonable detail the determination, act or failure
         to act, and where the Company has failed within 10 calendar days
         following receipt of such notice to gain the Employee's agreement to
         change any such determination or remedy any such act or failure to act.

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16.7     If there is a Change of Control after the Restructuring has occurred
         (and for the avoidance of doubt, the Restructuring itself does not
         constitute a Change of Control) and within 12 months of the Change of
         Control:

         (a)      the Company or any other Group Company gives notice to
                  terminate the Employment or terminates the Employment
                  otherwise than in accordance with clause 16.4 or 16.5 of this
                  Agreement (irrespective of whether the period of such notice
                  expires after the first anniversary of the Change of Control);
                  or

         (b)      the Employee terminates the Employment for a Good Reason,

         the Company shall be obliged, within 7 days after the date on which the
         Employment so terminates (the TERMINATION DATE), to pay to the Employee
         as liquidated damages, a sum (THE LIQUIDATED SUM) equal to:

         (i)      the basic salary (calculated by reference to the Employee's
                  basic salary at the Termination Date) which the Employee would
                  have been entitled to receive under this Agreement during the
                  notice period referred to at clause 2.4 (a)] (the RELEVANT
                  PERIOD); plus

         (ii)     [the Employee's pension loss in respect of the arrangements in
                  clauses 8.1-8.2 which will be determined as an amount equal to
                  166% of the amount certified by the actuary to the relevant
                  scheme as being equal to the cash equivalent transfer value
                  (calculated using actuarial methods and assumptions consistent
                  with those specified in Actuarial Guidance Note GN11) of the
                  additional pension benefits net of any income tax payable by
                  the Employee at his marginal rate, which the Employee would
                  have accrued if the Employment had continued throughout the
                  Relevant Period[(iii) in relation to loss of pension benefits
                  under the FURBS, an amount equal to 100% of the aggregate
                  contributions (gross) which would have been paid by the
                  Company in respect of the FURBS in respect of the Employee
                  during the Relevant Period. For the avoidance of doubt, the
                  Company's obligations under this sub-clause shall be in
                  addition to the Company's obligations to make such
                  contributions to unapproved pension arrangements as are
                  required under the explanatory letter dated [     ] in respect
                  of past service as at the leaving date; [plus]];

         (iii)    For the purposes of sub-paragraphs (ii) [and (iii)] PENSION
                  BENEFITS shall also include life assurance, ill health, early
                  retirement and spouse pension benefits; [plus]; The Employee
                  shall have no entitlement to the Liquidated Sum if, prior to
                  the Change of Control, the Employee gives notice to terminate
                  the Employment

         (iv)     the cost to the Company of providing all the other benefits
                  (excluding pension, bonus and any amounts payable and shares
                  receivable under any share option or other incentive plan)
                  that the Employee would have been entitled to receive during
                  the Relevant Period or, if the Company in its absolute
                  discretion decides, a sum based on an estimated cost to the
                  Company of providing those benefits for that period which is
                  agreed to be 10% of the Employee's basic salary (calculated by
                  reference to the Employee's basic salary at the Termination
                  Date) for each year for which the other benefits are to be
                  provided.

16.8     The Liquidated Sum shall be subject to such deductions as may be
         required by law and shall be in full and final settlement of any claims
         the Employee has or may have against the

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         Company or any Group Company arising from the Employment or its the
         termination. Any entitlement the Employee has or may have under any
         plan referred to under clause 5 shall be determined in accordance with
         the rules of the relevant plan and shall not be affected by the
         Employee's receipt of the Liquidated Sum. In consideration for the
         payment of the Liquidated Sum the Employee agrees to remain bound the
         restrictions contained in clauses 18 and 19 of this Agreement.

16.9     To the extent that any payment required to be made under this clause
         16.6 is not made within the period specified the Company shall be
         liable for interest on such late payment at the rate of 150% of the
         prime rate compounded monthly as posted by Lloyds TSB Bank plc from
         time to time.

16.10    If the Termination Date falls during the period of 12 months
         immediately prior to the Employee's date of retirement under clause
         2.5, the Liquidated Sum shall be reduced pro-rata to the remaining
         period of the Employment.

16.11    The Company shall reimburse the Employee for all reasonable costs
         (including legal costs) incurred by him in calculating, agreeing and
         being paid the Liquidated Sum.

16.12    The Employee shall have no entitlement to the Liquidated Sum if, prior
         to the Change of Control, the Employee gives notice to terminate the
         Employment.

16.13    On termination of the Employment for whatever reason (and whether in
         breach of contract or otherwise) the Employee will:

         (a)      immediately deliver to the Company or the relevant Group
                  Company (as appropriate) all books, documents, papers,
                  computer records, computer data, credit cards, and any other
                  property relating to the business of or belonging to the
                  Company or any other Group Company which is in his possession
                  or under his control. The Employee is not entitled to retain
                  copies or reproductions of any documents, papers or computer
                  records relating to the business of or belonging to the
                  Company or any other Group Company;

         (b)      immediately resign from any office he holds with the Company
                  or any other Group Company (and from any related trusteeships)
                  without any compensation for loss of office. Should the
                  Employee fail to do so he hereby irrevocably authorises the
                  Company to appoint some person in his name and on his behalf
                  to sign any documents and do any thing to give effect to his
                  resignation from office; and

         (c)      immed Where notice of termination has been served by either
                  party (whether or not in accordance with the terms of this
                  Agreement), the Company shall be under no obligation to
                  provide work for or assign any duties to the Employee for the
                  whole or any part of the relevant notice period and may
                  require him immediately pay to the Company or, as the case may
                  be, any other Group Company all outstanding loans or other
                  amounts due or owed to the Company or any Group Company. The
                  Employee confirms that, should he fail to do so, the Company
                  is to be treated as authorised to deduct from any amounts due
                  or owed to the Employee by the Company (or any other Group
                  Company) a sum equal to such amounts.

16.14    It is acknowledged that the Employee may, during the Employment, be
         granted rights upon the terms and subject to the conditions of the
         rules from time to time in force of plans referred

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         to in clause 5 of this Agreement. If, on termination of the Employment,
         whether lawfully or in breach of contract the Employee loses any of the
         rights or benefits under such plan (including rights or benefits which
         the Employee would not have lost had the Employment not been
         terminated) the Employee shall not by reason of this Agreement (other
         than, for the avoidance of doubt, under clauses 16.3 or 16.6) be
         entitled, by way of compensation for loss of office or otherwise, to
         any compensation for the loss of any rights under any such plan.

16.15    The Employee will not at any time after termination of the Employment
         represent himself as being in any way concerned with or interested in
         the business of, or employed by, the Company or any other Group
         Company.

17.      SUSPENSION AND GARDENING LEAVE

17.1     Where notice of termination has been served by either party (whether or
         not in accordance with the terms of this Agreement), the Company shall
         be under no obligation to provide work for or assign any duties to the
         Employee for the whole or any part of the relevant notice period and
         may require him:

         (i)      not to attend any premises of the Company or any other Group
                  Company; and/or

         (ii)     to resign with immediate effect from any offices he holds with
                  the Company or any other Group Company (and any related
                  trusteeships); and/or

         (iii)    to refrain from business contact with any customers, clients
                  or employees of the Company or any Group Company; and/or

         (iv)     to take any holiday which has accrued under clause 10 during
                  any period of suspension under this clause 17.1.

         Such period of suspension shall not constitute a termination of the
         Employment and the provisions of clause 12.1 shall remain in full force
         and effect during any period of suspension under this clause 17.1. The
         Employee will also continue to be bound by duties of good faith and
         fidelity to the Company during any period of suspension under this
         clause 17.1 and will undertake such duties as the Company may from time
         to time require in accordance with clause 3.1.

         Any suspension under this clause 17.1 shall be on full salary and
         benefits (save that, if the Employee gives notice, the Employee shall
         not be entitled to earn or be paid any bonus or commission during any
         period of suspension). For the avoidance of doubt, if the suspension
         occurs part way through a bonus year, the Employee shall be entitled to
         be paid a bonus (if any) accruing at the end of the bonus year, pro
         rated for that period of the bonus year he was not suspended.

         The Company may appoint another individual to carry out the duties of
         the Employee during any period that the Employee is suspended in
         accordance with this clause 17.1.

         The Employee acknowledges that the demands made by the Company in
         accordance with the terms of this clause 17.1 shall not constitute a
         breach of contract of any kind whatsoever nor shall the Employee have
         any claim against the Company as a consequence of being required to
         comply with this clause.

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17.2     The Company may suspend the Employee from the Employment during any
         period in which it is carrying out a disciplinary investigation into
         any alleged acts or defaults of the Employee. Such suspension shall be
         on full salary and benefits (save that the Employee shall not be
         entitled to earn or be paid any bonus or commission during any period
         of suspension unless the alleged acts or defaults prove to be
         unfounded).

18.      CONFIDENTIALITY

18.1     Save insofar as such information is already in the public domain the
         Employee will keep secret and will not at any time (whether during the
         Employment or thereafter) use for his own or another's advantage, or
         reveal to any person, firm, company or organisation and shall use his
         best endeavours to prevent the publication or disclosure of any
         information which the Employee knows or ought reasonably to have known
         to be confidential, concerning the business or affairs of the Company
         or any other Group Company or any of its or their customers.

         The restrictions in this clause shall not apply:

         (a)      to any disclosure or use authorised by the Company or required
                  by law or by the Employment; or

         (b)      so as to prevent the Employee from using his own personal
                  skill in any business in which he may be lawfully engaged
                  after the Employment is ended; or

         (c)      to prevent the Employee making a protected disclosure within
                  the meaning of Section 43A of the Employment Rights Act 1996.

19.      POST-TERMINATION COVENANTS

19.1     For the purposes of clause 19, TERMINATION DATE shall mean the date of
         the termination of the Employment.

19.2     The Employee covenants with the Company (for itself and as trustee and
         agent for each other Group Company) that he shall not, whether directly
         or indirectly, on his own behalf or on behalf of or in conjunction with
         any other person, firm, company or other entity:

         Solicitation of clients

         (a)      for the period of [ ] months following the Termination Date,
                  solicit or entice away or endeavour to solicit or entice away
                  from the Company or any Group Company any person, firm,
                  company or other entity who is, or was, in the twelve months
                  immediately prior to the Termination Date, a client of the
                  Company or any Group Company with whom the Employee had
                  business dealings during the course of his employment in that
                  twelve month period. NOTHING IN THIS CLAUSE 19.2(a) SHALL
                  PROHIBIT THE SEEKING OR DOING OF BUSINESS NOT IN DIRECT OR
                  INDIRECT COMPETITION WITH THE BUSINESS OF THE COMPANY OR ANY
                  GROUP COMPANY;

         Dealings with clients

         (b)      for the period of [ ] months following the Termination Date,
                  have any business dealings with any person, firm, company or
                  other entity who is, or was, in the

                                       76

<PAGE>

                  twelve months immediately prior to the Termination Date, a
                  client of the Company or any Group Company with whom the
                  Employee had business dealings during the course of his
                  employment in that twelve month period. NOTHING IN THIS CLAUSE
                  19.2(b) SHALL PROHIBIT THE SEEKING OR DOING OF BUSINESS NOT IN
                  DIRECT OR INDIRECT COMPETITION WITH THE BUSINESS OF THE
                  COMPANY OR ANY GROUP COMPANY;

         Enticement of employees

         (c)      for the period of [     ] months following the Termination
                  Date, solicit or entice away or endeavour to solicit or entice
                  away any individual person who is employed or engaged by the
                  Company or any Group Company either (a) as a director or in a
                  managerial or technical capacity; or (b) who is in possession
                  of confidential information belonging to the Company and/or
                  any Group Company and with whom the Employee had business
                  dealings during the course of his employment in the twelve
                  month period immediately prior to the Termination Date;

         Competition

         (d)      for the period of [     ] months following the Termination
                  Date, carry on, set up, be employed, engaged or interested in
                  a business anywhere in the United Kingdom or any other
                  jurisdiction or locale in which any Group Company conducts
                  material activities which is or is about to be in competition
                  with the business of the Company or any Group Company with
                  which the Employee was involved at any time during the period
                  of twelve months immediately prior to the Termination Date.
                  THE PROVISIONS OF THIS CLAUSE 19.2(d) SHALL NOT, AT ANY TIME
                  FOLLOWING THE TERMINATION DATE, PREVENT THE EMPLOYEE FROM
                  HOLDING SHARES OR OTHER CAPITAL NOT AMOUNTING TO MORE THAN 5%
                  OF THE TOTAL ISSUED SHARE CAPITAL OF ANY COMPANY WHETHER
                  LISTED ON A RECOGNISED INVESTMENT EXCHANGE OR NOT AND, IN
                  ADDITION, SHALL NOT PROHIBIT THE SEEKING OR DOING OF BUSINESS
                  NOT IN DIRECT OR INDIRECT COMPETITION WITH THE BUSINESS OF THE
                  COMPANY OR ANY GROUP COMPANY.

19.3     If the Company has served notice pursuant to clause 2.4(a), the period
         during which the restrictions referred to in clauses 19.2(a) to (d)
         inclusive shall apply following the Termination Date shall be reduced
         by the amount of time during which, if at all, the Company suspends the
         Employee under the provisions of clause 17.1.

19.4     The Employee agrees that if, during either his employment with the
         Company or the period of the restrictions set out in 19.2(a) to (d)
         inclusive, he accepts an offer of employment or engagement, he will
         provide a copy of clause 19 to the offeror as soon as is reasonably
         practicable after accepting the offer.

19.5     The Employee will, at the request and expense of the Company, enter
         into a separate agreement with any Group Company that the Company may
         require under the terms of which he will agree to be bound by
         restrictions corresponding to those contained in clauses 19.2(a) to (d)
         inclusive (or such as may be appropriate in the circumstances).

19.6     For the purposes of applying the restrictions contained within this
         clause 19, where the Employment is terminated within 12 months after a
         Change of Control (other than in accordance with clause 16.4 or 16.5),
         the term "Group Company" shall not include any company that was not a
         Group Company immediately prior to the Change of Control.

                                       77

<PAGE>

20.      EMPLOYEE'S POSITION AS DIRECTOR

20.1     The Employee's duties as a director of any Group Company are subject to
         the articles of association of the relevant Group Company for the time
         being.

21.      WAIVER OF RIGHTS

21.1     If the Employment is terminated by either party and the Employee is
         offered re-employment by the Company (or employment with another Group
         Company) on terms no less favourable in all material respects than the
         terms of the Employment under this Agreement, the Employee shall have
         no claim against the Company in respect of such termination.

22.      DATA PROTECTION

22.1     The Employee consents to the Company and any Group Company processing
         data relating to him at any time (whether before, during or after the
         Employment) for the following purposes:

         (a)      performing its obligations under the Agreement;

         (b)      the legitimate interests of the Company and any Group Company
                  including any sickness policy, working time policy,
                  investigating acts or defaults (or alleged or suspected acts
                  or defaults) of the Employee, security, management forecasting
                  or planning and negotiations with the Employee;

         (c)      processing in connection with any merger, sale or acquisition
                  of a company or business in which the Company or any Group
                  Company is involved or any transfer of any business in which
                  the Employee performs his duties;

         (d)      transferring data to countries outside the European Economic
                  Area for the purposes of operating the business of the Company
                  or any Group Company.

22.2     The Employee explicitly consents to the Company and any Group Company
         processing sensitive personal data (within the meaning of the Data
         Protection Act 1998) at any time (whether before, during or after the
         Employment) for the following purposes:

         (a)      where the sensitive personal data relates to the Employee's
                  health, any processing in connection with the operation of the
                  Company's (or any Group Company's) sickness policy or any
                  relevant pension scheme or monitoring absence;

         (b)      where the sensitive personal data relates to an offence
                  committed, or allegedly committed, by the Employee or any
                  related proceedings, processing for the purpose of the
                  Company's or any Group Company's disciplinary purposes;

         (c)      for all sensitive personal data, any processing in connection
                  with any merger, sale or acquisition of a company or business
                  in which the Company or any Group Company is involved or any
                  transfer of any business in which the Employee performs his
                  duties; and

         (d)      for all sensitive personal data, any processing in the
                  legitimate interests of the Company or any Group Company.

                                       78

<PAGE>

23.      EMAIL AND INTERNET USE

23.1     The Employee agrees to be bound by and to comply with the terms of the
         Company's Acceptable Uses of IT Resources policy and any other
         information technology, email and internet policy which the Company may
         publish from time to time.

24.      MISCELLANEOUS

24.1     This Agreement, together with the letter from the Company dated [     ]
         dated, 2003 and any other documents referred to in clause 8 of this
         Agreement, constitutes the entire agreement and understanding between
         the parties, and supersedes all other agreements both oral and in
         writing between the Company and any other Group Company and the
         Employee relating to the subject matter hereof (other than those
         expressly referred to herein). The Employee acknowledges that he has
         not entered into this Agreement in reliance upon any representation,
         warranty or undertaking which is not set out in this Agreement or
         expressly referred to in it as forming part of the Employee's contract
         of employment.

24.2     The Employee represents and warrants to the Company that he will not by
         reason of entering into the Employment, or by performing any duties
         under this Agreement, be in breach of any terms of employment with a
         third party whether express or implied or of any other obligation
         binding on him.

24.3     Any notice to be given under this Agreement to the Employee may be
         served by being handed to him personally or by being sent by recorded
         delivery first class post to him at his usual or last known address;
         and any notice to be given to the Company may be served by being left
         at or by being sent by recorded delivery first class post to its
         respective registered office for the time being. Any notice served by
         post shall be deemed to have been served on the day (excluding Sundays
         and public or bank holidays) next following the date of posting and in
         proving such service it shall be sufficient proof that the envelope
         containing the notice was properly addressed and posted as a prepaid
         letter by recorded delivery first class post.

24.4     Any reference in this Agreement to an Act of Parliament shall be deemed
         to include any statutory modification or re-enactment thereof.

24.5     This Agreement is governed by, and shall be construed in accordance
         with, the laws of England.

SIGNED for and on behalf of        )
MARCONI CORPORATION PLC            )

SIGNED as a DEED and               )
DELIVERED by the                   )
EMPLOYEE in the presence of:       )

                                       79

<PAGE>

                                   SCHEDULE 6

                         BONDHOLDER CONFIRMATION LETTER

The Law Debenture Trust Corporation plc
Fifth Floor
100 Wood Street
London EC2V 7EX

The Bank of New York
101 Barclay Street
New York
New York 10286
USA

                                                                   - March, 2003

Dear Sirs,

BONDHOLDER CONFIRMATION

1.       We refer to the deed entered into on - March, 2003 between, among
         others, Marconi plc (plc), Marconi Corporation plc (CORP), Ancrane, E-A
         Continental Limited and Marconi Nominees Limited (SCHEME IMPLEMENTATION
         DEED). Except as otherwise provided in this letter, capitalised terms
         in this letter shall have the meaning ascribed to them in the Scheme
         Implementation Deed and where there is a conflict, the definition in
         this letter shall prevail.

2.       We also refer to the Trust Deeds dated 30th March, 2000 (each as
         supplemented) between plc, Corp and The Law Debenture Trust Corporation
         p.l.c. (the EUROBOND TRUSTEE) relating to Eurobonds issued by Corp and
         guaranteed by plc (the TRUST DEEDS) and the Indenture dated 19th
         September, 2000 (as supplemented) between plc, Corp and The Bank of New
         York (the YANKEE BOND TRUSTEE) relating to Yankee Bonds issued by Corp
         and guaranteed by plc (the INDENTURE).

3.       In connection with the Scheme Implementation Deed and recognising that
         certain creditors of Corp and plc have made it clear that the execution
         of this letter by Corp and plc is a condition of their continued
         support for the Financial Restructuring and notwithstanding:

         (i)      the provisions of clause 4.9 (Termination of guarantee) of the
                  Trust Deeds and Article 12.03 (Termination of guarantee) of
                  the Indenture;

         (ii)     a claim in respect of the Bonds being Admitted (as defined in
                  the Corp Scheme) in the Corp Scheme and any Distributions (as
                  defined in the Corp Scheme) being made in respect thereof; and

         (iii)    the cancellation of the Eurobonds and the Yankee Bonds (or any
                  of them) as a result of any Distribution (as defined in the
                  Corp Scheme) or other effect of the Corp Scheme or otherwise,

                                       80

<PAGE>

         plc hereby:

         (a)      undertakes to the Eurobond Trustee, the Yankee Bond Trustee
                  and the Definitive Holders (as defined in the Corp Scheme)
                  that the guarantees given by plc in respect of Corp's
                  obligations under the Bonds shall remain in full force and
                  effect;

         (b)      guarantees to each Definitive Holder of a Eurobond mutatis
                  mutandis on the same terms as the guarantee given to the
                  Eurobond Trustee set out in clause 4 of each Trust Deed; and

         (c)      guarantees to each Definitive Holder of a Yankee Bond mutatis
                  mutandis on the same terms as the guarantee given to the
                  Yankee Bond Trustee set out in section 12 of the Indenture,

         and Corp hereby undertakes to the Eurobond Trustee, the Yankee Bond
         Trustee and the Definitive Holders that it will not deliver to the
         Eurobond Trustee a certificate of the nature referred to in clause 4.9
         (Termination of guarantee) of the Trust Deeds.

4.       This deed may be executed in one or more counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same deed.

5.       In the event that any provision of this deed is void and unenforceable
         by reason of any applicable law, it shall be deleted and the remaining
         provisions of this deed shall continue in full force and effect, and if
         necessary be so amended as necessary to give effect to the spirit of
         this deed so far as possible.

6.       No amendment or waiver of any provision of this deed will be effective
         unless it is in writing and signed by each of Corp, plc, the Eurobond
         Trustee and the Yankee Bond Trustee.

7.       With the exception of paragraph 3 of this deed, the benefit of which is
         conferred upon each of the Definitive Holders who each have the right
         to enforce its terms, no provision of this deed is enforceable by any
         person who is not a party to this deed, under the Contracts (Rights of
         Third Parties) Act 1999 or otherwise.

8.       This deed will be governed by and construed in accordance with English
         law.

IN WITNESS WHEREOF this deed has been executed as a deed poll by the parties to
it in favour of the Eurobond Trustee, the Yankee Bond Trustee and each
Definitive Holder and is intended to be and is hereby delivered on the date
stated above.

EXECUTED as a Deed         )      ______________________________
by MARCONI PLC             )      Director
acting by [     ] and      )      ______________________________
[                       ]  )      Director/Secretary

EXECUTED as a Deed         )      ______________________________
by MARCONI CORPORATION PLC )      Director
acting by [     ] and      )      ______________________________
[                       ]  )      Director/Secretary

                                       81

<PAGE>

                                   SCHEDULE 7

                     FINMECCANICA GUARANTEE DEED OF NOVATION

                           NOVATION AND AMENDMENT DEED

                           DATED          MARCH, 2003

                                     BETWEEN

                                   MARCONI plc

                             MARCONI CORPORATION plc

                         MARCONI (BRUTON STREET) LIMITED

                                       AND

                               FINMECCANICA S.p.A.

              IN RESPECT OF AN AGREEMENT FOR THE SALE AND PURCHASE
                    OF THE ENTIRE ISSUED SHARE CAPITAL OF MMH
                           DATED AS OF 2ND AUGUST 2002

                                  ALLEN & OVERY
                                     London

                                       84

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>                                                                                                             <C>
CLAUSE
1.       Definitions and Interpretation......................................................................    86
2.       Representations and Warranties......................................................................    87
3.       Novation............................................................................................    88
4.       Agreement Amendment.................................................................................    88
5.       Notices.............................................................................................    89
6.       Counterparts........................................................................................    89
7.       Third Parties.......................................................................................    89
8.       Governing Law.......................................................................................    89

SCHEDULE

1.       Warranties..........................................................................................    91
</TABLE>

                                       85

<PAGE>

THIS DEED is made on                         2003

BETWEEN:

(1)      MARCONI plc, having its registered office at New Century Park, PO Box
         53, Coventry CV3 1HJ, England (EXISTING GUARANTOR);

(2)      MARCONI CORPORATION plc, having its registered office at New Century
         Park, PO Box 53, Coventry CV3 1HJ, England (NEW GUARANTOR);

(3)      MARCONI (BRUTON STREET) LIMITED, having its registered office at New
         Century Park, PO Box 53, Coventry CV3 1HJ, England (MARCONI); and

(4)      FINMECCANICA S.P.A., having its registered office at Piazza Monte
         Grappa 4, Rome, Italy (the PURCHASER).

WHEREAS

(A)      By an agreement dated 2nd August 2002 between the Existing Guarantor,
         Marconi and the Purchaser (the AGREEMENT), Marconi agreed to sell and
         transfer, and the Purchaser agreed to purchase, the MMH Shares. In
         accordance with clause 12 of the Agreement, the Existing Guarantor
         unconditionally and irrevocably (i) guaranteed to the Purchaser the
         full, due and punctual payment and observation by Marconi of all its
         obligations under the Agreement and the Share Purchase Documents to
         which Marconi was a party and (ii) indemnified the Purchaser
         immediately on demand against any cost, loss or liability suffered by
         it if any obligation guaranteed by it is or becomes unenforceable,
         invalid or illegal.

(B)      The Marconi Corporate Restructuring (as defined in sub-clause 12.7 of
         the Agreement) will be effected, as from the Effective Time, pursuant
         to the New Guarantor Scheme (as such terms are defined below).

(C)      In accordance with sub-clause 12.7 of the Agreement, the parties have
         agreed that with effect from the Effective Time, the Existing Guarantor
         (upon ceasing to be the ultimate parent company of the Marconi Group)
         shall be released from, and the New Guarantor shall assume, the
         Existing Guarantor's rights, obligations, duties and liabilities under
         the Agreement, on the terms and subject to the conditions hereinafter
         provided.

(D)      The Existing Guarantor, the New Guarantor, Marconi and the Purchaser
         have agreed to enter into this Deed novating and amending the
         Agreement.

In consideration of the provisions and mutual covenants contained in this Deed
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto,

IT IS AGREED AS FOLLOWS:

1.       DEFINITIONS AND INTERPRETATION

1.1      Definitions

                                       86

<PAGE>

         In this Deed the following expressions shall have the following
         meanings:

         EFFECTIVE TIME means for the purposes of this Deed in relation to the
         New Guarantor Scheme the date upon which an office copy of the order of
         the High Court of England and Wales sanctioning that New Guarantor
         Scheme shall have been delivered to the Registrar of Companies for
         registration.

         NEW GUARANTOR SCHEME means the proposed scheme of arrangement in
         respect of the New Guarantor pursuant to section 425 of the Companies
         Act 1985 (as amended) to be sanctioned on or around May 2003.

         NOVATED AGREEMENT shall mean the AGREEMENT as novated, amended and
         supplemented by this Deed.

         REGISTRAR OF COMPANIES means the registrar or other officer performing
         under the Companies Act 1985 (as amended) the duty of registration of
         companies in England and Wales including a deputy registrar.

1.2      In this Deed, unless the contrary appears, a reference to:

         (a)      party is a party to this Deed;

         (b)      a person includes its successors and assigns;

         (c)      a provision of law is a reference to that provision as amended
                  or re-enacted; and

         (d)      a time of day is a reference to London time.

1.3      Unless the contrary intention appears a term defined in the Agreement
         has the same meaning where used in this Deed.

1.4      The clause and sub-clause headings in this Deed are for convenience
         only and are to be ignored in construing this Deed.

2.       REPRESENTATIONS AND WARRANTIES

2.1      The New Guarantor represents and warrants to the Purchaser on the terms
         set out in the Schedule to this Deed as at the Effective Time, by
         reference to the circumstances then existing.

2.2      The Existing Guarantor warrants, for the benefit of the New Guarantor,
         that save in relation to claims already notified to it by the
         Purchaser, it is not aware of any claim (actual or threatened) by the
         Purchaser against the Existing Guarantor under the Agreement.

2.3      In consideration for the representations and warranties given by the
         New Guarantor in sub-clause 2.1 above, with effect from the Effective
         Time, the parties agree that the New Guarantor shall have no liability
         in respect of the Warranties given under paragraph 1 of schedule 4 of
         the Agreement in respect of the Existing Guarantor.

2.4      The representations and warranties set out in sub-clause 2.1 above
         shall survive the execution and delivery of this Deed.

                                       87

<PAGE>

3.       NOVATION

3.1      With effect from the Effective Time:

         (a)      the Existing Guarantor is released and discharged from its
                  obligations, duties and liabilities under the Agreement;

         (b)      the Existing Guarantor agrees that it has no rights under the
                  Agreement;

         (c)      the New Guarantor agrees to (i) assume the rights,
                  obligations, duties and liabilities of the Existing Guarantor
                  under the Agreement and (ii) perform all the obligations of
                  the Existing Guarantor under the Agreement in favour of the
                  Purchaser as if the New Guarantor had been a party to the
                  Agreement in place of the Existing Guarantor;

         (d)      the parties consent to and accept the assumption by the New
                  Guarantor of the Existing Guarantor's rights, obligations,
                  duties and liabilities under the Agreement and the release and
                  discharge of the Existing Guarantor from its obligations,
                  duties and liabilities under the Agreement;

         (e)      each of the other parties to the Novated Agreement agrees with
                  the New Guarantor to perform its obligations under the
                  Agreement (as amended and supplemented by this Deed) in favour
                  of the New Guarantor,

         each of the foregoing events and agreements being conditional on, and
         taking effect simultaneously with, the others.

3.2      With effect from the Effective Time, the New Guarantor hereby agrees
         that all of the Purchaser's rights, claims, actions, demands and
         proceedings whatsoever and howsoever arising out of or in respect of
         the Share Purchase Documents, (including any such accrued rights which
         have arisen against the Existing Guarantor prior to the Effective Time,
         and any such rights arising against the New Guarantor after the
         Effective Time) shall be enforceable by the Purchaser against the New
         Guarantor.

3.3      Notwithstanding clause 3.1 above, the Existing Guarantor and the New
         Guarantor are each released from any obligations under the Novated
         Agreement to the extent that such obligations have been fully
         performed, satisfied or otherwise fully complied with in accordance
         with the Agreement by the Existing Guarantor as at the Effective Time.

4.       AGREEMENT AMENDMENT

4.1      With effect from the Effective Time the Agreement will be amended as
         follows:

         (a)      the expression "Marconi plc" wherever it appears in the
                  Agreement will be deleted and replaced with "Marconi
                  Corporation plc";

         (b)      where the context so permits, the expression "this Agreement"
                  wherever it appears in the Agreement shall be treated as
                  though it referred to the Novated Agreement;

         (c)      for the purposes of sub-clause 18.4 of the Agreement, the
                  address details for the New Guarantor shall be as follows:

                                       88

<PAGE>

<TABLE>
<CAPTION>
Name of party        Addressee                Address          Facsimile No.     E-mail address
<S>                 <C>                <C>                     <C>               <C>
Marconi             The Company        4th Floor, Regents      +44 20 7306        Mary.Skelly@
Corporation plc     Secretary          Place, 338 Euston Rd,   1395                marconi.com
                                       London NW1 3BT,
                                       England
</TABLE>

4.2      The parties agree that, with effect from the Effective Time the
         Agreement is novated and constitutes an agreement between New Guarantor
         (as guarantor), Marconi and the Purchaser on the terms and conditions
         of the Novated Agreement. In particular, the New Guarantor shall
         perform all the guarantee and indemnification obligations in favour of
         the Purchaser under sub-clauses 12.1 to 12.6 of the Novated Agreement.

4.3      Save as amended hereby, the Agreement as novated remains in full force
         and effect.

5.       NOTICES

         All notices under or in connection with this Deed will, unless
         otherwise stated, be given in accordance with the Novated Agreement.

6.       COUNTERPARTS

         This Deed may be executed in any number of counterparts, and by the
         parties on separate counterparts. Each counterpart shall constitute an
         original of this Deed, and the counterparts together shall constitute
         one and the same document.

7.       THIRD PARTIES

         A person who is not a party to this Deed has no rights under the
         Contracts (Rights of Third Parties) Act 1999 to enforce any term of
         this Deed, but this does not affect any right or remedy of a third
         party which exists or is available apart from that Act.

8.       GOVERNING LAW

         This Deed shall be governed by and construed in accordance with English
         law. Any disputes that may arise out of or in connection with this Deed
         will settled by arbitration as provided in clause 28 of the Novated
         Agreement.

IN WITNESS of which this deed has been executed and has been delivered on the
date stated at the beginning of this Deed.

                                       89

<PAGE>

EXISTING GUARANTOR
EXECUTED as a deed by                      )   _________________________________
Marconi plc                                )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

NEW GUARANTOR
EXECUTED as a deed by                      )   _________________________________
Marconi Corporation plc                    )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

MARCONI
EXECUTED as a deed by                      )   _________________________________
Marconi (Bruton Street) Limited            )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

PURCHASER
EXECUTED as a deed by                      )   _________________________________
Finmeccanica S.p.A                         )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

                                       90

<PAGE>

                                   SCHEDULE 1

                                   WARRANTIES

(a)      The New Guarantor is duly incorporated and validly existing under the
         laws of England, and has the requisite power and authority to enter
         into and perform its obligations under this Deed and the Novated
         Agreement.

(b)      This Deed and the Novated Agreement constitute binding obligations of
         the New Guarantor.

(c)      The execution and delivery of this Deed, and the performance by the New
         Guarantor of its obligations under this Deed and the Novated Agreement
         will (or with the giving of notice or lapse of time or both would) not:

         (i)      result in a breach of any provision of the memorandum or
                  articles of association of the New Guarantor; or

         (ii)     result in a breach of any order, judgment or decree of any
                  court or governmental agency to which the New Guarantor is a
                  party or by which the New Guarantor is bound or of any other
                  contractual commitment to which the New Guarantor is a party.

(d)      The New Guarantor has full knowledge of the Agreement and is fully
         aware of its terms and conditions, in particular of the provisions
         contained in sub-clauses 12.1 to 12.6 thereof which constitute the
         Marconi Guarantee.

(e)      The New Guarantor shall be immediately after the Effective Time, the
         ultimate parent company of the Marconi Group and the company owning
         (directly or indirectly as a result of its direct or indirect
         shareholdings in the members of the Marconi Group) all or substantially
         all of the assets of the Marconi Group.

(f)      Each of Marconi and the Existing Guarantor have not assigned or
         transferred any of their respective benefits or obligations under any
         of the Share Purchase Documents to which they are a party.

                                       91

<PAGE>

                                   SCHEDULE 8

                    LEMELSON ASSUMPTION AGREEMENT AND CONSENT

                            DATED        MARCH, 2003

                                   MARCONI PLC

                                       AND

                             MARCONI CORPORATION PLC

                                       AND

          LEMELSON MEDICAL, EDUCATION AND RESEARCH FOUNDATION, LIMITED
                                  PARTNERSHIP

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

                              ASSUMPTION AGREEMENT
                                   AND CONSENT

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

                                  ALLEN & OVERY
                                     London

                                       92

<PAGE>

THIS ASSUMPTION AGREEMENT AND CONSENT (AGREEMENT) is made as of
                  [ - ]March, 2003

BETWEEN:

(1)      Marconi plc (registered number 03846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, CV3 1HJ. (the ORIGINAL
         CONTRACTING PARTY);

(2)      Marconi Corporation plc (registered number 00067307) whose registered
         office is at New Century Park, PO Box 53, Coventry, CV3 1HJ. (the NEW
         CONTRACTING PARTY); and

(3)      Lemelson Medical, Education and Research Foundation, Limited
         Partnership whose principal place of business is at Tahoe Boulevard
         #1802, Incline Village, Nevada, U.S.A NV 89451 (the CONTINUING
         CONTRACTING PARTY).

RECITALS:

(A)      The Original Contracting Party and the Continuing Contracting Party
         entered into an agreement dated 1st December 1999 (the ORIGINAL
         AGREEMENT) in which the Continuing Contracting Party granted to the
         Original Contracting Party a non-exclusive licence in relation to
         Licensed Patents as defined and described in the Original Agreement.

(B)      The Original Contracting Party wishes to be released and discharged
         from the Original Agreement and the Continuing Contracting Party has
         agreed to release and discharge the Original Contracting Party on the
         terms of the New Contracting Party's undertaking to perform, discharge
         and observe the terms of the Original Agreement in place of the
         Original Contracting Party.

(C)      This Agreement is supplemental to the Original Agreement.

In consideration of the matters described above, and of the mutual benefits and
obligations set forth in this Agreement, the parties agree as follows:

1.       ASSUMPTION AND CONSENT

1.1      This Agreement shall have effect or be deemed to have effect from the
         date of the Original Agreement (the EFFECTIVE DATE).

1.2      The New Contracting Party agrees to and undertakes to the Continuing
         Contracting Party to accept and to perform, discharge and observe all
         obligations and liabilities to be performed, discharged or observed by
         the Original Contracting Party under the Original Agreement in every
         way as if the New Contracting Party were named in the Original
         Agreement in place of the Original Contracting Party with effect from
         the Effective Date.

1.3      In consideration of the New Contracting Party's undertaking in
         subclause 1.2 hereof, the Continuing Contracting Party fully and
         completely releases and discharges the Original Contracting Party from
         all claims, demands, duties, obligations and liabilities whatsoever in
         respect of the Original Agreement arising whether before, on or after
         the Effective Date. The Continuing Contracting Party consents to the
         assignment of all duties, obligations and liabilities to the New
         Contracting Party by the Original Contracting Party and the Continuing
         Contracting Party accepts the liability of the New Contracting Party in
         lieu of the liability of

                                       93

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         the Original Contracting Party for all liabilities whether such
         liabilities arose before, on or after the Effective Date.

1.4      The Continuing Contracting Party undertakes to the New Contracting
         Party to perform, discharge and observe all such obligations and
         liabilities on the part of the Continuing Contracting Party under the
         Original Agreement, as amended and supplemented by this Agreement and
         acknowledges that the New Contracting Party shall be entitled to the
         rights and benefits of the Original Agreement, as amended and
         supplemented by this Agreement as if the New Contracting Party were
         named in the Original Agreement in place of the Original Contracting
         Party with effect from the Effective Date.

1.5      The Original Agreement, as amended and supplemented by this Agreement,
         shall continue in full force and effect.

2.       GENERAL

2.1      This Agreement may be executed in any number of counterparts, all of
         which taken together shall constitute one and the same Agreement and
         any party may enter into this Agreement by executing a counterpart.

2.2      This Agreement is governed by and shall be construed in accordance with
         the law of the State of Nevada. Each party submits to the jurisdiction
         of the State of Nevada for all purposes relating to this Agreement.

2.3      The Recitals are true and correct and are incorporated into this
         Agreement as if fully set forth herein.

                                       94

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IN WITNESS of which this Agreement has been executed and has been delivered on
the date which appears first on page 1.

EXECUTED as an agreement by                )   _________________________________
MARCONI PLC                                )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

EXECUTED as an agreement by                )   _________________________________
MARCONI CORPORATION PLC                    )   Director
acting by                                  )   _________________________________
and                                        )   Director/Secretary

EXECUTED as an agreement by                )
LEMELSON MEDICAL, EDUCATION AND RESEARCH   )
FOUNDATION, LIMITED PARTNERSHIP                _________________________________
                                               Dorothy Lemelson

                                               Title: authorised representative

                                       95

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                                   SCHEDULE 9

                           SURRENDER OF CAPITAL LOSSES

Corp and plc agree that this Schedule takes effect on the understanding between
them that they will act in good faith in the implementation of the provisions of
this Schedule in accordance with the principles on which it is based.

1.       INTERPRETATION

         In this Schedule:

         Unless the contrary intention appears, words and expressions defined
         elsewhere in this deed shall have the same meaning;

         ACCOUNTING PERIOD means an accounting period as defined by s.12 Income
         and Corporation Taxes Act 1988;

         BUSINESS DAY means any day on which banks are open for general business
         in London;

         CHARGEABLE GAIN means any chargeable gain for the purposes of TCGA 1992
         arising to the s.171A Transferee;

         COMPLETION means, in respect of a 171A Transferee, completion of a Sale
         of the shares of the s.171A Transferee (or, if the shares of the direct
         or indirect parent of the s.171A Transferee are sold and not those of
         the s.171A Transferee, the company whose shares are sold);

         CONSIDERATION means amounts payable under paragraph 2.3;

         CORP GROUP means the group of which Corp is, from time to time, a
         member for the purposes of chargeable gains in accordance with s.170
         TCGA 1992;

         ELECTED SHARES means in relation to a s.171A Transferee, the Yeslink
         Interco Shares to which the plc s.171A Election applies;

         ELIGIBLE SUBSIDIARY means any company which satisfies the condition
         that, had any of the Yeslink Interco Shares been transferred by plc to
         that company immediately before the Yeslink Interco Disposal, s.171(1)
         TCGA 1992 would have applied to that transfer;

         FINAL DETERMINATION means for any accounting period of a company, if
         the relevant s.171A Transferee's tax return has been agreed with the
         Inland Revenue the agreement of that tax return, or, if no such
         agreement has been reached, on the earlier of the following events:

         (i)      a determination being agreed by Corp and plc; or

         (ii)     the corporation tax return of such s.171A Transferee for such
                  period being submitted to the Inland Revenue and one of the
                  following events having occurred:

                  (a)      such s.171A Transferee has received a binding notice
                           from the Inland Revenue that such tax return is final
                           and incapable of amendment;

                                       96

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                  (b)      the Inland Revenue is precluded from serving a notice
                           of enquiry or further notice of enquiry (as the case
                           may be) into such tax return;

                  (c)      any such enquiry has been finally determined by the
                           Inland Revenue's serving a closure notice on such
                           s.171A Transferee and (1) such s.171A Transferee has
                           amended such tax return in a manner which accords
                           with the conclusions stated in the closure notice and
                           the Inland Revenue has failed to make any further
                           amendments to that tax return within the time limit
                           allowed by law, (2) the Inland Revenue has amended
                           such tax return in a manner which accords with the
                           conclusions stated in the closure notice or such
                           s.171A Transferee has failed to appeal against such
                           amendments within the time limit allowed by law or
                           (3) no such amendments are required;

                  (d)      such s.171A Transferee has either failed to appeal
                           within the time limit allowed by law against any
                           amendment to such tax return made by the Inland
                           Revenue or any such appeal has been finally
                           determined;

                  (e)      the Inland Revenue is precluded from amending or
                           further amending (as the case may be) such tax
                           return; or

                  (f)      an appeal has been made against an amendment of such
                           tax return, such appeal has been determined by the
                           relevant court or tribunal and (1) one party to that
                           appeal has notified the other that it will not appeal
                           against that decision, (2) an expert has determined
                           that there is no reasonable prospect of an appeal
                           against that decision succeeding, and for this
                           purpose "expert" means leading tax counsel of at
                           least ten years' standing appointed by mutual
                           agreement between Corp and plc or, failing such
                           agreement, by the Chairman of the International Bar
                           Association, or (3) such determination is a decision
                           of the highest court of appeal;

         HOLDING COMPANY OF A TRADING SUBGROUP means a company which is a
         holding company of a trading subgroup for the purposes of Schedule 7AC
         TCGA 1992;

         LOSSES means, in relation to a s.171A Transferee, the losses finally
         agreed or determined (in accordance with paragraph 3) to be allowable
         losses for the purposes of TCGA 1992, which arise to the s.171A
         Transferee as a result of the Yeslink Interco Disposal being deemed to
         be made in part by the s.171A Transferee;

         NET ASSETS means the aggregate amount of the assets (disregarding the
         value of any Losses) less the aggregate amount of the liabilities of
         the s.171A Transferee as at Completion, and as certified in writing in
         good faith by or on behalf of Corp;

         plc s.171A ELECTION means a s.171A Election made by plc in accordance
         with paragraph 2.1;

         PRESCRIBED RATE means the rate of one per cent. per annum above the
         base rate for the time being of Barclays Bank PLC;

         PROFITS means the total profits of a s.171A Transferee which would be
         chargeable to corporation tax for a Relevant Accounting Period;

                                       97

<PAGE>

         RELEVANT ACCOUNTING PERIOD means, in relation to a s.171A Transferee,
         an Accounting Period ending on or after 31st October, 2001 but on or
         before the date on which the s.171A Transferee ceases to be a member of
         the Corp Group, so that an Accounting Period should be treated as
         ending immediately before it so ceases, if that would not otherwise be
         the case;

         RELEVANT AMOUNT means:

         (a)      the amount by which the Sale Consideration exceeds the Net
                  Assets of the s.171A Transferee (or, if the shares of the
                  direct or indirect parent of the s.171A Transferee are sold
                  and not those of the s.171A Transferee, the company whose
                  shares are sold), provided that

         (b)      if those Net Assets exceed L2.5m or the s.171A Transferee (or,
                  if the shares of the direct or indirect parent of the s.171A
                  Transferee are sold and not those of the s.171A Transferee,
                  the company whose shares are sold) is a Trading Company or the
                  Holding Company of a Trading Subgroup, the Relevant Amount is
                  the amount of the Losses available to the s.171A Transferee to
                  reduce a Chargeable Gain arising in a Subsequent Accounting
                  Period;

         RELEVANT PERCENTAGE means 50 per cent, unless the Relevant Amount is
         established in accordance with subparagraph (b) of the definition of
         Relevant Amount, in which case it means 0.03 per cent;

         s.171A means s.171A TCGA 1992;

         s.171A ELECTION means a joint election under s.171A;

         s.171A TRANSFEREE means a company which is an Eligible Subsidiary which
         makes a plc s.171A Election in accordance with paragraph 2.1;

         SALE means the sale by a Seller of the shares of a s.171A Transferee
         (or the direct or indirect parent of a s.171A Transferee) to a company
         which is not a member of the Corp Group;

         SALE CONSIDERATION means consideration or value received by the Seller
         whether directly or indirectly on the sale of the shares of a s.171A
         Transferee (or the direct or indirect parent of a s.171A Transferee) to
         a company which is not a member of the Corp Group, where Losses are
         available to the relevant s.171A Transferee to reduce a Chargeable Gain
         arising in a Subsequent Accounting Period;

         SELLER means Corp or a subsidiary of Corp which sells the shares of a
         s.171A Transferee (or the direct or indirect parent of a s.171A
         Transferee) to a person which is not a member of the Corp Group;

         SUBSEQUENT ACCOUNTING PERIOD means, in relation to a s.171A Transferee,
         an Accounting Period commencing after 31st October, 2001 which is not a
         Relevant Accounting Period, treating an Accounting Period as ending
         immediately before it ceases to be a member of the Corp Group, if that
         would not otherwise be the case;

         TCGA 1992 means Taxation of Chargeable Gains Act 1992;

                                       98

<PAGE>

         TRADING COMPANY means a company which is a trading company for the
         purposes of Schedule 7AC TCGA 1992;

         YESLINK INTERCO DISPOSAL means the disposal by plc of the Yeslink
         Interco Shares to a third party on 31st October, 2001;

         YESLINK INTERCO SHARES means the shares of Yeslink Interco Limited
         (registered number 03855625) which were in issue immediately prior to
         the Yeslink Interco Disposal.

