Document:

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[CLIFFORD CHANCE LOGO]                             LIMITED LIABILITY PARTNERSHIP

                                                                     EXHIBIT 4.5

                                                                  CONFORMED COPY

                                   19 MAY 2003

                             MARCONI CORPORATION PLC

                                   AS COMPANY

                   THE LAW DEBENTURE TRUST CORPORATION p.l.c.

                               AS SECURITY TRUSTEE

                                  HSBC BANK plc

                          AS NEW BONDING FACILITY AGENT

                                       AND

                                  HSBC BANK plc
                                 AS ESCROW BANK

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                                ESCROW AGREEMENT

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                                    CONTENTS

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                                                                                                          PAGE
<S>                                                                                                       <C>
1.     Definitions And Interpretation..................................................................     1

2.     Appointment Of Security Trustee.................................................................     2

3.     Mandatory Redemption Escrow Accounts............................................................     2

4.     Existing Performance Bond Escrow Accounts.......................................................     5

5.     Currency Of Escrow Accounts.....................................................................     7

6.     General Provisions For Escrow Accounts..........................................................     9

7.     Representations And Covenants Of The Company....................................................    10

8.     The Security Trustee............................................................................    11

9.     Escrow Bank's Actions...........................................................................    12

10.    Security Trustee And Escrow Bank Fees...........................................................    16

11.    Resignation Of Escrow Bank......................................................................    16

12.    Assignment......................................................................................    17

13.    Further Assurance...............................................................................    17

14.    Remedies And Waivers, Partial Invalidity........................................................    17

15.    Amendments......................................................................................    18

16.    Notices.........................................................................................    18

17.    Miscellaneous...................................................................................    19

18.    Governing Law And Jurisdiction..................................................................    19

Schedule 1 DEFINITIONS.................................................................................    21

Schedule 2 ESCROW ACCOUNTS.............................................................................    38
       Part A Mandatory Redemption Escrow Accounts.....................................................    38
       Part B Existing Performance Bond Escrow Accounts................................................    39

Schedule 3 FORM OF RELEASE CERTIFICATE.................................................................    40

Schedule 4 FORM OF REDEMPTION CERTIFICATE..............................................................    41
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THIS ESCROW AGREEMENT is made as a DEED on 19 May 2003

BETWEEN:

(1)      MARCONI CORPORATION PLC (the "COMPANY");

(2)      THE LAW DEBENTURE TRUST CORPORATION P.L.C. (the "SECURITY TRUSTEE"
         which expression shall, where the context so admits, include all
         persons for the time being the security trustee or trustees pursuant to
         the Security Trust and Intercreditor Deed);

(3)      HSBC BANK PLC (the "ESCROW BANK"); and

(4)      HSBC BANK PLC as security trustee and agent under the New Bonding
         Facility Agreement (the "NEW BONDING FACILITY AGENT").

WHEREAS:

(A)      The Company has issued or intends to issue the Senior Notes and the
         Junior Notes under the Senior Note Indenture and the Junior Note
         Indenture respectively.

(B)      Security has been or will be granted in favour of the Security Trustee
         over, inter alia, the Escrow Account, as security for the obligations
         of the Obligors under the Relevant Documents.

(C)      In order to fund the mandatory redemption of some or all of the Notes
         (subject to the terms of the Indentures and the Security Trust and
         Intercreditor Deed) and to satisfy certain of its obligations under the
         Existing Performance Bonds, the Company has established the Escrow
         Accounts with the Escrow Bank for the deposit of certain amounts into
         the Escrow Accounts.

(D)      The parties hereto have agreed to describe and regulate the operation
         of the Escrow Accounts in the manner hereinafter appearing.

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AND DECLARED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         Unless a contrary indication appears, defined terms and expressions in
         this Deed shall have the meanings and interpretation ascribed to them
         in Schedule 1 (Definitions) to this Deed.

1.2      INTERPRETATION

         Unless the context or the express provisions of this Deed otherwise
         require:

         1.2.1    words importing the singular shall include the plural and vice
                  versa;

         1.2.2    any obligation of any party herein to do something shall
                  include an obligation to procure the same to be done and any
                  obligation not to do something shall include an obligation not
                  knowingly to permit, suffer or allow the same;

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         1.2.3    references to a "Clause" or "Schedule" shall, subject to any
                  contrary indication, be construed as a reference to a Clause
                  hereof or a Schedule hereto and are for ease of reference
                  only;

         1.2.4    a provision of law is a reference to that provision as the
                  same may be amended or re-enacted from time to time;

         1.2.5    any "SECURITY TRUSTEE", "JUNIOR NOTE TRUSTEE", "SENIOR NOTE
                  TRUSTEE", "NEW BONDING FACILITY AGENT", "NEW BONDING FACILITY
                  BANK", "DEPOSITARY", "PAYING AGENT", "REGISTRAR", "GUARANTOR"
                  or "ESCROW BANK" shall be construed so as to include its
                  successors in title, permitted assignees and permitted
                  transferees and, in the case of the Security Trustee and the
                  Note Trustees, any person for the time being appointed as
                  security trustee, trustee or co-trustee in accordance with the
                  applicable Relevant Document;

         1.2.6    "ASSETS" includes present and future properties, revenues and
                  rights of every description;

         1.2.7    "REPAY", "REDEEM", "PREPAY" and "PAY" shall each include all
                  others and "REPAID", "REPAYABLE" and "REPAYMENT", "REDEEMED",
                  "REDEEMABLE" and "REDEMPTION", "PREPAID", "PREPAYABLE",
                  "PREPAYMENT" and "PAID", "PAYABLE" and "PAYMENT" shall be
                  construed accordingly;

         1.2.8    a "REGULATION" includes any regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law) of any governmental, intergovernmental or
                  supranational body, agency, department or regulatory,
                  self-regulatory or other authority or organisation; and

         1.2.9    a "RELEVANT DOCUMENT" or any other agreement or instrument is
                  a reference to that Relevant Document or other agreement or
                  instrument, as the same may have been amended or novated as
                  permitted by the Security Trust and Intercreditor Deed.