2.       SURRENDER OF CAPITAL LOSSES

2.1      plc and Corp agree that a s.171A Election, or, as applicable, s.171A
         Elections, will be made so that in aggregate fifty per cent of the
         Yeslink Interco Shares shall be deemed under s.171A for the purposes of
         corporation tax on chargeable gains to have been transferred to Corp
         and/or such Eligible Subsidiary or Eligible Subsidiaries as Corp may
         nominate immediately prior to the Yeslink Interco Disposal and that the
         Yeslink Interco Disposal shall be deemed for those purposes to have
         been made by that Eligible Subsidiary or Eligible Subsidiaries to the
         extent, in each case, of the Elected Shares.

2.2      plc shall enter into each s.171A Election and Corp shall enter into, or
         shall procure that each relevant Eligible Subsidiary enters into, the
         relevant s.171A Election with plc and plc and Corp shall do, or, in the
         case of an Eligible Subsidiary other than Corp, Corp shall procure that
         each relevant Eligible Subsidiary does, all necessary things to ensure
         that each s.171A Election is duly made in accordance with s.171A as
         soon as reasonably practicable after the date of this Agreement and in
         any event prior to 31st March, 2004.

2.3      Corp agrees to pay, or to procure that the relevant s.171A Transferee
         (in the case of subparagraph (a)) or the relevant Seller (in the case
         of subparagraph (b)) pays, to plc by way of consideration for plc
         entering into the plc s.171A Elections:

         (a)      a sum equal to 0.33 per cent. of the amount by which a
                  Chargeable Gain arising to a s.171A Transferee is treated
                  under s.8(1) TCGA 1992 as reduced by any Losses or any part of
                  them; and

         (b)      a sum equal to the Relevant Percentage of the Relevant Amount.

2.4      Any payment due under paragraphs 2.3 and 2.5 shall be paid within five
         Business Days of the later of:

         (a)      the fifth Business Day after the Corp Scheme becomes
                  effective; and

         (b)      either:

                  (i)      in the case of a payment due under subparagraph
                           2.3(a), a Final Determination that the Chargeable
                           Gain has been reduced as referred to in that
                           subparagraph; or

                  (ii)     in the case of a payment due under subparagraph
                           2.3(b), the fifth Business Day after the date on
                           which the Sale Consideration (or the relevant part of
                           the Sale Consideration) is received by the Seller.

                                       99

<PAGE>

2.5      Consideration payable under:

         (a)      subparagraph 2.3(a) shall carry interest at the Prescribed
                  Rate from the later of:

                  (i)      six months after the end of the accounting period of
                           the s.171A Transferee in which the Chargeable Gain
                           arose; and

                  (ii)     the fifth Business Day after the Corp Scheme becomes
                           effective,

                  until the date of payment of the Consideration to plc
                  compounded annually;

         (b)      subparagraph 2.3(b) shall carry interest at the Prescribed
                  Rate from the fifth Business Day following the later of:

                  (i)      the date (or, if relevant, dates) on which the Sale
                           Consideration (or the relevant part of the Sale
                           Consideration) is received by the Seller; and

                  (ii)     the day on which the Corp Scheme becomes effective,

                  until the date of payment of the Consideration to plc
                  compounded annually.

3.       CONDUCT OF CLAIMS

3.1      Corp and plc agree that:

         (a)      plc will promptly following the Effective Date seek to agree
                  the amount of the Losses with the Inland Revenue;

         (b)      where any computation, return, ancillary information,
                  statements, reports or accounts (each a DOCUMENT) is or are
                  required to be submitted for, or in respect of agreeing either
                  the amount of the Losses or, in the case of a submission by
                  plc, any matter which is relevant to the losses arising to plc
                  as a result of the Yeslink Interco Disposal, a draft shall be
                  submitted:

                  (i)      in the case of a submission by Corp or a s.171A
                           Transferee, by Corp to plc (or such advisers as plc
                           shall nominate), or

                  (ii)     in the case of a submission by plc, by plc to Corp
                           (or such advisers as Corp shall nominate),

                  at least 21 days before its intended submission to the Inland
                  Revenue, and plc and its advisers or, as the case may be, Corp
                  and its advisers shall be given access to all information
                  reasonably necessary to determine its accuracy. In addition,
                  Corp and plc shall keep each other informed of any
                  negotiations relating to the agreement of the amount of the
                  Losses or the relevant matter and before any agreement in
                  respect of the amount of the Losses or the relevant matter is
                  reached with the Inland Revenue, details of the proposed
                  agreement shall be given to plc or, as the case may be, Corp
                  at least 21 days before the proposed conclusion of such
                  agreement; and

         (c)      if, within 21 days of receiving any document or details of
                  negotiations or proposed agreements referred to in
                  subparagraph 3.1(b), plc makes any representations to Corp

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<PAGE>

                  or, as the case may be, Corp makes any representation to plc,
                  those representations shall, to the extent that they are
                  reasonable, be reflected in the document submitted to,

3.2      If the parties, having negotiated in good faith for a period of 30
         days, fail to reach agreement as to whether representations made under
         subparagraph 3.1(c) are reasonable, Corp or plc may refer the matter
         for determination by a member of a firm of chartered accountants who is
         also a member of the Chartered Institute of Taxation in the United
         Kingdom (the EXPERT). The Expert shall be appointed either by agreement
         between the parties or (if they do not agree within seven days of the
         party wishing to make the reference notifying the other of the proposed
         reference) on the application of either Corp or plc to the President
         for the time being of the Chartered Institute of Taxation or (in the
         absence of an appointment by the President for the time being of the
         Chartered Institute of Taxation) on the application of either Corp or
         plc to the President for the time being of the Law Society. The Expert
         shall decide the matter in question as an expert (and not as an
         arbitrator) and his decision shall be final, except in the case of
         manifest error. Both parties shall make all relevant information
         available to the Expert. The costs of the Expert shall be borne by the
         parties in such proportions as the Expert considers to be fair and
         reasonable in all the circumstances.

3.3      plc shall give Corp (and its advisers) such assistance and access to
         information as Corp reasonably requires in order to prepare and submit
         any document and conduct any negotiations in as far as they relate to
         the amount of the Losses.

3.4      Corp agrees to give plc notice in writing if a s.171A Transferee
         realises a Chargeable Gain in a Relevant Accounting Period which it is
         intended should be reduced by any Losses or any part of them. Such
         notice is to be given within three months of the end of the s.171A
         Transferee's relevant accounting period (or, if relevant, promptly
         after a change of intention, following which it is intended so to
         reduce the Chargeable Gain).

3.5      Following a notice under paragraph 3.4 Corp shall:

         (a)      promptly give plc notice if the Chargeable Gain is not to be
                  reduced by the Losses or any part of them:

         (b)      at least annually, keep plc informed as to the agreement and
                  negotiation in relation to the Chargeable Gain in so far as it
                  is being sought to reduce it with Losses, but shall not be
                  required to disclose copies of, or details of, its returns,
                  supporting documentation or correspondence (written or
                  otherwise) with the Inland Revenue; and

         (c)      following Final Determination that the Chargeable Gain has
                  been reduced by the Losses or any part of them, give plc
                  written notice of the amount of such reduction together with
                  supporting evidence, such notice to be determinative of the
                  amount of the reduction, save in the case of manifest error.

4.       AGREEMENT OF ATTRIBUTABLE CONSIDERATION

4.1      Corp agrees to give plc notice in writing if a Seller intends to
         dispose, or has disposed, of the shares of a s.171A Transferee (or the
         direct or indirect parent of a s.171A Transferee) in circumstances
         which could give rise to a Relevant Amount.

                                      101

<PAGE>

4.2      Following the service of a notice under subparagraph 4.1, Corp and plc
         shall use reasonable endeavours to agree the Relevant Amount and Corp
         shall give plc such access as is reasonably necessary for plc to
         determine the Relevant Amount.

5.       RELATIONS BETWEEN THE PARTIES

5.1      Corp and plc agree that neither of them (and that each of them will
         procure that none of their subsidiaries) will seek to interpret the
         provisions of this Schedule in a manner which materially disadvantages
         the other or is inconsistent with the principles on which it is based.

5.2      Corp agrees that it will not (and will use reasonable endeavours to
         procure that none of its subsidiaries will) take any action the main
         purpose of which is to minimise any payment to plc under this Schedule
         other than with the prior written consent of plc.

                                      102

<PAGE>

                                  SCHEDULE 10

                          RECEIVABLES ASSIGNMENT LETTER

                            [MARCONI PLC LETTERHEAD]

[-] March 2003

From:    Marconi plc (plc)
         4th Floor, Regents Place
         338 Euston Road
         London NW1 3BT
         Fax: +44 20 7493 1974
         Attention: Charlie Shepherd

To:      Marconi Corporation plc (CORP)
         4th Floor, Regents Place
         338 Euston Road
         London NW1 3BT
         Fax: +44 20 7493 1974
         Attention: Charlie Shepherd

         and

The subsidiaries of Corp whose names and addresses are set out in the Schedule
to this letter (each an OPERATING COMPANY).

Dear Sirs

ASSIGNMENT OF RECEIVABLES

In consideration for the mutual covenants set out below, and for such other
valuable consideration, receipt of which is hereby acknowledged, it is agreed as
follows:

1.       DEFINITIONS

         In this letter:

         CORP CLAIM means the L165,748,102 representing an amount owed by plc to
         Corp as being the net amount of intra-group loans made between Corp and
         plc, as evidenced by group accounting records;

         TRADE RECEIVABLES means each of:

         (a)      the US$1,768,992 (equivalent to approximately L1,101,284) loan
                  balance owing to plc by Marconi Software International Inc. as
                  evidenced by group accounting records;

         (b)      the L45,631 trade receivable owing to plc by Systems
                  Management Specialists Inc. as evidenced by group accounting
                  records;

                                      103

<PAGE>

         (c)      the L387,377 trade receivable owing to plc by Marconi
                  Communications Inc., as evidenced by group accounting records;

         (d)      the L42,746 trade receivable owing to plc by Marconi
                  Communications Optical Networks Corp (Canada), as evidenced by
                  group accounting records;

         (e)      the L353,861 trade receivable owing to plc by Marconi
                  Communications Inc. (incurred when trading previously as Fore
                  Systems Inc.), as evidenced by group accounting records;

         (f)      the L38,615 trade receivable owing to plc by Marconi
                  Communications Limited (Canada), as evidenced by group
                  accounting records; and

         (g)      the US$5,736,273 (equivalent to approximately L3,571,109) loan
                  balance owing to plc by Systems Management Specialists Inc.,
                  as evidenced by group accounting records.

2.       ASSIGNMENT

         (a)      With effect from the date of this letter plc hereby assigns to
                  Corp, with full title guarantee, all of its rights, title and
                  interest in and to the Trade Receivables and all proceeds of
                  the same (the ASSIGNMENT).

         (b)      As consideration for the Assignment, Corp agrees to reduce the
                  amount of the Corp Claim by L19,160,663, to an amount of
                  L146,587,439.

         (c)      Each Operating Company confirms its liability in relation to
                  the Trade Receivable expressed to be owing by it and
                  acknowledges and consents to the Assignment.

3.       FURTHER ASSURANCE

         The parties shall take whatever action may be necessary to implement
         the terms of this letter including the execution of any further
         documents and the giving of any notice, order or direction which in
         each case may be required, so that Corp may assume, to the fullest
         extent permitted by the provisions of this letter, all of the rights of
         plc with respect to the Trade Receivables and the proceeds thereof.

4.       COUNTERPARTS

         This letter may be executed in any number of counterparts and all such
         counterparts taken together shall be deemed to constitute one and the
         same instrument.

5.       GOVERNING LAW

         This letter shall be governed by and construed in accordance with the
         laws of England. Each party to this letter agrees that the courts of
         England are to have exclusive jurisdiction to settle any disputes which
         may arise out of or in connection with this letter.

Please confirm your agreement to the terms of this letter by signing below.

Yours faithfully

                                      104

<PAGE>

______________________________
For and on behalf of
MARCONI plc

We hereby agree to the above.

______________________________
For and on behalf of
MARCONI CORPORATION plc

______________________________
For and on behalf of
MARCONI COMMUNICATIONS INC.

______________________________
For and on behalf of
SYSTEMS MANAGEMENT SPECIALISTS INC.

______________________________
For and on behalf of
MARCONI SOFTWARE INTERNATIONAL INC.

______________________________
For and on behalf of
MARCONI COMMUNICATIONS OPTICAL NETWORKS CORP (CANADA)

______________________________
For and on behalf of
MARCONI COMMUNICATIONS LIMITED (CANADA)

                                      105

<PAGE>

                                    SCHEDULE

                               OPERATING COMPANIES

MARCONI COMMUNICATIONS INC.
1000 Marconi Drive
Warrendale, PA 15086

MARCONI COMMUNICATIONS OPTICAL NETWORKS CORP (CANADA)
1375 Trans Canada Highway
Dorval, Quebec, Canada H9P 2W8

SYSTEMS MANAGEMENT SPECIALISTS INC.
3 Hutton Centre Drive
Suite 100
Santa Ana, CA 92707
United States

MARCONI SOFTWARE INTERNATIONAL INC.
1755 North Collins Blvd.
Suite 400
Richardson, TX 75080

MARCONI COMMUNICATIONS LIMITED (CANADA)
1125 Innovation Drive
Kanata, Ottawa, Canada K2K 3O6

                                      106

<PAGE>

                                  SCHEDULE 11

                              plc ESOP RELEASE DEED

                               [PLC HEADED PAPER]

[Date]

To: Each Opco

Dear Sirs

ESOP SETTLEMENT AGREEMENT DATED [ ] MARCH, 2003 ENTERED INTO BY MARCONI plc
(plc), MARCONI CORPORATION plc (CORP), HSBC BANK plc, BARCLAYS BANK plc, UBS AG,
SALOMON BROTHERS INTERNATIONAL LIMITED AND BEDELL CRISTIN TRUSTEES LIMITED (THE
ESOP SETTLEMENT AGREEMENT)

Capitalised terms used but not defined in this deed of release shall have the
same meaning as set out and adopted in the ESOP Settlement Agreement.

We refer to clause 3.1.1 of the ESOP Settlement Agreement and hereby
unconditionally and irrevocably release all of our claims, causes or rights of
action or proceedings whether at law or in equity in any jurisdiction
whatsoever, whether known or unknown to the parties, whether or not presently
known to the law and whether arising before, on or after the date of this letter
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 each Opco in connection with the same.

This letter is intended to be executed as a deed and shall be governed by
English law.

EXECUTED as a Deed by MARCONI            )     _________________________________
PLC                                      )     Director
acting by [     ]                        )
and [      ]                                   _________________________________
                                               Director/Secretary

                                      107

<PAGE>

                                  SCHEDULE 12

                           SECURITY POWER OF ATTORNEY

THIS SECURITY POWER OF ATTORNEY is made on        March, 2003 by Marconi plc
(registered number 3846429) whose registered office is at New Century Park, PO
Box 53, Coventry CV3 1HJ (the COMPANY).

The Company irrevocably and by way of security for the performance of the
Company's obligations (the OBLIGATIONS) under the Scheme Implementation Deed
made on March, 2003 (the SID) entered into between the Company, Marconi
Corporation plc, E-A Continental Limited, Ancrane, Marconi Nominees Limited and
others hereby appoints Marconi Corporation plc (registered number 67307) whose
registered office is at New Century Park, PO Box 53, Coventry CV3 1HJ (CORP) and
any officer or employee of Corp acting in his or her capacity as such officer or
employee and with or under the authority of Corp to be its true and lawful
attorney (together and separately, the ATTORNEY) with the full power (including,
but not limited to, the power to sub-delegate) and authority of the Company in
its name to:

(a)      execute on the Company's behalf in whatever manner required any
         document or thing lawfully necessary to effect the Obligations in such
         form as the Attorney in its absolute discretion may reasonably deem
         necessary or desirable;

(b)      do or cause to be done all such acts and things as the Attorney in its
         absolute discretion may reasonably deem necessary or desirable in order
         to carry out and give effect to all of the Obligations; and

(c)      do every other act or thing and execute all such deeds, documents and
         certificates which the Attorney in its absolute discretion may
         reasonably deem necessary, proper, or expedient for all or any of the
         foregoing purposes (including, without limitation, to appoint corporate
         representatives to attend meetings of Corp on behalf of the Company and
         its nominee).

The Company undertakes to ratify whatever the Attorney may do in its name or on
its behalf in exercising the powers contained in this document and to indemnify
the Attorney against any loss incurred by him in connection with anything
lawfully done by him in the exercise or the purported exercise of the powers
contained in this document, save for any loss which would not have arisen but
for the negligence or fraud of the Attorney.

The Company declares that this power of attorney is given by way of security to
secure the performance of the Obligations by the Company and any matters
necessary, desirable, conducive or incidental thereto, and shall be irrevocable
and shall not be affected by the liquidation, receivership, the making of an
administration order or appointment of an administrative receiver or any other
equivalent event of or affecting the Company.

This security power of attorney shall be governed by and construed in accordance
with English law.

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IN WITNESS of which this security power of attorney has been executed as a deed
and has been delivered on the date which first appears above.

EXECUTED as a Deed by                    )     _________________________________
MARCONI PLC                              )     Director
acting by [     ]                        )
and [      ]                             )     _________________________________
                                               Director/Secretary

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                                  SCHEDULE 13

                              STATEMENT AND WAIVER

                      STATEMENT AND WAIVER OF INTER COMPANY
                                    BALANCES

                            DATED [     ] MARCH, 2003

                                   MARCONI PLC

                             MARCONI CORPORATION PLC

                   THE TRADING COMPANIES LISTED IN SCHEDULE 1

                                       AND

                THE NON-TRADING SUBSIDIARIES LISTED IN SCHEDULE 1

                                       AND

                  THE DORMANT SUBSIDIARIES LISTED IN SCHEDULE 1

                                  ALLEN & OVERY
                                     London

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THIS AGREEMENT is made on            March, 2003

BETWEEN:

(1)      MARCONI PLC, (registered number 03846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (plc);

(2)      MARCONI CORPORATION PLC, (registered number 00067307) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (CORP);

(3)      THE TRADING COMPANIES whose names and addresses are set out in Part 1
         of Schedule 1 (together with any person who accedes to this Agreement
         as a trading company, each a TRADING COMPANY);

(4)      THE NON-TRADING SUBSIDIARIES whose names and addresses are set out in
         Part 2 of Schedule 1 (together with any person who accedes to this
         Agreement as a non-trading company, each an NON-TRADING COMPANY); and

(5)      THE DORMANT SUBSIDIARIES whose names and addresses are set out in Part
         3 of Schedule 1 (together with any person who accedes to this Agreement
         as a dormant company, each a DORMANT COMPANY).

WHEREAS:

(A)      plc, Corp, each Trading Company, each Non-Trading Company and each
         Dormant Company are members of the Group.

(B)      On 29th August 2002, Corp and plc concluded with certain of their
         creditors non-binding indicative heads of terms detailing the
         principles for the proposed Financial Restructuring of Corp and plc.
         These non-binding indicative heads of terms were amended by addenda
         concluded on 13th December 2002.

(C)      It is proposed that plc will enter into the plc Scheme with the plc
         Scheme Creditors, constituting a compromise and arrangement between plc
         and the plc Scheme Creditors which will have the effect of compromising
         all of plc's creditors' claims against plc as at the Record Date (other
         than certain excluded claims), in consideration for a distribution of
         plc's assets.

(D)      It is proposed that Corp will enter into the Corp Scheme with the Corp
         Scheme Creditors, constituting a compromise and arrangement between
         Corp and the Corp Scheme Creditors which will have the effect of
         compromising all of Corp's creditors' claims against Corp as at the
         Record Date (other than certain excluded claims), in consideration for
         a distribution of cash, new equity and new debt securities of Corp.

(E)      In order to facilitate an effective implementation of the Schemes it is
         proposed that each Trading Company, each Non-Trading Company and each
         Dormant Company confirms its existing inter-company claims against plc
         and Corp and waives any other claims it may have against plc or Corp
         arising from circumstances existing prior to the Effective Date. It is

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         further proposed that plc and Corp will give equivalent waivers in
         favour of each Trading Company, each Non-Trading Company and each
         Dormant Company.

(F)      Each party to this Agreement severally considers that, given the
         Group's financial position, the entry by it into this Agreement and all
         agreements in relation thereto is in the best interests of it and its
         stakeholders and that the exercise by each party of its respective
         rights and the performance of its respective obligations pursuant to
         this Agreement will assist in the successful implementation of the
         Financial Restructuring.

(G)      It is the intention of the parties that this document be executed as an
         Agreement. Each Participating Company, Corp and plc agree to enter into
         this Agreement in consideration of the respective mutual obligations
         contained hereunder.

IT IS AGREED as follows:

1.       INTERPRETATION

         In this Agreement:

         ACCESSION LETTER means an accession letter in substantially the form
         set out in Schedule 4 (Accession Letter);

         CLAIM means any claim or right of action of any kind whatsoever or
         howsoever arising (whether actual or contingent), whether arising under
         common law, statute or otherwise and whether arising in the United
         Kingdom or any other place;

         CORP SCHEME means a scheme of arrangement in respect of Corp pursuant
         to section 425 of the Companies Act, 1985;

         COURT means the High Court of Justice of England and Wales;

         CREDITOR CONSENT means, in relation to any intra-group loan, that such
         loan is permitted in accordance with:

         (a)      the letter of undertaking dated 25th April, 2002 from Corp and
                  plc to the co-ordination committee of Corp's syndicate banks,
                  as amended; and

         (b)      the letter of undertaking dated 30th May, 2002 from Corp and
                  plc to the ad-hoc committee of Corp's bondholders, as amended

         including in each case any intra-group loan which is made with the
         requisite consent of the respective creditor groups;

         EFFECTIVE DATE means in relation to the Corp Scheme the date upon which
         an office copy of the order of the Court sanctioning the Corp Scheme is
         delivered to the Registrar of Companies for registration;

         FINANCIAL RESTRUCTURING means the proposed financial restructuring of
         the Corp and plc pursuant to the Schemes more particularly described in
         the scheme document (together with the explanatory statements and all
         appendices, schedules and annexures to it) to be issued in connection
         with the Schemes;

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         MARCONI GROUP means plc and each of plc's Subsidiaries;

         GROUP means plc and each of its Subsidiaries;

         PARTICIPATING COMPANY means any Trading Company, any Non-Trading
         Company or any Dormant Company;

         plc SCHEME means a scheme of arrangement in respect of plc pursuant to
         section 425 of the Companies Act, 1985;

         plc SCHEME CREDITORS means all scheme creditors of plc;

         RECORD DATE has the meaning given to it in the Corp Scheme or the plc
         Scheme, as appropriate;

         REGISTRAR shall have the meaning given in the Companies Act 1985;

         SCHEME means either or both of the Corp Scheme and the plc Scheme as
         appropriate including any modifications of either scheme or both or
         additions or conditions to either Scheme or both in each case as
         approved or imposed by the Court; and

         SUBSIDIARY has the meaning set forth in section 736 of Companies Act,
         1985 as amended by section 144 of the Companies Act, 1989.

1.2      Interpretation

         (a)      In this Agreement:

                  (i)      references to a person include a body corporate and
                           unincorporated associations of persons;

                  (ii)     references to an individual include his estate and
                           personal representatives; and

                  (iii)    references to a party to this Agreement include
                           references to the successors or assigns (immediate
                           or otherwise), of that party.

         (b)      In this Agreement any reference, express or implied, to an
                  enactment includes references to:

                  (i)      that enactment as re-enacted, amended, extended or
                           applied by or under any other enactment (before or
                           after the signature of this Agreement);

                  (ii)     any enactment which that enactment re-enacts (with or
                           without modification); and

                  (iii)    any subordinate legislation made (before or after the
                           signature of this Agreement) under that enactment, as
                           re-enacted, amended, extended or applied as described
                           in paragraph (i) above, or under any enactment
                           referred to in paragraph (ii) above,

                  and "enactment" includes any legislation in any jurisdiction.

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         (c)      In this Agreement, unless the contrary intention appears, a
                  reference to a clause, subclause or schedule is a reference to
                  a clause, subclause or schedule to this Agreement. The
                  schedules form part of this Agreement.

         (d)      Paragraphs (a), (b) and (c) above apply unless the contrary
                  intention appears.

         (e)      The headings in this Agreement do not affect its
                  interpretation.

2.       TARGET SUBSIDIARIES

2.1      Method of accession

         Corp shall, and is hereby authorised by each other Participating
         Company (other than plc) to, execute an Accession Letter, in respect of
         any proposed Trading Company, Non-Trading Company or Dormant Company,
         for itself and on behalf of each other Participating Company (other
         than plc). Plc shall promptly execute any Accession Letter delivered to
         it by Corp in respect of any proposed Trading Company, Non-Trading
         Company or Dormant Company.

2.2      Each Accession Letter shall take effect from the date of its execution
         by Corp, plc and the proposed Trading Company, Non-Trading Company or
         Dormant Company, as applicable.

3.       STATEMENT OF INTRA-GROUP LOANS

3.1      Intra-Group loans owed by Participating Companies

         Corp and plc each confirms, to the best of its knowledge and belief,
         that the loan balances set out opposite its name in Part 1 of Schedule
         2 (Intra-group loans owed by Participating Companies) are all of the
         loans which were owing to it by any Participating Company as at 31st
         December, 2002.

3.2      Intra-Group loans owed by Corp and plc

         Each Participating Company confirms, to the best of its knowledge and
         belief, that the loan balances set out opposite its name in Part 2 of
         Schedule 2 (Intra-group loans owed by Corp and plc) are all of the
         loans which were owing to it by Corp or plc as at 31st December, 2002.

4.       ACKNOWLEDGEMENT OF LIABILITIES

4.1      Acknowledgement by Corp and plc

         Each of Corp and plc acknowledges and confirms its liability in respect
         of:

         (a)      the loan balances set out in Part 2 of Schedule 2 (Intra-group
                  loans owed by Corp and plc) expressed to be owing by it;

         (b)      the trading and current account liabilities expressed to be
                  owing by it to each Participating Company in the management
                  accounts upon which the audited consolidated financial
                  accounts of plc as at 31st March, 2002 (in relation to each
                  Trading and each Non-Trading Company) and as at 30th
                  September, 2002 (in relation to each Dormant Company), have
                  been prepared, to the extent such trading and current account
                  liabilities remain outstanding;

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         (c)      the other preserved Claims set out in Part 2 of Schedule 3
                  (Other Preserved Claims owed by Corp and plc) expressed to be
                  owing by it.

4.2      Acknowledgement by each Participating Company

         Each Participating Company acknowledges and confirms its liability in
         respect of:

         (a)      the loan balances set out in Part 1 of Schedule 2 (Intra-group
                  loans owed by Participating Companies) and expressed to be
                  owing by it;

         (b)      the trading and current account liabilities and expressed to
                  be owing by it to plc and/or Corp in the management accounts
                  upon which the audited consolidated financial accounts of plc
                  as at 31st March, 2002 (in relation to each Trading and
                  Non-Trading Company) and as at 30th September, 2002 (in
                  relation to each Dormant Company), have been prepared, to the
                  extent such trading and current account liabilities remain
                  outstanding; and

         (c)      the other preserved Claims set out in Part 1 of Schedule 3
                  (Other Preserved Claims owed by Participating Companies)
                  expressed to be owing by it.

5.       WAIVER OF CLAIMS

5.1      Waiver by Corp and plc

         (a)      With effect from the Effective Date, each of Corp and plc
                  hereby unconditionally and irrevocably waives and releases
                  each Participating Company from any Claim which it may have
                  against that Participating Company and which arises out of or
                  in relation to any matter or circumstance existing on or prior
                  to the Effective Date.

         (b)      The waiver and release contained in paragraph (a) above shall
                  not apply in relation to:

                  (i)      any intra-group loan owed by a Participating Company
                           to Corp and/or plc and set out in Part 1 of Schedule
                           2 (Intra-group loans owed by Participating
                           Companies), including interest accrued thereon at
                           such applicable commercial rate of interest agreed
                           between the parties;

                  (ii)     any intra-group loan made to a Participating Company
                           by Corp on or after 1st January, 2003:

                           (A)      in the ordinary and usual course of
                                    business; or

                           (B)      with Creditor Consent,

                           including interest accrued thereon at such applicable
                           commercial rate of interest agreed between the
                           parties;

                  (iii)    any trading and current account liabilities owed by a
                           Participating Company to Corp and/or plc and detailed
                           in the management accounts upon which the audited
                           consolidated financial accounts of plc, as at 31st
                           March, 2002 (in relation to each Trading and
                           Non-Trading Company) and as at 30th September, 2002
                           (in relation to each Dormant Company), have been

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<PAGE>

                           prepared, to the extent such trading and current
                           account liabilities remain outstanding;

                  (iv)     any trading and current account liabilities owed by a
                           Trading Company or a Non-Trading Company to Corp
                           and/or plc and incurred after 31st, March, 2002 in
                           the ordinary and usual course of that Trading
                           Company's or Non-Trading Company's (as the case may
                           be) business, to the extent such trading and current
                           account liabilities remain outstanding;

                  (v)      any counter indemnity or equivalent reimbursement
                           obligation (which is written or is implied by law and
                           whether or not contingent) of a Participating Company
                           to Corp and/or plc under any financial guarantee or
                           indemnity (which is written or is implied by law) and
                           which is given by Corp and/or plc and is: (A) in
                           favour of any person which is not a member of the
                           Marconi Group (including the issuer of any
                           performance bond, bank guarantee or similar
                           instrument) and (B) in respect of any contractual
                           obligations of that Participating Company; provided
                           that where any payment has been made under such a
                           guarantee or indemnity on or before 31st March, 2002,
                           the resultant counter indemnity shall not be
                           preserved under this clause 5.1 (b) (v);

                  (vi)     any counter indemnity or equivalent reimbursement
                           obligation (which is written or is implied by law and
                           whether or not contingent) of a Participating Company
                           to Corp and/or plc under any non-financial guarantee
                           or indemnity (which is contractual or implied by law)
                           and which is given by Corp and/or plc and is: (A) in
                           favour of any person which is not a member of the
                           Marconi Group; (B) in respect of any contractual or
                           implied by law obligations of that Participating
                           Company and (C) set out in Part 1 of Schedule 5
                           (non-financial guarantees and indemnities given by
                           Corp or plc); provided that where any payment has
                           been made under such a guarantee or indemnity on or
                           before 31st March, 2002, the resultant counter
                           indemnity shall not be preserved under this clause
                           5.1 (b) (vi); and

                  (vii)    any other preserved Claims set out in Part 1 of
                           Schedule 3 (Other Preserved Claims owed by
                           Participating Companies) expressed to be owing by it

                  and each such Claim shall remain in full force and effect
                  notwithstanding the provisions of this Agreement.

5.2      Waiver by Participating Companies

         (a)      With effect from the Effective Date, each Participating
                  Company hereby unconditionally and irrevocably waives and
                  releases Corp and/or plc from any Claim which it may have
                  against Corp and/or plc and which arises out of or in relation
                  to any matter or circumstance existing on or prior to the
                  Effective Date.

         (b)      The waiver and release contained in paragraph (a) above shall
                  not apply in relation to:

                  (i)      any intra-group loan owed by Corp and/or plc to a
                           Participating Company and set out in Part 2 of
                           Schedule 2 (Intra-group loans owed by Corp and plc),

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                           including interest accrued thereon at such applicable
                           commercial rate of interest agreed between the
                           parties;

                  (ii)     any intra-group loan made to Corp by a Participating
                           Company on or after 1st January, 2003:

                           (A)      in the ordinary and usual course of
                                    business;

                           (B)      with Creditor Consent,

                  including interest accrued thereon at such applicable
                  commercial rate of interest agreed between the parties;

                  (iii)    any trading and current account liabilities owed by
                           Corp and/or plc to a Participating Company and
                           detailed in the management accounts upon which the
                           audited consolidated financial accounts of plc, as at
                           31st March, 2002 (in relation to each Trading and
                           Non-Trading Company) and as at 30th September, 2002
                           (in relation to each Dormant Company), have been
                           prepared, to the extent such trading and current
                           account liabilities remain outstanding;

                  (iv)     any trading and current account liabilities owed by
                           Corp and/or plc to a Trading Company or a Non-Trading
                           Company and incurred after 31st March, 2002 in the
                           ordinary and usual course of Corp's and/or plc's (as
                           the case may be) business, to the extent such trading
                           and current account liabilities remain outstanding;

                  (v)      any counter indemnity or equivalent reimbursement
                           obligation (which is written or is implied by law and
                           whether or not contingent) of Corp and/or plc to a
                           Participating Company under any financial guarantee
                           or indemnity (which is written or is implied by law)
                           and which is given by such Participating Company and
                           is: (A) in favour of any person which is not a member
                           of the Marconi Group (including the issuer of any
                           performance bond, bank guarantee or similar
                           instrument) and (B) in respect of any contractual
                           obligations of Corp and/or plc; provided that where
                           any payment has been made under such a guarantee or
                           indemnity on or before 31st March, 2002, the
                           resultant counter indemnity shall not be preserved
                           under this clause 5.2 (b) (v);

                  (vi)     any counter indemnity or equivalent reimbursement
                           obligation (which is written or is implied by law and
                           whether or not contingent) of Corp and/or plc to a
                           Participating Company under any non-financial
                           guarantee or indemnity (which is contractual or
                           implied by law) and which is given by such
                           Participating Company and is: (A) in favour of any
                           person which is not a member of the Marconi Group;
                           (B) in respect of any contractual or implied by law
                           obligations of Corp and/or plc and (C) set out in
                           Part 2 of Schedule 5 (non-financial guarantees and
                           indemnities given by Participating Companies);
                           provided that where any payment has been made under
                           such a guarantee or indemnity on or before 31st
                           March, 2002, the resultant counter indemnity shall
                           not be preserved under this clause 5.2 (b) (vi); and

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                  (vii)    any other preserved Claim set out in Part 2 of
                           Schedule 3 (Other Preserved Claims owed by Corp and
                           plc) expressed to be owing by it,

                  and each such Claim shall remain in full force and effect
                  notwithstanding the provisions of this Agreement.

6.       POST-EFFECTIVE DATE CLAIMS

6.1      Claims by Corp and plc

         Corp, plc and each Participating Company agree that nothing contained
         in this Agreement shall constitute a waiver or release by Corp and/or
         plc of any Claim it may have against any Participating Company and
         which arises out of or in relation to any matter or circumstance
         arising after the Effective Date and which did not arise out of any
         matter or circumstance existing on or prior to the Effective Date. For
         the avoidance of doubt, any Claim of Corp and/or plc against any
         Participating Company arising out of or in relation to any matter or
         circumstance arising after the Effective Date, in respect of any
         contract or arrangement entered into or arising by operation of law
         prior to the Effective Date shall not be affected by this Agreement.

6.2      Claims by Participating Companies

         Corp, plc and each Participating Company agree that nothing contained
         in this Agreement shall constitute a waiver or release by any
         Participating Company of any Claim it may have against Corp and/or plc
         and which arises out of or in relation to any matter or circumstance
         arising after the Effective Date and which did not arise out of any
         matter or circumstance existing on or prior to the Effective Date. For
         the avoidance of doubt, any Claim a Participating Company may have
         against Corp and/or plc arising out of or in relation to any matter or
         circumstance arising after the Effective Date, in respect of any
         contract or arrangement entered into or arising by operation of law
         prior to the Effective Date, shall not be affected by this Agreement.

7.       REPRESENTATIONS AND WARRANTIES

         Corp, plc and each Participating Company severally represents and
         warrants to each other party that:

         (a)      it has all requisite power and authority to execute and
                  deliver this Agreement and to carry out the transactions
                  contemplated by, and perform its obligations under, this
                  Agreement, and that it has taken all action necessary to
                  authorise such execution and delivery and the performance of
                  such obligations;

         (b)      the execution and delivery by it of this Agreement, and the
                  performance by it of its obligations hereunder does not and
                  will not violate or conflict with any law, rule or regulation
                  applicable to it, any provisions of constitutional documents,
                  any order or judgment of any court or other agency or
                  government applicable to it nor require any registration,
                  filing, consent, approval, notice or other action to, with or
                  by, any governmental or other authority, court or regulatory
                  body, except as expressly provided in this Agreement; and

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         (c)      this Agreement constitutes legal, valid and binding
                  obligations, enforceable against it in accordance with its
                  terms, except to the extent that enforcement may be limited by
                  bankruptcy, insolvency, reorganisation, moratorium or other
                  similar laws relating to or limiting creditors' rights
                  generally.

8.       COSTS

         Each party will be solely responsible for all costs and expenses
         incurred by it in connection with the negotiation, preparation and
         execution of this Agreement and for its compliance with the terms of
         this Agreement.

9.       NOTICES

         (a)      Any notice given in connection with this Agreement must be in
                  English. Any other document provided in connection with this
                  Agreement must be in English or accompanied by a certified
                  English translation; in this case, the English translation
                  prevails unless the document is a statutory or other official
                  document.

         (b)      Any notice or other formal communication given under this
                  Agreement must be in writing (which includes fax, but not
                  email) and may be delivered or sent by post or fax to the
                  party to be served at its address set out below or, where a
                  party accedes to this Agreement in accordance with clause 2,
                  as set out in the relevant Accession Letter:

                           CORP                   PLC

                  New Century Park                New Century Park
                  PO Box 53                       PO Box 53
                  Coventry                        Coventry
                  Warwickshire CV3 1HJ            Warwickshire CV3 1HJ

                  Attn: Company Secretary         Attn: Company Secretary

                  Fax: 020 7306 1395              Fax: 020 7306 1395

                  or at such other address or fax number as it may have notified
                  to the other parties in accordance with this clause. Any
                  notice or other document sent by post shall be sent by prepaid
                  first class post (if within the United Kingdom) or by prepaid
                  airmail (if elsewhere).

         (c)      Any notice or other formal communication shall be deemed to
                  have been given:

                  (i)      if delivered, at the time of delivery; or

                  (ii)     if posted, at 10.00 a.m. on the second Business Day
                           after it was put into the post; or

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                  (iii)    if sent by fax, on the date of transmission, if
                           transmitted before 3.00 p.m. on any Business Day, and
                           in any other case on the Business Day following the
                           date of transmission.

         (d)      In proving service of a notice or other formal communication,
                  it shall be sufficient to prove that delivery was made or that
                  the envelope containing the communication was properly
                  addressed and posted either by prepaid first class post or by
                  prepaid airmail, as the case may be or that the fax was
                  properly addressed and transmitted, as the case may be.

10.      ASSIGNMENT

         None of the parties to this Agreement may assign any of their
         respective rights or obligations under this Agreement. This Agreement
         is intended to bind and inure to the benefit of the parties and their
         respective successors, permitted assignees, administrators and
         representatives. The agreements, representations, warranties and
         obligations of each of the parties to this Agreement are, in all
         respects, several and not joint.

11.      GENERAL

         (a)      This Agreement may be executed in one or more counterparts,
                  each of which will be deemed an original and all of which will
                  constitute one and the same Agreement and any party may enter
                  into this Agreement by executing a counterpart.

         (b)      Time is not of the essence in relation to any obligation under
                  this Agreement unless:

                  (i)      time is expressly stated to be of the essence in
                           relation to that obligation; or

                  (ii)     one party fails to perform an obligation by the time
                           specified in this Agreement and the other party
                           serves a notice on the defaulting party requiring it
                           to perform the obligation by a specified time and
                           stating that time is of the essence in relation to
                           that obligation.

         (c)      The rights of each party under this Agreement:

                  (i)      may be exercised as often as necessary;

                  (ii)     are cumulative and not exclusive of rights and
                           remedies provided by law; and

                  (iii)    may be waived only in writing and specifically.

         (d)      A waiver (whether express or implied) by one of the parties of
                  any of the provisions of this Agreement or of any breach of or
                  default by the other party in performing any of those
                  provisions shall not constitute a continuing waiver and that
                  waiver shall not prevent the waiving party from subsequently
                  enforcing any of the provisions of this Agreement not waived
                  or from acting on any subsequent breach of or default by the
                  other party under any of the provisions of this Agreement.

         (e)      In the event that any provision of this Agreement is void and
                  unenforceable by reason of any applicable law, it shall be
                  deleted and the remaining provisions of this

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                  Agreement shall continue in full force and effect, and if
                  required be so amended as necessary to give effect to the
                  spirit of this Agreement so far as possible.

12.      ENTIRE AGREEMENT

         (a)      Each party acknowledges that in agreeing to enter into this
                  Agreement it has not relied on any representation, warranty,
                  collateral contract or other assurance (except those set out
                  in this Agreement) made by or on behalf of any other party
                  before the signature of this Agreement. Each party waives all
                  rights and remedies which, but for this subclause, might
                  otherwise be available to it in respect of any such
                  representation, warranty, collateral contract or other
                  assurance.

         (b)      Nothing in this preceding subclause limits or excludes any
                  liability for fraud.

13.      THIRD PARTIES

         No term of this Agreement is enforceable by a person who is not a party
         to this Agreement.

14.      GOVERNING LAW AND JURISDICTION

         This Agreement will be governed by and construed in accordance with
         English law. Each party irrevocably submits to the jurisdiction of the
         English courts for all purposes relating to this Agreement.

15.      SERVICE OF PROCESS

         Without prejudice to any other mode of service allowed under any
         relevant law, each Participating Company (other than those incorporated
         in England and Wales):

         (a)      irrevocably appoints Corp as its agent for service of process
                  in relation to any proceedings before the English courts in
                  connection with this Agreement; and

         (b)      agrees that failure by a process agent to notify it of the
                  process will not invalidate the proceedings concerned.

                                      121

<PAGE>

                                   SCHEDULE 1

                         INITIAL PARTICIPATING COMPANIES

                                     PART 1

                            INITIAL TRADING COMPANIES

1.       Marconi plc

2.       Marconi Corporation plc

                                     PART 2

                          INITIAL NON-TRADING COMPANIES

                                 [No companies]

                                     PART 3

                            INITIAL DORMAN COMPANIES

                                 [No companies]

                                      122

<PAGE>

                                   SCHEDULE 2

                                INTRA-GROUP LOANS

                                     PART 1

               INTRA-GROUP LOANS OWED BY PARTICIPATING COMPANIES(2)

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                          OWED TO PLC                 OWED TO CORP
------------------------------------------------------------------------------------
<S>                                       <C>                       <C>
TRADING COMPANIES (MATERIAL)
------------------------------------------------------------------------------------
ALBANY PARTNERSHIP LIMITED                                              1,079,346.13
------------------------------------------------------------------------------------
GPT SPECIAL PROJECT MANAGEMENT
LIMITED
------------------------------------------------------------------------------------
MARCONI BONDING LIMITED                                                26,563,509.96

                                                                     + 32,851,191.00

                                                                     + 45,289,547.16
                                                                       -------------

                                                                      104,704,248.12
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                     49,115.00
INVESTMENTS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(IRELAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED                                        126,924,380.22
(UK)
                                                                    +   7,166,659.40

                                                                    + 140,876,950.87

                                                                       +1,547,667.62

                                                                    + 311,701,804.42
                                                                      --------------

                                                                      588,217,462.53
------------------------------------------------------------------------------------
</TABLE>

------------------------
(2)

                                      123

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                          OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                      <C>                          <C>
MARCONI COMMUNICATIONS OPTICAL
NETWORKS LIMITED (IRELAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OVERSEAS SERVICES LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
AFRICA PTY LIMITED
------------------------------------------------------------------------------------
MARCONI OPTICAL COMPONENTS                                            120,601,369.40
LIMITED
------------------------------------------------------------------------------------
MARCONI CORPORATION PLC                  39,485,100.44
------------------------------------------------------------------------------------
MARCONI PLC                                                           201,888,433.35
------------------------------------------------------------------------------------
MARCONI SOFTWARE SOLUTIONS                                              1,933,904.88
LIMITED
------------------------------------------------------------------------------------
METAPATH SOFTWARE                                                       9,015,056.11
INTERNATIONAL LIMITED
------------------------------------------------------------------------------------
RONALDI LTD
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SA
(FRANCE)
------------------------------------------------------------------------------------
MNI TECNOLOGIASE E SISTEMAS DE                                             84,734.72
COMMUNICACAO SA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS B.V.
(NETHERLANDS)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GMBH
(GERMANY)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS REAL
ESTATE GMBH
------------------------------------------------------------------------------------
</TABLE>

                                      124

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                          OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                       <C>                          <C>
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS GMBH & CO KG
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS VER. GMBH
------------------------------------------------------------------------------------
BEIJING MARCONI COMMUNICATIONS
TECHNOLOGY CO LTD
------------------------------------------------------------------------------------
GEC (HONG KONG) LIMITED
------------------------------------------------------------------------------------
MARCONI AUSTRALIA PTY LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS ASIA                                             205,824.96
LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
EAST ASIA PTE LTD
------------------------------------------------------------------------------------
THE GENERAL ELECTRIC COMPANY
OF SINGAPORE PRIVATE LIMITED
(NOW KNOWN AS MARCONI
SINGAPORE PTE LTD)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONSSPA
------------------------------------------------------------------------------------
MARCONI IBERIA SA
------------------------------------------------------------------------------------
MARCONI MOBILE ACCESS SPA
------------------------------------------------------------------------------------
MARCONI SUD SPA
------------------------------------------------------------------------------------
MARCONI INTERNATIONAL SPA
------------------------------------------------------------------------------------
</TABLE>

                                      125

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                          OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                       <C>                         <C>
MARCONI COMMUNICATIONS DE
MEXICO SA DE CV
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                 31,374,720.05
TELEMULTI LIMITADA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS DO
BRASIL LTDA
------------------------------------------------------------------------------------
FORE SYSTEMS LIMITADA
------------------------------------------------------------------------------------
MARCONI COLUMBIA SA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                    481,426.26
ARGENTINA SA
------------------------------------------------------------------------------------
MARCONI VENEZUELA CA                                                      310,597.59
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL                                         35,849,269.63
NETWORKS CORP
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TECHNOLOGY INC
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CANADA
INC
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS FEDERAL
INC
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS INC                                            105,206,236.80
------------------------------------------------------------------------------------
MARCONI INC
------------------------------------------------------------------------------------
MARCONI SOFTWARE INTERNATIONAL            1,098,889.13*
INC
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (US) INC
------------------------------------------------------------------------------------
</TABLE>

-------------------------
* It is intended that this amount shall be assigned on or before the Record Date
to Corp as part of a Trade Receivable Assignment to be entered into by Corp and
plc

                                      126

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED TO CORP
------------------------------------------------------------------------------------
<S>                                       <C>                       <C>
SYSTEMS MANAGEMENT SPECIALISTS            3,563,345.14*
INC
------------------------------------------------------------------------------------
MARCONI MIDDLE EAST (SAUDI
ARABIA)
------------------------------------------------------------------------------------
MARCONI MIDDLE EAST LLC (DUBAI)
------------------------------------------------------------------------------------
MARCONI APPLIED TECNOLOGIES SA
------------------------------------------------------------------------------------
SNC COMPOSANTS & CIE
------------------------------------------------------------------------------------

------------------------------------------------------------------------------------
NON-TRADING SUBSIDIARIES
------------------------------------------------------------------------------------
MARCONI PROPERTY LTD
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL                                                     192,201.48
INDUSTRIES LIMITED
------------------------------------------------------------------------------------
BRUTON STREET INVESTMENTS
LIMITED
------------------------------------------------------------------------------------
EA CONTINENTAL LIMITED                     219,000,000*
------------------------------------------------------------------------------------
ELLIOTT-AUTOMATION HOLDINGS
LIMITED
------------------------------------------------------------------------------------
THE ENGLISH ELECTRIC COMPANY,                                           1,537,611.83
LIMITED
------------------------------------------------------------------------------------
MARCONI (BRUTON STREET) LIMITED                                     + 203,281,257.20

                                                                    + 104,419,241.30

                                                                    + 529,343,428.50
                                                                      --------------

                                                                      837,043,927.00
------------------------------------------------------------------------------------
</TABLE>

-----------------------
* It is intended that plc shall release this loan in consideration for the
assignment of the EA Continental Limited-Corp loan referred to below.

                                      127

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                      <C>
MARCONI (HOLDINGS) LIMITED
------------------------------------------------------------------------------------
MARCONI AEROSPACE UNLIMITED
------------------------------------------------------------------------------------
MARCONI CAPITAL LIMITED                                               + 4,658,963.85

                                                                     + 27,174,596.79
                                                                       -------------

                                                                       31,833,560.64
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AFRICA
(PTY) LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS LIMITED
------------------------------------------------------------------------------------
MARCONI (DGP1) LIMITED                                              + 372,717,107.72

                                                                    +   7,474,093,94
                                                                        ------------

                                                                      380,191,201.66

------------------------------------------------------------------------------------
MARCONI (DGP2) LIMITED                                              + 372,717,107.72

                                                                    +   7,474,093,69
                                                                        ------------

                                                                      380,191,201.41
------------------------------------------------------------------------------------
MARCONI (ELLIOTT AUTOMATION)
LIMITED
------------------------------------------------------------------------------------
MOBILE SYSTEMS INTERNATIONAL
HOLDINGS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GMBH
(SWITZERLAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                    575,830.28
HOLDINGS GMBH (GERMANY)
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES LTD (NOW
------------------------------------------------------------------------------------
</TABLE>

                                      128

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                 OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                         <C>
KNOWN AS
MARCONI AUSTRALIA HOLDINGS
PTY. LIMITED)
------------------------------------------------------------------------------------
MARCONI HOLDINGS SPA
------------------------------------------------------------------------------------
RELTEC MEXICO SA DE CV (NOW
KNOWN AS MARCONI
COMMUNICATIONS, S.A. DE C.V.)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(CANADA)
------------------------------------------------------------------------------------
FS FINANCE CORP
------------------------------------------------------------------------------------
FS HOLDING CORP
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS NORTH
AMERICA INC.
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CANADA
HOLDINGS INC.
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS HOLDINGS INC.
------------------------------------------------------------------------------------
METAPATH SOFTWARE INTERNATIONAL INC.                                   20,535,178.28
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
LIMITED (BERMUDA) (NOW
KNOWN AS MARCONI
INTERNATIONAL LIMITED)
------------------------------------------------------------------------------------

------------------------------------------------------------------------------------
DORMANT SUBSIDIARIES
------------------------------------------------------------------------------------
A.B. DICK HOLDINGS LTD
------------------------------------------------------------------------------------
ARROW LTD
------------------------------------------------------------------------------------
ASSOCIATED AUTOMATION LTD
------------------------------------------------------------------------------------
</TABLE>

                                      129

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
ASSOCIATED ELECTRICAL
INDUSTRIES HOLDINGS LTD
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES (MANCHESTER) LTD
------------------------------------------------------------------------------------
CLANVILLE LIMITED
------------------------------------------------------------------------------------
COMBINED ELECTRICAL MANUFACTURERS LTD
------------------------------------------------------------------------------------
COPPENHALL NOMINEES LIMITED
------------------------------------------------------------------------------------
DAYMO LTD
------------------------------------------------------------------------------------
FF CHRESTIAN & CO LTD
------------------------------------------------------------------------------------
GPT CONSUMER PRODUCTS LTD
------------------------------------------------------------------------------------
GPT PAYPHONE SYSTEMS LTD
------------------------------------------------------------------------------------
GPT RELIANCE LTD
------------------------------------------------------------------------------------
THE KINGSWAY HOUSING ASSOCIATION LTD
------------------------------------------------------------------------------------
KRAYFORD LTD
------------------------------------------------------------------------------------
LARNERWAY LTD
------------------------------------------------------------------------------------
LAYANA LIMITED                                                            165,556.64
------------------------------------------------------------------------------------
MARCONI CASWELL
DEVELOPMENTS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OPTICAL FIBRES LIMITED
------------------------------------------------------------------------------------
MARCONI (FIFTEEN) LIMITED
------------------------------------------------------------------------------------
                                                                          196,822.17
------------------------------------------------------------------------------------
MARCONI (FIFTY-NINE) LTD
------------------------------------------------------------------------------------
</TABLE>

                                      130

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
MARCONI (FIFTY-THREE) LTD
------------------------------------------------------------------------------------
MARCONI (FORTY-FIVE) LIMITED
------------------------------------------------------------------------------------
MARCONI (FORTY-FOUR) LTD
------------------------------------------------------------------------------------
MARCONI (FORTY-THREE) LIMITED
------------------------------------------------------------------------------------
MARCONI G.M. LIMITED                                                      283,500.00
------------------------------------------------------------------------------------
MARCONI MOBILE SYSTEMS LIMITED
------------------------------------------------------------------------------------
MARCONI (NINE) LIMITED
------------------------------------------------------------------------------------
MARCONI PHOTONICA LIMITED
------------------------------------------------------------------------------------
MARCONI (SIXTEEN) LIMITED
------------------------------------------------------------------------------------
MARCONI (SIXTY-NINE) LIMITED                                              801,146.76
------------------------------------------------------------------------------------
MARCONI (SIXTY-TWO) LTD                                                 2,859,252.73
------------------------------------------------------------------------------------
MARCONI (THIRTEEN) LIMITED
------------------------------------------------------------------------------------
MARCONI (THIRTY-TWO) LIMITED
------------------------------------------------------------------------------------
MARCONI (TLC) LTD
------------------------------------------------------------------------------------
MARCONI (TWENTY-SEVEN) LIMITED
------------------------------------------------------------------------------------
MARCONI (WCGL) UNLIMITED
------------------------------------------------------------------------------------
MCMICHAEL LIMITED
------------------------------------------------------------------------------------
METROPOLITAN-VICKERS
ELECTRICAL CO LTD
------------------------------------------------------------------------------------
</TABLE>

                                      131

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
MOBILE SYSTEMS GROUP LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS (HOLDINGS) LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS SERVICES LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS (UK) LTD
------------------------------------------------------------------------------------
THE M-O VALVE CO LTD                                                      101,122.49
------------------------------------------------------------------------------------
MSI CELLULAR INVESMTNETS (ONE) LTD
------------------------------------------------------------------------------------
PALMAZ LTD
------------------------------------------------------------------------------------
PHOTONICA LIMITED
------------------------------------------------------------------------------------
PHOTONIQA LIMITED
------------------------------------------------------------------------------------
PYFORD LIMITED
------------------------------------------------------------------------------------
RAINFORD GROUP TRUSTEES LTD
------------------------------------------------------------------------------------
RAINFORD RACKS LTD
------------------------------------------------------------------------------------
RELTEC (COVENTRY) LTD
------------------------------------------------------------------------------------
ROBERT STEPHENSON & HAWTHORNS LTD
------------------------------------------------------------------------------------
THE ROTARY ENGINEERING COMPANY LIMITED                                      1,876.19
------------------------------------------------------------------------------------
SALPLEX LTD
------------------------------------------------------------------------------------
STYLES & MEALING LIMITED
------------------------------------------------------------------------------------
TCL PROJECTS LIMITED
------------------------------------------------------------------------------------
ZIPBOND LTD
------------------------------------------------------------------------------------
</TABLE>

                                      132

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                       <C>
THE VULCAN FOUNDRY LTD
------------------------------------------------------------------------------------
TRADING COMPANIES (OTHERS)
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES INTERNATIONAL
LIMITED
------------------------------------------------------------------------------------
FORE SYSTEMS LIMITED                                                       87,021.00
------------------------------------------------------------------------------------
GPT MIDDLE EAST LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
(CIS) LIMITED
------------------------------------------------------------------------------------
MARCONI FINANCE PLC
------------------------------------------------------------------------------------
MARCONI FLEET MANAGEMENT LIMITED
------------------------------------------------------------------------------------
MARCONI INFORMATION SYSTEMS LIMITED                                    15,751,443.94
------------------------------------------------------------------------------------
MARCONI (NCP) LIMITED
------------------------------------------------------------------------------------
NETSCIENT LIMITED
------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES LIMITED
------------------------------------------------------------------------------------
TELEPHONE CABLES LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                 12,843,257.68
INTERNATIONAL LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CHINA LIMITED                                      381,562.68
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                               + 45,165,548.52
INTERNATIONAL HOLDINGS LIMITED                                       + 41,726,156.51
                                                                     + 28,633,106.00
                                                                       -------------
                                                                      115,524,811.03
------------------------------------------------------------------------------------
BRUTON STREET OVERSEAS                                                    100,000.00
INVESTMENTS LIMITED
------------------------------------------------------------------------------------
</TABLE>

                                      133

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                      <C>
BRUTON STREET PARTNERSHIP                                           + 965,313,353.52
                                                                    + 965,313,353.52
                                                                      --------------
                                                                    1,930,626,707.04
------------------------------------------------------------------------------------
MARCONI INDIA LIMITED                                                     + 2,590.85
                                                                      + 1,306,939.05
                                                                        ------------
                                                                        1,309,529.90
------------------------------------------------------------------------------------
MARCONI (THIRTY-ONE) LIMITED                                                8,346.03
------------------------------------------------------------------------------------
HIGHROSE LIMITED                                                      701,208,853.58
------------------------------------------------------------------------------------
ANCRANE
------------------------------------------------------------------------------------
WOODS OF COLCHESTER
HOUSING SOCIETY LIMITED
------------------------------------------------------------------------------------
MARCONI INSURANCE LIMITED
------------------------------------------------------------------------------------
TETREL LIMITED
------------------------------------------------------------------------------------
RELTEC SERVICES (UK) LIMITED
------------------------------------------------------------------------------------
MARCONI ANSTY LIMITED
------------------------------------------------------------------------------------
MARCONI NOMINEES LIMITED
------------------------------------------------------------------------------------
YESLINK UNLIMITED
------------------------------------------------------------------------------------
ELLIOT AUTOMATION CONTINENTAL SA                                             226,500
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL NOMINEES LIMITED
------------------------------------------------------------------------------------
MARCONI DEFENSE OVERSEAS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
GLOBAL NETWORKS LIMITED
------------------------------------------------------------------------------------
MARCONICOM LIMITED
------------------------------------------------------------------------------------
</TABLE>

                                      134

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
MICRO SCOPE LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL INVESTMENTS
LIMITED
------------------------------------------------------------------------------------
GPT (NEDERLAND) BV
------------------------------------------------------------------------------------
GEC OF PAKISTAN LIMITED                                                   100,000.00
------------------------------------------------------------------------------------
GEC ZAMBIA LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AB
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS BVBA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SARL
------------------------------------------------------------------------------------
MARCONI CHANNEL MARKETS GMBH
------------------------------------------------------------------------------------
AEI FURNACES PTY LTD
------------------------------------------------------------------------------------
HARMAN INFORMATION TECHNOLOGY PTY LTD
------------------------------------------------------------------------------------
MARCONI NEW ZEALAND LIMITED
------------------------------------------------------------------------------------
MARCONI TELECOMMUNICATIONS
INDIA PRIVATE LTD
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (AUSTRALIA) PTY LTD
------------------------------------------------------------------------------------
METAPATH SOFTWARE INTERNATIONAL
(HONG KONG) LIMITED
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (INDIA)
------------------------------------------------------------------------------------
</TABLE>

                                      135

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
PRIVATE LIMITED
------------------------------------------------------------------------------------
MARCONI ACQUISITION CORP
------------------------------------------------------------------------------------
MARCONI FINANCE INC.
------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES INC.                                             3,035,284.87
------------------------------------------------------------------------------------
APT NEDERLANDS BV
------------------------------------------------------------------------------------
APT TELECOMMUNICIONES SL
------------------------------------------------------------------------------------
METAPATH SOFTWARE INTERNATIONAL AB
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL BRASIL LTDA
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (FRANCE) SA
------------------------------------------------------------------------------------
MARCONI PROJECTS HONG KONG LTD                                             22,311.00
------------------------------------------------------------------------------------
</TABLE>

                                     PART 2

                    INTRA-GROUP LOANS OWED BY CORP AND PLC*

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
TRADING COMPANIES
(MATERIAL)
------------------------------------------------------------------------------------
</TABLE>

------------------------
*        It is intended that all loan balances owed by plc shall be schemed as
         part of the plc Scheme.

                                      136

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED BY CORP
------------------------------------------------------------------------------------
<S>                                      <C>                        <C>
ALBANY PARTNERSHIP LIMITED
------------------------------------------------------------------------------------
GPT SPECIAL PROJECT MANAGEMENT                                         18,793,671.00
LIMITED
------------------------------------------------------------------------------------
MARCONI BONDING LIMITED                                                         1.00
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INVESTMENTS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED                                            56,000,765
(IRELAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED                                          1,863,584.92
(UK)
                                                                    +   6,962,341.40

                                                                                   +

                                                                          150,000.00
                                                                          ----------

                                                                        8,975,926.32
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
NETWORKS LIMITED (IRELAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OVERSEAS SERVICES LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
AFRICA PTY LIMITED
------------------------------------------------------------------------------------
MARCONI OPTICAL COMPONENTS                                              6,147,994.77
LIMITED
------------------------------------------------------------------------------------
MARCONI CORPORATION PLC                  201,888,433.35
------------------------------------------------------------------------------------
MARCONI PLC                                                            39,485,100.44
------------------------------------------------------------------------------------
MARCONI SOFTWARE SOLUTIONS                                             29,802,166.98
LIMITED
------------------------------------------------------------------------------------
METAPATH SOFTWARE                                                     + 1,797,945.28
------------------------------------------------------------------------------------
</TABLE>

                                      137

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                         <C>
INTERNATIONAL LIMITED                                                   + 907,313.26
                                                                          ----------

                                                                        2,705,258.54
------------------------------------------------------------------------------------
RONALDI LTD
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SA                                               5,233,196.47
(FRANCE)
------------------------------------------------------------------------------------
MNI TECNOLOGIASE E SISTEMAS DE
COMMUNICACAO SA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS B.V.
(NETHERLANDS)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GMBH                                             6,531,622.34
(GERMANY)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS REAL
ESTATE GMBH
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS GMBH & CO KG
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS VER. GMBH
------------------------------------------------------------------------------------
BEIJING MARCONI COMMUNICATIONS
TECHNOLOGY CO LTD
------------------------------------------------------------------------------------
GEC (HONG KONG) LIMITED                                                53,669,470.54
------------------------------------------------------------------------------------
MARCONI AUSTRALIA PTY LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS ASIA
LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
EAST ASIA PTE LTD
------------------------------------------------------------------------------------
</TABLE>

                                      138

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC             OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                <C>
                                                                     SGD7,450,000.00
THE GENERAL ELECTRIC COMPANY                                       +   GBP860,000.00
OF SINGAPORE PRIVATE LIMITED                                    (Total equivalent to
(NOW KNOWN AS MARCONI                                         GBP 3,527,955.88 as at
SINGAPORE PTE LTD)                                                         31/12/02)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONSSPA
------------------------------------------------------------------------------------
MARCONI IBERIA SA                                                       7,169,860.51
------------------------------------------------------------------------------------
MARCONI MOBILE ACCESS SPA
------------------------------------------------------------------------------------
MARCONI SUD SPA
------------------------------------------------------------------------------------
MARCONI INTERNATIONAL SPA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS DE
------------------------------------------------------------------------------------
MEXICO SA DE CV
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TELEMULTI LIMITADA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS DO
BRASIL LTDA
------------------------------------------------------------------------------------
FORE SYSTEMS LIMITADA
------------------------------------------------------------------------------------
MARCONI COLUMBIA SA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ARGENTINA SA
------------------------------------------------------------------------------------
MARCONI VENEZUELA CA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
NETWORKS CORP
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TECHNOLOGY INC
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
------------------------------------------------------------------------------------
</TABLE>

                                      139

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                      <C>
CANADA INC
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS FEDERAL
INC
------------------------------------------------------------------------------------
                                                                           3,001,537
MARCONI COMMUNICATIONS INC                                                         +
                                                                        4,923,218.41
                                                                        ------------

                                                                        7,924,755.41
------------------------------------------------------------------------------------
MARCONI INC                                                         1,276,106,394.81
------------------------------------------------------------------------------------
MARCONI SOFTWARE INTERNATIONAL
INC
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (US) INC
------------------------------------------------------------------------------------
SYSTEMS MANAGEMENT SPECIALISTS
INC
------------------------------------------------------------------------------------
MARCONI MIDDLE EAST (SAUDI
ARABIA)
------------------------------------------------------------------------------------
MARCONI MIDDLE EAST LLC (DUBAI)
------------------------------------------------------------------------------------
MARCONI APPLIED TECNOLOGIES SA                                         12,263,858.23
------------------------------------------------------------------------------------
SNC COMPOSANTS & CIE                                                    3,954,810.98
------------------------------------------------------------------------------------
NON-TRADING SUBSIDIARIES
------------------------------------------------------------------------------------
MARCONI PROPERTY LTD                                                            1.00
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL                                                 134,993,728.40
INDUSTRIES LIMITED
------------------------------------------------------------------------------------
BRUTON STREET INVESTMENTS LIMITED                                             100.00
------------------------------------------------------------------------------------
</TABLE>

                                      140

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                      <C>
EA CONTINENTAL LIMITED                                               363,308,102.03*
------------------------------------------------------------------------------------
ELLIOTT-AUTOMATION                                                     78,486,756.70
HOLDINGS LIMITED
------------------------------------------------------------------------------------
THE ENGLISH ELECTRIC COMPANY, LIMITED                                 300,733,962.69
------------------------------------------------------------------------------------
MARCONI (BRUTON STREET) LIMITED                                       871,397,961.00
------------------------------------------------------------------------------------
MARCONI (HOLDINGS) LIMITED                                              8,353,965.42
                                                                    +     287,395.99
                                                                          ----------
                                                                        8,641,361.41
------------------------------------------------------------------------------------
MARCONI AEROSPACE UNLIMITED                                            69,607,029.63
------------------------------------------------------------------------------------
MARCONI CAPITAL LIMITED                                                         2.00
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                 12,270,242.05
AFRICA (PTY) LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS LIMITED
------------------------------------------------------------------------------------
MARCONI (DGP1) LIMITED
------------------------------------------------------------------------------------
MARCONI (DGP2) LIMITED
------------------------------------------------------------------------------------
MARCONI (ELLIOTT AUTOMATION) LIMITED                                   21,867,755.03
------------------------------------------------------------------------------------
MOBILE SYSTEMS INTERNATIONAL
HOLDINGS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
GMBH (SWITZERLAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS GMBH (GERMANY)
------------------------------------------------------------------------------------
</TABLE>

------------------------
*  It is intended that subject to certain creditor consent and prior to
         the Record Date this amount shall be assigned to Ancrane by an
         assignment between EA Continental Limited and plc and then assigned to
         Ancrane by an assignment between Ancrane and plc.

                                      141

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                 OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                        <C>
ASSOCIATED ELECTRICAL                                                 130,149,000.00
INDUSTRIES LTD (NOW
KNOWN AS MARCONI
AUSTRALIA HOLDINGS PTY
LIMITED)
------------------------------------------------------------------------------------
MARCONI HOLDINGS SPA
------------------------------------------------------------------------------------
RELTEC MEXICO SA DE
CV (NOW KNOWN AS
MARCONI COMMUNICATIONS,
S.A. DE C.V.)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
LIMITED (CANADA)
------------------------------------------------------------------------------------
FS FINANCE CORP
------------------------------------------------------------------------------------
FS HOLDING CORP
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
NORTH AMERICA INC.
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CANADA HOLDINGS INC.
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS INC.
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL INC.
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                  3,224,189.35
LIMITED (BERMUDA) (NOW
KNOWN AS MARCONI
INTERNATIONAL LIMITED)
------------------------------------------------------------------------------------

------------------------------------------------------------------------------------
DORMANT SUBSIDIARIES
------------------------------------------------------------------------------------
A.B. DICK HOLDINGS LTD                                                  7,308,638.58
------------------------------------------------------------------------------------
ARROW LTD                                                                  49,958.87
------------------------------------------------------------------------------------
</TABLE>

                                      142

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                 OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                         <C>
ASSOCIATED AUTOMATION LTD                                               2,723,292.41
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES HOLDINGS LTD
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES (MANCHESTER)
LTD
------------------------------------------------------------------------------------
CLANVILLE LIMITED                                                               1.00
------------------------------------------------------------------------------------
COMBINED ELECTRICAL MANUFACTURERS LTD                                   6,895,676.71
------------------------------------------------------------------------------------
COPPENHALL NOMINEES LIMITED
------------------------------------------------------------------------------------
DAYMO LTD
------------------------------------------------------------------------------------
FF CHRESTIAN & CO LTD                                                      34,944.36
------------------------------------------------------------------------------------
GPT CONSUMER PRODUCTS LTD
------------------------------------------------------------------------------------
GPT PAYPHONE SYSTEMS LTD
------------------------------------------------------------------------------------
GPT RELIANCE LTD
------------------------------------------------------------------------------------
THE KINGSWAY HOUSING                                                    1,280,159.82
ASSOCIATION LTD
------------------------------------------------------------------------------------
KRAYFORD LTD
------------------------------------------------------------------------------------
LARNERWAY LTD
------------------------------------------------------------------------------------
LAYANA LIMITED
------------------------------------------------------------------------------------
MARCONI CASWELL
DEVELOPMENTS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OPTICAL FIBRES LIMITED
------------------------------------------------------------------------------------
</TABLE>

                                      143

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
MARCONI (FIFTEEN) LIMITED
------------------------------------------------------------------------------------
MARCONI (FIFTY-NINE) LTD
------------------------------------------------------------------------------------
MARCONI (FIFTY-THREE) LTD                                                 151,087.68
------------------------------------------------------------------------------------
MARCONI (FORTY-FIVE) LIMITED
------------------------------------------------------------------------------------
MARCONI (FORTY-FOUR) LTD
------------------------------------------------------------------------------------
MARCONI (FORTY-THREE) LIMITED
------------------------------------------------------------------------------------
MARCONI G.M. LIMITED
------------------------------------------------------------------------------------
MARCONI MOBILE SYSTEMS LIMITED
------------------------------------------------------------------------------------
MARCONI (NINE) LIMITED                                                    141,080.92
------------------------------------------------------------------------------------
MARCONI PHOTONICA LIMITED
------------------------------------------------------------------------------------
MARCONI (SIXTEEN) LIMITED                                               1,250,099.99
------------------------------------------------------------------------------------
MARCONI (SIXTY-NINE) LIMITED                                            1,119,739.39
------------------------------------------------------------------------------------
MARCONI (SIXTY-TWO) LTD
------------------------------------------------------------------------------------
MARCONI (THIRTEEN) LIMITED
------------------------------------------------------------------------------------
MARCONI (THIRTY-TWO) LIMITED                                              107,416.44
------------------------------------------------------------------------------------
MARCONI (TLC) LTD
------------------------------------------------------------------------------------
MARCONI (TWENTY-SEVEN) LIMITED                                          1,542,489.94
------------------------------------------------------------------------------------
MARCONI (WCGL) UNLIMITED                                                1,853,074.20
------------------------------------------------------------------------------------
</TABLE>

                                      144

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
MCMICHAEL LIMITED                                                       5,075,000.00
------------------------------------------------------------------------------------
METROPOLITAN-VICKERS ELECTRICAL CO LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS GROUP LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS (HOLDINGS) LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS SERVICES LTD
------------------------------------------------------------------------------------
MOBILE SYSTEMS (UK) LTD
------------------------------------------------------------------------------------
THE M-O VALVE CO LTD
------------------------------------------------------------------------------------
MSI CELLULAR INVESMTNETS (ONE) LTD
------------------------------------------------------------------------------------
PALMAZ LTD
------------------------------------------------------------------------------------
PHOTONICA LIMITED                                                          76,009.00
------------------------------------------------------------------------------------
PHOTONIQA LIMITED                                                               1.00
------------------------------------------------------------------------------------
PYFORD LIMITED
------------------------------------------------------------------------------------
RAINFORD GROUP TRUSTEES LTD
------------------------------------------------------------------------------------
RAINFORD RACKS LTD
------------------------------------------------------------------------------------
RELTEC (COVENTRY) LTD
------------------------------------------------------------------------------------
ROBERT STEPHENSON & HAWTHORNS LTD
------------------------------------------------------------------------------------
THE ROTARY ENGINEERING COMPANY LIMITED
------------------------------------------------------------------------------------
SALPLEX LTD                                                                92,386.96
------------------------------------------------------------------------------------
STYLES & MEALING LIMITED
------------------------------------------------------------------------------------
</TABLE>

                                      145

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
TCL PROJECTS LIMITED
------------------------------------------------------------------------------------
ZIPBOND LTD                                                             6,731,913.50
------------------------------------------------------------------------------------
THE VULCAN FOUNDRY LTD
------------------------------------------------------------------------------------
TRADING SUBSIDIARIES (OTHERS)
------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL                                                      76,913.47
INDUSTRIES INTERNATIONAL LIMITED
------------------------------------------------------------------------------------
FORE SYSTEMS LIMITED
------------------------------------------------------------------------------------
GPT MIDDLE EAST LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS (CIS) LIMITED
------------------------------------------------------------------------------------
MARCONI FINANCE PLC                                                     2,775,111.02
------------------------------------------------------------------------------------
MARCONI FLEET MANAGEMENT LIMITED                                        1,292,411.63
------------------------------------------------------------------------------------
MARCONI INFORMATION SYSTEMS LIMITED                                        54,945.94
------------------------------------------------------------------------------------
MARCONI (NCP) LIMITED
------------------------------------------------------------------------------------
NETSCIENT LIMITED
------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES LIMITED
------------------------------------------------------------------------------------
TELEPHONE CABLES LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                  7,065,000.00
INTERNATIONAL LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CHINA LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL HOLDINGS LIMITED
------------------------------------------------------------------------------------
</TABLE>

                                      146

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC           OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>             <C>
BRUTON STREET
OVERSEAS INVESTMENTS LIMITED
------------------------------------------------------------------------------------
BRUTON STREET PARTNERSHIP
------------------------------------------------------------------------------------
MARCONI INDIA LIMITED
------------------------------------------------------------------------------------
MARCONI (THIRTY-ONE) LIMITED
------------------------------------------------------------------------------------
HIGHROSE LIMITED
------------------------------------------------------------------------------------
ANCRANE
                                                                       14,635,059.00

                                                           + an amount
                                                           approximately equal to
                                                                      387,403,015.00
                                                           (stemming from four
                                                           separate bond issues of
                                                           (1)E256,735,000;
                                                           (2)E67,868,000; (3)
                                                           US$131,011,000; and (4)
                                                           US$130,090,000)
------------------------------------------------------------------------------------
WOODS OF COLCHESTER
HOUSING SOCIETY LIMITED
------------------------------------------------------------------------------------
MARCONI INSURANCE LIMITED
------------------------------------------------------------------------------------
TETREL LIMITED
------------------------------------------------------------------------------------
RELTEC SERVICES (UK) LIMITED
------------------------------------------------------------------------------------
MARCONI ANSTY LIMITED
------------------------------------------------------------------------------------
MARCONI NOMINEES LIMITED
------------------------------------------------------------------------------------
YESLINK UNLIMITED
------------------------------------------------------------------------------------
ELLIOT AUTOMATION CONTINENTAL SA
------------------------------------------------------------------------------------
</TABLE>

                                      147

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
METAPATH SOFTWARE
INTERNATIONAL NOMINEES
LIMITED
------------------------------------------------------------------------------------
MARCONI DEFENSE OVERSEAS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GLOBAL
NETWORKS LIMITED
------------------------------------------------------------------------------------
MARCONICOM LIMITED
------------------------------------------------------------------------------------
MICRO SCOPE LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL INVESTMENTS
LIMITED
------------------------------------------------------------------------------------
GPT (NEDERLAND) BV
------------------------------------------------------------------------------------
GEC OF PAKISTAN LIMITED
------------------------------------------------------------------------------------
GEC ZAMBIA LIMITED                                                        154,866.00
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AB
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS BVBA
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SARL
------------------------------------------------------------------------------------
MARCONI CHANNEL MARKETS GMBH
------------------------------------------------------------------------------------
AEI FURNACES PTY LTD
------------------------------------------------------------------------------------
HARMAN INFORMATION
TECHNOLOGY PTY LTD
------------------------------------------------------------------------------------
MARCONI NEW ZEALAND LIMITED
------------------------------------------------------------------------------------
MARCONI
TELECOMMUNICATIONS
------------------------------------------------------------------------------------
</TABLE>

                                      148

<PAGE>

                                 LOAN BALANCES L

   (Loan balances as at 31st December, 2002 (to the extent such loan balances
                              remain outstanding))

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED BY CORP
------------------------------------------------------------------------------------
<S>                                        <C>                          <C>
INDIA PRIVATE LTD
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (AUSTRALIA) PTY LTD
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (HONG KONG) LIMITED
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (INDIA) PRIVATE LIMITED
------------------------------------------------------------------------------------
MARCONI ACQUISITION CORP
------------------------------------------------------------------------------------
MARCONI FINANCE INC.
------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES INC.
------------------------------------------------------------------------------------
APT NEDERLANDS BV
------------------------------------------------------------------------------------
APT TELECOMMUNICIONES SL
------------------------------------------------------------------------------------
METAPATH SOFTWARE INTERNATIONAL AB
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL BRASIL LTDA
------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (FRANCE) SA
------------------------------------------------------------------------------------
MARCONI PROJECTS HONG KONG LTD                                             55,454.23
------------------------------------------------------------------------------------
</TABLE>

                                      149

<PAGE>

                                   SCHEDULE 3

                             OTHER PRESERVED CLAIMS

                                     PART 1

             OTHER PRESERVED CLAIMS OWED BY PARTICIPATING COMPANIES

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                         OWED TO PLC           OWED TO CORP
------------------------------------------------------------------------------------
<S>                                    <C>               <C>
TRADING COMPANIES (MATERIAL)
------------------------------------------------------------------------------------
ALBANY PARTNERSHIP LIMITED
------------------------------------------------------------------------------------
GPT SPECIAL PROJECT MANAGEMENT
LIMITED
------------------------------------------------------------------------------------
MARCONI BONDING LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INVESTMENTS LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED                                          2,659,104.80
(IRELAND)

                                                         Trading balance transferred
                                                         to Corp on disposal of
                                                         Mobile business
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(UK)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
NETWORKS LIMITED (IRELAND)
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OVERSEAS SERVICES LIMITED
------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
AFRICA PTY LIMITED
------------------------------------------------------------------------------------
MARCONI OPTICAL COMPONENTS
LIMITED
------------------------------------------------------------------------------------
MARCONI CORPORATION PLC                Balance owed to
                                       plc by Corp of
                                       L195k arising
                                       from disposal of
                                       Mobile business.
------------------------------------------------------------------------------------
</TABLE>

                                      150

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                         OWED TO PLC           OWED TO CORP
------------------------------------------------------------------------------------
<S>                                    <C>               <C>
                                       Plc has no
                                       record of debt
                                       and as such it
                                       is being written
                                       back to capital
                                       projects in
                                       March 2003
------------------------------------------------------------------------------------
MARCONI PLC                                              EXCHANGE AGREEMENT -
                                                         PURCHASE OF SHARES IN
                                                         SYSTEMS MANAGEMENT
                                                         SPECIALISTS, INC. in
                                                         exchange for shares in
                                                         Marconi plc (22nd May, 2000)
                                                         with a follow-up share sale
                                                         agreement from plc to Corp

                                                         Outstanding liabilities as
                                                         follows: minimal capacity,
                                                         trading and regulatory
                                                         warranties; certain
                                                         covenants; and indemnity
                                                         given to Miguel Winder
                                                         for any losses, damages,
                                                         costs etc incurred in
                                                         connection with the breach
                                                         of any representation,
                                                         warranty or covenant.

                                                         Following on from the first
                                                         share sale agreement, plc
                                                         entered into an agreement
                                                         for the sale and purchase
                                                         of shares in Systems
                                                         Management Specialists, Inc.
                                                         with Corp under which the
                                                         obligations under the
                                                         original agreement were
                                                         mirrored between purchaser
                                                         and seller in the
                                                         intra-group sale
                                                         agreement. (18th July,
                                                         2000).

                                                         SHARE SALE AND PURCHASE
                                                         AGREEMENT RELATING TO THE
                                                         ACQUISITION OF ALBANY
                                                         PARTNERSHIP LIMITED from AJC
                                                         Elliman, Andrew Jones and
                                                         Dolphin Head Group Holdings
                                                         Plc to Plc ("Vendors")
                                                         (28th July, 2000) with a
                                                         follow-up intra
------------------------------------------------------------------------------------
</TABLE>

                                      151

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                         OWED TO PLC           OWED TO CORP
------------------------------------------------------------------------------------
<S>                                      <C>             <C>
                                                         group share  sale agreement
                                                         from Plc to Corp.

                                                         Liabilities outstanding as
                                                         follows:

                                                         Plc warrants to the Vendors,
                                                         their estates and PRs that
                                                         at the date of the
                                                         Agreement: it is a
                                                         corporation duly
                                                         incorporated and validly
                                                         existing under the laws
                                                         of England and Wales; it
                                                         has the corporate power to
                                                         perform all its obligations
                                                         under and as envisaged by
                                                         the Agreement; the
                                                         execution or performance of
                                                         the Agreement by Plc does
                                                         not contravene any
                                                         provision of its memorandum
                                                         or articles of association
                                                         or any agreement created by
                                                         Plc or any law; and Plc has
                                                         full power and has procured
                                                         all corporate consents for
                                                         the execution and
                                                         performance by it of the
                                                         Agreement, which has been
                                                         executed in compliance with
                                                         its constitutional
                                                         documents and applicable
                                                         law. Under a related Tax
                                                         Deed dated 28th July, 2000,
                                                         Plc covenants to pay on
                                                         demand to the Vendors,
                                                         their estates and PRs an
                                                         amount equal to the amount
                                                         of any liability of
                                                         the Vendors or any Company
                                                         prior to Completion:
                                                         pursuant to section 767A,
                                                         767AA and 767B Taxes Act by
                                                         reason of the failure of
                                                         the Company to disclose a
                                                         liability to corporation
                                                         tax; and which results from
                                                         the Vendors or such other
------------------------------------------------------------------------------------
</TABLE>

                                      152

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                         OWED TO PLC           OWED TO CORP
------------------------------------------------------------------------------------
<S>                                      <C>             <C>
                                                         company being treated as
                                                         a member of the same group
                                                         as a Company for VAT
                                                         purposes during any
                                                         prescribed accounting
                                                         period which was current at
                                                         Completion.

                                                         Under a Share Sale
                                                         Agreement (undated) Plc
                                                         sold its shares in Albany
                                                         Partnership Limited to Corp
                                                         and the various obligations
                                                         contained in the original
                                                         sale agreement were
                                                         mirrored between purchaser
                                                         and seller in the intra-
                                                         group sale agreement.

                                                         ACQUISITION OF MARIPOSA
                                                         TECHNOLOGY, INC BY WAY OF
                                                         MERGER WITH MARCONI ACQ.
                                                         (20th September, 2000)

                                                         It appears the liabilities
                                                         under this acquisition were
                                                         assigned to Corp from PLC on
                                                         18th October, 2000 pursuant
                                                         to an Assignment Agreement,
                                                         but under the assignment
                                                         clause, Plc still remains
                                                         liable.

                                                         Liabilities outstanding as
                                                         follows:

                                                         1.  indemnity to selling
                                                         stockholders for costs,
                                                         losses, damages etc arising
                                                         in respect of breaches of
                                                         representations or
                                                         warranties in the merger
                                                         agreement/other documents;

                                                         2.  limited warranties
                                                         given (along with Marconi
                                                         Acquisition Sub)
                                                         reorganisation, consents and
                                                         approvals, capitalisation
                                                         and
------------------------------------------------------------------------------------
</TABLE>

                                      153

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                  <C>
                                                                various mechanical/admin
                                                                steps; and

                                                                3.  bonus payments under
                                                                two employment contracts
                                                                plus indemnity for income
                                                                tax assessed on these
                                                                employees in respect of
                                                                certain employee share
                                                                options.
-------------------------------------------------------------------------------------------
MARCONI SOFTWARE
SOLUTIONS LIMITED
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL LIMITED
-------------------------------------------------------------------------------------------
RONALDI LTD
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SA (FRANCE)
-------------------------------------------------------------------------------------------
MNI TECNOLOGIASE E
SISTEMAS DE
COMMUNICACAO SA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
B.V. (NETHERLANDS)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS                                                           255,529.70
GmbH (GERMANY)
                                                                Trading balance transferred
                                                                to Corp on disposal of
                                                                Mobile business
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
REAL ESTATE GmbH
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS GmbH
& CO KG
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS VER.
GmbH
-------------------------------------------------------------------------------------------
</TABLE>

                                      154

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                  <C>
BEIJING MARCONI
COMMUNICATIONS
TECHNOLOGY CO LTD
-------------------------------------------------------------------------------------------
GEC (HONG KONG)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI AUSTRALIA PTY
LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ASIA LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOUTH EAST ASIA PTE LTD
-------------------------------------------------------------------------------------------
THE GENERAL ELECTRIC
COMPANY OF SINGAPORE
PRIVATE LIMITED (NOW
KNOWN AS MARCONI
SINGAPORE PTE LTD)
-------------------------------------------------------------------------------------------
MARCONI
COMMUNICATIONSSPA
-------------------------------------------------------------------------------------------
MARCONI IBERIA SA
-------------------------------------------------------------------------------------------
MARCONI MOBILE ACCESS
SpA
-------------------------------------------------------------------------------------------
MARCONI SUD SPA                                                                    6,518.06
                                                                Amount owed as part of
                                                                Jabil outsourcing transaction

                                                                              17,846,339.36

                                                                Balance due to corp by
                                                                Marconi Sud as per debt
                                                                agreement 31st July 2002.
                                                                (Project Saturn)
-------------------------------------------------------------------------------------------
MARCONI INTERNATIONAL
SpA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
DE MEXICO SA DE CV
-------------------------------------------------------------------------------------------
</TABLE>

                                      155

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
MARCONI COMMUNICATIONS
TELEMULTI LIMITADA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
DO BRASIL LTDA
-------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITADA
-------------------------------------------------------------------------------------------
MARCONI COLUMBIA SA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ARGENTINA SA
-------------------------------------------------------------------------------------------
MARCONI VENEZUELA CA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OPTICAL NETWORKS CORP
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TECHNOLOGY INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CANADA INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
FEDERAL INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INC
-------------------------------------------------------------------------------------------
MARCONI INC
-------------------------------------------------------------------------------------------
MARCONI SOFTWARE
INTERNATIONAL INC
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (US) INC
-------------------------------------------------------------------------------------------
SYSTEMS MANAGEMENT
SPECIALISTS INC
-------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST
(SAUDI ARABIA)
-------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST LLC
(DUBAI)
-------------------------------------------------------------------------------------------
</TABLE>

                                      156

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
MARCONI APPLIED
TECNOLOGIES SA
-------------------------------------------------------------------------------------------
SNC COMPOSANTS & CIE
-------------------------------------------------------------------------------------------
NON-TRADING SUBSIDIARIES
-------------------------------------------------------------------------------------------
MARCONI PROPERTY LTD
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES LIMITED
-------------------------------------------------------------------------------------------
BRUTON STREET INVESTMENTS
LIMITED
-------------------------------------------------------------------------------------------
EA CONTINENTAL LIMITED
-------------------------------------------------------------------------------------------
ELLIOTT-AUTOMATION
HOLDINGS LIMITED
-------------------------------------------------------------------------------------------
THE ENGLISH ELECTRIC
COMPANY, LIMITED
-------------------------------------------------------------------------------------------
MARCONI (BRUTON STREET)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (HOLDINGS)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI AEROSPACE
UNLIMITED
-------------------------------------------------------------------------------------------
MARCONI CAPITAL LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
AFRICA (PTY) LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS LIMITED
-------------------------------------------------------------------------------------------
MARCONI (DGP1) LIMITED
-------------------------------------------------------------------------------------------
MARCONI (DGP2) LIMITED
-------------------------------------------------------------------------------------------
</TABLE>

                                      157

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                  <C>
MARCONI (ELLIOTT
AUTOMATION) LIMITED
-------------------------------------------------------------------------------------------
MOBILE SYSTEMS
INTERNATIONAL HOLDINGS
LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
GmbH (SWITZERLAND)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS GmbH
(GERMANY)
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES LTD (NOW
KNOWN AS MARCONI
AUSTRALIA HOLDINGS PTY
LIMITED)
-------------------------------------------------------------------------------------------
MARCONI HOLDINGS SpA
-------------------------------------------------------------------------------------------
RELTEC MEXICO SA DE
CV (NOW KNOWN AS
MARCONI COMMUNICATIONS,
S.A. DE C.V.)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
LIMITED (CANADA)
-------------------------------------------------------------------------------------------
FS FINANCE CORP                                                 $1 billion obligation of FS
                                                                corp to pay Marconi
                                                                Corporation plc under the
                                                                "repo finance" clause, used
                                                                to purchase Fore Systems in
                                                                1999.
-------------------------------------------------------------------------------------------
FS HOLDING CORP
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
NORTH AMERICA INC.
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CANADA HOLDINGS INC.
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS INC.
-------------------------------------------------------------------------------------------
</TABLE>

                                      158

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
METAPATH SOFTWARE
INTERNATIONAL INC.
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
LIMITED (BERMUDA) (NOW
KNOWN AS MARCONI
INTERNATIONAL LIMITED)
-------------------------------------------------------------------------------------------
DORMANT SUBSIDIARIES
-------------------------------------------------------------------------------------------
A.B. DICK HOLDINGS LTD
-------------------------------------------------------------------------------------------
ARROW LTD
-------------------------------------------------------------------------------------------
ASSOCIATED AUTOMATION
LTD
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES HOLDINGS LTD
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES (MANCHESTER)
LTD
-------------------------------------------------------------------------------------------
CLANVILLE LIMITED
-------------------------------------------------------------------------------------------
COMBINED ELECTRICAL
MANUFACTURERS LTD
-------------------------------------------------------------------------------------------
COPPENHALL NOMINEES
LIMITED
-------------------------------------------------------------------------------------------
DAYMO LTD
-------------------------------------------------------------------------------------------
FF CHRESTIAN & CO LTD
-------------------------------------------------------------------------------------------
GPT CONSUMER PRODUCTS
LTD
-------------------------------------------------------------------------------------------
GPT PAYPHONE SYSTEMS
LTD
-------------------------------------------------------------------------------------------
GPT RELIANCE LTD
-------------------------------------------------------------------------------------------
THE KINGSWAY HOUSING
ASSOCIATION LTD
-------------------------------------------------------------------------------------------
</TABLE>

                                      159

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
KRAYFORD LTD
-------------------------------------------------------------------------------------------
LARNERWAY LTD
-------------------------------------------------------------------------------------------
LAYANA LIMITED
-------------------------------------------------------------------------------------------
MARCONI CASWELL
DEVELOPMENTS LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OPTICAL FIBRES LIMITED
-------------------------------------------------------------------------------------------
MARCONI (FIFTEEN) LIMITED
-------------------------------------------------------------------------------------------
MARCONI (FIFTY-NINE) LTD
-------------------------------------------------------------------------------------------
MARCONI (FIFTY-THREE) LTD
-------------------------------------------------------------------------------------------
MARCONI (FORTY-FIVE)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (FORTY-FOUR) LTD
-------------------------------------------------------------------------------------------
MARCONI (FORTY-THREE)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI G.M. LIMITED
-------------------------------------------------------------------------------------------
MARCONI MOBILE SYSTEMS
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (NINE) LIMITED
-------------------------------------------------------------------------------------------
MARCONI PHOTONICA
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (SIXTEEN) LIMITED
-------------------------------------------------------------------------------------------
MARCONI (SIXTY-NINE)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (SIXTY-TWO) LTD
-------------------------------------------------------------------------------------------
MARCONI (THIRTEEN)
LIMITED
-------------------------------------------------------------------------------------------
</TABLE>

                                      160

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
MARCONI (THIRTY-TWO)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (TLC) LTD
-------------------------------------------------------------------------------------------
MARCONI (TWENTY-SEVEN)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI (WCGL)
UNLIMITED
-------------------------------------------------------------------------------------------
MCMICHAEL LIMITED
-------------------------------------------------------------------------------------------
METROPOLITAN-VICKERS
ELECTRICAL CO LTD
-------------------------------------------------------------------------------------------
MOBILE SYSTEMS GROUP
LTD
-------------------------------------------------------------------------------------------
MOBILE SYSTEMS (HOLDINGS)
LTD
-------------------------------------------------------------------------------------------
MOBILE SYSTEMS SERVICES
LTD
-------------------------------------------------------------------------------------------
MOBILE SYSTEMS (UK) LTD
-------------------------------------------------------------------------------------------
THE M-O VALVE CO LTD
-------------------------------------------------------------------------------------------
MSI CELLULAR INVESMTNETS
(ONE) LTD
-------------------------------------------------------------------------------------------
PALMAZ LTD
-------------------------------------------------------------------------------------------
PHOTONICA LIMITED
-------------------------------------------------------------------------------------------
PHOTONIQA LIMITED
-------------------------------------------------------------------------------------------
PYFORD LIMITED
-------------------------------------------------------------------------------------------
RAINFORD GROUP TRUSTEES
LTD
-------------------------------------------------------------------------------------------
RAINFORD RACKS LTD
-------------------------------------------------------------------------------------------
RELTEC (COVENTRY) LTD
-------------------------------------------------------------------------------------------
</TABLE>

                                       161

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
ROBERT STEPHENSON &
HAWTHORNS LTD
-------------------------------------------------------------------------------------------
THE ROTARY ENGINEERING
COMPANY LIMITED
-------------------------------------------------------------------------------------------
SALPLEX LTD
-------------------------------------------------------------------------------------------
STYLES & MEALING LIMITED
-------------------------------------------------------------------------------------------
TCL PROJECTS LIMITED
-------------------------------------------------------------------------------------------
ZIPBOND LTD
-------------------------------------------------------------------------------------------
THE VULCAN FOUNDRY LTD
-------------------------------------------------------------------------------------------
TRADING SUBSIDIARIES
(OTHERS)
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES INTERNATIONAL
LIMITED
-------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITED
-------------------------------------------------------------------------------------------
GPT MIDDLE EAST LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
(CIS) LIMITED
-------------------------------------------------------------------------------------------
MARCONI FINANCE plc
-------------------------------------------------------------------------------------------
MARCONI FLEET
MANAGEMENT LIMITED
-------------------------------------------------------------------------------------------
MARCONI INFORMATION
SYSTEMS LIMITED
-------------------------------------------------------------------------------------------
MARCONI (NCP) LIMITED
-------------------------------------------------------------------------------------------
NETSCIENT LIMITED
-------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES
LIMITED
-------------------------------------------------------------------------------------------
TELEPHONE CABLES LIMITED
-------------------------------------------------------------------------------------------
</TABLE>

                                      162

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
MARCONI COMMUNICATIONS
INTERNATIONAL LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CHINA LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL HOLDINGS
LIMITED
-------------------------------------------------------------------------------------------
BRUTON STREET OVERSEAS
INVESTMENTS LIMITED
-------------------------------------------------------------------------------------------
BRUTON STREET PARTNERSHIP
-------------------------------------------------------------------------------------------
MARCONI INDIA LIMITED
-------------------------------------------------------------------------------------------
MARCONI (THIRTY-ONE)
LIMITED
-------------------------------------------------------------------------------------------
HIGHROSE LIMITED
-------------------------------------------------------------------------------------------
ANCRANE
-------------------------------------------------------------------------------------------
WOODS OF COLCHESTER
HOUSING SOCIETY LIMITED
-------------------------------------------------------------------------------------------
MARCONI INSURANCE
LIMITED
-------------------------------------------------------------------------------------------
TETREL LIMITED
-------------------------------------------------------------------------------------------
RELTEC SERVICES (UK)
LIMITED
-------------------------------------------------------------------------------------------
MARCONI ANSTY LIMITED
-------------------------------------------------------------------------------------------
MARCONI NOMINEES
LIMITED
-------------------------------------------------------------------------------------------
YESLINK UNLIMITED
-------------------------------------------------------------------------------------------
ELLIOT AUTOMATION
CONTINENTAL SA
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL NOMINEES
-------------------------------------------------------------------------------------------
</TABLE>

                                      163

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
LIMITED
-------------------------------------------------------------------------------------------
MARCONI DEFENSE OVERSEAS
LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
GLOBAL NETWORKS LIMITED
-------------------------------------------------------------------------------------------
MARCONICOM LIMITED
-------------------------------------------------------------------------------------------
MICRO SCOPE LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL INVESTMENTS
LIMITED
-------------------------------------------------------------------------------------------
GPT (NEDERLAND) BV
-------------------------------------------------------------------------------------------
GEC OF PAKISTAN LIMITED
-------------------------------------------------------------------------------------------
GEC ZAMBIA LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
AB
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
BVBA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SARL
-------------------------------------------------------------------------------------------
MARCONI CHANNEL MARKETS
GmbH
-------------------------------------------------------------------------------------------
AEI FURNACES PTY LTD
-------------------------------------------------------------------------------------------
HARMAN INFORMATION
TECHNOLOGY PTY LTD
-------------------------------------------------------------------------------------------
MARCONI NEW ZEALAND
LIMITED
-------------------------------------------------------------------------------------------
MARCONI
TELECOMMUNICATIONS
INDIA PRIVATE LTD
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (AUSTRALIA)
-------------------------------------------------------------------------------------------
</TABLE>

                                      164

<PAGE>

                                OTHER LIABILITIES

               (Excluding trading and current account liabilities)

<TABLE>
<CAPTION>
                                           OWED TO PLC                   OWED TO CORP
-------------------------------------------------------------------------------------------
<S>                                        <C>                           <C>
PTY LTD
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (HONG KONG)
LIMITED
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (INDIA) PRIVATE
LIMITED
-------------------------------------------------------------------------------------------
MARCONI ACQUISITION CORP
-------------------------------------------------------------------------------------------
MARCONI FINANCE INC.
-------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES
INC.
-------------------------------------------------------------------------------------------
APT NEDERLANDS BV
-------------------------------------------------------------------------------------------
APT TELECOMMUNICIONES
SL
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL AB
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL BRASIL LTDA
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (FRANCE) SA
-------------------------------------------------------------------------------------------
MARCONI PROJECTS HONG
KONG LTD
-------------------------------------------------------------------------------------------
</TABLE>

                                      165

<PAGE>

                                   SCHEDULE 4

                                ACCESSION LETTER

To:    Marconi plc, Marconi Corporation plc and each other party to the
       Statement and Waiver Agreement referred to below

From:  [NAME OF PARTICIPATING COMPANY] (the ACCEDING COMPANY)]

Dated:

Dear Sirs,

We refer to the Statement and Waiver of Intercompany Balances dated [     ] and
entered into by, inter alios, Marconi plc, Marconi Corporation plc, and each of
the Participating Companies (defined therein), (the STATEMENT AND WAIVER
AGREEMENT). This is an Accession Letter. Terms defined in the Statement and
Waiver Agreement have the same meaning in this Accession Letter.