2.       APPOINTMENT OF SECURITY TRUSTEE

2.1      The parties to this Deed agree and acknowledge that the Security
         Trustee shall maintain and operate the Escrow Accounts, established and
         opened in the name of the Company pursuant to a mandate letter dated 15
         May 2003 between the Company and the Escrow Bank, upon and subject to
         the terms of this Deed and the Security Trust and Intercreditor Deed.

2.2      The Company, as the holder of the Escrow Accounts, hereby irrevocably
         agrees with the Escrow Bank that the Security Trustee shall be the only
         Person entitled to give the Escrow Bank instructions in relation to
         Escrow Accounts.

3.       MANDATORY REDEMPTION ESCROW ACCOUNTS

3.1      PURPOSE OF MANDATORY REDEMPTION ESCROW ACCOUNTS

         The purpose of the Mandatory Redemption Escrow Accounts is to enable
         the Company to fund the mandatory redemption of the Junior Notes and/or
         the Senior Notes in accordance with the Indentures and the Security
         Trustee to apply amounts standing to the

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         credit of the Mandatory Redemption Escrow Accounts in accordance with
         Clause 3.2 (Payments out of the Mandatory Redemption Escrow Accounts).

3.2      PAYMENTS OUT OF THE MANDATORY REDEMPTION ESCROW ACCOUNTS

         3.2.1    Subject to sub-clauses 3.2.2 and 3.2.3 of this Clause 3.2, if
                  at any time the Company determines that the aggregate balance
                  standing to the credit of the Mandatory Redemption Escrow
                  Accounts is equal to or greater than the lesser of:

                  (a)      $30,000,000 (or the Dollar Equivalent);

                  (b)      (in the event that Junior Notes are Outstanding at a
                           time when Junior Notes may be redeemed in accordance
                           with the Junior Note Indenture) an amount sufficient
                           to redeem all Outstanding Junior Notes at the
                           Redemption Price; or

                  (c)      (in the event that no Junior Notes are Outstanding)
                           an amount sufficient to redeem all Outstanding Senior
                           Notes at the Redemption Price,

                  the Company shall deliver a Redemption Certificate to the
                  Security Trustee, the Senior Note Trustee, the Junior Note
                  Trustee, the Depositary, the Registrar and the Paying Agent,
                  and shall, within five London Business Days of the date of the
                  Redemption Certificate, cause a notice of redemption to be
                  given to the holders of the relevant Notes to be redeemed
                  (with a copy thereof to the Security Trustee and the relevant
                  Note Trustees) and the Security Trustee shall upon receipt of
                  such notice of redemption promptly instruct the Escrow Bank to
                  transfer an amount equal to the lesser of:

                  (i)      the aggregate balance then standing to the credit of
                           the Mandatory Redemption Escrow Accounts; and

                  (ii)     the amount certified in such Redemption Certificate
                           as the Redemption Price for the relevant Notes,

                  on the London Business Day prior to the Repayment Date
                  specified in such notice of redemption (which Repayment Date
                  shall not be less than ten nor more than fifteen London
                  Business Days after the date of such notice of redemption), to
                  such account or accounts as the Security Trustee may direct
                  (acting on the instructions of the relevant Note Trustee) in
                  order for such balance or amount to be applied on the
                  specified Repayment Date in accordance with the
                  Pre-Acceleration Payment Priorities.

         3.2.2    If the Security Trustee has received a notice from the Senior
                  Note Trustee that a Payment Stop Event has occurred and is
                  continuing, the Security Trustee shall upon receipt of such
                  notice promptly instruct the Escrow Bank:

                  (a)      first, to act in accordance with sub-clause 3.2.3(a)
                           of this Clause 3.2 (Payments out of the Mandatory
                           Redemption Escrow Accounts) PROVIDED THAT if the
                           Security Trustee has determined (such determination
                           to be made pursuant to the provisions of the Security
                           Trust and Intercreditor Deed)

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                           that on the day preceding such notice from the Senior
                           Note Trustee, a Standstill Period was in effect, the
                           Security Trustee shall promptly instruct the Escrow
                           Bank to act in accordance with sub-clause 3.2.2(b) of
                           this Clause 3.2 (Payments out of the Mandatory
                           Redemption Escrow Accounts);

                  (b)      second, following the date of such notice from the
                           Senior Note Trustee and until such time as the
                           Security Trustee (having been notified by the Senior
                           Note Trustee) informs the Escrow Bank that the
                           relevant Payment Stop Event is no longer continuing,
                           to pay all monies credited to the Mandatory
                           Redemption Escrow Accounts to the Security Trustee in
                           order for the Security Trustee to apply such monies
                           in accordance with the Post-Acceleration Payment
                           Priorities, PROVIDED THAT the Security Trustee shall
                           only instruct the Escrow Bank to make a payment out
                           of the Mandatory Redemption Escrow Accounts under
                           this sub-clause 3.2.2(b) of this Clause 3.2 (Payments
                           out of the Mandatory Redemption Escrow Accounts) if
                           the Security Trustee has determined that the
                           aggregate monies standing to the credit of the
                           Mandatory Redemption Escrow Accounts are equal to or
                           exceed $4,000,000 (or the Dollar Equivalent).

         3.2.3    If the Security Trustee receives a Standstill Notice from the
                  Senior Note Trustee, the Security Trustee shall upon receipt
                  of such notice promptly instruct the Escrow Bank:

                  (a)      first, on the date of such instruction and PROVIDED
                           THAT on the day preceding the date of such Standstill
                           Notice from the Senior Note Trustee no Standstill
                           Period was in effect (to be determined by the
                           Security Trustee pursuant to the provisions of the
                           Security Trust and Intercreditor Deed), to transfer
                           as soon as possible in accordance with normal bank
                           procedures, an amount equal to the aggregate balance
                           standing to the credit of the Mandatory Redemption
                           Escrow Accounts on the date of such instruction, to
                           the Security Trustee in order for the Security
                           Trustee to apply such balance in accordance with the
                           Pre-Acceleration Payment Priorities; and

                  (b)      second, following such transfer referred to in
                           paragraph (a) above, to hold any amounts credited to
                           or standing to the credit of the Mandatory Redemption
                           Escrow Accounts in such account until the Security
                           Trustee has notified the Escrow Bank of the earlier
                           of the cessation of the relevant Standstill Period or
                           the occurrence of a Payment Stop Event, at which
                           point the Security Trustee shall further instruct the
                           Escrow Bank to act either in accordance with:

                           (i)      sub-clause 3.2.1 of this Clause 3.2
                                    (Payments out of the Mandatory Redemption
                                    Escrow Accounts), in the case of a cessation
                                    of such Standstill Period PROVIDED THAT at
                                    such time no Payment Stop Event is
                                    continuing and no other Standstill Period is
                                    in effect; or

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                           (ii)     sub-clause 3.2.2(b) of this Clause 3.2
                                    (Payments out of the Mandatory Redemption
                                    Escrow Accounts), if at such time a Payment
                                    Stop Event is continuing.

         3.2.4    If at any time the New Bonding Facility Agent determines that
                  the amount held by it as collateral under the New Bonding
                  Facility Agreement, whether pursuant to Cash Collateral
                  Releases or otherwise (together with all interest earned on
                  such amounts), exceeds the aggregate facility limit then in
                  effect under the New Bonding Facility Agreement, the New
                  Bonding Facility Agent shall immediately notify the Security
                  Trustee and the Company and shall, within three London
                  Business Days of making such determination, transfer the
                  amount of such excess (as calculated in accordance with the
                  Security Agreement (as defined in the New Bonding Facility
                  Agreement) as in effect at the date hereof) to the Mandatory
                  Redemption Escrow Accounts.

4.       EXISTING PERFORMANCE BOND ESCROW ACCOUNTS

4.1      PURPOSE OF EXISTING PERFORMANCE BOND ESCROW ACCOUNTS

         The purpose of the Existing Performance Bond Escrow Accounts is to
         enable the Company to satisfy certain of its obligations to provide
         cash collateral under the Existing Performance Bonds.

4.2      PAYMENTS OUT OF THE EXISTING PERFORMANCE BOND ESCROW ACCOUNTS

         4.2.1    If at any time prior to:

                  (a)      the Security Trustee being notified by the Senior
                           Note Trustee of the occurrence of an Enforcement
                           Event or a payment Event of Default under the Senior
                           Notes and/or the Senior Note Indenture; and

                  (b)      the first anniversary of the Issue Date,

                  the Security Trustee receives a Release Certificate, the
                  Security Trustee shall promptly instruct the Escrow Bank to
                  release and transfer an amount or amounts in cash and in the
                  currency specified in such Release Certificate from the
                  Existing Performance Bond Escrow Accounts to any bank,
                  insurance company or other financial institution (as set out
                  in such Release Certificate) which is certified under the
                  relevant Release Certificate as having issued an Existing
                  Performance Bond and as having made a valid demand, pursuant
                  to an enforceable right, for cash collateral to be provided by
                  the Company or any of its Subsidiaries pursuant to such
                  Existing Performance Bond (or any related instrument or
                  document in existence at the date of this Deed), which amount
                  of cash specified in such Release Certificate shall be used by
                  such bank, insurance company or other financial institution to
                  cash-collateralise the obligations of the Company or any of
                  its Subsidiaries in relation to such Existing Performance
                  Bond.

         4.2.2    Subject to sub-clauses 4.2.3 and 4.2.4 of this Clause 4.2
                  (Payments out of the Existing Performance Bond Escrow
                  Accounts), if the Company determines that the aggregate amount
                  standing to the credit of the Existing Performance Bond Escrow
                  Accounts is in excess of the amount needed to satisfy the
                  obligations of

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                  the Company and its Subsidiaries to provide collateral under
                  all Existing Performance Bonds (the amount of such excess
                  being the "EXCESS AMOUNT"), the Company shall promptly provide
                  the Security Trustee with written notice certifying the amount
                  of such Excess Amount. Upon receipt of such certification the
                  Security Trustee shall promptly instruct the Escrow Bank to
                  release and transfer an amount in cash equal to such Excess
                  Amount to be paid as follows:

                  (a)      first, to the New Bonding Facility Agent, who having
                           received a request from the Security Trustee has
                           promptly provided the Security Trustee with a
                           certificate setting out an amount, if any, that is
                           certified by the New Bonding Facility Agent to the
                           Security Trustee as being, together with all other
                           Cash Collateral Releases transferred to the New
                           Bonding Facility Agent since the Issue Date (together
                           with all interest earned on such transferred
                           amounts), equal to the New Bonding Facility Funding
                           Amount (or its Sterling Equivalent); and

                  (b)      second, to the extent any Excess Amount is remaining
                           after giving effect to paragraph (a) above, such
                           amount (such amount having been converted by the
                           Escrow Bank into US dollars at the then prevailing
                           exchange rate) to the Mandatory Redemption Escrow
                           Accounts for application by the Security Trustee in
                           accordance with Clause 3.2 (Payments out of the
                           Mandatory Redemption Escrow Accounts).