1.       ACCESSION

         The Acceding Company agrees to accede to the Statement and Waiver
         Agreement as a [Trading Company/Non-Trading Company/Dormant Company]
         (*) and to be bound by the terms of the Statement and Waiver Agreement
         and undertakes to perform all the obligations expressed in the
         Statement and Waiver Agreement to be assumed by a [Trading
         Company/Non-Trading Company/Dormant Company] (*) and agrees to be bound
         by all the provisions of the Statement and Waiver Agreement, as if it
         were an original party to the Statement and Waiver Agreement and that
         all the obligations assumed by it under the Statement and Waiver
         Agreement are legal, valid and binding.

2.       STATEMENT OF INTRA-GROUP LOANS

2.1      Corp and plc each confirms, to the best of its knowledge and belief,
         that the loan balances set out opposite its name in Part 1 of Schedule
         2 (Intra-group loans owed by Participating Companies) to the Statement
         and Waiver Agreement are all of the loans which were owing to it by the
         Acceding Company as at 31st December, 2002.

2.2      The Acceding Company confirms, to the best of its knowledge and belief,
         that the loan balances set out opposite its name in Part 2 of Schedule
         2 (Intra-group loans owed by Corp and plc) to the Statement and Waiver
         Agreement are all of the loans which were owing to it by Corp or plc as
         at 31st December, 2002.

3.       ACKNOWLEDGEMENT OF LIABILITIES

3.1      Acknowledgement by Corp and plc

         Each of Corp and plc acknowledges and confirms its liability in respect
         of:

--------------------------
* Delete as applicable

                                       166

<PAGE>

         (a)      the loan balances set out in Part 2 of Schedule 2 (Intra-group
                  loans owed by Corp and plc) to the Statement and Waiver
                  Agreement and expressed to be owing by it;

         (b)      the trading and current account liabilities expressed to be
                  owing by it to the Acceding Company in the management accounts
                  upon which the audited consolidated financial accounts of plc
                  as at [31st March, 2002] [in relation to each Trading and each
                  Non-Trading Company] / 30th September, 2002] [in relation to
                  each Dormant Company] have been prepared, to the extent such
                  trading and current account liabilities remain outstanding;

         (c)      any counter indemnity or equivalent reimbursement obligation
                  (which is written or is implied by law) of Corp and/or plc to
                  the Acceding Company under any non-financial guarantee or
                  indemnity (which is contractual or implied by law) and which
                  is given by such Acceding Company and is: (A) in favour of any
                  person which is not a member of the Marconi Group; (B) in
                  respect of any contractual or implied by law obligations of
                  Corp and/or plc and (C) set out in Part 2 of Schedule 5
                  (non-financial guarantees and indemnities given by
                  Participating Companies) to the Statement and Waiver
                  Agreement; and

         (d)      the other preserved Claims set out in Part 2 of Schedule 3
                  (Other preserved Claims owed by Corp and plc) to the Statement
                  and Waiver Agreement expressed to be owing by it.

3.2      Acknowledgement of Acceding Company

         The Acceding Company acknowledges and confirms its liability in respect
         of:

         (a)      the loan balances set out in Part 1 of Schedule 2 (Intra-group
                  loans owed by the Participating Companies) to the Statement
                  and Waiver Agreement and expressed to be owing by it;

         (b)      the trading and current account liabilities and expressed to
                  be owing by it to plc and/or Corp in the management accounts
                  upon which the audited consolidated financial accounts of plc
                  as at [31st March, 2002] [in relation to each Trading and each
                  Non-Trading Company] / 30th September, 2002] [in relation to
                  each Dormant Company] have been prepared, to the extent such
                  trading and current account liabilities remain outstanding;

         (c)      any counter indemnity or equivalent reimbursement obligation
                  (which is written or is implied by law) of the Acceding
                  Company to Corp and/or plc under any non-financial guarantee
                  or indemnity (which is contractual or implied by law) and
                  which is given by Corp and/or plc and is: (A) in favour of any
                  person which is not a member of the Marconi Group; (B) in
                  respect of any contractual or implied by law obligations of
                  that Acceding Company and (C) set out in Part 1 of Schedule 5
                  (non-financial guarantees and indemnities given by Corp or
                  plc) to the Statement and Waiver Agreement; and

         (d)      the other preserved Claims set out in Part 1 of Schedule 3
                  (Other preserved Claims owed by Participating Companies) to
                  the Statement and Waiver Agreement expressed to be owing by
                  it.

                                       167

<PAGE>

4.       GENERAL

         This Accession Letter is governed by English law.

                                       168

<PAGE>

This Accession Letter is entered into by Agreement.

SIGNED by                  )
for [INSERT NAME]          )
                           )

Address:
Fax:

SIGNED by                  )
for MARCONI                )
CORPORATION PLC            )

SIGNED by                  )
for MARCONI PLC            )

                                       169

<PAGE>

                                   SCHEDULE 5

                    NON-FINANCIAL GUARANTEES AND INDEMNITIES

                                     PART 1

          NON-FINANCIAL GUARANTEES AND INDEMNITIES GIVEN BY CORP OR PLC

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
TRADING COMPANIES
(MATERIAL)
-------------------------------------------------------------------------------------------
ALBANY PARTNERSHIP LIMITED
-------------------------------------------------------------------------------------------
GPT SPECIAL PROJECT MANAGEMENT
LIMITED
-------------------------------------------------------------------------------------------
MARCONI BONDING LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INVESTMENTS LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(IRELAND)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(UK)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
NETWORKS LIMITED (IRELAND)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OVERSEAS SERVICES LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
AFRICA PTY LIMITED
-------------------------------------------------------------------------------------------
MARCONI OPTICAL COMPONENTS                                      SALE OF MARCONI OPTICAL
LIMITED                                                         BUSINESS TO BOOKHAM
                                                                TECHNOLOGY PLC (17th
                                                                December, 2001, supplemental
                                                                agreement dated 31st
                                                                January, 2002)
-------------------------------------------------------------------------------------------
</TABLE>

                                       170

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                Corp guaranteed:

                                                                Marconi Optical's
                                                                undertaking to purchase a
                                                                minimum of L30m of
                                                                components from Bookham over
                                                                18 months from February,
                                                                2002. Out of the L27
                                                                million still outstanding,
                                                                it is estimated that the
                                                                business plan can justify
                                                                only half being purchased in
                                                                that time frame, with the
                                                                balance to be paid out to
                                                                Bookham;

                                                                all other obligations of
                                                                Marconi Optical under the
                                                                Agreement, Transfer of
                                                                Freehold Property and
                                                                certain payment obligations
                                                                under a Supply Agreement.

                                                                Corp also indemnified
                                                                Bookham against any costs
                                                                incurred in ensuring
                                                                compliance with the above
                                                                agreements.

                                                                Marconi Optical gave usual
                                                                warranties (limited to
                                                                awareness of Corp).

                                                                Total liability of Marconi
                                                                Optical and Corp shall not
                                                                exceed L12 million,
                                                                excluding an environmental
                                                                indemnity claim which (when
                                                                aggregated with all other
                                                                claims) shall not exceed
                                                                L24 million. Maximum
                                                                liability under
                                                                environmental remediation
                                                                works is L500,000, plus
                                                                effect of pay-out under
                                                                minimum purchasing
                                                                undertaking.
-------------------------------------------------------------------------------------------
MARCONI CORPORATION plc         SALE OF THE SHARE CAPITAL OF
                                YESLINK INTERCO LTD.
</TABLE>

                                            171

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                                      <C>
                                AND YESLINK UNLIMITED TO
                                PRUDENTIAL

                                Indemnity by PLC in respect of
                                all costs, expenses and
                                liabilities incurred to the
                                extent that Corp did not meet
                                its obligations under the
                                Trade Mark Assignment.

                                Trade mark indemnity is
                                uncapped.

                                SALE OF MARCONI MEDICAL
                                SYSTEMS HOLDINGS, INC. (3rd
                                July, 2000)

                                According to Marconi, Plc
                                guaranteed the Seller's
                                obligations under this
                                agreement.

                                On 15th July, 2002, Corp,
                                Marconi, Inc. (as successor to
                                Marconi Holding Systems, Inc.)
                                and Philips entered into a
                                Final Settlement Agreement.
                                Under this Agreement, the
                                purchase price was adjusted to
                                US$837 million. The value of
                                the Closing Net Assets was
                                agreed to be US$755 million.
                                Marconi paid Philips US$12
                                million on 19th July, 2002 and
                                was released from liabilities
                                in relation to the warranty in
                                respect of the non-US Vendor
                                Debt (Latin American debt)
                                which was rescinded and in
                                relation to the indemnity for
                                breach of representation. US$8
                                million of this was in full
                                satisfaction of Marconi's
                                payment obligations under the
                                Stock Purchase Agreement. The
                                tax
</TABLE>

                                      172

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                                      <C>
                                indemnity under the Stock
                                Purchase Agreement remains in
                                effect, including in respect
                                of the tax liabilities that
                                could have been included in
                                determining the Closing Net
                                Assets.

                                Following the Final Settlement
                                Agreement, estimated liability
                                is US$15.3 million (being
                                approx. L10 million).

                                DISPOSAL OF MARCONI DATA
                                SYSTEMS INC, MARCONI DATA
                                SYSTEMS LIMITED, MARCONI DATA
                                SYSTEMS EUROPE B.V. AND
                                MARCONI DATA SYSTEMS B.V.
                                (10th January, 2002)

                                Sellers were Marconi Systems
                                Holdings, Inc. (now Marconi,
                                Inc.) and A.B. Dick Holdings.
                                Corp was a joint-Seller.

                                Plc guaranteed all the
                                obligations of the Sellers and
                                warranted its status,
                                authority and non-violation of
                                any obligation in providing
                                the guarantee. Note that the
                                Sellers have given extensive
                                warranties (on an indemnified
                                basis), which are all still in
                                force:

                                1. usual warranties on an
                                indemnified basis;

                                2. tax warranties;

                                3. environmental warranties;
</TABLE>

                                      173

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                                      <C>
                                and

                                4. incorporation, authority,
                                shares and capital stock
                                warranties.

                                Total not to exceed US$100
                                million (US$100 million is 25%
                                of purchase price).

                                SALE OF MARCONI COMMERCE
                                SYSTEMS, INC. AND MARCONI
                                COMMERCE SYSTEMS LIMITED (20th
                                December, 2001)

                                Plc guaranteed the obligations
                                of the sellers. Corp is a
                                Joint seller with Marconi
                                Systems Holdings, Inc. (now
                                Marconi, Inc.) (the
                                "SELLERS").

                                Capped at 25% of the Adjusted
                                Purchase Price (25% is approx.
                                US$81.25 million).
-------------------------------------------------------------------------------------------
MARCONI plc
-------------------------------------------------------------------------------------------
MARCONI SOFTWARE SOLUTIONS      THE EASAMS AGREEMENT  UNDER THE
LIMITED                         DISPOSAL OF MES BUSINESS TO
                                BRITISH AEROSPACE PLC ("BAE").
                                (1st November, 1999)

                                PLC guarantees various
                                obligations.
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE               AGREEMENT AND PLAN OF MERGER
INTERNATIONAL LIMITED           BETWEEN MARCONI AND METAPATH
                                (17th April, 2000)

                                Indemnity given to officers/
                                directors/employees
</TABLE>

                                      174

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                as at time of merger for
                                acts/omissions by them
                                occurring at or prior to date
                                of merger.
-------------------------------------------------------------------------------------------
RONALDI LTD
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SA
(FRANCE)
-------------------------------------------------------------------------------------------
MNI TECNOLOGIASE E SISTEMAS DE
COMMUNICACAO SA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS B.V.
(NETHERLANDS)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GmbH     Corp and Marconi                Corp and Marconi
(GERMANY)                       Communications as joint and     Communications Ltd as joint
                                several guarantors of MC GmbH   and several guarantors of MC
                                jointly and severally with      GmbH jointly and severally
                                Marconi Communications Real     with Marconi Communications
                                Estate GmbH under the purchase  Real Estate GmbH under the
                                of the P1 Business from Robert  purchase of the P1 Business
                                Bosch GmbH ("RB GmbH") and      from Robert Bosch GmbH ("RB
                                Bosch Telecom GmbH ("BT         GmbH") and Bosch Telecom
                                GmbH")dated 14th November,      GmbH ("BT GmbH") dated 14th
                                1999.                           November, 1999.

                                Each Guarantor undertook to     Each Guarantor undertook to
                                perform jointly and severally   perform jointly and
                                with the Purchaser all          severally with the Purchaser
                                obligations of the Purchaser    all obligations of the
                                under the agreement. Corp       Purchaser under the
                                agreed to procure that the new  agreement. Corp agreed to
                                ultimate parent of the Marconi  procure that the new
                                Group under the 1999 Scheme of  ultimate parent of the
                                Arrangement [PLC] would become  Marconi Group under the 1999
                                an additional Guarantor as      Scheme of Arrangement [PLC]
                                soon as practicable after       would become an additional
                                signing.                        Guarantor as soon as
                                                                practicable after signing

-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS REAL     PURCHASE OF P1 BUSINESS (24th   PURCHASE OF P1 BUSINESS
ESTATE GmbH                     November, 1999) Corp, PLC and   (24th November, 1999) Corp,
                                Marconi                         PLC and Marconi
-------------------------------------------------------------------------------------------
</TABLE>

                                     175

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                Communications Limited are      Communications Limited are
                                guarantors of the obligations   guarantors of the
                                of Marconi Communications GmbH  obligations of Marconi
                                and Marconi Communications      Communications GmbH and
                                Real Estate GmbH.               Marconi Communications Real
                                                                Estate GmbH.

                                Each Guarantor undertook to     Each Guarantor undertook to
                                perform jointly and severally   perform jointly and
                                with the Purchaser all          severally with the Purchaser
                                obligations of the Purchaser    all obligations of the
                                under the agreement. Corp       Purchaser under the
                                agreed to procure that the new  agreement. Corp agreed to
                                ultimate parent of the Marconi  procure that the new
                                Group under the 1999 Scheme of  ultimate parent of the
                                Arrangement would become an     Marconi Group under the 1999
                                additional Guarantor as soon    Scheme of Arrangement would
                                as practicable after signing    become an additional
                                [i.e. PLC].                     Guarantor as soon as
                                                                practicable after signing
                                                                [i.e. PLC].

-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS GmbH & CO KG
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS VER. GmbH
-------------------------------------------------------------------------------------------
BEIJING MARCONI COMMUNICATIONS
TECHNOLOGY CO LTD
-------------------------------------------------------------------------------------------
GEC (HONG KONG)                                                 Corp guarantees GEC (HK)
LIMITED                                                         Ltd's various obligations
                                                                to:

                                                                the HONG KONG GOVERNMENT
                                                                under a MAINTENANCE CONTRACT
                                                                FOR THE HONG KONG AIR
                                                                TRAFFIC CONTROL SYSTEM for
                                                                damage to premises, 3rd
                                                                party IPR claims and defects
                                                                in the Works [+ Corp
                                                                undertakes not to assign or
                                                                dispose etc. of any part of
                                                                its shareholding in GEC (HK)
                                                                which would affect the
-------------------------------------------------------------------------------------------
</TABLE>

                                     176

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
                                                                beneficial ownership and
                                                                control of GEC (HK) by Corp
                                                                or take any action that will
                                                                result in GEC (HK) being
                                                                unable to comply with its
                                                                obligations under the
                                                                contract];

                                                                NISHIMATSU CONSTRUCTION CO.
                                                                AND KUMAGAI GUMI CO, LTD
                                                                under a SUB-CONTRACT DATED
                                                                30/06/94 [Corp authorises
                                                                Standard Chartered Bank Hong
                                                                Kong to debit from it's a/c
                                                                all amounts Standard
                                                                Chartered pays under a
                                                                HK$32,480,000 performance
                                                                bond under this
                                                                sub-contract];

                                                                NISHIMATSU CONSTRUCTION CO.
                                                                LTD AND DRAGAGES ET TRAVAUX
                                                                PUBLICS (H.K.) LTD IN A
                                                                JOINT VENTURE UNDER A
                                                                SUB-CONTRACT DATED 21/03/96
                                                                FOR THE ROUTE 3 COUNTRY PARK
                                                                SECTION TAI LAM TUNNEL &
                                                                YUEN LONG APPROACH ROAD
                                                                [HK$23 million retention but
                                                                also guarantee contains a
                                                                clause limiting Corp's
                                                                maximum liability to the
                                                                sub-contract sum];
                                                                Performance Bond issued by
                                                                Federal Insurance Company
                                                                for the value :
                                                                HK$47,479,800.00 is due
                                                                outstanding

                                                                THE AIRPORT AUTHORITY UNDER
                                                                A SUB-CONTRACT DATED
                                                                31/01/97 [+ Corp undertakes
                                                                not to assign or dispose
                                                                etc. of any part of its
                                                                shareholding in GEC (HK)
                                                                which would affect the
                                                                beneficial ownership and
                                                                control of GEC (HK) by
</TABLE>

                                      177

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
                                                                Corp or take any action that
                                                                will result in GEC (HK)
                                                                being unable to comply with
                                                                its obligations under the
                                                                contract]

                                                                THE MASS TRANSIT RAILWAY
                                                                CORPORATION UNDER A
                                                                SUB-CONTRACT DATED 10/11/97:
                                                                Mass Transit Railway
                                                                Corporation under a Contract
                                                                690 for Quarry Bay
                                                                Congestion Relief
                                                                Works-Power Supply System.
                                                                Performance Bond issued by
                                                                Federal Insurance Co for HK$
                                                                3,782,800.00 was returned
                                                                for cancellation on 13 Feb
                                                                03. Parent Company Guarantee
                                                                also returned

                                                                MASS TRANSIT RAILWAY
                                                                CORPORATION UNDER a Contract
                                                                No. 674 , Tseung Kwan O
                                                                Extension -Building Services
                                                                for TKO Station and Tiu Keng
                                                                Leng Station Performance
                                                                Bond issued by Federal
                                                                Insurance Company for the
                                                                value : HK$19,280,000.00

                                                                THE DRAGAGES-ZEN PACIFIC
                                                                JOINT VENTURE UNDER A
                                                                SUB-CONTRACT DATED 03/08/99
                                                                for KCRC West Rail DB320

                                                                HONG KONG GOVERNMENT UNDER
                                                                TWO CONTRACTS for Lantau
                                                                Fixed Crossing Contracts for
                                                                Traffic Control and
                                                                Surveillance System Contract
                                                                No.
</TABLE>

                                      178

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
                                                                HY/92/24 ( Part N works, &
                                                                HY/92/24 ( Part X & Y works)
                                                                Performance Bonds are
                                                                HK$25,581,080.00 and
                                                                HK$5,007,605.00 issued by
                                                                American Home Assurance
                                                                Company
-------------------------------------------------------------------------------------------
MARCONI AUSTRALIA PTY LIMITED                                   Corp has issued letters of
                                                                comfort to MAPL in respect
                                                                of its business

-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS ASIA
LIMITED
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOUTH EAST ASIA PTE LTD
-------------------------------------------------------------------------------------------
THE GENERAL ELECTRIC COMPANY
OF SINGAPORE PRIVATE LIMITED
(NOW KNOWN AS MARCONI SINGAPORE
PTE LTD)
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONSSPA
-------------------------------------------------------------------------------------------
MARCONI IBERIA SA
-------------------------------------------------------------------------------------------
MARCONI MOBILE ACCESS SpA
-------------------------------------------------------------------------------------------
MARCONI SUD SpA
-------------------------------------------------------------------------------------------
MARCONI INTERNATIONAL SpA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS DE
MEXICO SA DE CV
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TELEMULTI LIMITADA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
DO BRASIL LTDA
-------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITADA
-------------------------------------------------------------------------------------------
</TABLE>

                                     179

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
MARCONI COLUMBIA SA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ARGENTINA SA
-------------------------------------------------------------------------------------------
MARCONI VENEZUELA CA
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OPTICAL NETWORKS CORP
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TECHNOLOGY INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CANADA INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
FEDERAL INC
-------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS INC                                      Global Procurement
                                                                Agreement between Marconi
                                                                Communications Inc. and
                                                                Bookham Technology Plc.
                                                                Marconi Corporation plc
                                                                guarantees Marconi
                                                                Communications Inc.'s
                                                                obligations under this
                                                                Global Procurement
                                                                Agreement. The Global
                                                                Procurement Agreement
                                                                contains no warranties or
                                                                indemnities, but states that
                                                                except in relation to PI or
                                                                death caused by negligence,
                                                                cap in respect of any
                                                                Purchase Order is limited to
                                                                the greater of:
                                                                (a)   L10 million; or
                                                                (b)   the total purchase
                                                                price paid for all products
                                                                under this agreement at the
                                                                date such a claim arises,
                                                                except maximum liability in
                                                                no event to
-------------------------------------------------------------------------------------------
</TABLE>

                                     180

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                exceed the minimum Purchase
                                                                         Commitments (L 30
                                                                         million).

MARCONI INC                     DISPOSAL OF MARCONI DATA        STOCK PURCHASE AGREEMENT
                                SYSTEMS INC, MARCONI DATA       RELATING TO SALE OF
                                SYSTEMS LIMITED, MARCONI DATA   OUTSTANDING SHARES IN A.B.
                                SYSTEMS EUROPE B.V. AND         DICK COMPANY (19th December,
                                MARCONI DATA SYSTEMS B.V.       1996)
                                (10th January, 2002)
                                                                Continuing an irrevocable
                                Sellers were Marconi Systems    guarantee given by Corp in
                                Holdings, Inc. (now Marconi,    favour of the Purchaser in
                                Inc.) and A.B. Dick Holdings.   consideration of $10.
                                Corp was a joint-Seller.        Guarantees the Seller's full
                                                                and prompt performance and
                                Plc guaranteed all the          payment of all obligations
                                obligations of the Sellers and  of Seller under the stock
                                warranted its status,           purchase agreement and the
                                authority and non-violation of  Assumption Agreement.
                                any obligation in providing     Guarantee only triggered by
                                the guarantee. Note that the    Change of Control (another
                                Sellers have given extensive    party acquires more than 50%
                                warranties (on an indemnified   "beneficial ownership" in
                                basis), which are all still in  the Seller's shares - other
                                force:                          than Corp) or Seller does
                                                                not satisfy its obligations
                                1. usual warranties on an       under Purchase Agreement and
                                indemnified basis;              also where Seller declares
                                                                dividends, or makes other
                                2. tax warranties;              distributions/payments to
                                                                Corp or any of its
                                3. environmental warranties;    affiliates. Enforceable
                                and                             against Corp without need
                                                                for proceedings to have been
                                4. incorporation, authority,    implemented by Purchaser or
                                shares and capital stock        direct notice of
                                warranties.                     non-performance etc. to
                                                                Corp.
                                Total not to exceed US$100
                                million (US$100 million is      SALE OF MARCONI COMMERCE
                                                                SYSTEMS INC. AND MARCONI
                                                                COMMERCE SYSTEMS LIMITED
                                                                (20th
-------------------------------------------------------------------------------------------
</TABLE>

                                     181

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                              <C>                            <C>
                                 25% of purchase price).        December, 2001)

                                 SALE OF MARCONI COMMERCE       Corp and Marconi Systems
                                 SYSTEMS INC. AND MARCONI       Holdings Inc. (now Marconi,
                                 COMMERCE SYSTEMS LIMITED       Inc.) (the SELLERS) to DH
                                 (20th December, 2001)          Holdings Corp, Launchchange
                                                                Limited and DH Holdings (the
                                                                PURCHASERS)
                                 Plc guaranteed the obligations
                                 Corp is a Joint seller with    Capped at 25% of The
                                 Marconi Systems Holdings,      Adjusted Purchase Price (25%
                                 Inc. (now Marconi, Inc.)       is approx. US$81.25 million).
                                 (the "SELLERS").               of the Sellers.

                                 Capped at 25% of the           ASSET TRANSFER AGREEMENT IN
                                 Adjusted Purchase Price (25%   RESPECT OF THE HEALTHCARE
                                 is approx. US$81.25 million).  INFORMATION BUSINESS (BEING
                                                                TRANSFERRED TO HCIS SUB)
                                                                (17th October, 2001)
                                 SALE OF MARCONI MEDICAL
                                 SYSTEMS HOLDINGS, INC. (3rd    Corp, Marconi Systems
                                 July, 2001)                    Holdings, Inc. (now Marconi,
                                                                Inc.) and Marconi
                                                                Communications Limited
                                 Plc guaranteed the Sellers'    (called HCIS Sub) have
                                 obligations under this         jointly and severally
                                 agreement jointly and          indemnified Marconi Medical
                                 severally with Marconi         Systems U.K. Limited (sold
                                 Systems Holdings, Inc (now     to Koninklijke Philips
                                 Marconi, Inc.) (and possibly   Electronics) in relation to
                                 other subsidiaries). Cap is    any liability or obligation
                                 US$825 million.                related to the Healthcare
                                                                Information business
                                                                (subject to the Stock
                                                                Purchase Agreement).

                                                                No cap.

                                                                SETTLEMENT AND RELEASE
                                                                AGREEMENT RELATING TO THE
                                                                SALE OF MARCONI COMMERCE
                                                                SYSTEMS LIMITED AND MARCONI
-------------------------------------------------------------------------------------------
</TABLE>

                                     182

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                COMMERCE SYSTEMS, INC
                                                                between Launchchange
                                                                Limited, DH Holdings Corp
                                                                (together "Danaher"), Corp
                                                                and Marconi, Inc. (7th
                                                                August, 2002)

                                                                Liability is capped at the
                                                                available Holdback Amount
                                                                except as provided in the
                                                                Agreement
-------------------------------------------------------------------------------------------
MARCONI SOFTWARE
INTERNATIONAL INC
-------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (US) INC
-------------------------------------------------------------------------------------------
SYSTEMS MANAGEMENT              EXCHANGE AGREEMENT - PURCHASE
SPECIALISTS INC                 OF SHARES IN SYSTEMS
                                MANAGEMENT SPECIALISTS, INC.
                                IN EXCHANGE FOR SHARES IN
                                MARCONI PLC (22nd May, 2000)

                                Outstanding liabilities as
                                follows:

                                1. minimal capacity, trading
                                and regulatory warranties;

                                2. certain covenants; and

                                3. indemnity given to Miguel
                                Winder for any losses,
                                damages, costs etc incurred in
                                connection with the breach of
                                representation, warranty or
                                covenant.

                                Plc's liability is capped at
                                $12,750,000 but the indemnity
                                will not be triggered unless
                                the aggregate amount of its
                                liability exceeds $300,000 in
                                which case it must
-------------------------------------------------------------------------------------------
</TABLE>

                                     183

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
-------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                indemnify Miguel Winder for
                                any damage in excess of
                                $50,000.

                                Plc will meet its indemnity
                                obligation through the issue
                                of additional common stock,
                                valued in the same manner as
                                the consideration for the
                                Shares was valued.

                                Following on from this, Plc
                                entered into an agreement for
                                the sale and purchase of
                                shares in Systems Management
                                Specialists, Inc. with Corp
                                (18th July, 2000)
-------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST
(SAUDI ARABIA)
-------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST LLC
(DUBAI)
-------------------------------------------------------------------------------------------
MARCONI APPLIED
TECNOLOGIES SA
-------------------------------------------------------------------------------------------
SNC COMPOSANTS & CIE
-------------------------------------------------------------------------------------------

NON-TRADING SUBSIDIARIES
-------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES LIMITED
-------------------------------------------------------------------------------------------
BRUTON STREET INVESTMENTS
LIMITED
-------------------------------------------------------------------------------------------
EA CONTINENTAL LIMITED
-------------------------------------------------------------------------------------------
ELLIOTT-AUTOMATION
HOLDINGS LIMITED
-------------------------------------------------------------------------------------------
</TABLE>

                                     184

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
---------------------------------------------------------------------------------------------
<S>                              <C>                            <C>
THE ENGLISH ELECTRIC COMPANY,
LIMITED
---------------------------------------------------------------------------------------------
                                 Guarantee of approx.           Guarantee of approx.
MARCONI (BRUTON STREET)          E 353,050,000, re SALE OF      E 353,050,000, re SALE OF
LIMITED                          MARCONI MOBILE HOLDINGS        MARCONI MOBILE HOLDINGS
                                 S.P.A BY MARCONI (BRUTON       S.p.A BY MARCONI (BRUTON
                                 STREET) LIMITED TO             STREET) LIMITED TO
                                 FINMECCANICA S.p.A.            FINMECCANICA S.p.A.
                                 Currently relates to Plc and   Currently relates to Plc and
                                 Marconi (Bruton Street)        Marconi (Bruton Street)
                                 Limited, however, relevant     Limited, however , relevant
                                 to Corp as part of the         to Corp as part of the
                                 proposed restructuring.        proposed restructuring.
                                 Concurrent with any Marconi    Concurrent with any Marconi
                                 Corporate Restructuring, Plc   Corporate Restructuring, Plc
                                 is to procure that the         is to procure that the
                                 ultimate parent of Marconi     ultimate parent of Marconi
                                 and the company owing all or   and the company owing all or
                                 substantially all of the       substantially all of the
                                 assets of the Marconi Group    assets of the Marconi Group
                                 immediately prior to the       immediately prior to the
                                 date of completion of the      date of completion of the
                                 Marconi Group Restructuring    Marconi Group Restructuring
                                 [i.e. Corp] novates the        [i.e. Corp] novates the
                                 Marconi Guarantee under this   Marconi Guarantee under this
                                 deal [value: 57.7% of the      deal [value: 57.7% of the
                                 Purchase Price (this amounts   Purchase Price (this amounts
                                 to approx. E 353,050,000,       to approx. E 353,050,000,
                                 subject to any completion      subject to any completion
                                 adjustment)] to Corp           adjustment)] to Corp
                                 [The cap of E 353,050,000      [The cap of E 353,050,000
                                 excludes any matter            excludes any matter
                                 regarding the Private Mobile   regarding the Private
                                 Radio and Public Mobile        Mobile Radio and Public
                                 Radio Business, the            Mobile Radio Business, the
                                 demergers of Marconi           demergers of Marconi
                                 Holdings SpA and Marconi       Holdings SpA and Marconi
                                 Communications SpA and the     Communications SpA and the
                                 Closing Restructuring and      Closing Restructuring and
                                 any matter relating to         any matter relating to
                                 capacity, authority and        capacity, authority and
                                 title to the MMH Shares and    title to the MMH Shares and
                                 the shares in the MMH          the shares in the MMH
                                 Subsidiaries.]                 Subsidiaries.]
---------------------------------------------------------------------------------------------
MARCONI (HOLDINGS)
---------------------------------------------------------------------------------------------
</TABLE>

                                     185

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>
LIMITED
--------------------------------------------------------------------------------------------
MARCONI AEROSPACE UNLIMITED
--------------------------------------------------------------------------------------------
MARCONI CAPITAL LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AFRICA
(PTY) LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
MARCONI (DGP1) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (DGP2) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (ELLIOTT AUTOMATION)
LIMITED
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS INTERNATIONAL
HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GMBH
(SWITZERLAND)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS GMBH (GERMANY)
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL                                           Marconi Corp. has given to
INDUSTRIES LTD (NOW KNOWN AS                                    Marconi Australia Holdings
MARCONI AUSTRALIA HOLDINGS PTY                                  Pty Ltd ("MAHL") a letter of
LIMITED)                                                        support in respect of an
                                                                intra-group transaction
                                                                comprising a loan from MAHL
                                                                to the Bedell and Cristin
                                                                Trustees Limited ("Bedell")
                                                                for GBP 11M, bearing
                                                                interest. Bedell does not
                                                                have adequate funds to repay
                                                                the loan itself.

                                                                Corp. has issued letters of
                                                                comfort to MAHL in respect
--------------------------------------------------------------------------------------------
</TABLE>

                                      186

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                              <C>                            <C>
                                                                of its business
--------------------------------------------------------------------------------------------
                                                                Guarantee implied under
MARCONI HOLDINGS SpA                                            article 2362 of the Italian
                                                                Civil Code which may arise
                                                                as a result of the Marconi
                                                                Corporation plc's sole
                                                                shareholding in Marconi
                                                                Finanziaria SpA (now Marconi
                                                                Holdings SpA) for the period
                                                                from March 2000 to 29
                                                                October 2001.
--------------------------------------------------------------------------------------------
RELTEC MEXICO SA DE CV (NOW
KNOWN AS MARCONI
COMMUNICATIONS, S.A. DE C.V.)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(CANADA)
--------------------------------------------------------------------------------------------
FS FINANCE CORP
--------------------------------------------------------------------------------------------
FS HOLDING CORP
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS NORTH
AMERICA INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CANADA
HOLDINGS INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS INC.
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(BERMUDA) (NOW KNOWN AS
MARCONI INTERNATIONAL LIMITED)
--------------------------------------------------------------------------------------------

DORMANT SUBSIDIARIES
--------------------------------------------------------------------------------------------
A.B. DICK HOLDINGS LTD           DISPOSAL OF MARCONI DATA
                                 SYSTEMS INC, MARCONI
--------------------------------------------------------------------------------------------
</TABLE>

                                      187

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                                      <C>
                                DATA SYSTEMS LIMITED, MARCONI
                                DATA SYSTEMS EUROPE B.V. AND
                                MARCONI DATA SYSTEMS B.V.
                                (Index ref: G.1.35) (10th
                                January, 2002)

                                Plc guaranteed all the
                                obligations of the Sellers and
                                warranted its status,
                                authority and non-violation of
                                any obligation in providing
                                the guarantee. Note that the
                                Sellers have given extensive
                                warranties (on an indemnified
                                basis), which are all still in
                                force

                                Sellers are jointly and
                                severally liable as follows:

                                1. usual warranties on an
                                indemnified basis;

                                2. tax warranties;

                                3. environmental warranties.

                                4. incorporation, authority,
                                shares and capital stock
                                warranties.

                                Other Sellers are Marconi
                                Systems Holdings, Inc. (now
                                Marconi, Inc.) and A.B. Dick
                                Holdings..
--------------------------------------------------------------------------------------------
ARROW LTD
--------------------------------------------------------------------------------------------
ASSOCIATED AUTOMATION LTD
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
--------------------------------------------------------------------------------------------
</TABLE>

                                      188

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>
INDUSTRIES HOLDINGS LTD
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES (MANCHESTER) LTD
--------------------------------------------------------------------------------------------
CLANVILLE LIMITED
--------------------------------------------------------------------------------------------
COMBINED ELECTRICAL
MANUFACTURERS LTD
--------------------------------------------------------------------------------------------
COPPENHALL NOMINEES LIMITED
--------------------------------------------------------------------------------------------
DAYMO LTD
--------------------------------------------------------------------------------------------
FF CHRESTIAN & CO LTD
--------------------------------------------------------------------------------------------
GPT CONSUMER PRODUCTS LTD
--------------------------------------------------------------------------------------------
GPT PAYPHONE SYSTEMS LTD
--------------------------------------------------------------------------------------------
GPT RELIANCE LTD
--------------------------------------------------------------------------------------------
THE KINGSWAY HOUSING
ASSOCIATION LTD
--------------------------------------------------------------------------------------------
KRAYFORD LTD
--------------------------------------------------------------------------------------------
LARNERWAY LTD
--------------------------------------------------------------------------------------------
LAYANA LIMITED
--------------------------------------------------------------------------------------------
MARCONI CASWELL DEVELOPMENTS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
FIBRES LIMITED
--------------------------------------------------------------------------------------------
MARCONI (FIFTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (FIFTY-NINE) LTD
--------------------------------------------------------------------------------------------
</TABLE>

                                      189

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>
MARCONI (FIFTY-THREE) LTD
--------------------------------------------------------------------------------------------
MARCONI (FORTY-FIVE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (FORTY-FOUR) LTD
--------------------------------------------------------------------------------------------
MARCONI (FORTY-THREE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI G.M. LIMITED
--------------------------------------------------------------------------------------------
MARCONI MOBILE SYSTEMS LIMITED
--------------------------------------------------------------------------------------------
MARCONI (NINE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI PHOTONICA LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTY-NINE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTY-TWO) LTD
--------------------------------------------------------------------------------------------
MARCONI (THIRTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (THIRTY-TWO) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (TLC) LTD
--------------------------------------------------------------------------------------------
MARCONI (TWENTY-SEVEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (WCGL) UNLIMITED
--------------------------------------------------------------------------------------------
MCMICHAEL LIMITED
--------------------------------------------------------------------------------------------
METROPOLITAN-VICKERS
--------------------------------------------------------------------------------------------
</TABLE>

                                      190

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>
ELECTRICAL CO LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS GROUP LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS (HOLDINGS) LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS SERVICES LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS (UK) LTD
--------------------------------------------------------------------------------------------
THE M-O VALVE CO LTD
--------------------------------------------------------------------------------------------
MSI CELLULAR INVESMTNETS (ONE)
LTD
--------------------------------------------------------------------------------------------
PALMAZ LTD
--------------------------------------------------------------------------------------------
PHOTONICA LIMITED
--------------------------------------------------------------------------------------------
PHOTONIQA LIMITED
--------------------------------------------------------------------------------------------
PYFORD LIMITED
--------------------------------------------------------------------------------------------
RAINFORD GROUP TRUSTEES LTD
--------------------------------------------------------------------------------------------
RAINFORD RACKS LTD
--------------------------------------------------------------------------------------------
RELTEC (COVENTRY) LTD
--------------------------------------------------------------------------------------------
ROBERT STEPHENSON & HAWTHORNS
LTD
--------------------------------------------------------------------------------------------
THE ROTARY ENGINEERING COMPANY
LIMITED
--------------------------------------------------------------------------------------------
SALPLEX LTD
--------------------------------------------------------------------------------------------
STYLES & MEALING LIMITED
--------------------------------------------------------------------------------------------
TCL PROJECTS LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      191

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>
ZIPBOND LTD
--------------------------------------------------------------------------------------------
THE VULCAN FOUNDRY LTD
--------------------------------------------------------------------------------------------
TRADING SUBSIDIARIES
(OTHERS)
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES INTERNATIONAL
LIMITED
--------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITED
--------------------------------------------------------------------------------------------
GPT MIDDLE EAST LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS (CIS)
LIMITED
--------------------------------------------------------------------------------------------
MARCONI FINANCE PLC
--------------------------------------------------------------------------------------------
MARCONI FLEET MANAGEMENT
LIMITED
--------------------------------------------------------------------------------------------
MARCONI INFORMATION SYSTEMS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI (NCP) LIMITED
--------------------------------------------------------------------------------------------
NETSCIENT LIMITED
--------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES LIMITED
--------------------------------------------------------------------------------------------
TELEPHONE CABLES LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CHINA
LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      192

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>
BRUTON STREET OVERSEAS
INVESTMENTS LIMITED
--------------------------------------------------------------------------------------------
BRUTON STREET PARTNERSHIP
--------------------------------------------------------------------------------------------
MARCONI INDIA LIMITED
--------------------------------------------------------------------------------------------
MARCONI (THIRTY-ONE) LIMITED
--------------------------------------------------------------------------------------------
HIGHROSE LIMITED
--------------------------------------------------------------------------------------------
ANCRANE
--------------------------------------------------------------------------------------------
WOODS OF COLCHESTER HOUSING
SOCIETY LIMITED
--------------------------------------------------------------------------------------------
MARCONI INSURANCE LIMITED
--------------------------------------------------------------------------------------------
TETREL LIMITED
--------------------------------------------------------------------------------------------
RELTEC SERVICES (UK) LIMITED
--------------------------------------------------------------------------------------------
MARCONI ANSTY LIMITED
--------------------------------------------------------------------------------------------
MARCONI NOMINEES LIMITED
--------------------------------------------------------------------------------------------
YESLINK UNLIMITED
--------------------------------------------------------------------------------------------
ELLIOT AUTOMATION CONTINENTAL
SA
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL NOMINEES LIMITED
--------------------------------------------------------------------------------------------
MARCONI DEFENSE OVERSEAS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GLOBAL
NETWORKS LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      193

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
MARCONICOM LIMITED
--------------------------------------------------------------------------------------------
MICRO SCOPE LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL INVESTMENTS
LIMITED
--------------------------------------------------------------------------------------------
GPT (NEDERLAND) BV
--------------------------------------------------------------------------------------------
GEC OF PAKISTAN LIMITED
--------------------------------------------------------------------------------------------
GEC ZAMBIA LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AB
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS BVBA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SARL
--------------------------------------------------------------------------------------------
MARCONI CHANNEL MARKETS GMBH
--------------------------------------------------------------------------------------------
AEI FURNACES PTY LTD
--------------------------------------------------------------------------------------------
HARMAN INFORMATION
TECHNOLOGY
PTY LTD
--------------------------------------------------------------------------------------------
MARCONI NEW ZEALAND LIMITED
--------------------------------------------------------------------------------------------
MARCONI TELECOMMUNICATIONS
INDIA PRIVATE LTD
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (AUSTRALIA) PTY
LTD
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (HONG KONG)
--------------------------------------------------------------------------------------------
</TABLE>

                                      194

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                          OWED BY PLC                    OWED BY CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
LIMITED
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (INDIA)
PRIVATE LIMITED
--------------------------------------------------------------------------------------------
MARCONI ACQUISITION CORP
--------------------------------------------------------------------------------------------
MARCONI FINANCE INC.
--------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES INC.
--------------------------------------------------------------------------------------------
APT NEDERLANDS BV
--------------------------------------------------------------------------------------------
APT TELECOMMUNICIONES SL
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL AB
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL BRASIL LTDa
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (FRANCE) SA
--------------------------------------------------------------------------------------------
MARCONI PROJECTS HONG KONG LTD
--------------------------------------------------------------------------------------------
</TABLE>

                                      195

<PAGE>

                                     PART 2

         NON-FINANCIAL GUARANTEES AND INDEMNITIES GIVEN BY PARTICIPATING
                                    COMPANIES

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
TRADING COMPANIES
(MATERIAL)
--------------------------------------------------------------------------------------------
ALBANY PARTNERSHIP LIMITED
--------------------------------------------------------------------------------------------
GPT SPECIAL PROJECT MANAGEMENT
LIMITED
--------------------------------------------------------------------------------------------
MARCONI BONDING LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INVESTMENTS LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(IRELAND)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED                                  In consideration of Corp
(UK)                                                            agreeing to provide the
                                                                services of certain
                                                                executives, each of whom has
                                                                signed a service agreement
                                                                with corp, for the purposes
                                                                of advising on MCL's
                                                                business, MCL
                                                                unconditionally and
                                                                irrevocably guarantees to
                                                                all of these executives the
                                                                due and punctual performance
                                                                and observance by corp of
                                                                all its obligations,
                                                                commitments and undertakings
                                                                under and pursuant to each
                                                                of their respective service
                                                                agreements as mentioned
                                                                above, and agrees to
                                                                indemnify each executive in
                                                                respect of any breach by
                                                                corp, of any of its
                                                                obligations, commitments
--------------------------------------------------------------------------------------------
</TABLE>

                                      196

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                and undertakings under and
                                                                pursuant to each respective
                                                                service agreement. This
                                                                guarantee is to be a
                                                                continuing guarantee and
                                                                accordingly is to remain in
                                                                force until all obligations
                                                                of corp shall have been
                                                                performed or satisfied.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
NETWORKS LIMITED (IRELAND)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
OVERSEAS SERVICES LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SOUTH
AFRICA PTY LIMITED
--------------------------------------------------------------------------------------------
MARCONI OPTICAL COMPONENTS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI CORPORATION plc
--------------------------------------------------------------------------------------------
MARCONI plc                                                     SALE OF THE SHARE CAPITAL OF
                                                                YESLINK INTERCO LTD. AND
                                                                YESLINK UNLIMITED TO
                                                                PRUDENTIAL

                                                                Indemnity by PLC in respect
                                                                of all costs, expenses and
                                                                liabilities incurred to the
                                                                extent that Corp did not
                                                                meet its obligations under
                                                                the Trade Mark Assignment.