         4.2.3    If at any time prior to the first anniversary of the Issue
                  Date the Security Trustee has been notified:

                  (a)      of the occurrence of an Enforcement Event; or

                  (b)      of the occurrence of a payment Event of Default under
                           the Senior Notes and/or the Senior Note Indenture,

                  the Security Trustee shall promptly instruct the Escrow Bank
                  to release and transfer all amounts standing to the credit of
                  the Existing Performance Bond Escrow Accounts as follows:

                           (i)      first, to the New Bonding Facility Agent,
                                    who having received a request from the
                                    Security Trustee has promptly provided the
                                    Security Trustee with a certificate setting
                                    out an amount, if any, that is certified by
                                    the New Bonding Facility Agent to the
                                    Security Trustee as being, together with all
                                    other Cash Collateral Releases transferred
                                    to the New Bonding Facility Agent since the
                                    Issue Date (together with all interest
                                    earned on such transferred amounts), equal
                                    to the lesser of (x) L25,000,000 (or the
                                    Sterling Equivalent) and (y) 100 per cent.
                                    in aggregate of all bonds, guarantees,
                                    letters of credit, indemnities and similar
                                    instruments issued and outstanding on such
                                    date under the New Bonding Facility
                                    Agreement PROVIDED THAT, if the amount set
                                    out in such certificate exceeds the
                                    aggregate balance standing to the credit of
                                    the Existing Performance Bond Escrow

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                                    Accounts, the Escrow Bank shall only be
                                    obliged to transfer such amount standing to
                                    the credit of the Existing Performance Bond
                                    Escrow Accounts; and

                           (ii)     second, to the extent any amount remains
                                    standing to the credit of the Existing
                                    Performance Bond Escrow Accounts after
                                    giving effect to paragraph (i) above, such
                                    amount to the Mandatory Redemption Escrow
                                    Accounts for application by the Security
                                    Trustee in accordance with Clause 3.2
                                    (Payments out of the Mandatory Redemption
                                    Escrow Accounts).

         4.2.4    On the first anniversary of the Issue Date, and having given
                  effect to any release, transfer or payment due and payable
                  prior to or on such date, if any, pursuant to a Release
                  Certificate delivered on or prior to the first anniversary of
                  the Issue Date, and if such date is not a London Business Day
                  on the preceding London Business Day, the Security Trustee
                  shall instruct the Escrow Bank to transfer all amounts
                  standing to the credit of the Existing Performance Bond Escrow
                  Accounts on that date as follows:

                  (a)      first, to the New Bonding Facility Agent, who having
                           received a request from the Security Trustee has
                           promptly provided the Security Trustee with a
                           certificate setting out an amount, if any, that is
                           certified by the New Bonding Facility Agent to the
                           Security Trustee as being, together with all other
                           Cash Collateral Releases transferred to the New
                           Bonding Facility Agent since the Issue Date (together
                           with all interest earned on such transferred
                           amounts), equal to the New Bonding Facility Funding
                           Amount PROVIDED THAT, if the amount set out in such
                           certificate exceeds the aggregate balance standing to
                           the credit of the Existing Performance Bond Escrow
                           Accounts, the Escrow Bank shall only be obliged to
                           transfer such amount standing to the credit of the
                           Existing Performance Bond Escrow Accounts; and

                  (b)      second, to the extent any amount remains standing to
                           the credit of the Existing Performance Bond Escrow
                           Accounts after giving effect to paragraph (a) above,
                           such amount to the Mandatory Redemption Escrow
                           Accounts for application by the Security Trustee in
                           accordance with Clause 3.2 (Payments out of the
                           Mandatory Redemption Escrow Accounts).

         4.2.5    The Company undertakes to notify the Security Trustee and the
                  Escrow Bank promptly upon any reduction of the New Bonding
                  Facility Funding Amount to an amount of less than
                  L25,000,000 (or the Sterling Equivalent).

5.       CURRENCY OF ESCROW ACCOUNTS

5.1      CURRENCY OF ESCROW ACCOUNTS

         In relation to any payment to the Escrow Bank made by the Company or
         any other Obligor to be credited to the Mandatory Redemption Escrow
         Accounts, the Escrow Bank shall only deposit: (i) US dollars in the
         MREA US Dollar Escrow Account; (ii) British

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         sterling in the MREA Sterling Escrow Account and (ii) Euros in the MREA
         Euro Escrow Account.

5.2      CURRENCY UNDERTAKING

         5.2.1    The Company hereby undertakes that it shall (and shall procure
                  that the Obligors will) only transfer amounts to the Escrow
                  Bank to be credited to an Escrow Account in the currencies
                  specified in Clause 5.1 (Currency of Escrow Accounts) and in
                  compliance with its obligations under the Indentures including
                  but not limited to Sections 4.02 (Asset Sales) and 4.25
                  (Escrow Agreement) of the Junior Note Indenture and Section
                  4.03 (Asset Sales) and 4.26 (Escrow Agreement) of the Senior
                  Note Indenture.

         5.2.2    In the event that the Company or any Obligor transfers an
                  amount to the Escrow Bank to be credited to the Mandatory
                  Redemption Escrow Accounts and such currency is in a currency
                  ("CURRENCY B") other than a currency specified in Clause 5.1
                  (Currency of Escrow Accounts), the Escrow Bank shall convert
                  such amount from Currency B into US dollars at the then
                  prevailing exchange rate and deposit such amounts to the
                  credit of MREA US Dollar Escrow Account PROVIDED THAT to the
                  extent the Escrow Bank is unable to effect such conversion, it
                  will immediately notify the Company of its inability to effect
                  such conversion and such amount shall be converted into such
                  other currency as agreed between the Escrow Bank and the
                  Company.

         5.2.3    In the event that the Company or any Obligor transfers an
                  amount to the Escrow Bank to be credited to the Mandatory
                  Redemption Escrow Accounts and such amount is in Euro or
                  British sterling, the Escrow Bank shall deposit such amount
                  into the MREA Euro Escrow Account or MREA Sterling Escrow
                  Account, as the case may be, and then shall promptly convert
                  such amount into US dollars at the then prevailing exchange
                  rate and deposit such US dollar converted amount to the credit
                  of the MREA US Dollar Escrow Account.

         5.2.4    Unless caused by its gross negligence or wilful misconduct,
                  the Escrow Bank shall not be responsible or be liable to any
                  party to this Deed for any loss, cost, expense or liability
                  arising as a result of any currency conversion made pursuant
                  to the operation of this Clause 5.2 (Currency Undertaking) or
                  Clause 5.3 (Payments by the Escrow Bank) or for acting in
                  accordance with any instructions received by it pursuant to
                  this Clause 5.2 (Currency Undertaking) or Clause 5.3 (Payments
                  by the Escrow Bank).

5.3      PAYMENTS BY THE ESCROW BANK

         Unless instructed to the contrary by the Security Trustee, the Escrow
         Bank shall only pay monies credited to an Escrow Account to the
         Security Trustee in the currency of the monies standing to the credit
         of such Escrow Account; PROVIDED THAT to the extent that any amount
         required to be released pursuant to Clause 4.2 (Payments out of
         Existing Performance Bond Escrow Accounts) is required to be
         denominated in a currency other than US dollars, Euro or British
         sterling (as set forth in the Release Certificate or, as the case may
         be, as requested by the Security Trustee) ("CURRENCY C"), the Escrow
         Bank shall convert such amount from the currency of the Existing
         Performance Bond Escrow

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         Accounts into Currency C at the then prevailing exchange rate; PROVIDED
         FURTHER THAT to the extent the Escrow Bank is unable to effect such
         conversion, it will immediately notify the Company or, as the case may
         be, the Security Trustee of its inability to effect such conversion and
         such amount shall be converted into such other currency as agreed
         between the Escrow Bank and the Company or, as the case may be, the
         Security Trustee (acting on the instructions of the Note Trustees).

6.       GENERAL PROVISIONS FOR ESCROW ACCOUNTS

6.1      GENERAL TERMS OF ESCROW

         Each of the parties agrees that:

         6.1.1    each Escrow Account will be a separate account with the Escrow
                  Bank;

         6.1.2    no party shall have any rights to the deposits held in the
                  Escrow Accounts other than in accordance with the terms of
                  this Deed, the Security Documents creating Security over the
                  Escrow Accounts, the Indentures and the Security Trust and
                  Intercreditor Deed;

         6.1.3    the Security Trustee shall instruct the Escrow Bank to release
                  and make payments to or to the order of the Security Trustee,
                  the Senior Note Trustee, the Junior Note Trustee, the New
                  Bonding Facility Agent or the issuer of an Existing
                  Performance Bond (as the case may be) only in accordance with
                  the terms of this Deed and the Security Trust and
                  Intercreditor Deed;

         6.1.4    none of the restrictions contained in this Deed on the
                  withdrawal of funds from the Escrow Accounts shall affect the
                  obligations of the Company to make any payments of any nature
                  required to be made to any of the Secured Creditors on the due
                  date for payment thereof in accordance with any of the
                  Relevant Documents;

         6.1.5    nothing in this Deed shall permit a payment by the Security
                  Trustee which is prohibited by the Security Trust and
                  Intercreditor Deed; and

         6.1.6    in establishing the balance standing to the credit of any
                  Escrow Account at any time, the Escrow Bank may (but shall not
                  be obliged to) take into account credits to and withdrawals
                  from such Escrow Account which are to be made on the same day.

6.2      PAYMENTS FROM ESCROW

         6.2.1    The Security Trustee shall only instruct the Escrow Bank to
                  make payments or transfers from an Escrow Account if:

                  (a)      the giving of such instruction is expressly permitted
                           by this Deed; or

                  (b)      the Security Trustee has been instructed to enforce
                           the Transaction Security pursuant to the provisions
                           of the Security Trust and Intercreditor Deed.

         6.2.2    All amounts withdrawn from an Escrow Account for transfer to
                  another Escrow Account or for application in or towards making
                  a specific payment or for

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                  satisfying a specific liability shall be transferred to that
                  Escrow Account, or applied in or towards making that specific
                  payment or, as the case may be, satisfying that specific
                  liability, and for no other purpose.

6.3      INTEREST

         Each amount from time to time standing to the credit of an Escrow
         Account shall bear interest at the rate agreed between the Escrow Bank
         and the Company, such interest to be credited to the Escrow Account in
         respect of which such interest has accrued at such times as the Escrow
         Bank and the Company shall agree or, in the absence of such agreement,
         in accordance with the Escrow Bank's usual practice for accounts of the
         same type as the relevant Escrow Account.

6.4      INFORMATION

         The Company irrevocably grants to the Security Trustee the right to
         review all books and records which the Company is entitled to as holder
         of the Escrow Accounts (including, without limitation, computer records
         and account statements) relating to the Escrow Accounts and irrevocably
         waives any right of confidentiality which may exist in respect of such
         books and records to the extent necessary to allow disclosure by the
         Escrow Bank to the Security Trustee and its advisers of all books and
         records which the Company is entitled to as holder of the Escrow
         Accounts.

7.       REPRESENTATIONS AND COVENANTS OF THE COMPANY

7.1      REPRESENTATIONS

         The Company represents that:

         7.1.1    it has and will have the necessary power to enable it to enter
                  into and perform its obligations under this Deed;

         7.1.2    this Deed constitutes its legal, valid and binding obligations
                  enforceable against it in accordance with the terms set out
                  herein, subject only to equitable principles of general
                  application and applicable bankruptcy, insolvency,
                  reorganisation or other similar laws affecting the enforcement
                  of creditors' rights generally; and

         7.1.3    all necessary authorisations to enable it to enter into this
                  Deed have been obtained and are in full force and effect and
                  will remain in full force and effect.

7.2      COVENANTS

         The Company shall:

         7.2.1    provide to the Security Trustee and the Escrow Bank, as and
                  when the Security Trustee or, as the case may be, the Escrow
                  Bank so reasonably requires and so as to enable the Security
                  Trustee or, as the case may be, the Escrow Bank to perform its
                  duties and functions under this Deed, such information, copies
                  of any accounting records and other documents, statements and
                  reports maintained by or in the possession of the Company or
                  which the Company is entitled to obtain from any person;

                                     - 10 -

<PAGE>

         7.2.2    do all such things within its control as are necessary or
                  appropriate to give effect to the provisions of this Deed; and

         7.2.3    at all times comply with its obligations under the Indentures
                  in relation to the Escrow Accounts including, but not limited
                  to, its obligations to deposit monies or cause monies to be
                  deposited in each of the Escrow Accounts from time to time.