                                                                Trade mark indemnity is
                                                                uncapped.

                                                                SALE OF MARCONI MEDICAL
                                                                SYSTEMS HOLDINGS, INC. (3rd
                                                                July, 2000)

                                                                According to Marconi, Plc
                                                                guaranteed the Seller's
                                                                obligations under this
                                                                agreement.
--------------------------------------------------------------------------------------------
</TABLE>

                                      197
<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                On 15th July, 2002, Corp,
                                                                Marconi, Inc. (as successor
                                                                to Marconi Holding Systems,
                                                                Inc.) and Philips entered
                                                                into a Final Settlement
                                                                Agreement. Under this
                                                                Agreement, the purchase
                                                                price was adjusted to US$837
                                                                million. The value of the
                                                                Closing Net Assets was
                                                                agreed to be US$755 million.
                                                                Marconi paid Philips US$12
                                                                million on 19th July, 2002
                                                                and was released from
                                                                liabilities in relation to
                                                                the warranty in respect of
                                                                the non-US Vendor Debt
                                                                (Latin American debt) which
                                                                was rescinded and in
                                                                relation to the indemnity
                                                                for breach of
                                                                representation. US$8 million
                                                                of this was in full
                                                                satisfaction of Marconi's
                                                                payment obligations under
                                                                the Stock Purchase
                                                                Agreement. The tax indemnity
                                                                under the Stock Purchase
                                                                Agreement remains in effect,
                                                                including in respect of the
                                                                tax liabilities that could
                                                                have been included in
                                                                determining the Closing Net
                                                                Assets.

                                                                Following the Final
                                                                Settlement Agreement,
                                                                estimated liability is
                                                                US$15.3 million (being
                                                                approx. L10 million).

                                                                DISPOSAL OF MARCONI DATA
                                                                SYSTEMS INC, MARCONI DATA
                                                                SYSTEMS LIMITED, MARCONI
                                                                DATA SYSTEMS EUROPE B.V. AND
                                                                MARCONI DATA SYSTEMS B.V.
                                                                (10th
--------------------------------------------------------------------------------------------
</TABLE>

                                      198

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                January, 2002)

                                                                Sellers were Marconi Systems
                                                                Holdings, Inc. (now Marconi,
                                                                Inc.) and A.B. Dick
                                                                Holdings. Corp was a
                                                                joint-Seller.

                                                                Plc guaranteed all the
                                                                obligations of the Sellers
                                                                and warranted its status,
                                                                authority and non-violation
                                                                of any obligation in
                                                                providing the guarantee.
                                                                Note that the Sellers have
                                                                given extensive warranties
                                                                (on an indemnified basis),
                                                                which are all still in
                                                                force:

                                                                1. usual warranties on an
                                                                indemnified basis;

                                                                2. tax warranties;

                                                                3. environmental warranties;
                                                                and

                                                                4. incorporation, authority,
                                                                shares and capital stock
                                                                warranties.

                                                                Total not to exceed US$100
                                                                million (US$100 million is
                                                                25% of purchase price).

                                                                SALE OF MARCONI COMMERCE
                                                                SYSTEMS, INC. AND MARCONI
                                                                COMMERCE SYSTEMS LIMITED
                                                                (20th December, 2001)

                                                                Plc guaranteed the
                                                                obligations of the sellers.
                                                                Corp is a Joint seller with
--------------------------------------------------------------------------------------------
</TABLE>

                                      199

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
                                                                Marconi Systems Holdings,
                                                                Inc. (now Marconi, Inc.)
                                                                (the "SELLERS").

                                                                Capped at 25% of the
                                                                Adjusted Purchase Price (25%
                                                                is approx. US$81.25
                                                                million)..
--------------------------------------------------------------------------------------------
MARCONI SOFTWARE SOLUTIONS
LIMITED
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL LIMITED
--------------------------------------------------------------------------------------------
RONALDI LTD
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SA
(FRANCE)
--------------------------------------------------------------------------------------------
MNI TECNOLOGIASE e
SISTEMAS de
COMMUNICACAO SA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS B.V.
(NETHERLANDS)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GmbH
(GERMANY)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS REAL
ESTATE GMBH
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS GmbH
& CO KG
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOFTWARE SYSTEMS VER. GmbH
--------------------------------------------------------------------------------------------
BEIJING MARCONI COMMUNICATIONS
TECHNOLOGY CO LTD
--------------------------------------------------------------------------------------------
GEC (HONG KONG)
--------------------------------------------------------------------------------------------
</TABLE>

                                      200

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
LIMITED
--------------------------------------------------------------------------------------------
MARCONI AUSTRALIA PTY LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ASIA LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
SOUTH EAST ASIA PTE LTD
--------------------------------------------------------------------------------------------
THE GENERAL ELECTRIC COMPANY
OF SINGAPORE PRIVATE LIMITED
(NOW KNOWN AS MARCONI
SINGAPORE PTE LTD)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONSSPA
--------------------------------------------------------------------------------------------
MARCONI IBERIA SA
--------------------------------------------------------------------------------------------
MARCONI MOBILE ACCESS SpA
--------------------------------------------------------------------------------------------
MARCONI SUD SpA
--------------------------------------------------------------------------------------------
MARCONI INTERNATIONAL SpA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS de
MEXICO SA de CV
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TELEMULTI LIMITADA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS DO
BRASIL LTDa
--------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITADA
--------------------------------------------------------------------------------------------
MARCONI COLUMBIA SA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
ARGENTINA SA
--------------------------------------------------------------------------------------------
MARCONI VENEZUELA CA
--------------------------------------------------------------------------------------------
</TABLE>

                                      201

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
MARCONI COMMUNICATIONS
OPTICAL NETWORKS CORP
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
TECHNOLOGY INC
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
CANADA INC
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
FEDERAL INC
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS INC
--------------------------------------------------------------------------------------------
MARCONI INC
--------------------------------------------------------------------------------------------
MARCONI SOFTWARE
INTERNATIONAL INC
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (US) INC
--------------------------------------------------------------------------------------------
SYSTEMS MANAGEMENT
SPECIALISTS INC
--------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST
(SAUDI ARABIA)
--------------------------------------------------------------------------------------------
MARCONI MIDDLE EAST
LLC (DUBAI)
--------------------------------------------------------------------------------------------
MARCONI APPLIED TECNOLOGIES
SA
--------------------------------------------------------------------------------------------
SNC COMPOSANTS & CIE
--------------------------------------------------------------------------------------------

NON-TRADING SUBSIDIARIES
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES LIMITED
--------------------------------------------------------------------------------------------
BRUTON STREET INVESTMENTS
LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      202

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
EA CONTINENTAL LIMITED
--------------------------------------------------------------------------------------------
ELLIOTT-AUTOMATION HOLDINGS
LIMITED
--------------------------------------------------------------------------------------------
THE ENGLISH ELECTRIC COMPANY,
LIMITED
--------------------------------------------------------------------------------------------
MARCONI (BRUTON STREET)
LIMITED
--------------------------------------------------------------------------------------------
MARCONI (HOLDINGS) LIMITED
--------------------------------------------------------------------------------------------
MARCONI AEROSPACE UNLIMITED
--------------------------------------------------------------------------------------------
MARCONI CAPITAL LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AFRICA
(PTY) LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
MARCONI (DGP1) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (DGP2) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (ELLIOTT AUTOMATION)
LIMITED
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS INTERNATIONAL
HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GmbH
(SWITZERLAND)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS GmbH (GERMANY)
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
--------------------------------------------------------------------------------------------
</TABLE>

                                      203

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
INDUSTRIES LTD (NOW KNOWN AS
MARCONI AUSTRALIA HOLDINGS PTY
LIMITED)
--------------------------------------------------------------------------------------------
MARCONI HOLDINGS SpA
--------------------------------------------------------------------------------------------
RELTEC MEXICO SA de CV (NOW
KNOWN AS MARCONI
COMMUNICATIONS, S.A. DE C.V.)
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(CANADA)
--------------------------------------------------------------------------------------------
FS FINANCE CORP
--------------------------------------------------------------------------------------------
FS HOLDING CORP
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS NORTH
AMERICA INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CANADA
HOLDINGS INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
HOLDINGS INC.
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL INC.
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS LIMITED
(BERMUDA) (NOW KNOWN AS
MARCONI INTERNATIONAL LIMITED)
--------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
DORMANT SUBSIDIARIES
--------------------------------------------------------------------------------------------
A.B. DICK HOLDINGS LTD
--------------------------------------------------------------------------------------------
ARROW LTD
--------------------------------------------------------------------------------------------
</TABLE>

                                      204

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
ASSOCIATED AUTOMATION LTD
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES HOLDINGS LTD
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES (MANCHESTER) LTD
--------------------------------------------------------------------------------------------
CLANVILLE LIMITED
--------------------------------------------------------------------------------------------
COMBINED ELECTRICAL
MANUFACTURERS LTD
--------------------------------------------------------------------------------------------
COPPENHALL NOMINEES LIMITED
--------------------------------------------------------------------------------------------
DAYMO LTD
--------------------------------------------------------------------------------------------
FF CHRESTIAN & CO LTD
--------------------------------------------------------------------------------------------
GPT CONSUMER PRODUCTS LTD
--------------------------------------------------------------------------------------------
GPT PAYPHONE SYSTEMS LTD
--------------------------------------------------------------------------------------------
GPT RELIANCE LTD
--------------------------------------------------------------------------------------------
THE KINGSWAY HOUSING
ASSOCIATION LTD
--------------------------------------------------------------------------------------------
KRAYFORD LTD
--------------------------------------------------------------------------------------------
LARNERWAY LTD
--------------------------------------------------------------------------------------------
LAYANA LIMITED
--------------------------------------------------------------------------------------------
MARCONI CASWELL DEVELOPMENTS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS OPTICAL
FIBRES LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      205

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
MARCONI (FIFTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (FIFTY-NINE) LTD
--------------------------------------------------------------------------------------------
MARCONI (FIFTY-THREE) LTD
--------------------------------------------------------------------------------------------
MARCONI (FORTY-FIVE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (FORTY-FOUR) LTD
--------------------------------------------------------------------------------------------
MARCONI (FORTY-THREE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI G.M. LIMITED
--------------------------------------------------------------------------------------------
MARCONI MOBILE SYSTEMS LIMITED
--------------------------------------------------------------------------------------------
MARCONI (NINE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI PHOTONICA LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTY-NINE) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (SIXTY-TWO) LTD
--------------------------------------------------------------------------------------------
MARCONI (THIRTEEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (THIRTY-TWO) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (TLC) LTD
--------------------------------------------------------------------------------------------
MARCONI (TWENTY-SEVEN) LIMITED
--------------------------------------------------------------------------------------------
MARCONI (WCGL) UNLIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      206

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
MCMICHAEL LIMITED
--------------------------------------------------------------------------------------------
METROPOLITAN-VICKERS
ELECTRICAL CO LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS GROUP LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS (HOLDINGS) LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS SERVICES LTD
--------------------------------------------------------------------------------------------
MOBILE SYSTEMS (UK) LTD
--------------------------------------------------------------------------------------------
THE M-O VALVE CO LTD
--------------------------------------------------------------------------------------------
MSI CELLULAR INVESMTNETS (ONE)
LTD
--------------------------------------------------------------------------------------------
PALMAZ LTD
--------------------------------------------------------------------------------------------
PHOTONICA LIMITED
--------------------------------------------------------------------------------------------
PHOTONIQA LIMITED
--------------------------------------------------------------------------------------------
PYFORD LIMITED
--------------------------------------------------------------------------------------------
RAINFORD GROUP TRUSTEES LTD
--------------------------------------------------------------------------------------------
RAINFORD RACKS LTD
--------------------------------------------------------------------------------------------
RELTEC (COVENTRY) LTD
--------------------------------------------------------------------------------------------
ROBERT STEPHENSON & HAWTHORNS
LTD
--------------------------------------------------------------------------------------------
THE ROTARY ENGINEERING COMPANY
LIMITED
--------------------------------------------------------------------------------------------
SALPLEX LTD
--------------------------------------------------------------------------------------------
</TABLE>

                                      207

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
STYLES & MEALING LIMITED
--------------------------------------------------------------------------------------------
TCL PROJECTS LIMITED
--------------------------------------------------------------------------------------------
ZIPBOND LTD
--------------------------------------------------------------------------------------------
THE VULCAN FOUNDRY LTD
--------------------------------------------------------------------------------------------
TRADING SUBSIDIARIES (OTHERS)
--------------------------------------------------------------------------------------------
ASSOCIATED ELECTRICAL
INDUSTRIES INTERNATIONAL
LIMITED
--------------------------------------------------------------------------------------------
FORE SYSTEMS LIMITED
--------------------------------------------------------------------------------------------
GPT MIDDLE EAST LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS (CIS)
LIMITED
--------------------------------------------------------------------------------------------
MARCONI FINANCE plc
--------------------------------------------------------------------------------------------
MARCONI FLEET MANAGEMENT
LIMITED
--------------------------------------------------------------------------------------------
MARCONI INFORMATION SYSTEMS
LIMITED
--------------------------------------------------------------------------------------------
MARCONI (NCP) LIMITED
--------------------------------------------------------------------------------------------
NETSCIENT LIMITED
--------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES LIMITED
--------------------------------------------------------------------------------------------
TELEPHONE CABLES LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS CHINA
LIMITED
--------------------------------------------------------------------------------------------
</TABLE>

                                      208

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
MARCONI COMMUNICATIONS
INTERNATIONAL HOLDINGS LIMITED
--------------------------------------------------------------------------------------------
BRUTON STREET OVERSEAS
INVESTMENTS LIMITED
--------------------------------------------------------------------------------------------
BRUTON STREET PARTNERSHIP
--------------------------------------------------------------------------------------------
MARCONI INDIA LIMITED
--------------------------------------------------------------------------------------------
MARCONI (THIRTY-ONE) LIMITED
--------------------------------------------------------------------------------------------
HIGHROSE LIMITED
--------------------------------------------------------------------------------------------
ANCRANE
--------------------------------------------------------------------------------------------
WOODS OF COLCHESTER HOUSING
SOCIETY LIMITED
--------------------------------------------------------------------------------------------
MARCONI INSURANCE LIMITED
--------------------------------------------------------------------------------------------
TETREL LIMITED
--------------------------------------------------------------------------------------------
RELTEC SERVICES (UK) LIMITED
--------------------------------------------------------------------------------------------
MARCONI ANSTY LIMITED
--------------------------------------------------------------------------------------------
MARCONI NOMINEES LIMITED
--------------------------------------------------------------------------------------------
YESLINK UNLIMITED
--------------------------------------------------------------------------------------------
ELLIOT AUTOMATION CONTINENTAL
SA
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL NOMINEES LIMITED
--------------------------------------------------------------------------------------------
MARCONI DEFENSE OVERSEAS
--------------------------------------------------------------------------------------------
</TABLE>

                                      209

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS GLOBAL
NETWORKS LIMITED
--------------------------------------------------------------------------------------------
MARCONICOM LIMITED
--------------------------------------------------------------------------------------------
MICRO SCOPE LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS
INTERNATIONAL INVESTMENTS
LIMITED
--------------------------------------------------------------------------------------------
GPT (NEDERLAND) BV
--------------------------------------------------------------------------------------------
GEC OF PAKISTAN LIMITED
--------------------------------------------------------------------------------------------
GEC ZAMBIA LIMITED
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS AB
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS BVBA
--------------------------------------------------------------------------------------------
MARCONI COMMUNICATIONS SARL
--------------------------------------------------------------------------------------------
MARCONI CHANNEL MARKETS GmbH
--------------------------------------------------------------------------------------------
AEI FURNACES PTY LTD
--------------------------------------------------------------------------------------------
HARMAN INFORMATION TECHNOLOGY
PTY LTD
--------------------------------------------------------------------------------------------
MARCONI NEW ZEALAND LIMITED
--------------------------------------------------------------------------------------------
MARCONI TELECOMMUNICATIONS
INDIA PRIVATE LTD
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (AUSTRALIA)
--------------------------------------------------------------------------------------------
</TABLE>

                                      210

<PAGE>

                          OFF-BALANCE SHEET LIABILITIES

<TABLE>
<CAPTION>
                                           OWED TO PLC                  OWED TO CORP
--------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
PTY LTD
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (HONG KONG)
LIMITED
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (INDIA) PRIVATE
LIMITED
--------------------------------------------------------------------------------------------
MARCONI ACQUISITION CORP
--------------------------------------------------------------------------------------------
MARCONI FINANCE INC.
--------------------------------------------------------------------------------------------
NORTHWOOD TECHNOLOGIES INC.
--------------------------------------------------------------------------------------------
APT NEDERLANDS BV
--------------------------------------------------------------------------------------------
APT TELECOMMUNICIONES SL
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL AB
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL BRASIL LTDA
--------------------------------------------------------------------------------------------
METAPATH SOFTWARE
INTERNATIONAL (FRANCE) SA
--------------------------------------------------------------------------------------------
MARCONI PROJECTS HONG KONG LTD
--------------------------------------------------------------------------------------------
</TABLE>

                                      211

<PAGE>

         IN WITNESS of which this Agreement has been executed as an Agreement
and has been delivered on the date which appears first on page 1.

SIGNED by                        )
for MARCONI                      )
CORPORATION PLC                  )
as CORP                          )

SIGNED by                        )
for MARCONI                      )
CORPORATION PLC                  )
as a TRADING COMPANY             )

SIGNED by                        )
for MARCONI PLC                  )
as plc                           )

SIGNED by                        )
for MARCONI PLC                  )
as a TRADING COMPANY             )

                                      212

<PAGE>

                                   SCHEDULE 14

                                  CORP COVENANT

                              DATED [  ] MARCH, 2003

                             MARCONI CORPORATION PLC

                                   MARCONI PLC

                                       AND

                                     ANCRANE

                             CORP DEED OF INDEMNITY

                                  ALLEN & OVERY

                                     London

                                      213

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                                 PAGE
<S>                                                                                                    <C>
1.  Interpretation...................................................................................  215
2.  Covenant.........................................................................................  218
3.  Mitigation.......................................................................................  219
4.  Exclusions.......................................................................................  219
5.  Due Date for Payment.............................................................................  219
6.  Repayments.......................................................................................  219
7.  Conduct of Claims................................................................................  220
8.  Time Limit.......................................................................................  220
9.  Deductions from Payments, etc....................................................................  220
10. Non-Assignability................................................................................  221
11. Waivers and Remedies Cumulative..................................................................  221
12. Severability.....................................................................................  221
13. Counterparts.....................................................................................  221
14. Notices..........................................................................................  221
15. Expenses.........................................................................................  222
16. Jurisdiction.....................................................................................  222
17. Governing Law....................................................................................  222
</TABLE>

                                      214

<PAGE>

THIS DEED OF INDEMNITY is made on [ ] March, 2003 BETWEEN:

(1)      MARCONI CORPORATION PLC, (registered number 67307) whose registered
         office is at New Century Park, PO Box 53, Coventry, Warwickshire, CV3
         1HJ (CORP);

(2)      MARCONI PLC, (registered number 3846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (plc); and

(3)      ANCRANE, (registered number 4308188) whose registered office is at New
         Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (ANCRANE).

WHEREAS

(A)      It is proposed that Ancrane will, by way of a repayment of capital in
         specie, assign its beneficial interest in inter alia the Bonds and the
         Highrose Debt to plc.

(B)      plc and Ancrane may incur a liability to Taxation in respect of
         Exchange Gains in respect of the Bonds and the Highrose Debt.

(C)      Corp is willing to indemnify plc and Ancrane for liability to Taxation
         as set forth in this Deed.

THIS DEED WITNESSES AND IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         ARRANGEMENTS means arrangements as a result of which Ancrane and Corp,
         or plc and Corp, as the case may be, are treated in accordance with
         section 410 ICTA 1988 as not being members of the same group of
         companies for the purposes of Part X, Chapter IV of ICTA 1988;

         ARRANGEMENTS PERIOD means the period commencing on the day on which
         Arrangements come into existence in relation to Corp and the Relevant
         Company and ending on the Effective Date;

         BONDS means the Eurobonds and Yankee Bonds in which Ancrane has the
         ultimate beneficial ownership on the Record Date, totalling
         approximately L450,000,000;

         BUSINESS DAY means any day on which banks are open for general business
         in both London and New York;

         CORP CONDUCT MATTERS means the preparation, submission and negotiation
         of all returns and computations, the preparation and submission of all
         correspondence relating to such returns and computations and the
         agreement of all matters relevant to the tax position of the Relevant
         Companies in relation to Taxation payable by the Relevant Companies in
         respect of which Corp may be liable in accordance with clause 2;

                                      215

<PAGE>

         CORP SCHEME means the proposed scheme of arrangement in respect of Corp
         pursuant to section 425 Companies Act 1985, the terms of which are set
         out in Part II of the Scheme Document, including any modifications,
         additions or conditions approved or imposed by the Court;

         Document, including any modifications, additions or conditions approved
         or imposed by the Court;

         EFFECTIVE DATE means the date upon which an office copy of the order of
         the Court sanctioning the Corp Scheme shall have been delivered to the
         Registrar of Companies for registration;

         EUROBONDS means the E 500,000,000 5.625 per cent. bonds due 2005 and
         the E 1,000,000,000 6.375 per cent. bonds due 2010, both issued by Corp
         and both guaranteed by plc;

         EXCHANGE GAIN means an exchange gain as defined in section 103 Finance
         Act 1996;

         FINAL DETERMINATION means for any accounting period of a Relevant
         Company, if that Relevant Company's tax return has been agreed with the
         Inland Revenue the agreement of that tax return, or, if no such
         agreement has been reached, on the earlier of the following events:

         (i)      a determination being agreed by Corp and the Relevant Company;
                  or

         (ii)     the corporation tax return of such Relevant Company for such
                  period being submitted to the Inland Revenue and one of the
                  following events having occurred:

                  (a)      such Relevant Company has received a binding notice
                           from the Inland Revenue that such tax return is final
                           and incapable of amendment;

                  (b)      the Inland Revenue is precluded from serving a notice
                           of enquiry or further notice of enquiry (as the case
                           may be) into such tax return;

                  (c)      any such enquiry has been finally determined by the
                           Inland Revenue's serving a closure notice on such
                           Relevant Company and (1) such Relevant Company has
                           amended such tax return in a manner which accords
                           with the conclusions stated in the closure notice and
                           the Inland Revenue has failed to make any further
                           amendments to that tax return within the time limit
                           allowed by law, (2) the Inland Revenue has amended
                           such tax return in a manner which accords with the
                           conclusions stated in the closure notice or such
                           Relevant Company has failed to appeal against such
                           amendments within the time limit allowed by law or
                           (3) no such amendments are required;

                  (d)      such Relevant Company has either failed to appeal
                           within the time limit allowed by law against any
                           amendment to such tax return made by the Inland
                           Revenue or any such appeal has been finally
                           determined;

                  (e)      the Inland Revenue is precluded from amending or
                           further amending (as the case may be) such tax
                           return; or

                                      216

<PAGE>

                  (f)      an appeal has been made against an amendment of such
                           tax return, such appeal has been determined by the
                           relevant court or tribunal and (1) one party to that
                           appeal has notified the other that it will not appeal
                           against that decision, (2) an expert has determined
                           that there is no reasonable prospect of an appeal
                           against that decision succeeding, and for this
                           purpose "expert" means leading tax counsel of at
                           least ten years' standing appointed by mutual
                           agreement between Corp and plc or, failing such
                           agreement, by the Chairman of the International Bar
                           Association, or (3) such determination is a decision
                           of the highest court of appeal;

         GROUP RELIEF means losses or other amounts eligible for surrender under
         Chapter IV of Part X of ICTA 1988;

         HIGHROSE DEBT means the inter company loan of L23,404,000 from
         Ancrane to Highrose Limited;

         HIGHROSE LIMITED means Highrose Limited (registered number 4410334)
         whose registered office is at New Century Park, P.O. Box 53, Coventry,
         Warwickshire CV3 1HJ;

         ICTA 1988 means the Income and Corporation Taxes Act 1988;

         PLC SCHEME means the proposed scheme of arrangement in respect of plc
         pursuant to section 425 Companies Act 1985, the terms of which are set
         out in Part III of the Scheme Document, including any modifications,
         additions, or conditions approved or imposed by the Court;

         PRE-ARRANGEMENTS PERIOD means the period commencing on 1 April 2003 and
         ending on the day before the day on which Arrangements come into
         existence in relation to Corp and the Relevant Company;

         PRESCRIBED RATE means the rate of 1 per cent. per annum above the base
         rate for the time being of Barclays Bank PLC;

         RECORD DATE has the meaning given to it in the Corp Scheme or the plc
         Scheme, as appropriate;

         RELEVANT COMPANY means Ancrane or plc as appropriate;

         RELIEF means loss, allowance, credit, relief, deduction or set-off or
         any right to a repayment of Taxation;

         SAVEABLE AMOUNT means, in respect of a Relief, the amount by which a
         liability to Taxation may be decreased by the use of that Relief;

         SCHEME DOCUMENT means the scheme document (together with the
         explanatory statements and all appendices, schedules and annexures to
         it) to be issued in connection with the Corp Scheme;

         TAXATION means corporation tax and any interest, penalty, surcharge or
         fine relating to such corporation tax; and

                                      217

<PAGE>

         YANKEE BONDS means the US$900,000,000 7 3/4 per cent. bonds due 2010
         and the US$900,000,000 8 3/8 per cent. bonds due 2030 both issued by
         Corp and both guaranteed by plc.

1.2      CONSTRUCTION

         (a)      In this Deed:

                  (i)      references to a person include a body corporate and
                           unincorporated associations of persons;

                  (ii)     references to an individual include his estate and
                           personal representatives; and

                  (iii)    references to a party to this Deed include references
                           to the successors or assigns (immediate or
                           otherwise), of that party.

         (b)      In this Deed any reference, express or implied, to an
                  enactment includes references to:

                  (i)      that enactment as re-enacted, amended, extended or
                           applied by or under any other enactment (before or
                           after the signature of this Deed);

                  (ii)     any enactment which that enactment re-enacts (with or
                           without modification); and

                  (iii)    any subordinate legislation made (before or after the
                           signature of this Deed) under that enactment, as
                           re-enacted, amended, extended or applied as described
                           in paragraph (i) above, or under any enactment
                           referred to in paragraph (ii) above,

                           and "enactment" includes any legislation in any
                           jurisdiction.

         (c)      In this Deed a reference to a clause, subclause or schedule is
                  a reference to a clause, subclause or schedule to this Deed.
                  The schedules form part of this Deed.

         (d)      Subclauses 1.1 to 1.2(c) above apply unless the contrary
                  intention appears.

         (e)      The headings in this Deed do not affect its interpretation.

2.       COVENANT

2.1      Corp covenants with Ancrane that, subject to the provisions of this
         Deed, Corp will pay to the Inland Revenue on behalf of Ancrane an
         amount equal to any Taxation payable by Ancrane in respect of Exchange
         Gains on the Bonds and the Highrose Debt the liability for which arises
         in Ancrane's accounting period commencing on 1 April 2003 and where the
         relevant profit is not apportioned to the Pre-Arrangements Period in
         accordance with section 403B ICTA 1988.

2.2      Corp covenants with plc that, conditional on the plc Scheme becoming
         effective by delivery of an office copy of the order of the Court
         sanctioning the plc Scheme being delivered to the Registrar of
         Companies for registration and subject to the provisions of this Deed,
         Corp will

                                      218

<PAGE>

         pay to the Inland Revenue on behalf of plc an amount equal to any
         Taxation payable by plc in respect of Exchange Gains on the Bonds and
         the Highrose Debt the liability for which arises in plc's accounting
         period commencing on 1 April 2003 and where the relevant profit is not
         apportioned to the Pre-Arrangements Period in accordance with section
         403B ICTA 1988.

2.3      Where Corp makes any payment in accordance with clause 2.1 or 2.2, it
         will make it clear to the Inland Revenue at the time it makes such
         payment that the payment is made in discharge of the relevant liability
         to Taxation of Ancrane or plc, as the case may be.

3.       MITIGATION

         Corp shall not be liable under clause 2 unless, and then only to the
         extent that, the amount of the relevant liability to Taxation exceeds
         the Saveable Amount in respect of any Relief available to mitigate that
         liability to Taxation (including for the avoidance of doubt any Reliefs
         which are available for surrender by plc to Ancrane or vice versa), so
         that in particular Corp's liability under each of clause 2.1 and 2.2
         shall not exceed the corporation tax on the lesser of relevant Exchange
         Gains and the total profits of Ancrane or, as the case may be, plc for
         its accounting period commencing 1 April 2003 and shall be reduced to
         the extent that Reliefs are available in subsequent accounting periods
         for carry back to reduce the corporation tax that would otherwise be
         payable as described in clauses 2.1 and 2.2.

4.       EXCLUSIONS

         The covenants contained in clause 2 shall not extend to any liability
         under this Deed to the extent that it would not have arisen but for a
         voluntary act or omission carried out or effected by plc or Ancrane
         after the Effective Date.

5.       DUE DATE FOR PAYMENT

5.1      Any payment due under clause 2 shall be paid within five Business Days
         of the later of:

         (a)      a Final Determination that the relevant Taxation is due; and

         (b)      the date on which plc or Ancrane, as the case may be, gives
                  Corp notice in writing, specifying (in reasonable detail) the
                  nature of the claim and the amount claimed.

5.2      If Corp fails to pay any sum due from it under this Deed on the due
         date for payment then, save to the extent that Corp's liability under
         clause 2 compensates the Relevant Company for late payment of the sum
         by virtue of its extending to interest and penalties, Corp shall pay
         interest on that sum from the due date until actual payment at the
         Prescribed Rate compounded annually.

6.       REPAYMENTS

6.1      If Ancrane or, as the case may be, plc is or may be entitled to receive
         from the Inland Revenue a repayment or credit in respect of Taxation in
         respect of which Corp is liable under this Deed (the UNDERLYING TAX)
         then:

         (a)      Ancrane or, as the case may be, plc shall give Corp full
                  details of the entitlement as soon as practicable and in any
                  event within 14 days of becoming aware of the entitlement;

                                      219

<PAGE>

         (b)      Ancrane or, as the case may be, plc shall at the request and
                  expense of Corp take all appropriate steps to procure that the
                  repayment or credit shall be obtained, keeping Corp fully
                  informed of the progress of any action taken or, at Corp's
                  request, the provisions of clause 7 shall apply as if
                  obtaining the repayment or credit were a Corp Conduct Matter,
                  with such amendments as are necessary; and

         (c)      Ancrane or, as the case may be, plc shall pay an amount equal
                  to the repayment or credit received by Ancrane or, as the case
                  may be, plc to Corp within five days of receipt to the extent
                  that Corp has made a payment in respect of the underlying tax
                  and shall at the same time also pay to Corp an amount equal to
                  any repayment supplement or interest on the amount of the
                  repayment or credit so paid.

7.       CONDUCT OF CLAIMS

7.1      Corp (or such professional advisers as Corp may select) shall be
         entitled to have the sole conduct of the Corp Conduct Matters.

7.2      plc and Ancrane shall immediately authorise, sign and submit to the
         Inland Revenue such returns and other ancillary information, accounts,
         statements and reports relating to each of the accounting periods of
         plc and Ancrane which include all or any part of the Arrangements
         Period, and make such claims and elections and give such consents
         (including claims for and consents to the surrender of losses by way of
         Group Relief from Ancrane to plc and vice versa) and comply with all
         procedural requirements in respect of the making or giving of such
         returns, ancillary information, accounts, statements and reports or
         such claims, elections or consents as Corp (or its advisers) may, in
         its absolute discretion, direct in writing.

7.3      Corp (and its advisers) shall be provided promptly with any information
         received by plc or Ancrane, or of which plc or Ancrane otherwise
         becomes aware, which may be relevant to the Corp Conduct Matters, and
         with such assistance and access to such information as Corp (or its
         advisers) may reasonably require in connection with the Corp Conduct
         Matters.

8.       TIME LIMIT

         The liability of Corp to make any payment under this Deed shall cease
         on the seventh anniversary of the Effective Date except in respect of
         any claim of which plc or Ancrane gives notice to Corp before that date
         specifying (in reasonable detail) the nature of the claim and the
         amount claimed and in relation to which proceedings have been commenced
         prior to the eighth anniversary of the Effective Date.

9.       DEDUCTIONS FROM PAYMENTS, ETC.

9.1      All sums payable by Corp under this Deed shall be paid free and clear
         of all deductions and withholdings whatsoever, save only as may be
         required by law.

9.2      If any deductions or withholdings are required by law to be made from
         any of the sums payable as mentioned in clause 9.1, other than in
         respect of interest under clause 5.2, Corp shall be obliged to pay such
         additional amount as will ensure that the net amount received under
         this Deed will equal the full amount that would have been received in
         the absence of any such requirement to make a deduction or withholding.

                                      220

<PAGE>

9.3      If any sum payable by Corp under this Deed (other than interest under
         clause 5.2) shall be subject to Taxation in the hands of plc or
         Ancrane, as the case may be, Corp shall be under the same obligation to
         make an increased payment in relation to that Taxation as if the
         liability were a deduction or withholding required by law.

10.      NON-ASSIGNABILITY

         No party may assign, transfer, novate, encumber or dispose of any of
         its interest in, its rights and/or obligations under this Deed.

11.      WAIVERS AND REMEDIES CUMULATIVE

         The rights of each party under this Deed:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any such right is not a waiver
         of that right.

12.      SEVERABILITY

         If a provision of this Deed is or becomes illegal, invalid or
         unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of this Deed; or

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of this Deed.

13.      COUNTERPARTS

         This Deed may be executed in any number of counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same Deed and any party may enter into this Deed by executing a
         counterpart.

14.      NOTICES

14.1     All notices or other communications under or in connection with this
         Deed shall be given in writing and may be made by facsimile. Any such
         notice will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile, when received in legible form.

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

                                      221

<PAGE>

14.2     The address and facsimile number of each party for all notices under or
         in connection with this Deed are:

         (a)      in relation to Corp:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number:               020 7306 1395

         (b)      in relation to plc:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number:               020 7306 1395

         (c)      in relation to Ancrane:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ

                  Fax Number:               020 7306 1395

         or any other notified by that party for this purpose to the other party
         by not less than five Business Days' notice.

15.      EXPENSES

         Each party shall pay its own costs and expenses in connection with the
         preparation, negotiation and execution of this Deed.

16.      JURISDICTION

         Each party to this Deed agrees that the courts of England shall have
         jurisdiction to settle any disputes in connection with this Deed and,
         accordingly, submits to the jurisdiction of the English courts.

17.      GOVERNING LAW

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

IN WITNESS of which this Deed has been executed as a deed and has been delivered
on the date which appears first on page 1.

                                      222

<PAGE>

EXECUTED as a Deed              )      ____________________________________
by MARCONI CORPORATION PLC      )      Director
acting by [  ] and              )      ____________________________________
[  ]                            )      Director/Secretary

EXECUTED as a Deed              )      ____________________________________
by MARCONI PLC                  )      Director
acting by [  ] and              )      ____________________________________
[  ]                            )      Director/Secretary

EXECUTED as a Deed              )      ____________________________________
by ANCRANE                      )      Director
acting by [  ] and              )      ____________________________________
[  ]                            )      Director/Secretary

                                      223

<PAGE>

                                  SCHEDULE 15

                           ANCRANE DEED OF ASSIGNMENT

                              DATED [ ] MARCH, 2003
                                     ANCRANE

                                       AND

                                   MARCONI PLC
                             ----------------------
                               DEED OF ASSIGNMENT
                         BY WAY OF REPAYMENT OF CAPITAL
                                    IN SPECIE
                          ---------------------------
                                  ALLEN & OVERY
                                     London

                                      224

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                                 PAGE
<S>                                                                                                    <C>
1.  Interpretation...................................................................................  226
2.  Assignment and Payment...........................................................................  229
3.  Further Assurance................................................................................  229
4.  Turnover.........................................................................................  230
5.  Set-off and Counterclaim.........................................................................  230
6.  Representations and Warranties...................................................................  230
7.  Assignor's Responsibility........................................................................  231
8.  Indemnity........................................................................................  231
9.  Changes to the Parties...........................................................................  231
10. Waivers and Remedies Cumulative..................................................................  231
11. Severability.....................................................................................  231
12. Counterparts.....................................................................................  232
13. Notices..........................................................................................  232
14. Expenses.........................................................................................  233
15. Stamp Duty.......................................................................................  233
16. Jurisdiction.....................................................................................  233
17. Governing Law....................................................................................  233

Signatories..........................................................................................  238
</TABLE>

                                      225

<PAGE>

THIS DEED is dated [ ] March, 2003

BETWEEN:

(1)      ANCRANE (registered number 04308188) whose registered office is at New
         Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (the
         ASSIGNOR); and

(2)      MARCONI PLC (registered number 03846429) whose registered office is at
         New Century Park, PO Box 53, Coventry, Warwickshire, CV3 1HJ (the
         ASSIGNEE).

BACKGROUND:

(A)      This Assignment has been entered into by the aforementioned parties as
         part of the proposed financial restructuring of the Assignee and Corp
         (the FINANCIAL RESTRUCTURING).

(B)      As part of the Financial Restructuring, the Assignor was re-registered
         as an unlimited company on 25th March, 2003 and the Assignee is the
         registered holder of its entire issued share capital, save for one
         ordinary share that is registered in the name of Marconi Nominees
         Limited and held on trust for the Assignee.

(C)      On the date of this Deed the Assignor reduced its existing share
         capital (including its share premium account) from [-] to L100 to
         enable it to make a repayment of capital in specie to the Assignee and
         pursuant to the repayment of capital the Assignor has agreed to assign
         the Assigned Rights to the Assignee prior to the Corp Creditors'
         Meeting.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         ASSIGNED RIGHTS means the beneficial interest in all assets, property,
         rights, title, interest, benefits and obligations of the Assignor
         including, but without limitation, any beneficial interest in the
         Bonds, the Corp Loan and the Highrose Debt and any right or entitlement
         of the Assignor to receive cash, loan notes, shares or other
         consideration or payment as a creditor of Corp or the Assignee as a
         result of the Financial Restructuring but, for the avoidance of doubt,
         excluding L100 and any rights which the Assignor has under the
         Corp Covenant;

         ASSIGNMENT means the assignment of the Assigned Rights under this Deed;

         BONDS means the Eurobonds and Yankee Bonds in which the Assignor had
         the ultimate beneficial ownership at the date of this Deed;

         BUSINESS DAY means any day other than Saturday, Sunday or any other day
         which is a public holiday in England and Wales;

         COMPLETION means the execution of this Deed by the parties set out
         herein;

                                      226

<PAGE>

         CORP means Marconi Corporation plc (registered number 67307) whose
         registered office is at New Century Park, PO Box 53, Coventry,
         Warwickshire, CV3 1HJ;

         CORP COVENANT means the deed entered into between, inter alia, Corp,
         plc and Ancrane on [-], 2003, pursuant to which Corp has agreed to pay
         certain corporation tax on behalf of plc and Ancrane;

         CORP CREDITORS' MEETING means a meeting of Corp Scheme Creditors called
         pursuant to the terms of the Corp Scheme to be held on [25th] April,
         2003;

         CORP LOAN means the loans from the Assignor to Corp in the amount
         of L 363,308,000;

         CORP SCHEME means the proposed scheme of arrangement with the Corp
         Scheme Creditors in respect of Corp pursuant to section 425 Companies
         Act 1985 (including any modifications, additions or conditions approved
         or imposed by the court);

         CORP SCHEME CREDITOR means a scheme creditor of Corp in respect of its
         Scheme Claim;

         CORP SPV means Krayford Limited (registered number 4307660),, whose
         registered address is at New Century Park, P.O. Box 52, Coventry,
         Warwickshire CV3 1HJ;

         EFFECTIVE DATE means in relation to either of the Schemes, the date on
         which an office copy of the order of the Court sanctioning that the
         relevant Scheme shall have been delivered to the Registrar of Companies
         for registration;

         ESCROW AND DISTRIBUTION AGREEMENT means the agreement to be entered
         into between (inter alios) Corp, the Supervisors, the Escrow Trustee
         and Bank of New York (as custodian and the distribution agent) in the
         form set out in the Scheme Document, a condition precedent to the
         effectiveness of which (insofar as it relates to the Scheme) is the
         occurrence of the Effective Date;

         ESCROW TRUSTEE means Corp Spv, who will be appointed under the terms of
         the Escrow and Distribution Agreement and any successor from time to
         time;

         EUROBOND ISSUES means the E 500,000,000 5.625 per cent. bonds due 2005
         and the E 1,000,000,000 6.375 per cent. bonds due 2010, both issued by
         Corp and both guaranteed by the Assignee;

         EUROBONDS means all or any of the bonds comprising the Eurobond Issues;

         EXCLUDED CLAIMS means in relation to the Corp Scheme the claims of the
         nature described in Part I of Appendix 9 of the Scheme Document and, in
         relation to the plc Scheme, the claims of the nature described in Part
         III of Appendix 9;

         HIGHROSE DEBT means the inter company loan of L 23,404,000 from the
         Assignor to Highrose Limited;

         HIGHROSE means Highrose Limited (registered number 4410334) whose
         registered office is at New Century Park, P.O. Box 53, Coventry,
         Warwickshire CV3 1HJ;

                                      227

<PAGE>

         LIABILITY or LIABILITIES means any liability or obligation of a person
         whether it is present, future, prospective or contingent, whether or
         not it is fixed or undetermined, whether or not it involves the payment
         of money or performance of an act or obligation and whether it arises
         at common law, in equity or by statute, in England and Wales or in any
         other jurisdiction, or in any other manner whatsoever, but such
         expression does not include any liability which is barred by statute or
         is otherwise unenforceable under English law or arises under a contract
         which is void or, being voidable, has been duly avoided;

         MARCONI NOMINEES LIMITED means Marconi Nominees Limited (registered
         number 3854422) whose registered office is at New Century Park, P.O.
         Box 53, Coventry, Warwickshire CV3 1HJ;

         PLC SCHEME means the proposed scheme of arrangement in respect of the
         Assignee pursuant to section 425 Companies Act 1985, the terms of which
         are set out in Part III of the Scheme Document (including any
         modifications, additions or conditions approved or imposed by the
         Court);

         RECORD DATE has the meaning given to it in the Corp Scheme or the plc
         Scheme, as appropriate;

         SCHEME means either or both of the Corp Scheme or the plc Scheme, as
         appropriate;

         SCHEME CLAIM means any claim or right which a person is, or may in any
         circumstances become, entitled to bring or enforce against Corp or the
         Assignee (as appropriate) in respect of any Liability of Corp or the
         Assignee (as appropriate) in each and every case in existence as at the
         Record Date or after that date by reason of any Liability incurred
         before that date, other than Excluded Claims.

         SCHEME DOCUMENT means the document (including all appendices, schedules
         and annexes to it) dated - March, 2003 issued in connection with the
         Schemes;

         SUPERVISORS means the persons holding office as the supervisors of the
         Corp Scheme or plc Scheme or both, as appropriate, from time to time;

         YANKEE BONDS means all or any of the bonds comprising the Yankee
         Issues; and

         YANKEE ISSUES means the US$900,000,000 7 3/4 per cent. bonds due 2010
         and the US$900,000,000 8 3/8 per cent. bonds due 2030 both issued by
         Corp and both guaranteed by plc.

1.2      CONSTRUCTION

(a)      In this Deed:

         (i)      references to a person include a body corporate and
                  unincorporated associations of persons;

         (ii)     references to an individual include his estate and personal
                  representatives; and

         (iii)    references to a party to this Deed include references to the
                  successors or assigns (immediate or otherwise), of that party.