8.       THE SECURITY TRUSTEE

8.1      OBLIGATIONS OF THE SECURITY TRUSTEE

         8.1.1    The Security Trustee will not, and shall not be required to,
                  monitor the performance or compliance by the Company of any
                  obligation or condition contained in this Deed.

         8.1.2    Each instruction provided to the Escrow Bank by the Security
                  Trustee shall be copied at the same time by the Security
                  Trustee to the Company, the Note Trustees and the New Bonding
                  Facility Agent.

         8.1.3    In performing or carrying out its duties, obligations and
                  responsibilities, the Security Trustee shall be considered to
                  be acting only in a mechanical and administrative capacity and
                  shall not have or be deemed to have any duty, obligation or
                  responsibility to, or relationship or trust or agency with the
                  Company (save as expressly provided herein).

8.2      SECURITY TRUSTEE'S ACTIONS

         8.2.1    Notwithstanding any contrary provision herein, the Security
                  Trustee may assume that any statement by the Company, the New
                  Bonding Facility Agent or the relevant Note Trustee that any
                  conditions for the making of any payment out of any Escrow
                  Account which are specified in any of the Relevant Documents
                  have been satisfied is correct, unless it has actual notice to
                  the contrary.

         8.2.2    Save as provided in this Deed, the Security Trustee shall not:

                  (a)      be bound to disclose to any other Person any
                           information relating to any other party hereto;

                  (b)      be under any fiduciary duty towards any other party
                           hereto or under any obligations other than those for
                           which express provision is made in this Deed;

                  (c)      have any responsibility to ensure that the
                           information set out in any instructions received by
                           it hereunder is correct or to check or enquire as to,
                           or otherwise be affected by, whether any condition
                           has been or will be met or fulfilled or any
                           instruction is properly given on behalf of the person
                           from whom it purports to be given; or

                  (d)      have any responsibility to any party if any
                           instruction which should be given to the Security
                           Trustee by any party under or in connection with this
                           Deed is for any reason not received by the Security
                           Trustee or is not made at the time it should be made.

                                     - 11 -

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8.3      SECURITY TRUSTEE'S RELIANCE

         In the event that the Security Trustee ceases to be a party to this
         Deed as a result of its resignation, removal or otherwise (pursuant to
         the provisions of the Security Trust and Intercreditor Deed), the
         Security Trustee shall remain entitled to the benefit of Clause 8.2
         (Security Trustee's Actions), Clause 10.1 (Security Trustee's Fees) and
         17.1 (Security Trust and Intercreditor Deed) to the extent that any
         fees have accrued and remain unpaid at the time it ceases to be the
         Security Trustee.

9.       ESCROW BANK'S ACTIONS

9.1      ESCROW BANK'S INSTRUCTIONS

         9.1.1    Except as otherwise expressly provided herein the Escrow Bank
                  shall act solely in accordance with any written instructions
                  given to it by (or on behalf of) the Security Trustee and
                  shall assume without enquiry:

                  (a)      that any instructions received by it from the
                           Security Trustee are duly given by the Security
                           Trustee; and

                  (b)      unless it has received actual written notice of
                           revocation, that any instructions or directions given
                           by the Security Trustee have not been revoked and no
                           revocation of any such instructions by the Security
                           Trustee shall affect any action of the Escrow Bank in
                           reliance upon such instruction or direction prior to
                           actual receipt of the notice of revocation.

         9.1.2    The Escrow Bank shall be entitled to request clarification of
                  any instruction or direction received by it from (or on behalf
                  of) the Security Trustee, and pending receipt of such
                  clarification to its reasonable satisfaction may refrain from
                  acting and shall have no liability for the consequences of its
                  refraining from acting.

         9.1.3    If in issuing any instruction the Security Trustee breaches
                  any restriction set out in the Relevant Documents, this shall
                  not invalidate the instruction unless the Escrow Bank has been
                  informed (in writing) by the Security Trustee, before it
                  commences to act on such instruction, that such instruction
                  was invalid and should not be acted upon or the Escrow Bank
                  otherwise has actual knowledge that it should not act on such
                  instruction. If the Escrow Bank is so informed by the Security
                  Trustee after it has commenced to act on an instruction the
                  validity of any action taken shall not be affected but the
                  Escrow Bank shall take no further action in accordance with
                  such instruction, except to the extent that it has become
                  legally obliged to do so.

         9.1.4    For the purposes of this Deed, the Escrow Bank shall be
                  entitled to rely conclusively upon any certificates, written
                  notices, written requests or written instructions received by
                  it pursuant hereto without making any further enquiries or
                  incurring any liability and, in the absence of any such
                  certificates, written notices, written requests or written
                  instructions, shall not be bound to take any action or may
                  refrain from taking any action under this Deed.

         9.1.5    For the purposes of this Deed, the Escrow Bank may carry out
                  what in its discretion it reasonably determines to be
                  administrative acts (any such

                                     - 12 -

<PAGE>

                  determination being, in the absence of manifest error, binding
                  on all parties hereto), or acts which are incidental to any
                  written instruction, without any instructions (though not
                  contrary to any written instructions) from any other party
                  hereto, but so that no such instruction shall have any effect
                  in relation to any administrative or incidental act performed
                  prior to actual receipt of such instruction by the Escrow
                  Bank.

         9.1.6    Notwithstanding anything contained in this Deed, the Escrow
                  Bank is entitled at all times to act without having been
                  instructed by the Security Trustee in order to protect its own
                  position and interests in its capacity as Escrow Bank
                  (including its own financial interest).

         9.1.7    The Escrow Bank shall be entitled to assume that all written
                  information, written notices, written instructions or
                  certifications received from the Security Trustee under or in
                  connection with this Deed are authentic, true, complete and
                  accurate and have been issued by a duly authorised
                  representative of the Security Trustee and shall not be
                  required to make further enquiries or incur any liabilities in
                  respect thereof.

         9.1.8    In performing or carrying out its duties, obligations and
                  responsibilities, the Escrow Bank shall be considered to be
                  acting only in a mechanical and administrative capacity.

9.2      ESCROW BANK'S DISCRETIONS

         The Escrow Bank may:

         9.2.1    if it receives any instructions or directions from the
                  Security Trustee to take any action in relation to this Deed,
                  assume that all applicable conditions for taking that action
                  have been satisfied unless the Escrow Bank (in its capacity
                  hereunder) has actual knowledge to the contrary;

         9.2.2    accept and rely upon:

                  (a)      any written notice, written information, written
                           communication, certificate or other document believed
                           by it to be genuine and correct;

                  (b)      as to any matters of fact which might reasonably be
                           expected to be within the knowledge of the other
                           parties to this Deed or any other person or any of
                           their respective directors, officers, partners or
                           employees or authorised representatives, any
                           certificate signed by or on behalf of such person as
                           sufficient evidence thereof;

                  (c)      any written notice or certificate purporting to be
                           duly signed by the persons giving such notice or
                           certificate as having been duly signed by or on
                           behalf of such person; and

                  (d)      any certificate to the effect that any particular
                           dealing or transaction or step or thing is, in the
                           opinion of the persons so certifying, expedient as
                           sufficient evidence that it is expedient,

                                     - 13 -

<PAGE>

                  in each case without incurring any liability to any other
                  party to this Deed or other person or any of their respective
                  directors, officers, partners or employees or authorised
                  representatives for so accepting and relying, without having
                  any duty to enquire as to the accuracy thereof and without
                  being bound to ask for further evidence or authority or
                  otherwise;

         9.2.3    in the exercise of any of its rights or the performance of any
                  of its duties, obligations and responsibilities under this
                  Deed, act through its agents selected by it which may be
                  corporations, partnerships or individuals, whether or not
                  lawyers or other professional persons, to transact or conduct,
                  or concur in transacting or conducting, any business and to do
                  or concur in doing all acts required to be done by the Escrow
                  Bank (including the receipt and payment of money) and the
                  Escrow Bank shall not be responsible for any misconduct or
                  omission on the part of, or be bound to supervise the
                  proceedings or acts of, any agent PROVIDED THAT the Escrow
                  Bank has exercised reasonable care in appointing such agent.
                  Any such agent shall be entitled to charge and be paid all
                  usual and properly incurred fees, expenses and other charges
                  for its services;

         9.2.4    retain for its own benefit, without liability to account to
                  any other person, any fee or other sum properly received by it
                  for its own account; and

         9.2.5    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 any Relevant Document and may do
                  so without any obligation to account to, or disclose any such
                  arrangement to, any Person.

9.3      EXCLUDED OBLIGATIONS

         Except as otherwise expressly provided in this Deed, the Escrow Bank
         shall not:

         9.3.1    be bound to account to any party to this Deed or any Secured
                  Creditor or any other party for any sum or the profit element
                  of any sum properly received by it for its own account;

         9.3.2    unless provided for in this Deed or ordered to do so by a
                  court of competent jurisdiction, be bound to disclose to any
                  Person any confidential information and each party to this
                  Deed agrees that it shall not take any action to obtain from
                  the Escrow Bank any confidential information;

         9.3.3    be under any obligations other than those which are
                  specifically provided for in this Deed;

         9.3.4    have or be deemed to have any duty, obligation or
                  responsibility to, or relationship of trust or agency with any
                  party to this Deed; or

         9.3.5    be required by anything contained in this Deed to expend or
                  risk its own funds or otherwise incur any financial liability
                  in the performance of any of its duties or the exercise of any
                  of its rights hereunder or under any other Relevant Document
                  to which it is a party.

                                     - 14 -

<PAGE>

9.4      EXCLUSION OF ESCROW BANK'S LIABILITY

         Unless caused directly by its gross negligence or wilful misconduct the
         Escrow Bank shall not accept responsibility or be liable to any party
         to this Deed or any other Person:

         9.4.1    for the adequacy, accuracy and/or completeness of any
                  information supplied by the Escrow Bank or any other person in
                  connection with this Deed, or any other agreement, arrangement
                  or document entered into, made or executed in anticipation of,
                  pursuant to or in connection with this Deed;

         9.4.2    for any losses of any Person or any liability of any Person
                  arising as a result of the Escrow Bank taking or refraining
                  from taking any action in relation to this Deed or otherwise,
                  whether in accordance with an instruction received or
                  otherwise;

         9.4.3    for the exercise of, or the failure to exercise, any judgment,
                  discretion or power given to it by or in connection to this
                  Deed or any other agreement, arrangement or document entered
                  into, made or executed in anticipation of, pursuant to or in
                  connection to this Deed;

         9.4.4    for any shortfall in relation to a payment out of an Escrow
                  Account or for any Tax in respect of the Escrow Accounts or in
                  respect of any payments out of an Escrow Account;

         9.4.5    for the Security Trustee or any other Person acting or failing
                  to act in accordance with the Security Trust and Intercreditor
                  Deed;

         9.4.6    for any moneys other than sums actually received by the Escrow
                  Bank; or

         9.4.7    for any costs, charges, losses, damages, liabilities or
                  expenses arising from or connected with any act, default,
                  omission or misconduct of the Escrow Bank or its officers,
                  employees or agents in connection with this Deed.

9.5      NO PROCEEDINGS

         Each party to this Deed (other than the Escrow Bank) agrees for the
         benefit of the Escrow Bank's officers, employees and agents that it
         will not assert any claim or take proceedings against any of the Escrow
         Bank's officers, employees and agents in respect of any claim it might
         have against the Escrow Bank or in respect of any act or omission of
         any kind by that officer, employee or agent in relation to this Deed
         and subject to Clause 18.3 (Third Party Rights) and the provisions of
         Contracts (Rights of Third Parties) Act 1999 any officer, employee or
         agent of the Escrow Bank may rely on this Clause 9.5.