                                      228

<PAGE>

(b)      In this Deed any reference, express or implied, to an enactment
         includes references to:

         (i)      that enactment as re-enacted, amended, extended or applied by
                  or under any other enactment (before or after the signature of
                  this Deed);

         (ii)     any enactment which that enactment re-enacts (with or without
                  modification); and

         (iii)    any subordinate legislation made (before or after the
                  signature of this Deed) under that enactment, as re-enacted,
                  amended, extended or applied as described in paragraph (a)
                  above, or under any enactment referred to in paragraph (b)
                  above,

         and "enactment" includes any legislation in any jurisdiction.

(c)      In this Deed, unless the contrary intention appears, a reference to a
         clause, subclause or schedule is a reference to a clause, subclause or
         schedule to this Deed. The schedules form part of this Deed.

(d)      Subclauses 1.1 to 1.2(c) above apply unless the contrary intention
         appears.

(e)      The headings in this Deed do not affect its interpretation.

2.       ASSIGNMENT AND PAYMENT

2.1      ASSIGNMENT

         With effect from Completion and subject to the terms of this Deed, the
         Assignor, with full title guarantee (in accordance with the Law of
         Property (Miscellaneous Provisions) Act 1994), assigns by way of
         repayment of capital in specie to the Assignee the Assigned Rights.

2.2      NOTICE AND ACKNOWLEDGEMENTS

(a)      The Assignor notifies the Assignee, and the Assignee acknowledges, that
         the Assignor shall not:

         (i)      be required to reimburse the Assignee for, or otherwise be
                  responsible for or assure the Assignee against, any loss
                  suffered by the Assignee in consequence of the matters
                  provided for in this Deed (other than loss caused by the
                  negligent or wilful failure of the Assignor to perform or
                  observe the terms of this Deed); or

         (ii)     have any obligation to reacquire the Assigned Rights or any
                  part of the Assigned Rights.

(b)      The Assignee agrees with effect from Completion to accept the
         Assignment without recourse and to benefit from the consideration the
         Assignor would have received (as original lender and creditor) as a
         result of the Financial Restructuring.

3.       FURTHER ASSURANCE

(a)      The Assignor undertakes to execute and deliver the form of directions
         letter appended to the Escrow and Distribution Agreement to Corp on or
         before the 17th April, 2003.

(b)      In addition, the Parties shall each take whatever action may be
         necessary:

                                      229

<PAGE>

         (i)      so that the Assignee may assume, to the fullest extent
                  permitted and in accordance with the provisions of this Deed,
                  all the rights of the Assignor with respect to the Assigned
                  Rights with effect from Completion;

         (ii)     for the Assignor to be released from all obligations arising
                  after Completion in relation to the Assigned Rights; and

         (iii)    otherwise to implement the terms of this Deed,

         including the execution of any further documents and the giving of any
         notice, order or direction and the making of any registration which in
         each case may be required.

4.       TURNOVER

         If any dividend is received or recovered by the Assignor in respect of
         the Assigned Rights on or after the Completion Date, the Assignor shall
         on and from such time hold such dividend on trust and forthwith assign
         and/or pay to the Assignee that amount together with interest on it
         from the date of receipt of the amount to the date of payment.

5.       SET-OFF AND COUNTERCLAIM

         The Assignment shall be made without set-off or counterclaim on amounts
         which are not the subject of this Deed.

6.       REPRESENTATIONS AND WARRANTIES

6.1      Each party severally represents and warrants to the other parties that:

         (a)      it has all requisite power and authority to enter into and
                  perform, and has taken all necessary action to authorise the
                  entry into, performance and delivery of, this Deed and the
                  transactions contemplated by this Deed.

         (b)      this Deed constitutes legal, valid and binding obligations
                  enforceable against it in accordance with its terms; and

         (c)      all authorisations required or desirable in connection with
                  the entry into, performance, validity and enforceability of
                  this Deed and the transactions contemplated by this Deed have
                  been obtained or effected and are in full force and effect.

6.2      The Assignor represents to the Assignee that:

         (a)      OBLIGATIONS: At the date of this Deed it will, to the best of
                  its knowledge and belief, have performed and complied with all
                  obligations required to be performed or complied with by it in
                  relation to the Assigned Rights under the Corp Loan up to the
                  Completion Date, and no rights, including rights of set-off,
                  will have arisen in respect of the Assigned Rights in favour
                  of Corp; and

         (b)      RIGHTS ASSIGNABLE: The rights in respect of the Assigned
                  Rights are assignable in accordance with the provisions of
                  this Deed and the Corp Loan.

                                      230

<PAGE>

         (c)      INDEBTEDNESS UNDER THE CORP LOAN: Corp is indebted to the
                  Assignor under the Corp Loan in the outstanding principal
                  amount of L363,308,000.

7.       ASSIGNOR'S RESPONSIBILITY

         Save as expressly provided in Clause 6 (Representations and Warranties)
         the Assignor has not made and does not by this Deed make, and the
         Assignee has not relied upon, any representation, warranty or condition
         (expressed or implied) about, and the Assignor will have no
         responsibility to the Assignee for, the effectiveness, validity or
         enforceability of, the Bonds, the Corp Loan, the Highrose Debt or other
         documentation delivered by the Assignor to the Assignee or any of the
         terms, covenants or conditions contained in the Bonds, the Corp Loan,
         the Highrose Debt or other documentation or any non-performance by any
         party to them or the financial condition of Corp, Highrose or any other
         person liable with respect to the Assigned Rights.

8.       INDEMNITY

         The Assignee agrees to indemnify the Assignor and the Assignor agrees
         to indemnify the Assignee against any liabilities, obligations, losses,
         damages, penalties, judgments, costs, expenses or disbursements of any
         kind or nature which may be imposed on or incurred by the other party
         as a consequence of failure by it duly and punctually to perform its
         obligations, or breach by it of any of the representations and
         warranties made by it, in this Deed.

9.       CHANGES TO THE PARTIES

         No party may assign, transfer, novate, encumber or dispose of any of
         its interest in, its rights and/or obligations under this Deed without
         the prior written consent of the other party. However, this Clause 9
         shall not restrict the Assignee from assigning, charging or pledging
         the whole or any part of its rights, title and interest in the Assigned
         Rights to any third party.

10.      WAIVERS AND REMEDIES CUMULATIVE

         The rights of each party under this Deed:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any such right is not a waiver
         of that right.

11.      SEVERABILITY

         If a provision of this Deed is or becomes illegal, invalid or
         unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of this Deed; or

                                      231

<PAGE>

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of this Deed.

12.      COUNTERPARTS

         This Deed may be executed in any number of counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same Deed and any party may enter into this Deed by executing a
         counterpart.

13.      NOTICES

13.1     GIVING OF NOTICES

         Subject to Clause 2.2 (Notices and acknowledgements), all notices or
         other communications under or in connection with this Deed shall be
         given in writing and, unless otherwise stated may be made by facsimile.
         Any such notice will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile, when received in legible form.

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

13.2     ADDRESSES FOR NOTICES

         The address and facsimile number of each party for all notices under or
         in connection with this Deed are:

         (a)      in relation to the Assignor:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ
                  Fax Number: 020 7306 1395
                  Attn:       Company Secretary

         (b)      in relation to the Assignee:

                  New Century Park, PO Box 53
                  Coventry, Warwickshire,
                  CV3 1HJ
                  Fax Number: 020 7306 1395
                  Attn:       Company Secretary

         or any other notified by that Party for this purpose to the other party
         by not less than five Business Days' notice.

                                      232

<PAGE>

14.      EXPENSES

         Each party shall pay its own costs and expenses in connection with the
         preparation, negotiation and execution of this Deed.

15.      STAMP DUTY

15.1     The Assignee shall pay, and forthwith on demand indemnify each of the
         other parties to this Deed against any liability it incurs in respect
         of, any stamp, registration and similar tax which is or becomes payable
         in connection with the entry into and performance of this Deed.

15.2     The Assignee covenants to submit this Deed to the Inland Revenue Stamp
         Office for adjudication as soon as reasonably practicable after the
         execution of this Deed (and in any event within thirty days thereof),
         claiming relief from transfer stamp duty under section 42 of the
         Finance Act 1930 (as amended).

16.      JURISDICTION

         Each party to this Deed agrees, for the benefit of the Assignor, that
         the courts of England shall have jurisdiction to settle any disputes in
         connection with this Deed and, accordingly, submits to the jurisdiction
         of the English courts.

17.      GOVERNING LAW

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

IN WITNESS of which this Deed has been executed as a deed and has been delivered
on the date which it appears first on page 1.

                                      233

<PAGE>

                                   SIGNATORIES

         EXECUTED as a Deed          )      __________________________________
         by MARCONI PLC              )      Director
         acting by [  ] and          )
         [  ]                        )      _________________________________
                                            Director/Secretary

         EXECUTED as a Deed          )      _________________________________
         by ANCRANE                  )      Director
         acting by [  ] and          )
         [  ]                        )      _________________________________
                                            Director/Secretary

                                      234

<PAGE>

                                  SCHEDULE 16

                                CORP SIDE LETTER

                           [ON LETTERHEAD OF CORP PLC]

To:      Richard Heis and Philip Wallace
         (or their successors) in their capacity as
         Scheme Supervisors of Marconi plc
         (the BENEFICIARIES)

                                                                    [DATE], 2003

Dear Sirs

FUNDING OF ONGOING COSTS

1.       DEFINITIONS

         Capitalised terms used in this letter, unless defined herein, shall
         have the meaning assigned to them in Schedule 2 of the Letter of
         Credit, as set out in Schedule 10 of the Performance Bonding Facility
         dated on or about [31st] March, 2003 between Marconi Bonding Limited
         (as applicant), Marconi Corporation plc (CORP), HSBC (as agent and
         security trustee), the original issuing banks named therein, the
         original banks named therein and the original indemnifying subsidiaries
         of Corp named therein (the LETTER OF CREDIT).

2.       CORP'S UNDERTAKING

         Corp undertakes to make available to the Beneficiaries the Total L/C
         Amount on the terms and conditions set out in the Letter of Credit on
         the basis that any reference to the Issuing Bank in the Letter of
         Credit will be interpreted as references to Corp. The terms in relation
         to [the Expiry Date,] Payments, Assignment, New Beneficiaries [and UCP]
         set out in the Letter of Credit shall also apply to this letter.

3.       THE BENEFICIARIES' REPRESENTATIONS AND WARRANTIES

         In consideration of Corp entering into this agreement and making the
         Total L/C Amount available to the Beneficiaries, each Beneficiary
         hereby undertakes that:

         (a)      any rights under, and any sums received pursuant to, this
                  letter by a Beneficiary will be in their capacity as agent of
                  Marconi plc;

         (b)      any sums received by a Beneficiary pursuant to this letter
                  will be used to meet Marconi plc's Ongoing Costs and will be
                  used solely for that purpose;

         (c)      any Demands shall be made on the basis provided under the
                  Letter of Credit;

         (d)      the Beneficiaries will submit a Demand in accordance with the
                  terms of the Letter of Credit if requested by Marconi plc and
                  if the request is to meet Ongoing Costs;

                                      235

<PAGE>

         (e)      when all Ongoing Costs have been met, any remaining sums
                  received pursuant to a Demand will be held on trust for Corp
                  and will be repaid to Corp as soon as reasonably practicable;

         (f)      the Beneficiaries shall notify Corp immediately in writing if
                  before, on or after the date upon which this letter is issued,
                  they are of the view (acting reasonably) that this letter is
                  no longer required or is required in a lesser amount; and

         (g)      if any such notification pursuant to subclause 3(f) above is
                  made before this letter has been issued, the Total L/C Amount
                  shall be reduced accordingly.

4.       DELIVERY OF DEMAND AND NOTICES

         Each Demand shall be in writing and, unless otherwise stated, may be
         made by letter or fax and must be received in legible form by Corp at
         its address and by the particular department or officer (if any) as
         follows:

         Marconi Corporation plc
         New Century Park,
         P.O. Box 53,
         Coventry,
         Warwickshire CV3 1HJ
         Fax: 020 7306 1395
         Attention: Company Secretary

         Any notice or other formal communication to be given under this
         agreement to the Beneficiaries must be in writing and, unless otherwise
         stated, may be made by letter or fax and may be delivered or sent by
         post or fax to the Beneficiaries at the following address:

         Richard Heis and Philip Wallace
         KPMG LLP
         8 Salisbury Square
         London EC4Y 8BB
         Fax: 020 7694 3011

5.       GOVERNING LAW

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

Yours faithfully

_________________________________

For and on behalf of
MARCONI CORPORATION PLC

By:

I agree to be bound by the terms of this agreement.

                                      236

<PAGE>

_______________________________               _________________________________

Richard Heis                                  Philip Wallace

Scheme Supervisor of Marconi plc              Scheme Supervisor of Marconi plc

Date:                                         Date:

                                      237

<PAGE>

                                   SIGNATORIES

EXECUTED as a Deed                          )        CHRISTOPHER HOLDEN
by MARCONI PLC                              )        Director
acting by C. HOLDEN and M.SKELLY            )        MARY SKELLY
                                            )        Secretary

EXECUTED as a Deed                          )        CHRISTOPHER HOLDEN
by MARCONI CORPORATION PLC                  )        Director
acting by C.HOLDEN and M.SKELLY             )        MARY SKELLY
                                            )        Secretary

EXECUTED as a Deed                          )        CRAIG DONALDSON
by E-A CONTINENTAL LIMITED                  )        Director
acting by C.DONALDSON and M.SKELLY          )        MARY SKELLY
                                            )        Secretary

EXECUTED as a Deed                          )        CHRISTOPHER HOLDEN
by ANCRANE                                  )        Director
acting by C.HOLDEN and M.SKELLY             )        MARY SKELLY
                                            )        Secretary

EXECUTED as a Deed                          )        CRAIG DONALDSON
by MARCONI NOMINEES LIMITED                 )        Director
acting by C.DONALDSON and M.SKELLY          )        MARY SKELLY
                                            )        Secretary

EXECUTED as a Deed                          )        GLENN HACKER
by MARIPOSA TECHNOLOGY, INC.                )        Director
acting by G.HACKER and P. HOFFMANN          )        PATRICIA HOFFMAN
                                            )        Director/Secretary
under authority of that Company, in the
presence of:
Witness signature: SUZANNE HOLTZ
Name:              Suzanne Holtz
Address:           333 Pierce Road
                   Suite 370
                   Itasca, IL 60143
Occupation:        Sr. Administrative Assistant

                                      238

<PAGE>

EXECUTED as a Deed                       )        GLENN HACKER
by SYSTEMS MANAGEMENT                    )        Director
SPECIALISTS, INC.                        )
acting by G.HACKER and P.HOFFMAN         )        PATRICIA HOFFMAN
                                         )        Director/Secretary

under authority of that Company, in the
presence of:
Witness signature:   SUZANNE HOLTZ
Name:                Suzanne Holtz

Address:             333 Pierce Road
                     Suite 370
                     Itasca, IL 60143
Occupation:          Senior Administrative Assistant

EXECUTED as a Deed                       )        JOHN THORNTON
by METAPATH SOFTWARE                     )        Director
INTERNATIONAL, INC.                      )
acting by J.THORNTON and P. HOFFMAN      )        PATRICIA HOFFMAN
                                         )        Director/Secretary

under authority of that Company, in the
presence of:
Witness signature:          SUZANNE HOLTZ
Name:                       Suzanne Holtz
Address:                    333 Pierce Road
                            Suite 370
                            Itasca, IL 60143
Occupation:                 Senior Administrative Assistant

EXECUTED as a Deed                       )        CRAIG DONALDSON
by MARCONI BONDING LIMITED               )        Director
acting by C. DONALDSON and M.SKELLY      )        MARY SKELLY
                                         )        Secretary

EXECUTED as a Deed                       )        CHRISTOPHER HOLDEN
by BRITISH SEALED BEAMS LIMITED          )        Director
acting by C.HOLDEN and S. COTTIS         )        STEPHEN COTTIS
                                         )        Director

                                      239

<PAGE>

EXECUTED as a Deed                        )        CRAIG DONALDSON
by MARCONI ANSTY LIMITED                  )        Director
acting by C. DONALDSON and M. SKELLY      )        MARY SKELLY
                                          )        Secretary

EXECUTED as a Deed                        )        CRAIG DONALDSON
by PHOTONIQA LIMITED                      )        Director
acting by C. DONALDSON and M. SKELLY      )        MARY SKELLY
                                          )        Secretary

EXECUTED as a Deed                        )        CRAIG DONALDSON
by YESLINK UNLIMITED                      )        Director
acting by C. DONALDSON and M. SKELLY      )        MARY SKELLY
                                          )        Secretary

                                      240<PAGE>

                                                                    EXHIBIT 4.29

                                                                  CONFORMED COPY

                             DATED 27TH MARCH, 2003

                             MARCONI CORPORATION PLC

                                   MARCONI PLC

                              REGENT ESCROW LIMITED

                              THE BANK OF NEW YORK
 (IN ITS CAPACITIES AS DISTRIBUTION AGENT AND TRUSTEE AND BOOK-ENTRY DEPOSITARY
                        IN RESPECT OF THE YANKEE BONDS )

                   THE LAW DEBENTURE TRUST CORPORATION p.l.c.

                                     ANCRANE

                         BONDHOLDER COMMUNICATIONS GROUP

                                       AND

                             THE SCHEME SUPERVISORS

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

                        ESCROW AND DISTRIBUTION AGREEMENT

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

                                  ALLEN & OVERY
                                     London

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE
<S>                                                                                         <C>
CLAUSE

1.       Interpretation...................................................................    2
2.       Conditions Precedent, Commencement and Accession.................................    6
3.       Agreement to Act.................................................................    7
4.       Corp Declaration of Trust........................................................    7
5.       Establishment of Escrow Accounts.................................................    8
6.       Undertakings.....................................................................   10
7.       Distributions under the Corp Scheme..............................................   12
8.       Distributions under the plc Scheme...............................................   18
9.       Rights, Powers and Duties of the Escrow Trustee and the Distribution Agent.......   23
10.      Covenants of the Escrow Trustee..................................................   27
11.      Investments......................................................................   28
12.      Conduct of Taxation Matters......................................................   28
13.      Termination......................................................................   32
14.      Representations and Warranties...................................................   33
15.      Exclusion of Personal Liability..................................................   33
16.      Exclusion of Liability...........................................................   33
17.      Fees and Expenses................................................................   34
18.      Further Assurance................................................................   34
19.      Further Terms and Conditions.....................................................   34
20.      Counterparts.....................................................................   35
21.      Notices..........................................................................   35
22.      Third Party Rights...............................................................   36
23.      Governing Law and Jurisdiction...................................................   36

SCHEDULE

1.       Form of Accession Letter.........................................................   38
2.       Form of Ancrane Direction Letter.................................................   40
3.       Form of Instruction Letter to the Registrars.....................................   43

SIGNATORIES...............................................................................   45
</TABLE>

<PAGE>

THIS AGREEMENT is made by way of deed on 27th March, 2003 BETWEEN:

(1)      MARCONI CORPORATION PLC, a public limited company incorporated in
         England and Wales with registered number 00067307 ("CORP");

(2)      MARCONI PLC, a public limited company incorporated in England and Wales
         with registered number 03846429 ("PLC");

(3)      REGENT ESCROW LIMITED, a limited liability company incorporated in
         England and Wales with registered number 4659445 ("ESCROW TRUSTEE");

(4)      THE BANK OF NEW YORK, a New York banking corporation acting through its
         London branch (in its capacity as distribution agent, the "DISTRIBUTION
         AGENT" and in its capacity as Trustee and Book-Entry Depositary of the
         Yankee Bonds (as defined in the Schemes which expression is, in turn,
         defined below), "BoNY");

(5)      THE LAW DEBENTURE TRUST CORPORATION p.l.c., a public limited company
         incorporated in England and Wales with registered number 01675231 (in
         its capacity as trustee of the Eurobonds, the "EUROBOND TRUSTEE");

(6)      ANCRANE, an unlimited liability company incorporated in England and
         Wales with registered number 4308188 ("ANCRANE");

(7)      BONDHOLDER COMMUNICATIONS GROUP, a New York corporation ("BONDHOLDER
         COMMUNICATIONS"); and

(8)      subject to their accession as provided in clause 2(4), PHILIP WALLACE
         and RICHARD HEIS of KPMG, 8 Salisbury Square, London EC4Y 8BB (the
         "SUPERVISORS", which expression shall include any other persons holding
         office as Supervisor of the Schemes from time to time).

WHEREAS:

(A)      Corp proposes to enter into a scheme of arrangement (the "CORP SCHEME")
         under section 425 of the Companies Act 1985 (the "ACT") with its Scheme
         Creditors (as defined in the Corp Scheme).

(B)      Plc also proposes to enter into a scheme of arrangement (the "PLC
         SCHEME", together with the Corp Scheme, the "SCHEMES" and each a
         "SCHEME") under section 425 of the Act with its Scheme Creditors (as
         defined in the plc Scheme).

(C)      The Corp Scheme and the plc Scheme are set out in sections II and III
         respectively of the circular (the "SCHEME DOCUMENT") relating to the
         Schemes prepared by Corp and plc incorporating an explanatory statement
         in accordance with section 426 of the Act and filed with the court on
         20th March, 2003 as the same may be approved or modified by the court.

(D)      Philip Wallace and Richard Heis are expected to be appointed as
         Supervisors by the Court on the Effective Date and to undertake to the
         court to be bound to carry out their designated functions under each
         Scheme. Upon their appointment as Supervisors, it is anticipated that
         the Supervisors will accede to this Agreement.

(E)      Each Scheme provides for the appointment of an escrow trustee and a
         distribution agent who will be responsible for, amongst other things,
         holding the Scheme Consideration (as

<PAGE>

                                       2

         separately defined in each Scheme) on trust for and distributing the
         Scheme Consideration to the relevant Scheme Creditors and Designated
         Recipients (as both of these terms are defined in the Schemes) who
         become entitled thereto pursuant to the operation of the relevant
         Scheme.

(F)      The Escrow Trustee has been incorporated for the sole purpose of acting
         as trustee in respect of the Scheme Consideration under the Schemes.
         The Distribution Agent will agree on the terms of this Agreement to act
         as custodian of the Trust Funds for the Escrow Trustee and to
         distribute the Scheme Consideration to Admitted Scheme Creditors and
         Designated Recipients in accordance with the terms of the Schemes and
         this Agreement.

(G)      Each of the Escrow Trustee, the Distribution Agent, the Supervisors,
         the Eurobond Trustee, BoNY and Bondholder Communications will undertake
         to the court to act in accordance with the terms of this Agreement.

(H)      This Agreement is entered into in contemplation of, and certain
         provisions of this Agreement are conditional upon, either or both of
         the Schemes becoming effective.

(I)      It is the intention of the parties that this Agreement be executed as a
         deed.

IT IS AGREED AND THIS DEED WITNESSES as follows:

1.       INTERPRETATION

(1)      Capitalised terms used in this Agreement have the meanings given to
         them in each Scheme unless otherwise expressly provided.

(2)      In this Agreement:

         "ACCESSION LETTER" means the letter to be executed as a deed by the
         Supervisors on the Effective Date in or substantially in the form set
         out in Schedule 1 to this Agreement, pursuant to its undertaking to the
         court;

         "ADMITTED KNOWN CORP SCHEME CREDITORS ESCROW ACCOUNTS" means each of
         the following accounts:

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Admitted Known Corp Scheme Creditors Trust
                  Account with The Bank of New York, One Canada Square, London
                  E14 5AL; and

         (ii)     the securities account to be established under the designation
                  Marconi Admitted Known Corp Scheme Creditors Trust Account
                  with The Bank of New York, account number 490320

         and a reference to one or more Admitted Known Corp Scheme Creditors
         Escrow Accounts is a reference to any one or more of those accounts;

         "ADMITTED KNOWN CORP SCHEME CREDITORS FUND" means the assets paid into
         or allocated to the Admitted Known Corp Scheme Creditors Escrow
         Accounts in accordance with clause 5 as the same may be increased or
         reduced in accordance with clauses 6, 7 and 11;

         "ADMITTED KNOWN PLC SCHEME CREDITORS ESCROW ACCOUNTS" means each of the
         following accounts:

<PAGE>

                                       3

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Admitted Known plc Scheme Creditors Trust
                  Account with The Bank of New York, One Canada Square, London
                  E14 5AL; and

         (ii)     the securities account to be established under the designation
                  Marconi Admitted Known plc Scheme Creditors Trust Account with
                  The Bank of New York, account number 490327

         and a reference to one or more Admitted Known plc Scheme Creditors
         Escrow Accounts is a reference to any one or more of those accounts;

         "ADMITTED KNOWN PLC SCHEME CREDITORS FUND" means the assets paid into
         or allocated to the Admitted Known plc Scheme Creditors Escrow Accounts
         in accordance with clause 5 as the same may be increased or reduced in
         accordance with clauses 6, 8 and 11;

         "ANCRANE DIRECTION LETTER" means the letter to be executed as a deed by
         Ancrane in or substantially in the form set out in Schedule 2 to this
         Agreement;

         "CLEARSTREAM, LUXEMBOURG" means Clearstream Banking, societe anonyme;

         "CORPORATE EXPENSES ACCOUNT" means the current account at The Bank of
         New York established by the Escrow Trustee for the sole purpose of
         depositing the fees it will receive for acting as Escrow Trustee in
         accordance with clause 17 of this Agreement, for depositing any sum it
         receives under the indemnity given by Corp set out in clause 9(4) of
         this Agreement and for making Permitted Withdrawals;

         "CORPORATE NOMINEE" means the corporate nominee service to be operated
         by Computershare Investor Services PLC on behalf of Corp in respect of
         part of the plc Shareholder Stock and the Warrants referred to in the
         Letter of Instruction (as defined below);

         "CUSTODY INSTRUCTIONS" means instructions given by an Account Holder to
         Euroclear, Clearstream, Luxembourg or DTC, as the case may be, to block
         from trading the Bonds identified in an Account Holder Letter and which
         must be given no later than 5.00 p.m. (local time) on the Business Day
         immediately prior to the date on which that Account Holder Letter is
         delivered to Bondholder Communications;

         "DISTRIBUTION AGENT FEE LETTER" means a letter dated 14th March, 2003
         from the Distribution Agent to the Supervisors, Corp and plc setting
         out the fees and expenses of the Distribution Agent;

         "DTC" means The Depository Trust Company of New York;

         "ESCROW ACCOUNTS" means each of the Admitted Known Corp Scheme
         Creditors Escrow Accounts, the Unadmitted Known Corp Scheme Creditors
         Escrow Accounts, the Reserve Corp Scheme Creditors Escrow Accounts and
         the plc Shareholders Account (such accounts, together, the "CORP ESCROW
         ACCOUNTS") and each of the Admitted Known plc Scheme Creditors Escrow
         Accounts, the Unadmitted Known plc Scheme Creditors Accounts and the
         Reserve plc Scheme Creditors Accounts (such accounts, together, the
         "PLC ESCROW ACCOUNTS");

         "ESCROW TAX FUND" means a fund of not more than L 4,500,000 set aside
         by Corp comprising any input value added tax recovered by Corp (whether
         by means of a payment from HM

<PAGE>

                                       4

         Customs & Excise or by way of reduction of the output value added tax
         for which Corp would otherwise be required to account to HM Customs &
         Excise) incurred in relation to the issue of New Shares or New Notes
         under the Corp Scheme;

         "ESCROW TRUSTEE FEE LETTER" means a letter dated the date of this
         Agreement from the Escrow Trustee to the Supervisors, Corp and plc
         setting out of the fees and expenses of the Escrow Trustee;

         "EUROBOND MEETING" means a meeting of holders of a series of the
         Eurobonds, duly convened and held in accordance with the terms of the
         relevant Trust Deed;

         "EUROCLEAR" means Euroclear Bank S.A./N.V. as operator of the Euroclear
         System;

         "LETTER OF INSTRUCTION" means the letter of instruction from Corp, the
         Escrow Trustee and the Distribution Agent to Computershare Investor
         Services PLC in or substantially in the form set out as Schedule 3 to
         this Agreement;

         "PERMITTED WITHDRAWAL" means any withdrawal by the Escrow Trustee from
         the Corporate Expenses Account for the sole purpose of paying for one
         or more of the following expenses:

         (i)      any expense arising under, or contemplated by, the terms of
                  this Agreement; and

         (ii)     any expense incurred in order to comply with its obligations
                  under the Act (including, but without limitation to the
                  generality of the foregoing, any expenses incurred in making
                  any requisite annual or other filings at Companies House) or
                  any other law or regulation applicable to companies generally;

         "PLC SHAREHOLDERS ACCOUNT" means the securities account to be
         established under the designation Marconi plc Shareholders Trust
         Account with The Bank of New York, account number 490328;

         "PLC SHAREHOLDERS FUND" means the assets allocated to the plc
         Shareholders Account in accordance with clause 5 as the same may be
         reduced in accordance with clause 7(9);

         "RESERVE CORP SCHEME CREDITORS ESCROW ACCOUNTS" means each of the
         following accounts:

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Reserve Corp Scheme Creditors Trust
                  Account with The Bank of New York, One Canada Square, London
                  E14 5AL; and

         (ii)     the securities account to be established under the designation
                  Marconi Reserve Corp Scheme Creditors Trust Account with The
                  Bank of New York, account number 490322

         and a reference to one or more Reserve Corp Scheme Creditors Escrow
         Accounts is a reference to any one or more of those Accounts;

         "RESERVE CORP SCHEME CREDITORS FUND" means the assets paid into or
         allocated to the Reserve Corp Scheme Creditors Escrow Accounts in
         accordance with clause 5 as the same may be increased or reduced in
         accordance with clauses 6, 7 and 11;

         "RESERVE PLC SCHEME CREDITORS ESCROW ACCOUNTS" means each of the
         following accounts:

<PAGE>

                                       5

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Reserve plc Scheme Creditors Trust Account
                  with The Bank of New York, One Canada Square, London E14 5AL;
                  and

         (ii)     the securities account to be established under the designation
                  Marconi Reserve plc Scheme Creditors Trust Account with The
                  Bank of New York, account number 490326

         and a reference to one or more Reserve plc Scheme Creditors Accounts is
         a reference to any one or more of those accounts;

         "RESERVE PLC SCHEME CREDITORS FUND" means the assets paid into or
         allocated to the Reserve plc Scheme Creditors Escrow Accounts in
         accordance with clause 5 as the same may be increased or reduced in
         accordance with clauses 6, 8 and 11;

         "SECURITY INTEREST" means any mortgage or sub-mortgage, standard
         security, sub-standard security, charge or sub-charge (whether legal or
         equitable), encumbrance, pledge, lien, hypothecation, assignment by way
         of security, assignation in security or other security interest or
         title retention arrangement any agreement, trust or arrangement having
         substantially the same economic or financial effect as any of the
         foregoing;

         "TRANSFER NOTICE" means an irrevocable notice served by the Supervisors
         on the Escrow Trustee (with a copy to the Distribution Agent)
         instructing the Escrow Trustee to cause the Distribution Agent to
         credit or transfer any Scheme Consideration to or between any Escrow
         Accounts;

         "TRUSTEES" means the Eurobond Trustee and BoNY (in its capacity as
         trustee of the Yankee Bonds);

         "TRUST FUNDS" means the Admitted Known Corp Scheme Creditors Fund, the
         Admitted Known plc Scheme Creditors Fund, the plc Shareholders Fund,
         the Reserve Corp Scheme Creditors Fund, the Reserve plc Scheme
         Creditors Fund, the Unadmitted Known Corp Scheme Creditors Fund and the
         Unadmitted Known plc Scheme Creditors Fund;

         "UNADMITTED KNOWN CORP SCHEME CREDITORS ESCROW ACCOUNTS" means each of
         the following accounts:

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Unadmitted Known Corp Scheme Creditors
                  Trust Account with The Bank of New York, One Canada Square,
                  London E14 5AL; and

         (ii)     the securities account to be established under the designation
                  Marconi Unadmitted Known Corp Scheme Creditors Trust Account
                  with The Bank of New York, account number 490321,

         and a reference to one or more Unadmitted Known Corp Scheme Creditors
         Escrow Accounts is a reference to any one or more of those Accounts;

         "UNADMITTED KNOWN CORP SCHEME CREDITORS FUND" means the assets paid
         into or allocated to the Unadmitted Known Corp Scheme Creditors Escrow
         Accounts in accordance with clause 5 as the same may be increased or
         reduced in accordance with clauses 6, 7 and 11;

<PAGE>

                                       6

         "UNADMITTED KNOWN PLC SCHEME CREDITORS ESCROW ACCOUNTS" means each of
         the following accounts:

         (i)      the interest bearing cash account to be established under the
                  designation Marconi Unadmitted Known plc Scheme Creditors
                  Trust Account with The Bank of New York, One Canada Square,
                  London E14 5AL; and

         (ii)     the securities account to be established under the designation
                  Marconi Unadmitted Known plc Scheme Creditors Trust Account
                  with The Bank of New York, account number 490325

         and a reference to one or more Unadmitted Known plc Scheme Creditors
         Escrow Accounts is a reference to any one or more of those Accounts;
         and

         "UNADMITTED KNOWN PLC SCHEME CREDITORS FUND" means the assets paid into
         or allocated to the Unadmitted Known plc Scheme Creditors Escrow
         Accounts in accordance with clause 5 as the same may be increased or
         reduced in accordance with clauses 6, 8 and 11.

(3)      In this Agreement:

         (a)      references to a person include an individual, firm,
                  partnership, company, corporation, unincorporated body of
                  persons and any state or state agency;

         (b)      references to a natural person include his estate and personal
                  representatives;

         (c)      references to a party to this Agreement include references to
                  the successors or assigns (immediate or otherwise) of that
                  party; and

         (d)      references to the singular include the plural and vice versa
                  and words importing one gender shall include all genders.

(4)      In this Agreement any reference, express or implied, to an enactment
         includes references to:

         (a)      that enactment as re-enacted, amended, extended or applied by
                  or under any other enactment (before or after the signature of
                  this Agreement);

         (b)      any enactment which that enactment re-enacts (with or without
                  modification); and

         (c)      any subordinate legislation made (before or after the
                  signature of this Agreement) under that enactment, as
                  re-enacted, amended, extended or applied as described in
                  paragraph (a) above or under any enactment referred to in
                  paragraph (b) above,

         and "ENACTMENT" includes any legislation in any jurisdiction.

(5)      Sub-clauses (1) to (4) above apply unless the contrary intention
         appears.

(6)      The headings in this Agreement do not affect its interpretation.

2.       CONDITIONS PRECEDENT, COMMENCEMENT AND ACCESSION

(1)      Save as provided in clauses 3, 13, 18, 19 and 21 and in sub-clauses (2)
         to (4) below, the obligations of the parties pursuant to this Agreement
         shall have effect from the Effective Time of the Corp Scheme as regards
         matters relevant to the Corp Scheme and the Effective Time of

<PAGE>

                                       7

         the plc Scheme as regards matters relevant to the plc Scheme. For the
         avoidance of doubt, if the Effective Time does not occur under the plc
         Scheme, this circumstance will have no effect on the provisions in this
         Agreement relating to the Corp Scheme if the Effective Time occurs
         under the Corp Scheme.

(2)      Corp shall notify promptly each of the other parties to this Agreement
         upon the occurrence of the Effective Time of the Corp Scheme and plc
         shall notify promptly each of the other parties to this Agreement upon
         the occurrence of the Effective Time of the plc Scheme.

(3)      The obligations of Corp set out in clause 4 of this Agreement and of
         the Escrow Trustee set out in clause 5(1) of this Agreement,
         respectively, shall have effect from the date of this Agreement.

(4)      Prior to the Effective Time, this Agreement shall operate as a contract
         between each of the parties to it other than the Supervisors.
         Accordingly, each of the parties to this Agreement (other than the
         Supervisors) acknowledges that following the appointment by the Court
         of Philip Wallace and Richard Heis as Supervisors, the Supervisors will
         become parties to this Agreement by executing the Accession Letter on
         the Effective Date. Prior to their execution of the Accession Letter,
         no provision of this Agreement shall operate to confer any right or
         impose any obligation on the Supervisors.

3.       AGREEMENT TO ACT

(1)      The Escrow Trustee hereby agrees to act as trustee in relation to each
         Scheme on the terms of this Agreement.

(2)      The Escrow Trustee shall apply the Scheme Consideration received by it
         in accordance with the terms of the Scheme pursuant to which it was
         received and agrees that its holding of Scheme Consideration on bare
         trusts for Scheme Creditors shall not affect the principles under which
         Scheme Consideration is distributed in accordance with the terms of
         each Scheme.

(3)      The Distribution Agent hereby agrees to act as custodian of the Trust
         Funds and as distribution agent in relation to the Scheme Consideration
         under each Scheme.

4.       CORP DECLARATION OF TRUST

         Corp hereby declares as follows:

         (a)      it holds 1,000 fully paid ordinary shares of L 1.00 each (the
                  "ESCROW TRUSTEE SHARES") in the Escrow Trustee (being the
                  Escrow Trustee's entire issued share capital) on an
                  irrevocable bare trust for the Scheme Creditors of each of the
                  Corp Scheme and plc Scheme and each Designated Recipient
                  absolutely;

         (b)      it will hold all dividends and other distributions of profits
                  or assets in respect of the Escrow Trustee Shares and all
                  other property and rights arising out of or derived from the
                  Escrow Trustee Shares on trust for the Scheme Creditors of
                  each of the Corp Scheme and plc Scheme and each Designated
                  Recipient absolutely in the same manner as the Escrow Trustee
                  Shares and references to the Escrow Trustee Shares will be
                  construed accordingly;

         (c)      it will only deal with and dispose of the Escrow Trustee
                  Shares and exercise all rights conferred by its holding of the
                  Escrow Trustee Shares as the Supervisors direct; and

<PAGE>

                                       8

         (d)      the power of appointing a new trustee or new trustees is
                  vested in the Supervisors.

5.       ESTABLISHMENT OF ESCROW ACCOUNTS

(1)      As soon as reasonably practicable after the date of this Agreement the
         Escrow Trustee shall establish the Escrow Accounts and each such
         account shall be designated by the Escrow Trustee as a trust account.
         The Escrow Trustee shall provide to the Prospective Supervisors, Corp
         and plc prompt confirmation of the establishment of the Escrow
         Accounts.

(2)      On the Effective Date, Corp shall transfer, issue and allot the Basic
         Scheme Consideration and the plc Shareholder Stock to the Escrow
         Trustee or, in the case of any New Shares comprised therein, to its
         nominee to be held by the Escrow Trustee on the trusts set out in
         sub-clause (7) below and to be paid into or allocated to the following
         Escrow Accounts:

         (a)      in the case of the portion of the Known Claims Segment which
                  is to be distributed in accordance with the First Initial
                  Distribution Notice, the relevant Admitted Known Corp Scheme
                  Creditors Escrow Account;

         (b)      in the case of the balance of the Known Claims Segment, the
                  relevant Unadmitted Known Corp Scheme Creditors Escrow
                  Account;

         (c)      in the case of the Reserve Claims Segment, the relevant
                  Reserve Corp Scheme Creditors Escrow Account; and

         (d)      in the case of the plc Shareholder Stock, the plc
                  Shareholders' Account.

         Except where defined herein, capitalised terms used in sub-clauses (2)
         and (3) of this clause 5 have the meanings given to them in the Corp
         Scheme.

(3)      Any Scheme Consideration, not being Basic Scheme Consideration, shall
         be paid into or allocated to the relevant Escrow Accounts by Corp in
         the manner directed by the Supervisors (acting in accordance with the
         authority given to them in the Corp Scheme) by a Transfer Notice.

(4)      On the Effective Date, plc shall, in accordance with clause 34 of the
         plc Scheme, direct that the Basic Scheme Consideration shall be
         transferred to the Escrow Trustee to be held by the Escrow Trustee on
         the trusts set out in sub-clause (7) below and to be paid into or
         allocated to the following Escrow Accounts:

         (a)      in the case of the portion of the Known Claims Segment which
                  is to be distributed in accordance with the First Initial
                  Distribution Notice, the relevant Admitted Known plc Scheme
                  Creditors Escrow Account;

         (b)      in the case of the balance of the Known Claims Segment, the
                  relevant Unadmitted Known plc Scheme Creditors Escrow Account;
                  and

         (c)      in the case of the Reserve Claims Segment, the relevant
                  Reserve plc Scheme Creditors Escrow Account.

         Except where defined herein, capitalised terms used in sub-clauses (4)
         and (5) of this clause 5 have the meanings given to them in the plc
         Scheme.

<PAGE>

                                       9

(5)      Any Scheme Consideration, not being Basic Scheme Consideration, shall
         be paid into or allocated to the relevant Escrow Accounts by plc in the
         manner directed by the Supervisors (acting in accordance with the
         authority given to them under the plc Scheme) by a Transfer Notice.

(6)      The Escrow Trustee shall, promptly after receipt of any Scheme
         Consideration pursuant to any of sub-clauses (2) to (5) above, provide:

         (a)      to Corp and the Supervisors an acknowledgement of the receipt
                  of each part of the Scheme Consideration (as defined in the
                  Corp Scheme) and plc Shareholder Stock transferred, issued and
                  allotted to it; and

         (b)      to plc and the Supervisors an acknowledgement of the receipt
                  of each part of the Scheme Consideration (as defined in the
                  plc Scheme) transferred to it.

         The Escrow Trustee shall maintain records of all its dealings with the
         Scheme Consideration and shall make such records (or copies thereof)
         available to Corp, plc and the Supervisors at all reasonable times upon
         request.

(7)      The Escrow Trustee shall hold:

         (a)      the Admitted Known Corp Scheme Creditors Fund on bare trust
                  for the Admitted Known Creditors named in the First Initial
                  Distribution Notice absolutely in proportion to their
                  respective entitlements to the First Initial Distribution
                  under clause 23 of the Corp Scheme;

         (b)      the Unadmitted Known Corp Scheme Creditors Fund and the
                  Reserve Corp Scheme Creditors Fund on bare trust for the
                  Scheme Creditors absolutely for application by the Escrow
                  Trustee on their behalf in accordance with the Corp Scheme and
                  this Agreement;

         (c)      the plc Shareholder Fund on trust for the plc Shareholders
                  absolutely in proportion to their respective entitlements
                  under sub-clause 31(3) of the Corp Scheme;

         (d)      the Admitted Known plc Scheme Creditors Fund on bare trust for
                  the Admitted Known Creditors named in the First Initial
                  Distribution Notice absolutely in proportion to their
                  respective entitlements to the First Initial Distribution
                  under clause 23 of the plc Scheme; and

         (e)      the Unadmitted Known plc Scheme Creditors Fund and the Reserve
                  plc Scheme Creditors Fund on bare trust for the Scheme
                  Creditors absolutely for application by the Escrow Trustee on
                  their behalf in accordance with the plc Scheme and this
                  Agreement.

         Except where defined herein, capitalised terms used in paragraphs (a)
         to (c) of this sub-clause (7) have the meanings given to them in the
         Corp Scheme and capitalised terms used in paragraphs (d) and (e) of
         this sub-clause (7) have the meanings given to them in the plc Scheme.

(8)      It shall be a term of each trust constituted by sub-clause (7) above
         that:

         (a)      the Supervisors of each Scheme shall have authority to give
                  instructions to the Escrow Trustee and the Distribution Agent
                  in order to give effect to the terms of the relevant

<PAGE>

                                       10

                  Scheme and that the Distribution Agent shall have authority to
                  act on the instructions of the Supervisors of the relevant
                  Scheme, the directions of the Trustees and Ancrane contained
                  in clauses 7(6) and 8(6) of this Agreement and in the Ancrane
                  Direction Letter, the directions of Corp (on behalf of the
                  persons absolutely entitled thereto) contained in clauses
                  7(11) and (12) of this Agreement and the directions of plc (on
                  behalf of the persons absolutely entitled thereto) contained
                  in clauses 8(8) and (9) of this Agreement with regard to the
                  distribution of the property the subject of such trust;

         (b)      the Escrow Trustee is authorised to take any action which the
                  Supervisors may instruct for the purposes of the relevant
                  Scheme, including by way of Distribution Notice and Transfer
                  Notice; and

         (c)      the duties of the Escrow Trustee in relation to each trust of
                  confidentiality and acting in the interests only of the
                  beneficiaries of such trust are disapplied to the extent
                  necessary to enable the Escrow Trustee to take action in
                  accordance with the terms of each Scheme.

(9)      The entity with which any Escrow Account is held may only be changed if
         the Escrow Trustee is directed to make such a change by the Supervisors
         and, if the Supervisors do make such a direction, the Distribution
         Agent shall use all reasonable efforts to assist in that change.

(10)     Neither the Escrow Trustee nor the Distribution Agent shall have, and
         each of them shall procure that none of their respective delegates
         shall have, any right of indemnity, set off, combination of accounts or
         any other right whatsoever to apply the assets comprised in the Trust
         Funds or any of them in discharge or satisfaction of any cost, right of
         reimbursement, expense, loss or other liability of the Escrow Trustee
         or, as the case may be, the Distribution Agent, and all such rights are
         hereby released by the Escrow Trustee and the Distribution Agent.

6.       UNDERTAKINGS

(1)      Subject as provided in clause 7 (in the case of paragraphs (a) to (c)
         below) and clause 8 (in the case of paragraphs (d) to (f) below), the
         Escrow Trustee hereby undertakes in favour of the Supervisors, each
         Admitted Scheme Creditor (including, for the avoidance of doubt, the
         Eurobond Trustee and BoNY upon their Scheme Claims being Admitted) and
         each Designated Recipient as follows:

         (a)      against receipt of the First Initial Distribution Notice under
                  the Corp Scheme, to direct (and it hereby does direct) the
                  Distribution Agent to transfer on behalf of the Admitted Known
                  Creditors named in the First Initial Distribution Notice from
                  the Admitted Known Corp Scheme Creditors Escrow Fund such
                  amounts and securities as are equal to the Distribution
                  Entitlement in respect of the Admitted Known Claims the
                  subject of the First Initial Distribution Notice to the
                  Admitted Scheme Creditors named in the First Initial
                  Distribution Notice;

         (b)      against receipt of any Distribution Notice (other than the
                  First Initial Distribution Notice) under the Corp Scheme, to
                  direct (and it hereby does direct) the Distribution Agent to
                  transfer on behalf of the Scheme Creditors from the relevant
                  Corp Escrow Accounts such amounts and securities as are
                  specified in the Distribution Notice to the Admitted Scheme
                  Creditors named in the Distribution Notice;

<PAGE>

                                       11

         (c)      against receipt of a Transfer Notice relating to any Corp
                  Scheme Consideration, to direct (and it hereby does direct)
                  the Distribution Agent to take the action required by that
                  Transfer Notice;

         (d)      against receipt of the First Initial Distribution Notice under
                  the plc Scheme, to direct (and it hereby does direct) the
                  Distribution Agent to transfer on behalf of the Admitted Known
                  Creditors named in the First Initial Distribution Notice from
                  the Admitted Known plc Scheme Creditors Escrow Fund such
                  amounts and securities as are equal to the Distribution
                  Entitlement in respect of the Admitted Known Claims the
                  subject of the First Initial Distribution Notice to the
                  Admitted Scheme Creditors named in the First Initial
                  Distribution Notice;

         (e)      against receipt of any Distribution Notice (other than the
                  First Initial Distribution Notice) under the plc Scheme, to
                  direct (and it hereby does direct) the Distribution Agent to
                  transfer on behalf of the Scheme Creditors from the relevant
                  plc Escrow Accounts such amounts and securities as are
                  specified in the Distribution Notice to the Admitted Scheme
                  Creditors named in the Distribution Notice; and

         (f)      against receipt of a Transfer Notice relating to any plc
                  Scheme Consideration, to direct (and it hereby does direct)
                  the Distribution Agent to take the action required by that
                  Transfer Notice.

         Each of the Escrow Trustee and the Distribution Agent agrees that it
         shall have no discretion in the making or withholding of any
         Distribution or credit or transfer required by a Transfer Notice, or
         portion thereof, and undertakes at all times to comply with the terms
         of Distribution Notices and Transfer Notices and any other directions
         given to it by the Supervisors and, in the case of the Distribution
         Agent, the Escrow Trustee.

         Except where defined herein, capitalised terms used in paragraphs (a)
         to (c) of this sub-clause (1) have the meanings given to them in the
         Corp Scheme and capitalised terms used in paragraphs (d) to (f) of this
         sub-clause (1) have the meanings given to them in the plc Scheme.

(2)      Each of the Escrow Trustee and the Distribution Agent undertakes that
         it will take any and all action required by the Supervisors of the
         relevant Scheme in order to give effect to the provisions of that
         Scheme.

(3)      Subject as provided in sub-clause (2) above, each of the Escrow Trustee
         and the Distribution Agent undertakes that, save with the prior written
         consent of the Supervisors of the relevant Scheme, it will not take any
         action affecting the trust property or any part of it except where
         necessary to give effect to either Scheme or as required by clause 7
         and 8 of this Agreement.

(4)      Any Distribution or transfer made in accordance with sub-clause (1)
         above shall only be made following receipt by the Escrow Trustee and
         the Distribution Agent of a duly signed Distribution Notice or Transfer
         Notice from the Supervisors and then only in accordance with the terms
         of that Distribution Notice or Transfer Notice. Each Distribution
         Notice and Transfer Notice shall constitute deemed directions from the
         Escrow Trustee to the Distribution Agent to make the relevant
         Distribution or transfer.

(5)      The Escrow Trustee hereby undertakes in favour of the Supervisors and
         the other parties to this Agreement that it will act honestly and in
         good faith and will exercise the diligence expected of a reasonably
         prudent trustee and custodian in the fulfilment and/or exercise of its
         duties and obligations under this Agreement.

<PAGE>

                                       12

(6)      The Distribution Agent hereby undertakes in favour of the Supervisors
         and the other parties to this Agreement that it will act honestly and
         in good faith and will exercise the diligence expected of a reasonably
         prudent custodian and agent in comparable circumstances in the
         fulfilment and/or exercise of its duties and obligations under this
         Agreement.

(7)      Bondholder Communications hereby undertakes in favour of the
         Supervisors, the Eurobond Trustee, BoNY and the other parties to this
         Agreement that it will act honestly and in good faith and will exercise
         the diligence of a reasonably prudent expert in comparable
         circumstances in the fulfilment and/or exercise of its duties and
         obligations under this Agreement.

(8)      Conditional upon the proposed reduction in its share capital and
         repayment of capital in specie being effected as contemplated by the
         Scheme Implementation Deed, Ancrane hereby undertakes in favour of each
         of the other parties to this Agreement that it shall execute the
         Ancrane Direction Letter on or before 17th April, 2003. Subject to
         Ancrane executing the Ancrane Direction Letter, in accordance with the
         proposed direction set out in paragraph 4(b) of that letter, each of
         the Eurobond Trustee, BoNY, the Escrow Trustee and the Supervisors
         hereby direct the Distribution Agent to pay all Corp and plc Scheme
         Consideration to which Ancrane would otherwise have been entitled
         through its Scheme Claim and as a Bondholder to plc.

7.       DISTRIBUTIONS UNDER THE CORP SCHEME

(1)      Capitalised terms used in this clause 7 and not otherwise defined in
         this Agreement have the meanings given to them in the Corp Scheme. This
         clause 7 applies only to Distributions made under the Corp Scheme.

(2)      As set out in the Corp Scheme, the Supervisors shall determine the
         Scheme Claims and shall decide whether or not they shall be Admitted.

(3)      In respect of each Distribution, the Supervisors will deliver to the
         Escrow Trustee (with a copy to the Distribution Agent) a duly completed
         Distribution Notice (in the form agreed between the Supervisors, the
         Escrow Trustee and the Distribution Agent) identifying each Admitted
         Scheme Creditor (which expression, in this sub-clause (3), includes the
         Eurobond Trustee and BoNY but does not include Account Holders or
         Designated Recipients who are dealt with as provided in sub-clause (6)
         below) to which the Distribution is to be made, the amount of each
         Element of Scheme Consideration (and the relevant Trust Funds and
         Escrow Accounts from which it should be taken) to be received by that
         Admitted Scheme Creditor, the cash or securities accounts of that
         Admitted Scheme Creditor to which the relevant portion of the Scheme
         Consideration is to be credited and, if applicable, whether that
         Admitted Scheme Creditor has elected to receive ADRs instead of New
         Creditor Shares. In respect of each Distribution Notice that contains a
         reference to BoNY or the Eurobond Trustee, the words "to be distributed
         to Designated Recipients in accordance with the directions contained in
         clauses 7 and 8 of the Escrow and Distribution Agreement dated 27th
         March, 2003 given by such Scheme Creditor" shall be inserted in
         parentheses following each such reference.

(4)      Except in the case of the First Initial Distribution, the Distribution
         Agent will make the relevant Distribution on behalf of the Escrow
         Trustee within 5 Business Days after having received a duly completed
         Distribution Notice from the Supervisors. Subject as provided in
         sub-clause (6)(f), the Distribution Agent will make the First Initial
         Distribution on the Effective Date.

<PAGE>

                                       13

(5)      Each of the Eurobond Trustee and BoNY has submitted or will submit a
         Claim Form and is expected to become an Admitted Scheme Creditor
         entitled to participate in the First Initial Distribution. Account
         Holders have been invited in the Scheme Document to complete and return
         to Bondholder Communications Account Holder Letters giving details of
         the manner in which the Scheme Consideration attributable to the
         Trustees but the subject of the direction set out in sub-clause (6)
         below should be delivered to Designated Recipients. Bondholder
         Communications undertakes in favour of each Trustee, the Escrow
         Trustee, the Distribution Agent, Corp, plc, the Supervisors, each
         Designated Recipient and each Definitive Holder:

         (a)      to collate all Account Holder Letters received;

         (b)      to liaise with the relevant Account Holders with a view to
                  completing any missing information and correcting any manifest
                  errors in each Account Holder Letter received by it;

         (c)      to liaise with each of DTC, Euroclear and Clearstream,
                  Luxembourg with a view to ensuring that all Bonds the subject
                  of an Account Holder Letter have been blocked and that
                  appropriate Custody Instruction References or VOI numbers, as
                  the case may be, have been granted;

         (d)      to complete and distribute copies of Account Holder Letters
                  and forms of proxy to Definitive Holders wishing to attend a
                  Scheme Meeting in person or by proxy and to compile and
                  distribute one or more omnibus proxies in respect of each
                  Definitive Holder wishing to appoint the chairman of a Scheme
                  Meeting as his proxy, all in accordance with the instructions
                  given in duly completed Account Holder Letters;

         (e)      to prepare definitive Yankee Bonds and an initial register of
                  Yankee Bond holders in accordance with the instructions given
                  in duly completed Account Holder Letters and to distribute
                  such Yankee Bonds and register in the manner agreed between
                  Bondholder Communications, BoNY and Corp;

         (f)      to prepare individual global Eurobonds in accordance with the
                  instructions given in duly completed Account Holder Letters
                  and to distribute such Eurobonds in the manner agreed between
                  Bondholder Communications, the Eurobond Trustee and Corp;

         (g)      in the case of all duly completed Account Holders Letters
                  received by it on or before 5.00p.m. (New York City time) on
                  17th April, 2003, to provide by no later than 10th May, 2003
                  all information necessary to the Distribution Agent to enable
                  the Distribution Agent to make the Distributions directed in
                  sub-clause (6) below as soon as may be practicable but subject
                  always as provided in sub-clause (6)(f); and

         (h)      to maintain records of all Account Holder Letters received and
                  the Designated Recipients and Definitive Holders named therein
                  and to make such records (or copies thereof) available to
                  Corp, plc and the Supervisors at all reasonable times upon
                  request.

(6)      Subject to the Scheme Claims of the Eurobond Trustee and BoNY being the
         subject of a Distribution Notice, each of the Eurobond Trustee or BoNY,
         as the case may be, with the authority and approval hereby given of the
         Supervisors, the Escrow Trustee and Ancrane, hereby directs the
         Distribution Agent, acting on behalf of the Escrow Trustee, to:

<PAGE>

                                       14

         (a)      in the case of the Eurobond Trustee, pay, at the same time as
                  the relevant Distribution is made, the Cash Element of each
                  Distribution which would otherwise have been made to it to (i)
                  all Account Holders (other than Morgan Stanley & Co.
                  Incorporated ("MORGAN STANLEY") to the extent that Morgan
                  Stanley is the Account Holder for Ancrane) which had Eurobonds
                  credited to their accounts on the Effective Date by a pro rata
                  distribution through Euroclear and Clearstream, Luxembourg or
                  (ii) if (for any reason), such a pro rata distribution through
                  Euroclear and Clearstream, Luxembourg is not possible, in the
                  manner contemplated in paragraph (b) below;

         (b)      in the case of BoNY (or the Eurobond Trustee pursuant to
                  sub-clause (6)(a)(ii) above), subject as provided in paragraph
                  (f) below, pay to each Designated Recipient, at the Specified
                  Time (as defined below), such Designated Recipient's
                  proportion of the Cash Element (together with any entitlement
                  to interest thereon) which would otherwise have been made to
                  BoNY in respect of the Yankee Bonds or the Eurobond Trustee in
                  respect of the Eurobonds, as the case may be, in accordance
                  with the cash payment directions contained in the relevant
                  Account Holder Letter; and

         (c)      subject to sub-clauses (11) and (12) and as provided in
                  paragraph (f) below, distribute to each Designated Recipient,
                  at the Specified Time, such Designated Recipient's proportion
                  of the New Notes Element and the New Creditor Shares Element
                  of the relevant Distribution (and any entitlement to interest
                  and dividends) which would otherwise have been distributed to
                  the relevant Trustee in accordance with the security delivery
                  directions (including, for the avoidance of doubt, directions
                  as to the currency of the Senior Notes to be delivered and in
                  relation to any ADRs to be delivered in lieu of New Creditor
                  Shares) contained in the relevant Account Holder Letters;

         (d)      other than any payments of Cash made in accordance with
                  sub-paragraph (a)(i) above, if the Relevant Conditions (as
                  defined below) have not been satisfied in relation to a
                  Designated Recipient of Scheme Consideration initially
                  attributable to the Eurobond Trustee or BoNY, as the case may
                  be, (whether in the Initial Distribution or any Further
                  Distribution) before the termination of the Scheme, to (i) (in
                  the case of the Eurobond Trustee) hold that Scheme
                  Consideration to the order of the Eurobond Trustee pending any
                  directions from it, which directions will be given by the
                  Eurobond Trustee if and to the extent that it is authorised or
                  directed by an extraordinary resolution passed at a Eurobond
                  Meeting or by court order and (ii) (in the case of BoNY)
                  transfer all such Scheme Consideration to BoNY or to its order
                  (including, but without limitation, by way of a payment into
                  court);

         (e)      in this sub-clause (6), "RELEVANT CONDITIONS" in relation to a
                  Designated Recipient means that (i) a duly completed Account
                  Holder Letter naming that Designated Recipient and (ii)
                  confirmation satisfactory to Bondholder Communications that
                  corresponding Custody Instructions have been given have been
                  received by Bondholder Communications and confirmed by it to
                  the Distribution Agent and all information necessary to make
                  the relevant Distribution has been provided by Bondholder
                  Communications to the Distribution Agent and "SPECIFIED TIME"
                  means the same time as the relevant Distribution is made where
                  the Relevant Conditions have been satisfied in relation to a
                  Designated Recipient or, where this is not the case, as soon
                  as practicable after the Relevant Conditions have been
                  satisfied in relation to that Designated Recipient. For the
                  avoidance of doubt, once the Relevant Conditions are met in
                  respect of a Designated Recipient, the Distribution Agent will
                  pay or transfer to that Designated Recipient all Scheme
                  Consideration (and any income accrued in respect of it) to
                  which that Designated Recipient would have been entitled

<PAGE>

                                       15

                  had the Relevant Conditions in relation to it been met prior
                  to 17th April, 2003 without further direction from any of the
                  parties to this Agreement; and

         (f)      in recognition of the fact that the Distribution Agent is
                  limited in its ability to prepare and process payment and
                  transfer instructions ("INSTRUCTIONS"), the Distribution Agent
                  shall act in the following manner in preparing and giving
                  effect to the First Initial Distribution:

                  (i)      prepare preliminary Instructions as soon as
                           practicable after it has received the necessary
                           information from the Supervisors in accordance with
                           sub-clause (3) above or Bondholder Communications in
                           accordance with sub-clause (5)(g) above and complete
                           such Instructions in the Order of Priority (as
                           defined below) as swiftly as possible following the
                           determination of both the Scheme Rate and the
                           Effective Date;

                  (ii)     on the Effective Date process as many Instructions
                           which have been completed as it is able to do in the
                           Order of Priority; and

                  (iii)    on each Business Day after the Effective Date until
                           completion of the First Initial Distribution, process
                           as many Instructions which have been completed as it
                           is able to in the Order of Priority.

                  For the purpose of this sub-clause (f), "ORDER OF PRIORITY"
                  means, first, to each of the Scheme Creditors named in the
                  First Initial Distribution Notice (which, for the avoidance of
                  doubt, shall include the Trustees but not Designated
                  Recipients) and, secondly, to each Designated Recipient by
                  reference to the principal amount of Bonds represented by the
                  Account Holder Letter in which it is named as the Designated
                  Recipient starting with the Designated Recipient which has the
                  highest principal amount so represented.

                  It is currently envisaged that the Distribution Agent will be
                  able to complete a maximum of 1,000 Instructions per Business
                  Day and to process a maximum of 5,000 Instructions per
                  Business Day.

(7)      Reflecting the directions and undertakings set out in the Ancrane
         Direction Letter and its undertaking not to vote at either Scheme
         Meeting, Ancrane undertakes in favour of each of the other parties to
         this Agreement that it will procure that its Account Holder does not
         deliver an Account Holder Letter in respect of its holdings of Bonds.
         Ancrane further irrevocably authorises and directs the Distribution
         Agent to instruct Euroclear and/or Clearstream, Luxembourg, as the case
         may be, not to credit any cash to which Ancrane would otherwise be
         entitled in respect of its holdings of Eurobonds to Morgan Stanley's
         account with such clearing system and undertakes in favour of each of
         the other parties to this Agreement that it will procure that Morgan
         Stanley will give corresponding instructions to the relevant clearing
         system. Ancrane undertakes to each of the other parties to this
         Agreement that it will irrevocably confirm to Morgan Stanley that it
         will not direct Morgan Stanley to process any transfer transactions
         unless and until the Corp Scheme is not approved or does not become
         effective in relation to any of its Bonds and hereby confirms that it
         will not give any such direction. Ancrane hereby confirms in favour of
         each of the other parties to this Agreement that it is incorporated in
         the United Kingdom.

(8)      In respect of each Distribution Notice that directs the Escrow Trustee
         and the Distribution Agent to distribute ADRs instead of New Creditor
         Shares in accordance with sub-clause (3) above and any elections in
         Account Holder Letters to receive ADRs instead of New Creditor

<PAGE>

                                       16

         Shares communicated to the Distribution Agent in accordance with
         sub-clause (5) above, the Escrow Trustee shall procure that the
         Distribution Agent, acting on behalf of the Escrow Trustee, shall:

         (a)      subject to paragraph (c) below, transfer the New Creditor
                  Shares relating to the relevant Eligible Recipient to the ADR
                  Depositary;

         (b)      arrange for the distribution of ADRs relating to those New
                  Creditor Shares to entitled Eligible Recipients; and

         (c)      where there are any New Creditor Shares which are not
                  sufficient in number to equate to one ADR and which therefore
                  cannot be transferred to the ADR Depositary in accordance with
                  paragraph (a) above, sell those New Creditor Shares and deal
                  with the proceeds as instructed by the Supervisors by Transfer
                  Notice.

(9)      Corp hereby directs the Escrow Trustee and the Escrow Trustee shall
         procure that the Distribution Agent:

         (a)      transfers the plc Shareholder Stock to the CREST account of
                  the Registrars by means of a matched transaction in CREST
                  bearing a "no change in beneficial ownership" denotation as
                  soon as practicable following the Effective Date; and

         (b)      instructs the Registrars to hold part of the plc Shareholders
                  Stock through the Corporate Nominee and otherwise to deal with
                  the plc Shareholder Stock and Warrants as set out in the
                  Letter of Instruction.

(10)     In respect of each Distribution Notice that directs the Escrow Trustee
         and the Distribution Agent to distribute New Creditor Shares, the
         Escrow Trustee shall procure that the Distribution Agent transfers on
         its behalf the requisite number of New Creditor Shares to the
         Registrars and instruct the Registrars to transfer the same to the
         relevant Eligible Recipient in accordance with the relevant
         Distribution Notice and sub-clause (6) above. For this purpose the
         Escrow Trustee shall give the Registrars standing instructions in the
         Letter of Instruction to effect the transfers contemplated by this
         sub-clause (10) and hereby irrevocably agrees not to withdraw or alter
         such instructions without the prior approval of the Supervisors.

(11)     Where an Account Holder Letter is submitted to Bondholder
         Communications in which the confirmations set out in section 5,
         paragraphs (D), (E) and (F) of that Account Holder Letter are not made
         or a Claim Form is submitted to the Supervisors by a Scheme Creditor
         (other than the Eurobond Trustee or BoNY) whose Scheme Claim is
         subsequently Admitted in which the confirmations set out in paragraphs
         (3) and (4) of Box 3 of that Claim Form are not made, Bondholder
         Communications or, as the case may be, the Supervisors shall inform the
         Distribution Agent accordingly and Corp may direct that (i) if the New
         Creditor Shares or New Notes or any of them are listed on a securities
         exchange, the Distribution Agent shall, on behalf of the Escrow
         Trustee, sell or procure the sale of the New Notes and the New Creditor
         Shares which would otherwise have been Distributed and shall instead
         pay the cash proceeds of such sale to the relevant Eligible Recipient
         (after deducting all applicable expenses including foreign currency
         conversion costs incurred) to the cash account set out in the relevant
         Account Holder Letter or Claim Form; or (ii) if the New Creditor Shares
         or New Notes or any of them are not listed on a securities exchange,
         the Distribution Agent shall, on behalf of the Escrow Trustee, pay a
         sum of cash which is substantially equivalent in value to such New
         Creditor Shares or New Notes determined in accordance with clause
         30(7)(e)(ii) of the Corp Scheme to the cash account set out in the
         relevant Account Holder Letter or Claim

<PAGE>

                                       17

         Form. Any sale made pursuant to sub-paragraph (i) of this sub-clause
         (11) shall be made for the best terms reasonably available at the time
         of the sale.

(12)     Where an Account Holder Letter or Claim Form is submitted in which the
         confirmations set out in section 5, paragraphs (D), (E) and (F) of that
         Account Holder Letter or paragraphs (3) and (4) of Box 3 of that Claim
         Form are made but, on the face of the Account Holder Letter or Claim
         Form, as the case may be, it is apparent that the confirmations may be
         inaccurate or Corp has reason to believe that a Distribution made in
         accordance with the Account Holder Letter or Claim Form, as the case
         may be, might be in breach of any of the securities laws described in
         part 1, Section 2 of Parts D.16 and D.17 of the Scheme Document:

         (a)      in the case of the Account Holder Letter, Bondholder
                  Communications shall draw that Account Holder Letter to the
                  attention of Corp and the Supervisors; and

         (b)      in the case of the Claim Form, the Supervisors shall draw that
                  Claim Form to the attention of Corp; and

         Corp may, after such investigation as it may deem appropriate in the
         circumstances, direct the Distribution Agent (acting on behalf of the
         Escrow Trustee) (i) if the New Creditor Shares or New Notes or any of
         them are listed on a securities exchange, to sell or procure the sale
         of the New Notes and the New Creditor Shares which would otherwise have
         been Distributed and instead and pay the cash proceeds of such sale to
         the relevant Eligible Recipient (after deducting all applicable
         expenses including foreign currency conversion costs incurred) to the
         cash account set out in the relevant Account Holder Letter or Claim
         Form or (ii) if the New Creditor Shares or New Notes or any of them are
         not listed on a securities exchange, to pay a sum of cash in sterling
         which is substantially equivalent in value to such New Creditor Shares
         or New Notes and determined in accordance with clause 30(7)(e)(ii) of
         the Corp Scheme to the cash account set out in the relevant Account
         Holder Letter or Claim Form. Any sale made pursuant to sub-paragraph
         (i) of this sub-clause (12) shall be made for the best terms reasonably
         available at the time of the sale.

(13)     In relation to each Distribution made by it, in any case where it would
         otherwise be required to distribute a fraction of a New Note or a
         fraction of a New Creditor Share to an Eligible Recipient, the
         Distribution Agent (acting on behalf of the Escrow Trustee) shall, in
         accordance with sub-clause 30(6) of the Corp Scheme, (a) if the New
         Creditor Shares or New Notes or any of them are Listed, aggregate all
         such fractions and sell the relevant number of New Notes and New
         Creditor Shares in the market and pay the net proceeds of such sale
         (after deducting all costs of the sale and paying all fractional
         entitlements) to the Escrow Account specified for this purpose in a
         Transfer Notice and (b) if the New Creditor Shares or New Notes are not
         Listed, round down to zero all fractional entitlements of Eligible
         Recipients to such unlisted New Creditor Shares and New Notes and
         transfer (if required) to the Escrow Account specified for this purpose
         in a Transfer Notice all fractional entitlements to those New Shares or
         New Notes (as the case may be) which, but for this sub-paragraph (b),
         Eligible Recipients would have received. No fraction of a unit of
         currency shall be Distributed by the Distribution Agent and any cash
         remaining after the relevant Distribution as a result of any such
         fractional entitlements shall be paid by the Distribution Agent to
         Corp. In this paragraph, the "RELEVANT NUMBER OF NEW NOTES OR NEW
         CREDITOR SHARES" means the number of New Notes and New Creditor Shares
         that would have resulted from the aggregation of all fractional
         entitlements and the rounding down of the result to the nearest whole
         New Note and New Creditor Share, respectively.

(14)     In each case where Undistributed Scheme Consideration is to be applied
         in reimbursing Corp for any SDRT Expense it has incurred in excess of
         L 500,000 in accordance with clause 25(2)

<PAGE>

                                       18

         of the Corp Scheme, the Supervisors shall give the Distribution Agent
         the directions necessary to make that reimbursement including, but not
         limited to, the following:

         (a)      the amount of the SDRT Expense that is to be reimbursed;

         (b)      if any Element of Undistributed Scheme Consideration other
                  than cash is required, the number of New Creditor Shares
                  and/or New Notes to be sold; and

         (c)      Corp's bank account details to which the reimbursement should
                  be made.

8.       DISTRIBUTIONS UNDER THE PLC SCHEME

(1)      Capitalised terms used in this clause 8 and not otherwise defined in
         this Agreement have the meanings given to them in the plc Scheme. This
         clause 8 applies only to Distributions made under the plc Scheme.

(2)      As set out in the plc Scheme, the Supervisors shall determine the
         Scheme Claims and shall decide whether or not they shall be Admitted.

(3)      In respect of each Distribution, the Supervisors will deliver to the
         Escrow Trustee (with a copy to the Distribution Agent) a duly completed
         Distribution Notice (in the form agreed between the Supervisors, the
         Escrow Trustee and the Distribution Agent) identifying each Admitted
         Scheme Creditor (which expression, in this sub-clause (3), includes the
         Eurobond Trustee and BoNY but does not include Account Holders or
         Designated Recipients who are dealt with as provided in sub-clause (6)
         below) to which the Distribution is to be made, the amount of each
         Element of Scheme Consideration (and the relevant Trust Funds and
         Escrow Accounts from which it should be taken) to be received by that
         Admitted Scheme Creditor, the cash or securities accounts of that
         Admitted Scheme Creditor to which the relevant portion of the Scheme
         Consideration is to be credited and, if applicable, whether that
         Admitted Scheme Creditor has elected to receive ADRs instead of New
         Creditor Shares. In respect of each Distribution Notice that contains a
         reference to BoNY or the Eurobond Trustee, the words "to be distributed
         to Designated Recipients in accordance with the directions contained in
         clauses 7 and 8 of the Escrow and Distribution Agreement dated 27th
         March, 2003 given by such Scheme Creditor" shall be inserted in
         parentheses following each such reference.

(4)      Except in the case of the First Initial Distribution, the Distribution
         Agent will make the relevant Distribution on behalf of the Escrow
         Trustee within 5 Business Days after having received a duly completed
         Distribution Notice from the Supervisors. Subject as provided in
         sub-clause (6)(f), the Distribution Agent will make the First Initial
         Distribution on the Effective Date.

(5)      Each of the Eurobond Trustee and BoNY has submitted or will submit a
         Claim Form and is expected to become an Admitted Scheme Creditor
         entitled to participate in the First Initial Distribution. Account
         Holders have been invited in the Scheme Document to complete and return
         to Bondholder Communications Account Holder Letters giving details of
         the manner in which the Scheme Consideration attributable to the
         Trustees but the subject of the direction set out in sub-clause (6)
         below should be delivered to Designated Recipients. Bondholder
         Communications undertakes in favour of each Trustee, the Escrow
         Trustee, the Distribution Agent, Corp, plc, the Supervisors, each
         Designated Recipient and each Definitive Holder:

         (a)      to collate all Account Holder Letters received;

<PAGE>

                                       19

         (b)      to liaise with the relevant Account Holders with a view to
                  completing any missing information and correcting any manifest
                  errors in each Account Holder Letter received by it;

         (c)      to liaise with each of DTC, Euroclear and Clearstream,
                  Luxembourg with a view to ensuring that all Bonds the subject
                  of an Account Holder Letter have been blocked and that
                  appropriate Custody Instruction References or VOI numbers, as
                  the case may be, have been granted;

         (d)      to complete and distribute copies of Account Holder Letters
                  and forms of proxy to Definitive Holders wishing to attend a
                  Scheme Meeting in person or by proxy and to compile and
                  distribute one or more omnibus proxies in respect of each
                  Definitive Holder wishing to appoint the chairman of a Scheme
                  Meeting as his proxy, all in accordance with the instructions
                  given in duly completed Account Holder Letters;

         (e)      to prepare definitive Yankee Bonds and an initial register of
                  Yankee Bond holders in accordance with the instructions given
                  in duly completed Account Holder Letters and to distribute
                  such Yankee Bonds and register in the manner agreed between
                  Bondholder Communications, BoNY and Corp;

         (f)      to prepare individual global Eurobonds in accordance with the
                  instructions given in duly completed Account Holder Letters
                  and to distribute such Eurobonds in the manner agreed between
                  Bondholder Communications, the Eurobond Trustee and Corp;

         (g)      in the case of all duly completed Account Holders Letters
                  received by it on or before 5.00p.m. (New York City time) on
                  17th April, 2003, to provide by no later than 10th May, 2003
                  all information necessary to the Distribution Agent to enable
                  the Distribution Agent to make the Distributions directed in
                  sub-clause (6) below as soon as may be practicable but subject
                  always as provided in sub-clause (6)(f); and

         (h)      to maintain records of all Account Holder Letters received and
                  the Designated Recipients and Definitive Holders named therein
                  and to make such records (or copies thereof) available to
                  Corp, plc and the Supervisors at all reasonable times upon
                  request.

(6)      Subject to the Scheme Claims of the Eurobond Trustee and BoNY being the
         subject of a Distribution Notice, each of the Eurobond Trustee or BoNY,
         as the case may be, with the authority hereby given and approval of the
         Supervisors, the Escrow Trustee and Ancrane, hereby directs the
         Distribution Agent, acting on behalf of the Escrow Trustee, to:

         (a)      in the case of the Eurobond Trustee, pay, at the same time as
                  the relevant Distribution is made, the cash Element of each
                  Distribution which would otherwise have been made to it to (i)
                  all Account Holders (other than Morgan Stanley to the extent
                  that Morgan Stanley is the Account Holder for Ancrane) which
                  had Eurobonds credited to their accounts on the Effective Date
                  by a pro rata distribution through Euroclear and Clearstream,
                  Luxembourg or (ii) if (for any reason), such a pro rata
                  distribution through Euroclear and Clearstream, Luxembourg is
                  not possible, in the manner contemplated in paragraph (b)
                  below;

         (b)      in the case of BoNY (or the Eurobond Trustee pursuant to
                  sub-clause (6)(a)(ii) above), subject as provided in paragraph
                  (f) below, pay to each Designated Recipient, at the Specified
                  Time (as defined below), such Designated Recipient's
                  proportion of

<PAGE>

                                       20

                  the cash Element (together with any entitlement to interest
                  thereon) which would otherwise have been made to BoNY in
                  respect of the Yankee Bonds or the Eurobond Trustee in respect
                  of the Eurobonds, as the case may be, in accordance with the
                  cash payment directions contained in the relevant Account
                  Holder Letter; and

         (c)      subject to sub-clauses (8) and (9) and subject as provided in
                  paragraph (f) below, distribute to each Designated Recipient,
                  at the Specified Time, such Designated Recipient's proportion
                  of the New Notes Element and the New Creditor Shares Element
                  of the relevant Distribution (and any entitlement to interest
                  and dividends) which would otherwise have been distributed to
                  the relevant Trustee in accordance with the security delivery
                  directions (including, for the avoidance of doubt, directions
                  as to the currency of the Senior Notes to be delivered and in
                  relation to any ADRs to be delivered in lieu of New Creditor
                  Shares) contained in the relevant Account Holder Letters;

         (d)      other than any payments of cash made in accordance with
                  sub-paragraph (a)(i) above, if the Relevant Conditions (as
                  defined below) have not been satisfied in relation to a
                  Designated Recipient of Scheme Consideration initially
                  attributable to the Eurobond Trustee or BoNY, as the case may
                  be, (whether in the Initial Distribution or any Further
                  Distribution) on or before the termination of the Scheme, to
                  (i) (in the case of the Eurobond Trustee) hold that Scheme
                  Consideration to the order of the Eurobond Trustee pending any
                  directions from it, which directions will be given by the
                  Eurobond Trustee if and to the extent that it is authorised or
                  directed by an extraordinary resolution passed at a Eurobond
                  Meeting or by court order and (ii) (in the case of BoNY)
                  transfer all such Scheme Consideration to BoNY or to its order
                  (including, but without limitation, by way of a payment into
                  court);

         (e)      in this sub-clause (6), "RELEVANT CONDITIONS" in relation to a
                  Designated Recipient means that (i) a duly completed Account
                  Holder Letter naming that Designated Recipient; and (ii)
                  confirmation satisfactory to Bondholder Communications that
                  corresponding Custody Instructions have been given have been
                  received by Bondholder Communications and confirmed by it to
                  the Distribution Agent and all information necessary to make
                  the relevant Distribution has been provided by Bondholder
                  Communications to the Distribution Agent and "SPECIFIED TIME"
                  means the same time as the relevant Distribution is made where
                  the Relevant Conditions have been satisfied in relation to a
                  Designated Recipient or, where this is not the case, as soon
                  as practicable after the Relevant Conditions have been
                  satisfied in relation to that Designated Recipient. For the
                  avoidance of doubt, once the Relevant Conditions are met in
                  respect of a Designated Recipient, the Distribution Agent will
                  pay or transfer to that Designated Recipient all Scheme
                  Consideration (and any income accrued in respect of it) to
                  which that Designated Recipient would have been entitled had
                  the Relevant Conditions in relation to it been met prior to
                  17th April, 2003 without further direction from any of the
                  parties to this Agreement; and

         (f)      in recognition of the fact that the Distribution Agent is
                  limited in its ability to prepare and process payment and
                  transfer instructions ("INSTRUCTIONS"), the Distribution Agent
                  shall act in the following manner in preparing and giving
                  effect to the First Initial Distribution:

                  (i)     prepare preliminary Instructions as soon as
                          practicable after it has received the necessary
                          information from the Supervisors in accordance with
                          sub-clause (3) above or Bondholder Communications in
                          accordance with sub-clause (5)(g) above and complete
                          such Instructions in the Order of Priority (as

<PAGE>

                                       21

                  defined below) as swiftly as possible following the
                  determination of both the Scheme Rate and the Effective Date;

                  (ii)     on the Effective Date process as many Instructions
                           which have been completed as it is able to do in the
                           Order of Priority; and

                  (iii)   on each Business Day after the Effective Date until
                          completion of the First Initial Distribution, process
                          as many Instructions which have been completed as it
                          is able to in the Order of Priority.

                  For the purpose of this sub-clause (f), "ORDER OF PRIORITY"
                  means, first, to each of the Scheme Creditors named in the
                  First Initial Distribution Notice (which, for the avoidance of
                  doubt, shall include the Trustees but not Designated
                  Recipients) and, secondly, to each Designated Recipient by
                  reference to the principal amount of Bonds represented by the
                  Account Holder Letter in which it is named as the Designated
                  Recipient starting with the Designated Recipient which has the
                  highest principal amount so represented.

                  It is currently envisaged that the Distribution Agent will be
                  able to complete a maximum of 1,000 Instructions per Business
                  Day and to process a maximum of 5,000 Instructions per
                  Business Day.

(7)      In respect of each Distribution Notice that directs the Escrow Trustee
         and the Distribution Agent to distribute ADRs instead of New Creditor
         Shares in accordance with sub-clause (3) above and any elections in
         Account Holder Letters to receive ADRs instead of New Creditor Shares
         communicated to the Distribution Agent in accordance with sub-clause
         (5) above, the Escrow Trustee shall procure that the Distribution
         Agent, acting on behalf of the Escrow Trustee, shall:

         (a)      subject to paragraph (c) below, transfer the New Creditor
                  Shares relating to the relevant Eligible Recipient to the ADR
                  Depositary;

         (b)      arrange for the distribution of ADRs relating to those New
                  Creditor Shares to entitled Eligible Recipients; and

         (c)      where there are any New Creditor Shares which are not
                  sufficient in number to equate to one ADR and which therefore
                  cannot be transferred to the ADR Depositary in accordance with
                  paragraph (a) above, sell those New Creditor Shares and deal
                  with the proceeds as instructed by the Supervisors by Transfer
                  Notice.

(8)      Where an Account Holder Letter is submitted to Bondholder
         Communications in which the confirmations set out in section 5,
         paragraphs (D), (E) and (F) of that Account Holder Letter are not made
         or a Claim Form is submitted to the Supervisors by a Scheme Creditor
         (other than the Eurobond Trustee or BoNY) whose Scheme Claim is
         subsequently Admitted in which the confirmations set out in paragraphs
         (3) and (4) of Box 3 of that Claim Form are not made, Bondholder
         Communications or, as the case may be, the Supervisors shall inform the
         Distribution Agent accordingly and plc may direct that (i) if the New
         Creditor Shares or New Notes or any of them are listed on a securities
         exchange, the Distribution Agent shall, on behalf of the Escrow
         Trustee, sell or procure the sale of the New Notes and the New Creditor
         Shares which would otherwise have been Distributed and shall instead
         pay the net cash proceeds of such sale to the relevant Eligible
         Recipient (after deducting all applicable expenses including foreign
         currency conversion costs incurred) to the cash account set out in the
         relevant Account Holder Letter or Claim Form; or (ii) if the New
         Creditor Shares or New

<PAGE>

                                       22

         Notes or any of them are not listed on a securities exchange, the
         Distribution Agent shall, on behalf of the Escrow Trustee, pay to the
         relevant Eligible Recipient a sum of cash which is substantially
         equivalent in value to such New Creditor Shares or New Notes and
         determined in accordance with clause 32(7)(e)(ii) of the plc Scheme to
         the cash account set out in the relevant Account Holder Letter or Claim
         Form. Any sale made pursuant to sub-paragraph (i) of this sub-clause
         (8) shall be made for the best terms reasonably available at the time
         of the sale.

(9)      Where an Account Holder Letter or Claim Form is submitted in which the
         confirmations set out in section 5, paragraphs (D), (E) and (F) of that
         Account Holder Letter or paragraphs (3) and (4) of Box 3 of that Claim
         Form are made but, on the face of the Account Holder Letter or Claim
         Form, as the case may be, it is apparent that the confirmations may be
         inaccurate or plc has reason to believe that a Distribution made in
         accordance with the Account Holder Letter or Claim Form, as the case
         may be, might be in breach of any of the securities laws described in
         part 1, and Section 2 of Parts D.16 and D.17 of the Scheme Document:

         (a)      in the case of the Account Holder Letter, Bondholder
                  Communications shall draw that Account Holder Letter to the
                  attention of plc and the Supervisors; and

         (b)      in the case of the Claim Form, the Supervisors shall draw that
                  Claim Form to the attention of plc; and

         plc may, after such investigation as it may deem appropriate in the
         circumstances, direct the Distribution Agent (i) if the New Creditor
         Shares or New Notes or any of them are listed on a securities exchange,
         to sell or procure the sale of the New Notes and the New Creditor
         Shares which would otherwise have been Distributed and instead either
         (i) pay the cash proceeds of such sale to the relevant Eligible
         Recipient in sterling (after deducting all applicable expenses
         including foreign currency conversion costs incurred) or (ii) if the
         New Creditor Shares or New Notes or any of them are not listed on a
         securities exchange, to pay a sum of cash in sterling which is
         substantially equivalent in value to such New Creditor Shares or New
         Notes and determined in accordance with clause 32(7)(e)(ii) of the plc
         Scheme to the cash account set out in the relevant Account Holder
         Letter or Claim Form. Any sale made pursuant to this sub-clause (9)
         shall be made for the best terms reasonably available at the time of
         the sale.

(10)     In respect of each Distribution Notice that directs the Escrow Trustee
         and the Distribution Agent to distribute New Creditor Shares, the
         Escrow Trustee shall procure that the Distribution Agent transfers on
         its behalf the requisite number of New Creditor Shares to the
         Registrars and instruct the Registrars to transfer the same to the
         relevant Scheme Creditor or Designated Recipient in accordance with the
         relevant Distribution Notice and sub-clause (6) above. For this purpose
         the Escrow Trustee shall give the Registrars standing instructions in
         the Letter of Instruction to effect the transfers contemplated by this
         sub-clause (10) and hereby irrevocably agrees not to withdraw or alter
         such instructions without the prior approval of the Supervisors.

(11)     In relation to each Distribution made by it, in any case where it would
         otherwise be required to distribute a fraction of a New Note or a
         fraction of a New Creditor Share to an Eligible Recipient, the
         Distribution Agent (acting on behalf of the Escrow Trustee) shall, in
         accordance with sub-clause 32(6) of the plc Scheme, (i) if the New
         Creditor Shares or New Notes or any of them are Listed, aggregate all
         such fractions and sell the relevant number of New Notes and New
         Creditor Shares in the market and pay the net proceeds of such sale
         (after deducting all costs of the sale and paying all fractional
         entitlements) to the Escrow Account specified for this purpose in a
         Transfer Notice; and (ii) if the New Creditor Shares or New Notes are
         not Listed, round down to zero all fractional entitlements of Eligible

<PAGE>

                                       23

         Recipients to such unlisted New Creditor Shares and New Notes and
         transfer (if required) to the Escrow Account specified for this purpose
         in a Transfer Notice all fractional entitlements to those New Shares or
         New Notes (as the case may be) which, but for this sub-paragraph (b),
         Eligible Recipients would have received. No fraction of a unit of
         currency shall be Distributed by the Distribution Agent and any cash
         remaining after the relevant Distribution as a result of any such
         fractional entitlements shall be paid by the Distribution Agent to plc.
         In this paragraph, the "RELEVANT NUMBER OF NEW NOTES OR NEW SHARES"
         means the number of New Notes and New Creditor Shares that would have
         resulted from the aggregation of all fractional entitlements and the
         rounding down of the result to the nearest whole New Note and New
         Creditor Share, respectively.

9.       RIGHTS, POWERS AND DUTIES OF THE ESCROW TRUSTEE AND THE DISTRIBUTION
         AGENT

(1)      Neither the Escrow Trustee nor the Distribution Agent will exercise any
         voting rights attaching to the New Notes or the New Shares whilst they
         are held in any of the Trust Funds.

(2)      The duties, responsibilities and obligations of the Escrow Trustee and
         the Distribution Agent shall be limited to those expressly set forth
         herein and no duties, responsibilities or obligations shall be inferred
         or implied. Neither the Escrow Trustee nor the Distribution Agent shall
         be required to, and nor shall either of them, expend or risk any of its
         own funds or otherwise incur any financial liability in the performance
         of any of its duties under this Agreement save where the same arises as
         a result of its negligence, misfeasance, breach of duty or wilful
         default.

(3)      Each of the Escrow Trustee and the Distribution Agent shall not be
         responsible for, or charged with knowledge of, the terms and conditions
         of any other agreement, instrument or document executed between the
         other parties and to which it is not a party, other than the Schemes
         and except such agreements, instruments or documents as may be
         specifically referred to in this Agreement.

(4)      Corp agrees (subject as provided in sub-clause (5)) to reimburse each
         of the Escrow Trustee and the Distribution Agent on demand for, and to
         indemnify (on an after tax basis) and hold each of the Escrow Trustee
         and the Distribution Agent harmless against and with respect to, any
         and all loss, liability, damage or expense (including, but without
         limitation, reasonable legal fees, costs and disbursements) that the
         Escrow Trustee or, as the case may be, the Distribution Agent may
         suffer or incur in connection with it acting in accordance with the
         Corp Scheme, the plc Scheme or this Agreement, except to the extent
         that such loss, liability, damage or expense arises from its own
         negligence, misfeasance, breach of duty or wilful default.

(5)      In case any action shall be brought against either the Escrow Trustee
         or the Distribution Agent (the "INDEMNIFIED PERSON") in respect of
         which recovery may be sought from Corp (the "INDEMNIFIER"), under
         sub-clause (4), the indemnified person shall promptly notify the
         indemnifier in writing but (subject as provided below) failure to do so
         will not relieve the indemnifier from any liability under this
         Agreement. Subject to sub-clause (6), the indemnifier may participate
         at its own expense in the defence of any action.

(6)      If it so elects within a reasonable time after receipt of the notice
         referred to in sub-clause (5), the indemnifier may assume the defence
         of the action with legal advisers chosen by it and approved by the
         indemnified person. Notwithstanding such election the indemnified
         person may employ separate legal advisers, and the indemnifier shall
         bear the fees and expenses of such separate legal advisers if:

<PAGE>

                                       24

         (a)      the use of the legal advisers chosen by the indemnifier to
                  represent the indemnified person would present such legal
                  advisers with a conflict of interest;

         (b)      the actual or potential defendants in, or targets of, any such
                  action include both the indemnified person and the indemnifier
                  and the indemnified person concludes that there may be legal
                  defences available to it which are different from or
                  additional to those available to the indemnifier;

         (c)      the indemnifier has not employed legal advisers satisfactory
                  to the indemnified person (acting reasonably) to represent the
                  indemnified person within a reasonable time after notice of
                  the institution of such action; or

         (d)      the indemnifier authorises the indemnified person to employ
                  separate legal advisers at the expense of the indemnifier.

         If the indemnifier assumes the defence of the action, the indemnifier
         shall not be liable for any fees and expenses of legal advisers of the
         indemnified person incurred thereafter in connection with the action,
         except as stated above.

(7)      Corp shall not be liable in respect of any settlement of any action
         effected without its consent, such consent not to be unreasonably
         withheld or delayed. Corp shall not, without the prior written consent
         of the indemnified person, where the indemnified person is an actual or
         is reasonably likely to be a potential party to such claim or action,
         settle or compromise or consent to the entry of any judgment with
         respect to any pending or threatened claim or action in respect of
         which recovery may be sought hereunder unless such settlement,
         compromise or consent includes an unconditional release of the
         indemnified person from all liability arising out of such claim or
         action and does not include a statement as to or an admission of fault,
         culpability or failure to act by or on behalf of the indemnified
         person.

(8)      Subject as provided in sub-clause (9), Corp agrees to reimburse each
         Designated Recipient on demand for, and to indemnify and hold each of
         them harmless against and with respect to, any Loss to the extent that
         such Loss arises out of any negligence, fraud, breach of duty, wilful
         misconduct or misfeasance of Bondholder Communications. For this
         purpose "LOSS" means any loss suffered by a Designated Recipient:

         (a)      in the case of the First Initial Distribution under each
                  Scheme, through it failing to receive any part of its part of
                  that First Initial Distribution or it receiving any part of
                  its part of that First Initial Distribution after the
                  Effective Date of the relevant Scheme; and

         (b)      in the case of the Initial Distribution (other than the First
                  Initial Distribution) under each Scheme, through it failing to
                  receive any part of its part of that Initial Distribution,

         in each case except where the failure to receive any part of the
         Distribution is as a result of the operation of any of clause 7(11),
         7(12), 7(13), 8(8), 8(9) and 8(11) of this Agreement.

(9)      The right of reimbursement and indemnity set out in sub-clause (8) will
         not apply:

         (a)      in the case of the First Initial Distribution under either
                  Scheme, where an Account Holder Letter was submitted after
                  5.00 p.m. (New York City time) on 17th April, 2003 or was
                  submitted before that time and date but was incomplete or
                  contained any

<PAGE>

                                       25

                  error or inconsistency which had not been rectified by that
                  time and date to Bondholder Communications' satisfaction
                  (acting as a reasonably prudent expert); or

         (b)      to the extent that the loss arose as a result of any action
                  taken or omitted by the relevant Designated Recipient or its
                  connected Bondholder, Account Holder or Intermediary or any
                  clearing system or agent of a clearing system or any other
                  party to this Agreement (other than Corp or plc); or

         (c)      where all necessary information in respect of a Designated
                  Recipient has been given by Bondholder Communications to the
                  Distribution Agent by the date specified in, and as required
                  by, but subject as provided in, clause 7(5)(g) or 8(5)(g), as
                  the case may be, Scheme Consideration under either Scheme is
                  not received by that Designated Recipient or, in the case of
                  the First Initial Distribution, is not received by him on the
                  Effective Date of the relevant Scheme.

(10)     Each of the Escrow Trustee and the Distribution Agent may obtain and
         pay for such legal or other expert advice or services as it may
         reasonably consider necessary in relation to this Agreement, may rely
         on the opinion of or advice obtained from any accountant, lawyer or
         other expert of good repute and shall incur no liability and shall be
         fully protected in acting in good faith in accordance with such opinion
         or advice.

(11)     Each of the Escrow Trustee and the Distribution Agent may call for and
         shall be at liberty to accept as sufficient evidence of any fact or
         matter or the expediency of any transaction or thing a certificate
         signed by the Supervisors or (but only where specifically provided in
         this Agreement that Corp or plc may give directions to the Escrow
         Trustee or, as the case may be, the Distribution Agent) by any two
         directors of Corp or plc, as the case may be, and neither the Escrow
         Trustee nor the Distribution Agent shall be bound in any such case to
         call for further evidence or be responsible for any liability that may
         be occasioned by it or any other person acting on such certificate.

(12)     Each of the Escrow Trustee and the Distribution Agent shall be at
         liberty to hold this Agreement and any other documents relating to it
         or to deposit them in any part of the world with any banker or banking
         company or company whose business includes undertaking the safe custody
         of documents or lawyer or firm of lawyers considered by the Escrow
         Trustee or, as the case may be, the Distribution Agent to be of good
         repute and neither the Escrow Trustee nor the Distribution Agent shall
         be responsible for or required to insure against any liability incurred
         in connection with any such holding or deposit and may pay all sums
         required to be paid on account of or in respect of any such deposit.

(13)     Neither the Escrow Trustee nor the Distribution Agent shall (unless and
         to the extent ordered so to do by a court of competent jurisdiction) be
         required to disclose to any Scheme Creditor any information (including,
         without limitation, information of a confidential, financial or price
         sensitive nature) made available to it by any other party to this
         Agreement or any other person in connection with this Agreement.

(14)     Neither the Escrow Trustee nor the Distribution Agent shall be required
         to take any legal action or proceedings unless it has been indemnified
         and/or provided with security to its satisfaction against all actions,
         proceedings, claims and demands to which it may render itself liable
         and all costs, charges, damages, expenses and liabilities which it may
         incur by so doing.

(15)     Each of the parties to this Agreement agrees (a) that it will not take
         any proceedings, or assert or seek to assert any claim, against any
         officer or employee of any of the Escrow Trustee, the Distribution
         Agent, Bondholder Communications, the Eurobond Trustee or BoNY in
         respect

<PAGE>

                                       26

         of any claim it might have against the Escrow Trustee, the Distribution
         Agent, Bondholder Communications, the Eurobond Trustee or BoNY (as the
         case may be) or in respect of this Agreement and (b) that any officer
         or employee of the Escrow Trustee, the Distribution Agent, Bondholder
         Communications, the Eurobond Trustee or BoNY may enforce this
         provision. Each of the parties to this Agreement agrees (a) that it
         will not take any proceedings, or assert or seek to assert any claim,
         against any partner (not being a Supervisor) in the same firm as the
         Supervisors, or any individual or natural person (provided that such
         person is not a Supervisor) employed, whether under a contract of
         service or a contract for services, by that firm or any company owned
         by that firm in respect of any claim it might have against the
         Supervisors or in respect of this Agreement and (b) that any such
         partner in the same firm as the Supervisors, or any such person
         employed, whether under a contract of service or a contract for
         services, by that firm or any company owned by that firm may enforce
         this provision.

(16)     Each of the Escrow Trustee and the Distribution Agent may (without any
         responsibility for any resulting loss) rely on:

         (a)      any written communication, certificate, legal opinion or other
                  document received or obtained by it in the course of
                  performing its obligations under this Agreement and believed
                  by it to be genuine and correct and to have been signed by, or
                  with the authority of, the proper person; and

         (b)      any written statement made to it in the course of, and as part
                  of, performing its obligations under this Agreement by a
                  director, officer, partner or employee of any person regarding
                  any matters which may reasonably be assumed to be within the
                  maker's knowledge or within the maker's power to verify.

(17)     Any opinion, advice or information described in sub-clause (16) on
         which the Escrow Trustee or, as the case may be, the Distribution Agent
         relies or intends to rely may be sent or communicated by letter or
         facsimile transmission. Neither the Escrow Trustee nor the Distribution
         Agent shall be liable for acting properly and in accordance with this
         Agreement on any opinion, advice or information which is so conveyed,
         even if the opinion, advice or information contains some error of which
         the Escrow Trustee or, as the case may be, the Distribution Agent is
         not aware or which is not manifest.

(18)     Each of the Escrow Trustee and the Distribution Agent may retain for
         its own benefit, without liability to account to any other person, any
         fee or other sum received by it for its own account.

(19)     The Distribution Agent may provide advisory or other services to or
         engage in any kind of business with any person party to, or affected
         by, the arrangements the subject of this Agreement and may do so
         without any obligation to account to or disclose any such arrangements
         to any person but not in respect of the Schemes unless permitted by a
         Scheme or this Agreement.

(20)     Each of the Escrow Trustee and the Distribution Agent may exercise any
         of its rights and perform any of its duties, obligations and
         responsibilities under this Agreement through its paid or unpaid
         agents, which may be corporations, partnerships or individuals (whether
         or not lawyers or other professional persons) and, provided that it has
         exercised reasonable care in the selection of any such agent, shall not
         be responsible for any misconduct or omission on the part of, or be
         bound to supervise the proceedings or acts of, any such agent save
         where the same arises as a result of the negligence, misfeasance,
         breach of duty or wilful default on the

<PAGE>

                                       27

         part of the agent. Any such agent which is engaged in any profession or
         business shall be entitled to charge and be paid all usual fees,
         expenses and other charges for its services.

(21)     Each of the Escrow Trustee and the Distribution Agent may refrain from
         doing anything which would or might in its opinion be contrary to any
         law or any directive or regulation of or having the force of law to
         which it is subject or which would or might otherwise render it liable
         to any person and may do anything which is, in its reasonable opinion,
         necessary to comply with such law, directive or regulation.

(22)     If so instructed by the Supervisors, each of the Escrow Trustee and the
         Distribution Agent shall concur with the other parties to this
         Agreement in the making of any modification to this Agreement which is
         certified by the Supervisors in writing as (a) relating to
         administrative matters or being a technical amendment arising out of a
         manifest or proven error and (b) not in the Supervisor's reasonable
         opinion materially prejudicial the Scheme Creditors or Designated
         Recipients affected by such modification.

10.      COVENANTS OF THE ESCROW TRUSTEE

The Escrow Trustee shall not:

(1)      create or permit to subsist any mortgage, standard security, pledge,
         lien, charge or other Security Interest whatsoever (unless arising by
         operation of law), upon the whole or any part of its assets or its
         undertakings, present or future;

(2)      sell, assign, transfer, convey, lease or otherwise dispose of, or deal
         with, or grant any option or present or future right to acquire all or
         any of its properties, assets, or undertakings or any interest, estate,
         right, title or benefit therein or thereto or agree or attempt to
         purport to do any of the foregoing except, in all cases, to the extent
         necessary to perform its obligations under this Agreement;

(3)      save in respect of the trusts created by this Agreement, permit any
         person other than itself to have any equitable interest in any of its
         assets or undertakings or any interest, estate, right, title or benefit
         therein;

(4)      have an interest in any bank account, other than the bank accounts
         comprised in the Escrow Accounts and the Corporate Expenses Account or
         to withdraw any sum from the Corporate Expenses Account other than a
         Permitted Withdrawal;

(5)      carry on any business other than as Escrow Trustee for the Schemes and
         the related activities described in the Schemes or as contemplated in
         this Agreement;

(6)      incur any indebtedness whatsoever or give any guarantee or indemnity in
         respect of any indebtedness or obligation of any person;

(7)      consolidate or merge with any other person or convey or transfer
         substantially all of its properties or assets to any other person;

(8)      have any employees or premises or subsidiaries; and

(9)      pay any dividend or make any other distribution to its shareholders or
         issue any further shares or alter any rights attaching to its shares as
         at the date of this Agreement.

<PAGE>

                                       28

11.      INVESTMENTS

(1)      The Escrow Trustee hereby directs the Distribution Agent to credit all
         interest earned (including any interest in the form of debt securities)
         and dividends (or any other rights or benefits) or other cash or
         property received in respect of any assets in any Escrow Account to the
         relevant account forming part of that Escrow Account until payment or
         transfer to Admitted Scheme Creditors in accordance with the provisions
         of this Agreement. The Supervisors shall have the power to direct (but
         shall not be obliged to direct) that any such property that cannot be
         conveniently held by the Escrow Trustee shall be sold and the cash
         proceeds of such sale dealt with in accordance with this clause.

(2)      Any payment of interest earned (including any interest in the form of
         debt securities) or dividends received in respect of any assets in an
         Escrow Account ("PROFITS") to Eligible Recipients shall only be made by
         the Distribution Agent (acting on behalf of the Escrow Trustee) if the
         Supervisors have so instructed the Distribution Agent, having first
         instructed the Distribution Agent (as agent for the Escrow Trustee) to
         retain a reserve in respect of any and all taxes payable by the Escrow
         Trustee, or required to be deducted by the Escrow Trustee (whether by
         law or by agreement with the Inland Revenue), in respect of such
         Profits being distributed.

12.      CONDUCT OF TAXATION MATTERS

(1)      For the purposes of this clause 12, a "BARE TRUST" is a trust which is
         not a settlement for the purposes of section 43 Inheritance Tax Act
         1984, whereby the trust property is held by the Escrow Trustee for
         another person absolutely entitled as against the Escrow Trustee within
         the meaning of section 60(2) Taxation of Chargeable Gains Act 1992 and
         which is a bare trust for all income tax purposes.

(2)      As soon as reasonably practicable after the Effective Date, the Escrow
         Trustee shall seek confirmation from the Inland Revenue that the
         arrangements constituted by the Corp Scheme, the plc Scheme and this
         Agreement result in the Trust Funds being held on bare trust (such
         confirmation being a "FAVOURABLE CONFIRMATION"). The Escrow Trustee
         shall notify Corp and the Supervisors within 21 days of receipt of a
         Favourable Confirmation.

(3)      If the Inland Revenue at any time confirms to the Escrow Trustee that
         the Trust Funds are not held on bare trust or commences an enquiry into
         any tax return submitted on the basis that the Trust Funds are held on
         bare trust (an "ADVERSE CONFIRMATION"), the provisions of sub-clauses
         (6) and (8) shall apply. If the Inland Revenue declines to give a
         Favourable Confirmation, or has not given a Favourable Confirmation
         within 3 months of the date on which confirmation was sought under
         sub-clause (2) above, but does not give an Adverse Confirmation (a
         "NON-CONFIRMATION"), the provisions of sub-clauses (7) and (8) shall
         apply.

(4)      Unless and until the Escrow Trustee receives or becomes aware of an
         Adverse Confirmation or Non-Confirmation, it shall direct the
         Distribution Agent to make distributions to Eligible Recipients without
         retaining or deducting any amounts on account of tax, save as provided
         in sub-clause 11(2). For the avoidance of doubt, nothing in this clause
         12 affects the obligations of the Distribution Agent in clause 11(2).

(5)      Corp agrees that, if and when it recovers any input value added tax
         incurred by it in relation to the issue of New Shares or New Notes
         under the Corp Scheme, it shall establish the Escrow Tax Fund as a
         separate fund to be applied only in accordance with the following
         provisions.

         (a)      Subject to paragraph (b) below, the Escrow Tax Fund shall only
                  be used:

<PAGE>

                                       29

                  (i)      to make any repayment of the input value added tax
                           comprising the Escrow Tax Fund for which Corp is
                           determined or agreed to be liable to HM Customs &
                           Excise (together with any applicable interest or
                           penalties) (a "VAT REPAYMENT");

                  (ii)     to meet any Tax Liability (as defined in sub-clause
                           (8)(d) below) of the Escrow Trustee; or

                  (iii)    to pay any Costs as provided in sub-clause (9).

         (b)      The Escrow Tax Fund shall be used to meet a VAT Repayment in
                  priority to a Tax Liability or any Costs (as defined in
                  sub-clause (9)). If any or all of the Escrow Tax Fund has been
                  used to meet a Tax Liability or any Costs (as defined in
                  sub-clause (9)) and is later required to meet a VAT Repayment,
                  such that there are insufficient sums in the Escrow Tax Fund
                  to meet Corp's liability to make the VAT Repayment, the
                  Supervisors hereby direct the Escrow Trustee (which hereby
                  directs the Distribution Agent) to pay to Corp an amount equal
                  to the deficiency from the Reserve Corp Scheme Creditors Fund
                  or the Combined Corp Funds, or the Reserve plc Scheme
                  Creditors Fund or the Combined plc Funds, as the case may be.

         (c)      Corp may cease to hold the Escrow Tax Fund as a separate fund,
                  and its use shall cease to be subject to the restrictions
                  referred to in paragraph (a) above on the occurrence of any of
                  the following:

                  (i)      the Escrow Trustee's receipt of a Favourable
                           Confirmation (including a Favourable Confirmation as
                           set out in sub-clause (7)(c));

                  (ii)     the determination by a court of competent
                           jurisdiction from which neither party appeals that
                           the Scheme Consideration is held on bare trust; or

                  (iii)    after the closure of all the Escrow Accounts as set
                           out in clause 13, the confirmation by the Escrow
                           Trustee that it has no further Tax Liability (as
                           defined in sub-clause (8)(d)) in connection with its
                           activities as escrow trustee under the Schemes.

         (d)      For the avoidance of doubt, nothing in this sub-clause (5)
                  shall require Corp to conduct its tax affairs in a particular
                  manner, to disclose any information relating to its tax
                  affairs, or to contest any assessment to value added tax made
                  by HM Customs & Excise.

(6)      This sub-clause applies if the Escrow Trustee receives an Adverse
         Confirmation.

         (a)      The Escrow Trustee shall, within 21 days of receiving the
                  Adverse Confirmation, inform the Supervisors. Unless and until
                  the Escrow Trustee receives a subsequent Favourable
                  Confirmation, it shall retain a reserve for any tax liability
                  it may have on the basis that the Trust Funds are not held on
                  bare trust, in accordance with sub-clause (8).

         (b)      The Escrow Trustee shall take reasonable steps to pursue
                  correspondence with the Inland Revenue to obtain a Favourable
                  Confirmation.

         (c)      If, after taking the steps referred to in paragraph (b) above,
                  the Escrow Trustee is unable to obtain a Favourable
                  Confirmation, the Escrow Trustee shall take reasonable

<PAGE>

                                       30

                  steps to pursue any available appeal. The Escrow Trustee shall
                  not be required to take any steps where, in the opinion of the
                  Supervisors, the cost of undertaking those steps outweighs any
                  likely benefit or where leading tax counsel has advised either
                  that an appeal is not likely to succeed or that it would not
                  be reasonable to pursue an appeal in the light of any
                  settlement offered.

         (d)      Until (i) the Adverse Confirmation is upheld by a court of
                  competent jurisdiction from whose decision the Escrow Trustee
                  does not appeal, (ii) the Escrow Trustee is not required to
                  take any further steps in respect of the Adverse Confirmation
                  in accordance with paragraph (c) above, or (iii) leading tax
                  counsel advises the Escrow Trustee otherwise, and in so far as
                  it is able to do so without incurring any penalty, the Escrow
                  Trustee shall file any tax returns on the basis that the Trust
                  Funds are held on bare trust. This paragraph is without
                  prejudice to sub-clause (8) below.

(7)      This sub-clause applies if the Escrow Trustee receives or becomes aware
         of a Non-Confirmation.

         (a)      The Escrow Trustee shall, within 21 days of receiving or
                  becoming aware of the Non-Confirmation, inform the
                  Supervisors. Unless and until the Escrow Trustee receives a
                  subsequent Favourable Confirmation, it shall retain a reserve
                  for any tax liability it may have on the basis that the Trust
                  Funds are not held on bare trust, in accordance with
                  sub-clause (8).

         (b)      The Escrow Trustee shall file any tax returns on the basis
                  that the Trust Funds are held on bare trust, unless leading
                  tax counsel advises the Escrow Trustee to file on a different
                  basis. This paragraph is without prejudice to sub-clause (8)
                  below.

         (c)      The agreement by the Inland Revenue of any tax return filed by
                  the Escrow Trustee on the basis that the Trust Funds are held
                  on bare trust shall be taken as a Favourable Confirmation.
                  Where the Escrow Trustee has filed such a tax return and no
                  notice of enquiry has been issued pursuant to Schedule 18
                  Finance Act 1998 within the prescribed time period, there
                  shall be deemed to have been a Favourable Confirmation unless
                  leading tax counsel advises otherwise.

         (d)      If at any point the Escrow Trustee receives an Adverse
                  Confirmation, the provisions of sub-clause (6) will apply.

(8)      If the Escrow Trustee receives an Adverse Confirmation or
         Non-Confirmation, the Supervisors hereby direct the Escrow Trustee
         (which hereby directs the Distribution Agent) to pay or set aside
         amounts (taking into account any amounts already paid or set aside
         under sub-clause 11(2) and the balance of the Escrow Tax Fund) on
         account of any tax payable by the Escrow Trustee (on the assumption
         that the Trust Funds are not held on bare trust) in respect of (i)
         assets or income comprising distributions to Scheme Creditors which
         have already been made ("PAST TAX LIABILITY"), and (ii) distributions
         of assets or income comprising distributions to Scheme Creditors which
         have not yet been made ("FUTURE TAX LIABILITY") in the following
         manner:

         (a)      If the Supervisors have not terminated the Waiting Period in
                  accordance with clause 24 of the Corp Scheme, or clause 24 of
                  the plc Scheme as the case may be, the Distribution Agent
                  shall set aside amounts from the Reserve Corp Scheme Creditors
                  Fund or the combined Unadmitted Known Corp Scheme Creditors
                  Fund and Reserve Corp Scheme Creditors Fund (the "COMBINED
                  CORP FUNDS") or from the Reserve plc Scheme Creditors Fund or
                  the combined Unadmitted Known plc Scheme Creditors

<PAGE>

                                       31

                  Fund and Reserve plc Scheme Creditors Fund (the "COMBINED PLC
                  FUNDS"), as the case may be:

                  (i)      in the case of amounts in respect of the Past Tax
                           Liability, forthwith after the receipt by the Escrow
                           Trustee of the Adverse Confirmation or
                           Non-Confirmation; and

                  (ii)     in the case of amounts in respect of a Future Tax
                           Liability, at the time at which the distribution to
                           which that liability relates is made. If, however, at
                           that time the Supervisors have terminated the Waiting
                           Period as set out above, amounts in respect of a
                           Future Tax Liability shall be retained as provided
                           for in paragraph (b)(ii) below.

         (b)      If the Supervisors have terminated the Waiting Period as set
                  out in paragraph (a) above or decide to do so as a result of
                  the operation of this sub-clause (8),

                  (i)      amounts shall be set aside in respect of the Past Tax
                           Liability from the Combined Corp Funds or the
                           Combined plc Funds, as the case may be, forthwith
                           after the receipt by the Escrow Trustee of the
                           Adverse Confirmation or Non-Confirmation; and

                  (ii)     amounts in respect of any Future Tax Liability shall
                           be retained by the Distribution Agent out of the
                           distribution to which that liability relates.

         (c)      The quantum of any amounts set aside or retained pursuant to
                  this sub-clause (8) shall be directed by the Supervisors.

         (d)      Any amounts which are determined or agreed to be payable on
                  account of any tax liability of the Escrow Trustee (a "TAX
                  LIABILITY") shall be met out of the following amounts and in
                  the following priority:

                  (i)      in the first instance, out of amounts already paid or
                           set aside under sub-clause 11(2);

                  (ii)     secondly, out of the Escrow Tax Fund; and

                  (iii)    thirdly, out of any amounts set aside in accordance
                           with this sub-clause (8),

                  Corp hereby agrees to make any payments necessary pursuant to
                  the operation of this paragraph from the Escrow Tax Fund to
                  the Escrow Trustee. The Supervisors hereby direct the Escrow
                  Trustee (which hereby directs the Distribution Agent) to pay
                  any amounts to be paid in accordance with paragraphs (i) and
                  (iii) above in satisfaction of its Tax Liability.

         (e)      To the extent that any amounts set aside pursuant to this
                  sub-clause (8) are not, in the event, required to meet a Tax
                  Liability, or, in the case of any amounts paid in satisfaction
                  of a Tax Liability, are subsequently repaid by the Inland
                  Revenue, then such amounts shall be dealt with as follows and
                  in the following order of priority:

                  (i)     where an amount has been retained and/or paid out of a
                          distribution made to an Eligible Recipient pursuant to
                          paragraph (b)(ii) above, an equivalent sum shall be
                          paid to that Eligible Recipient;

<PAGE>

                                       32

                  (ii)    where an amount has been set aside and/or paid from
                          the Reserve Corp Scheme Creditors Fund or the Combined
                          Corp Funds, or the Reserve plc Scheme Creditors Fund
                          or the Combined plc Funds, an equivalent sum shall be
                          returned to that fund (or any fund into which the
                          contents of that fund have been transferred pursuant
                          to this Agreement); and

                  (iii)    where an amount has been paid from the Escrow Tax
                           Fund, an equivalent sum shall be returned to that
                           fund,

                  unless Corp has made a payment to the Escrow Trustee pursuant
                  to sub-clause (10) (an "INDEMNITY PAYMENT"), in which case the
                  amounts shall first be paid over to Corp to the extent of such
                  Indemnity Payment.

(9)      The cost of any steps taken pursuant to this clause 12 ("COSTS") shall
         be met first out of the Escrow Tax Fund and subsequently:

         (a)      before the end of the Waiting Period, out of the Reserve Corp
                  Scheme Creditors Fund, or from the Reserve plc Scheme
                  Creditors Fund as the case may be; and

         (b)      after the end of the Waiting Period, out of the Combined Corp
                  Funds or the Combined plc Funds, as the case may be.

(10)     Clause 9(4) of this Agreement shall not apply to any Tax Liability or
         any Costs of the Escrow Trustee and instead the following provisions
         shall apply:

         (a)      Corp shall indemnify (on an after tax basis) the Escrow
                  Trustee against any Tax Liability or any Costs (whether
                  arising in relation to the Corp or plc Scheme) insofar as such
                  Tax Liability or Costs cannot be met out of amounts retained
                  for the purpose pursuant to sub-clause 11(2) or this clause
                  12. For the purposes of this sub-clause, a Tax Liability
                  includes any interest or penalties thereon.

         (b)      The Escrow Trustee shall promptly give notice to Corp if it
                  appears to it that it may incur or suffer a potential Tax
                  Liability. It shall demonstrate to Corp's reasonable
                  satisfaction the extent to which (if at all) such Tax
                  Liability or any Costs cannot be met out of the amounts
                  referred to in paragraph (a) above.

         (c)      If it appears that Corp may be obliged to make payment to the
                  Escrow Trustee in accordance with this sub-clause, Corp shall
                  be entitled to resist the Tax Liability in the name of the
                  Escrow Trustee and have the conduct of any proceedings
                  relating to that Tax Liability, having indemnified the Escrow
                  Trustee against all charges, costs and expenses which it might
                  incur in resisting the Tax Liability.

13.      TERMINATION

(1)      Promptly after each Escrow Account ceases to have any cash or
         securities credited to it, the Escrow Trustee shall, subject to
         obtaining the prior consent of the Supervisors, arrange for that Escrow
         Account to be closed.

(2)      Once all of the Escrow Accounts have been closed and the Distribution
         Agent's obligations fulfilled, the trusts set out in this Agreement
         shall be wound up.

(3)      Upon closure of all of the Escrow Accounts in accordance with the terms
         of this Agreement, each of the Escrow Trustee, the Distribution Agent
         and Bondholder Communications shall

<PAGE>

                                       33

         have no further duties, responsibilities or obligations hereunder save
         for such obligations as may have arisen prior to such closure, which
         obligations have not as at the time of such closure been fulfilled or
         discharged.

14.      REPRESENTATIONS AND WARRANTIES

(1)      Each of the parties to this Agreement represents and warrants to each
         of the others that it has the capacity, power and authority to enter
         into this Agreement and that the obligations assumed by it (if any) are
         legal, valid and binding obligations on it.

(2)      Each of the parties to this Agreement represents and warrants to each
         of the others that neither the execution by it of, nor the performance
         by it of its respective obligations (if any) in accordance with the
         terms of, this Agreement will:

         (a)      so far as that party is aware, violate or conflict with, or
                  constitute a default under, any agreement or other obligation
                  to which that party is subject or by which it is bound; or

         (b)      so far as that party is aware, contravene or conflict with or
                  constitute a violation of any provision of any law, rule,
                  regulation, judgement, order or decree which is binding on it.

(3)      Each of the parties to this Agreement represents and warrants to each
         of the other parties that it has obtained the power, capacity and
         authority to execute, and perform its respective obligations (if any)
         in accordance with the terms of, this Agreement.

(4)      Corp represents and warrants to each of the other parties to this
         Agreement that the Escrow Trustee has not carried on any business since
         the date of its incorporation to the date of this Agreement.

15.      EXCLUSION OF PERSONAL LIABILITY

         Nothing in this Agreement shall impose any personal liability on the
         Supervisors or either of them but without prejudice to the Supervisors
         obligations under the Schemes. This clause is without prejudice to the
         provisions of clause 16.

16.      EXCLUSION OF LIABILITY

(1)      None of the Supervisors, the Escrow Trustee, the Distribution Agent and
         Bondholder Communications (and their related parties (if any),
         delegates and agents appointed pursuant to the provisions of the
         Schemes) shall have any liability in respect of or arising from making
         the determinations or exercising any of the powers or performing any of
         the duties provided for in the Scheme or this Agreement or any matter
         relating to such determinations, powers or duties (including, without
         limitation, any payment made or not made to any person), other than as
         a direct consequence of its own wilful default, misfeasance, breach of
         duty or negligence (or that of its related parties (if any), delegates
         or agents). For the purpose of this clause 16, "RELATED PARTIES" means
         any partner in the same firm as the Supervisors, or any person
         employed, whether under a contract of service or a contract for
         services, by that firm or any company owned by that firm.

(2)      Neither the Eurobond Trustee nor BoNY (except where it is acting as
         Distribution Agent) shall have any liability or any obligations
         whatsoever to any person under or pursuant to this Agreement.

<PAGE>

                                       34

17.      FEES AND EXPENSES

(1)      The Escrow Trustee shall be paid fees and expenses for its services
         under this Agreement in accordance with the Escrow Trustee Fee Letter.

(2)      The Distribution Agent shall be paid fees and expenses for its services
         under this Agreement in accordance with the Distribution Agent Fee
         Letter.

(3)      The fees and expenses referred to in sub-clauses (1) and (2) above
         shall be paid by Corp and plc in the proportion agreed between them
         without recourse to any of the Trust Funds.

18.      FURTHER ASSURANCE

         The parties shall do and execute, or procure to be done and executed,
         all necessary acts, deeds and documents, including but not limited to
         giving the necessary instructions to their solicitors, to effect the
         release of the contents of any of the Escrow Accounts in accordance
         with any termination of any of them pursuant to clause 13, and shall
         provide each other with all necessary mutual support for the purposes
         of doing so and giving effect to the terms of this Agreement.

19.      FURTHER TERMS AND CONDITIONS

(1)      If at any time either the Escrow Trustee or the Distribution Agent is
         served with any judicial or administrative order, judgment, decree,
         writ or other form of judicial or administrative process which in any
         way affects the Escrow Accounts (each a "JUDICIAL NOTICE"), the Escrow
         Trustee or, as the case may be, the Distribution Agent may comply
         therewith in any manner as it or legal counsel of its choosing deems
         appropriate; provided that, if reasonably practicable, it shall notify
         Corp and/or plc (as the case may be) of such Judicial Notice received
         and shall use its best efforts to discuss the manner in which it
         proposes to comply with that Judicial Notice with Corp and/or plc prior
         to doing so. If the Escrow Trustee or, as the case may be, the
         Distribution Agent complies with any Judicial Notice, it shall not be
         liable to any other person or entity even though such Judicial Notice
         may be subsequently modified or vacated or otherwise determined to have
         been without legal force or effect.

(2)      The Distribution Agent shall provide the Escrow Trustee and the
         Supervisors with monthly statements identifying the transactions,
         charges (if any) and Profits earned on the Escrow Accounts and
         undistributed balances of the Escrow Accounts.

(3)      Subject to the provisions of sub-clause (4), the Distribution Agent may
         resign at any time by giving to the other parties not less than 90
         days' prior written notice.

(4)      If the Distribution Agent has given notice of resignation as provided
         in sub-clause (5), the Escrow Trustee shall promptly appoint a
         successor Distribution Agent. A successor Distribution Agent shall
         deliver a written acceptance of its appointment to the retiring
         Distribution Agent and the Escrow Trustee. A resignation of the
         Distribution Agent shall not become effective until a successor
         Distribution Agent is appointed. The retiring Distribution Agent shall
         ensure that the successor Distribution Agent becomes the custodian of
         the Escrow Accounts and the successor Distribution Agent shall have all
         the rights, powers and duties of the Distribution Agent under this
         Agreement.

(5)      No variation or amendment may be made to any provision in this
         Agreement that would have the effect of altering or extinguishing the
         entitlement of any Admitted Scheme Creditor or

<PAGE>

                                       35

         Designated Recipient unless consented to by that Admitted Scheme
         Creditor or Designated Recipient.

(6)      None of the parties to this Agreement shall be in breach of its
         obligations (if any) under this Agreement as a result of any delay or
         non-performance of its obligations (if any) under this Agreement
         arising from any Force Majeure.

20.      COUNTERPARTS

         This Agreement may be signed in any number of counterparts, all of
         which taken together shall constitute one and the same instrument.

21.      NOTICES

(1)      Any notice or other document to be served under this Agreement may be
         delivered or sent by post or facsimile process to the party to be
         served as follows:

         (a)   to Corp at:                       (b)   to plc at:
               Marconi Corporation plc                 Marconi plc
               New Century Park                        New Century Park
               PO Box 53                               PO Box 53
               Coventry                                Coventry
               Warwickshire                            Warwickshire
               CV3 1HT                                 CV3 1HT

               Fax: 024 7656 3377                      Fax: 024 7656 3377
               Marked for the attention of The         Marked for the attention
               Company Secretary,                      of The Company Secretary,

         (c)   to the Distribution Agent and     (d)   to the Eurobond Trustee
               BoNY at:                                at:
               The Bank of New York                    The Law Debenture Trust
               One Canada Square                       Corporation p.l.c.
               London E14 5AL                          Fifth Floor
                                                       100 Wood Street
                                                       London EC2V 7EX

               Fax: 020 7964 6399                      Fax: 020 7606 0643
               Marked for the attention of             Marked for the attention
               Corporate Trust Administration,         of Abigail Holladay,

         (e)   to Ancrane at:                    (f)   to Bondholder
               Ancrane                                 Communications at:
               New Century Park                        Bondholder Communications
               PO Box 53                               Group
               Coventry                                30 Broad Street,46th
               Warwickshire                            Floor
               CV3 1HT                                 New York, NY 10004

                                                       Fax: + 212 422 0790
               Fax: 024 7656 3377                      Marked for the attention
               Marked for the attention of The         of Donna Martini,
               Company Secretary,

<PAGE>

                                       36

         (g)   to the Supervisors at:            (h)   to the Escrow Trustee at:
               KPMG                                    Regent Escrow Limited
               8 Salisbury Square                      New Century Park
               London EC4Y 8BS                         PO Box 53
                                                       Coventry
                                                       Warwickshire
                                                       CV3 1HT

               Fax: +44 20 7694 3011                   Fax: +024 7656 3377
               Marked for the attention of             Marked for the attention
               Richard Heis,                           of the Company Secretary,

         or at such other address or facsimile number as it may have notified to
         the other parties in accordance with this clause. Any notice or other
         document sent by post shall be sent by prepaid first class post (if
         within the United Kingdom) or by prepaid airmail (if elsewhere).

(2)      In proving service of a notice or document it shall be sufficient to
         prove that delivery was made or that the envelope containing the notice
         or document was properly addressed and posted (either by prepaid first
         class post or by prepaid airmail, as the case may be) or that the
         facsimile message was properly addressed and despatched, as the case
         may be.

22.      THIRD PARTY RIGHTS

(1)      The parties to this Agreement agree that wherever in this Agreement a
         right is specifically expressed to be given to (or an undertaking is
         expressed to be in favour of) a person (being a Scheme Creditor
         (including a Definitive Holder) or a Designated Recipient) who is not a
         party to this Agreement, such language is intended to confer benefits
         on that person thereby granting to him rights capable of being enforced
         by him separately under the Contracts (Rights of Third Parties) Act
         1999. Subject as stated in the previous sentence, a person who is not a
         party to this Agreement may not enforce any of its terms under the
         Contracts (Rights of Third Parties) Act 1999.

(2)      Nothing in sub-clause (1) above shall confer a right on any Designated
         Recipient to disturb a prior Distribution under either Scheme, whether
         on the grounds that there remains insufficient Scheme Consideration to
         satisfy that Designated Recipient's entitlement to any part of a
         Distribution pursuant to the direction given in clause 7 or, as the
         case may be, clause 8 or otherwise.

23.      GOVERNING LAW AND JURISDICTION

         This Agreement is governed by, and shall be construed in accordance
         with, the laws of England. Each party irrevocably agrees that the
         courts of England are to have exclusive jurisdiction to settle any
         dispute which may arise out of or in connection with this Agreement and
         that accordingly any suit, action or proceedings arising out of or in
         connection with this Agreement (together referred to as "PROCEEDINGS")
         may be brought in such courts. Each party irrevocably waives any
         objection which it may have now or hereafter to the laying of the venue
         of any Proceedings in the courts of England and any claim that any
         Proceedings have been brought in an inconvenient forum. Each of the
         Bank of New York (in its capacity as both the Distribution Agent and
         the Yankee Bond Trustee) and Bondholder Communications appoint the
         General Manager at the London branch of The Bank of New York and the
         Manager at the London branch of Bondholder Communications,
         respectively, as its agent for service of process in England in respect
         of any Proceedings and each undertakes that in the event of such agent
         ceasing so to act it will appoint another person as its agent for

<PAGE>

                                       37

         that purpose. Nothing in this Agreement shall affect the right to serve
         process in any other manner permitted by law.

IN WITNESS of which this Agreement has been executed as a deed and has been
delivered on the date which appears first on page 1.

<PAGE>

                                       38

                                   SCHEDULE 1

                            FORM OF ACCESSION LETTER

   [to be amended as appropriate if the plc Scheme does not become effective]

                                                           [Effective Date] 2003
BY FACSIMILE AND BY POST

To:      Marconi Corporation plc
         Marconi plc
         Regent Escrow Limited
         Ancrane
         The Bank of New York
         The Law Debenture Trust Corporation p.l.c.
         Bondholder Communications Group

c/o      Marconi Corporation plc
         4th Floor
         Regents Place
         338 Euston Road
         London NW1 3BT

Fax No.: 020 7409 7748

Dear Sirs,

MARCONI CORPORATION PLC:
SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985 (THE "CORP
SCHEME") MARCONI PLC:
SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985 (THE "PLC
SCHEME" AND, TOGETHER WITH THE CORP SCHEME, THE "SCHEMES")

We refer to the Escrow and Distribution Agreement (the "AGREEMENT") dated 27th
March, 2003 between yourselves and confirm that we have been appointed today by
the High Court of England and Wales as the Supervisors of each of the Schemes.
Accordingly, we both jointly and severally agree to become a party to, and be
bound by the terms of, the Agreement from the date of this Accession Letter and
hereby accede to the Agreement in accordance with clause 2(4) thereof. We both
intend that this Accession Letter shall take effect as a deed poll for the joint
and several benefit of each of the addressees of this Accession Letter.

We may each sign a counterpart of this Accession Letter, both of which taken
together shall constitute one and the same instrument. If one of us does not
sign this Accession Letter, this shall not affect the validity of this Accession
Letter with respect to the Supervisor who has signed it.

Capitalised terms used in this Accession Letter shall have the same meaning
given to them in the Agreement.

<PAGE>

                                       39

IN WITNESS whereof this Accession Letter has been entered into as a deed poll by
both of us on the date first set out above.

SIGNED as a deed by                   )
PHILIP WALLACE, without               )
personal liability in his             )
capacity as a Supervisor              )
of the Schemes, in the presence of:   )

Witness's signature:   ___________________________________

Name:                  ___________________________________

Address:               ___________________________________

                       ___________________________________

SIGNED as a deed by                   )
RICHARD HEIS, without                 )
personal liability in his             )
capacity as a Supervisor              )
of the Schemes, in the presence of:   )

Witness's signature:   ___________________________________

Name:                  ___________________________________

Address:               ___________________________________

                       ___________________________________

<PAGE>

                                       40

                                   SCHEDULE 2

                        FORM OF ANCRANE DIRECTION LETTER

                             [LETTERHEAD OF ANCRANE]

To:      Marconi plc
         New Century Park
         PO Box 53
         Coventry
         Warwickshire
         CV3 1HT
         ("PLC")

         Marconi Corporation plc
         New Century Park
         PO Box 53
         Coventry
         Warwickshire
         CV3 1HT
         ("CORP")

                                                                    [date], 2003

Dear Sirs,

ESCROW AND DISTRIBUTION AGREEMENT - DIRECTIONS OF ANCRANE

1.       We refer to the escrow and distribution agreement (the "ESCROW
         AGREEMENT") entered into on 27th March, 2003 between, inter alios, plc,
         Corp and Ancrane (the "COMPANY"). Except as otherwise provided in this
         letter, capitalised terms in this letter shall have the meaning
         ascribed to them in the Escrow Agreement and where there is a conflict,
         the definition in this letter shall prevail.

2.       It is proposed that Corp and plc will each enter into a scheme of
         arrangement whereby, under the plc Scheme, the Scheme Claims of plc
         Scheme Creditors against plc will be compromised in exchange for a
         distribution of plc's assets pursuant to the plc Scheme and, under the
         Corp Scheme, the Scheme Claims of Corp Scheme Creditors against Corp
         will be compromised for a distribution of cash, new equity and new debt
         securities of Corp pursuant to the Corp Scheme.

3.       The Company has repaid capital in specie, being all of its assets other
         than L 100, to plc as contemplated in the scheme implementation deed
         (the "SCHEME IMPLEMENTATION DEED") entered into on 27th March, 2003
         between, inter alios, plc, Corp and the Company. The Company is a
         Scheme Creditor of Corp for the purpose of the Corp Scheme and is also
         entitled to Corp Scheme Consideration and plc Scheme Consideration by
         virtue of its holding of Bonds.

<PAGE>

                                       41

4.       (a)      The Company hereby irrevocably directs Corp to deliver to plc
                  any Scheme Consideration (as defined in the Corp Scheme) to
                  which the Company is entitled pursuant to the Claim Form
                  filed by it in the Corp Scheme. This delivery is being
                  directed in connection with the repayment of capital in specie
                  to plc contemplated by the Scheme Implementation Deed.

         (b)      The Company hereby irrevocably authorises and directs each of
                  the Eurobond Trustee, BoNY, the Escrow Trustee and the
                  Supervisors to direct the Distribution Agent to pay all Corp
                  and plc Scheme Consideration to which it is entitled by virtue
                  of its holding of Bonds to plc. This delivery is being
                  directed in connection with the repayment of capital in specie
                  to plc contemplated by the Scheme Implementation Deed.

5.       This letter may be executed in one or more counterparts, each of which
         will be deemed an original and all of which will constitute one and the
         same letter.

6.       In the event that any provision of this letter is void and
         unenforceable by reason of any applicable law, it shall be deleted and
         the remaining provisions of this letter shall continue in full force
         and effect, and if necessary be so amended as necessary to give effect
         to the spirit of this letter so far as possible.

7.       This letter will be governed by, and construed in accordance with,
         English law. Each party irrevocably submits to the jurisdiction of the
         English courts for all purposes relating to this letter.

If you agree with the above, please sign where indicated below.

Yours faithfully

______________________________________            Date:
For
ANCRANE
Authorised Signatory

Copy:    Regent Escrow Limited               Philip Wallace and Richard Heis
         New Century Park                    c/o KPMG LLP
         PO Box 53                           8 Salisbury Square
         Coventry                            London
         Warwickshire                        EC4Y 8BB
         CV3 1HT

         The Law Debenture Trust             The Bank of New York
         Corporation p.l.c.                  One Canada Square
         Fifth Floor                         London E14 5AL
         100 Wood Street
         London EC2V 7EX

<PAGE>

                                       42

FORM OF ACKNOWLEDGEMENT

We hereby agree with the above letter and will carry out the directions of
Ancrane as set out in the above letter.

______________________________________            Date:
For
MARCONI PLC
Authorised Signatory

______________________________________            Date:
For
MARCONI CORPORATION PLC
Authorised Signatory

<PAGE>

                                       43

                                   SCHEDULE 3

                  FORM OF INSTRUCTION LETTER TO THE REGISTRARS

To:      Computershare Investor Services PLC
         P.O. Box 82
         The Pavilions
         Bridgwater Road
         Bristol BS99 7NH

Dear Sirs,

MARCONI CORPORATION PLC:
SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985 (THE "CORP
SCHEME") MARCONI PLC:
SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985 (THE "PLC
SCHEME" AND, TOGETHER WITH THE CORP SCHEME, THE "SCHEMES")

Pursuant to the terms of the Schemes and the Escrow and Distribution Agreement
(the "AGREEMENT") dated 27th March, 2003 between, among others, Marconi
Corporation plc, Marconi plc, Regent Escrow Limited, Bondholder Communications
Group, The Bank of New York, The Law Debenture Trust Corporation p.l.c. and
Philip Wallace and Richard Heis (in their capacity as Supervisors of the
Schemes), we are giving this Letter of Instruction to you as Corp's share and
warrant registrars. Capitalised terms used in this Letter of Instruction shall
have the same meaning given to them in the relevant Scheme and the Agreement.

We hereby direct you as follows:

1.       Each plc Shareholder on the register of members shall receive one New
         Share and such additional New Shares and Warrants as provided below.

2.       The allocation of New Shares and Warrants to plc Shareholders shall be
         calculated as provided in clause 31(3) of the Corp Scheme.

3.       Except as provided in paragraph 4, final allocations of New Shares and
         Warrants shall be distributed by you to the plc Shareholders as
         follows:

3.1      You shall transfer to your CREST securities account or that of your
         subsidiary which will operate the Corporate Nominee, such number of New
         Shares and Warrants as are allocated to plc Shareholders who hold share
         certificates in respect of plc Shares, are aged 18 or more and have a
         registered address in the United Kingdom, Channel Islands, Isle of Man
         or Ireland.

3.2      You shall transfer to the relevant plc Shareholders' CREST securities
         accounts by means of a USE message in CREST, such number of New Shares
         and Warrants as are allocated to plc Shareholders who hold their
         interests in plc Shares in CREST.

3.3      You shall issue new certificates to the relevant holders of the
         remainder of the New Shares and Warrants within five business days of
         the date of this Letter of Instruction.

3.4      All such transfers and issues shall be effected in such a way as not to
         incur stamp duty or stamp duty reserve tax.

<PAGE>

                                       44

4.       Clauses 31(6) and (7) of the Corp Scheme shall apply in respect of plc
         Shareholders in certain jurisdictions and you will perform the
         responsibilities of the Registrars as referred to therein.

5.       Following the issuance by the Supervisors of a Distribution Notice
         under one or both of the Schemes, the Escrow Trustee will procure that
         the Distribution Agent (on its behalf) transfers sufficient New
         Creditor Shares to you. Based on specific instructions given to you by
         the Escrow Trustee in relation to each such Distribution Notice, we
         hereby direct you as follows:

5.1      You shall transfer any New Creditor Shares to the CREST accounts
         designated in Claim Forms and in those Account Holder Letters which
         specify that New Creditor Shares are to be delivered in this manner by
         issuing USE instructions.

5.2      You shall issue and post any share certificates to the persons
         identified as receiving such in Claim Forms and the Account Holder
         Letters.

6.       This letter shall be governed by English law.

Yours faithfully,

By:___________________________________       By:________________________________
     For and on behalf of                         For and on behalf of
     Regent Escrow Limited                        Marconi Corporation plc
     (as Escrow Trustee)

By:___________________________________
     For and on behalf of
     The Bank of New York
     (as Distribution Agent)

<PAGE>

                                       45

                                   SIGNATORIES

EXECUTED as a deed                    )
by MARCONI CORPORATION PLC,           )     MICHAEL PARTON
acting by MICHAEL PARTON              )     director
and MARY SKELLY                       )
                                      )     MARY SKELLY
                                            secretary

EXECUTED as a deed                    )
by MARCONI PLC,                       )     MICHAEL PARTON
acting by MICHAEL                     )     director
PARTON and                            )
MARY SKELLY                           )     MARY SKELLY
                                            secretary

EXECUTED as a deed                    )
by REGENT ESCROW LIMITED,             )     MARY SKELLY
acting by MARY SKELLY and             )     director
CHRISTOPHER HOLDEN                    )
                                            CHRISTOPHER HOLDEN
                                            director

EXECUTED as a deed                    )
by THE BANK OF NEW YORK,              )
acting by ALISON MITCHELL             )     ALISON MITCHELL
acting on the authority of that       )
company in the presence of:           )

Witness's signature:       SUNJEEVE PATEL

Name:                      SUNJEEVE PATEL

Address:                   ONE CANADA SQUARE

                           LONDON E14 5AL

<PAGE>

                                       46

The COMMON SEAL of                    )
THE LAW DEBENTURE                     )     ABIGAIL HOLLADAY
TRUST CORPORATION p.l.c.              )     authorised signatory
was affixed to this                   )                           [SEAL AFFIXED]
deed in the presence of:              )
                                      )
                                            ROBERT BEBB
                                            authorised signatory

EXECUTED as a deed                    )
by BONDHOLDER                         )
COMMUNICATIONS GROUP,                 )     ROBERT APFEL
acting by ROBERT APFEL                )     President
acting on the authority of that       )
company in the presence of:           )

Witness's Signature:       DUNCAN WEBSTER

Name:                      DUNCAN WEBSTER

Address:                   ONE NEW CHANGE

                          LONDON EC4M 9QQ

EXECUTED as a deed                    )
by ANCRANE,                           )     CHRISTOPHER HOLDEN
acting by CHRISTOPHER                 )     director
HOLDEN and MARY                       )
SKELLY                                )
                                            MARY SKELLY
                                            secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]