9.6      REFRAIN FROM ILLEGALITY

         The Escrow Bank may refrain from doing anything which in its reasonable
         opinion would or might be contrary to any relevant law, directive or
         regulation of any relevant jurisdiction or which would or might
         otherwise render it liable to any Person, and the Escrow Bank may do
         anything which is, in its sole discretion (such discretion to be
         reasonably exercised), necessary to comply with any such law, directive
         or regulation of any such jurisdiction.

                                     - 15 -

<PAGE>

9.7      INDEMNITY

         The Company shall forthwith on demand indemnify the Escrow Bank against
         all losses, liabilities, costs, claims, actions or demands (including
         without limitation, legal expenses and other out-of-pocket expenses
         plus any VAT payable in respect thereof) which it may properly incur or
         which may be made against the Escrow Bank as a result of or in
         connection with its appointment or the exercise of its powers and
         duties under this Deed notwithstanding the resignation of the Escrow
         Bank pursuant to this Deed, other than in the case of the gross
         negligence or wilful misconduct of the Escrow Bank. The indemnity
         contained in this Clause 9.7 shall survive the termination or
         expiration of this Deed.

10.      SECURITY TRUSTEE AND ESCROW BANK FEES

10.1     SECURITY TRUSTEE'S FEES

         The Company shall pay to the Security Trustee, the escrow fees together
         with any applicable VAT thereon specified in the Security Trustee
         Escrow Fee Letter at the times and in the amounts specified in the
         Security Trustee Escrow Fee Letter.

10.2     ESCROW BANK'S FEES

         The Company shall pay to the Escrow Bank, the fees together with any
         applicable VAT thereon specified in the Escrow Bank Fee Letter at the
         times and in the amounts specified in the Escrow Bank Fee Letter.

11.      RESIGNATION OF ESCROW BANK

11.1     RESIGNATION OF ESCROW BANK

         11.1.1   The Escrow Bank may, at any time by giving not less than
                  fifteen London Business Days' prior notice, (without being
                  required to assign any reason therefor) notify the Security
                  Trustee and the Company in writing that it wishes to cease to
                  be a party hereto as the Escrow Bank (a "CESSATION NOTICE").

         11.1.2   Upon receipt of a cessation notice, the Security Trustee (with
                  the prior consent of each Debt Representative) may nominate a
                  successor (a "SUCCESSOR ESCROW BANK"). If no such nomination
                  is made by the Security Trustee before the date specified in
                  the cessation notice as being the date on which the Escrow
                  Bank wishes to cease to be a party hereto (the "CESSATION
                  DATE") (which date shall be a London Business Day falling not
                  less than fifteen London Business Days after the date of
                  delivery of the cessation notice to the Security Trustee) then
                  the Escrow Bank may nominate a successor Escrow Bank in
                  London.

         11.1.3   For the avoidance of doubt, the resignation of the Escrow Bank
                  shall not be effective until the appointment of a successor
                  Escrow Bank has become effective in accordance with Clause
                  11.2 (Appointment of Successor Escrow Bank) below.

11.2     APPOINTMENT OF SUCCESSOR ESCROW BANK

         If the Escrow Bank has delivered a cessation notice pursuant to Clause
         11 (Resignation of Escrow Bank), then on the relevant cessation date
         and PROVIDED THAT (a) the successor Escrow Bank has executed and
         delivered to the Company and the Security Trustee a deed of novation in
         such form as the Company and the Security Trustee may require

                                     - 16 -

<PAGE>

         pursuant to which the successor Escrow Bank becomes a party to, and
         agrees to be bound by the terms and conditions of this Deed and agrees
         to become a party to such other documents as may be required by the
         Company and the Security Trustee; and (b) the Escrow Bank, without
         responsibility or liability (other than for gross negligence or wilful
         misconduct) and acting on the instructions of the Security Trustee, has
         taken all steps necessary and/or become party to any document necessary
         to transfer the Escrow Accounts to the successor Escrow Bank:

         11.2.1   the resigning Escrow Bank shall cease to be a party hereto and
                  shall cease to have any obligation hereunder in such capacity
                  (without prejudice to any accrued liabilities under this Deed
                  and its obligations under this Clause 11.2 but shall remain
                  entitled to the benefit of the provisions of Clause 9.7
                  (Indemnity), Clause 10 (Security Trustee and Escrow Bank Fees)
                  (to the extent of any fees which have accrued and are unpaid
                  at the time it ceases to be the Escrow Bank hereunder), Clause
                  9.4 (Exclusion of Escrow Bank's Liability) and this Clause 11;
                  and

         11.2.2   the successor Escrow Bank and each of the other parties hereto
                  shall have the same rights and obligations amongst themselves
                  as they would have had such successor Escrow Bank been an
                  original party hereto as Escrow Bank.

11.3     REMOVAL OF ESCROW BANK

         The Security Trustee (acting on the instructions of either Note
         Trustee) may, by notice to the Escrow Bank, require the Escrow Bank to
         resign in accordance with Clause 11.1 (Resignation of Escrow Bank) and
         upon receipt of any such notice the Escrow Bank shall resign in
         accordance with Clause 11.1 (Resignation of Escrow Bank) and, for the
         avoidance of doubt, the provisions of Clause 11.2 (Appointment of
         Successor Escrow Bank) shall apply.

12.      ASSIGNMENT

         No party may assign all or any of its rights or transfer any of its
         rights and obligations under this Deed except as contemplated by this
         Deed, the Security Trust and Intercreditor Deed or as required by law.

13.      FURTHER ASSURANCE

         The parties hereto agree that they will co-operate fully to do all such
         further acts and things and execute any further documents as may be
         necessary or desirable to give full effect to the arrangements
         contemplated by this Deed, subject to any such party (other than the
         Company) being reimbursed to its satisfaction by the Company for any
         costs, expenses (including VAT), liabilities or fees reasonably
         incurred by it in the negotiation, preparation or execution of any such
         further documents.

14.      REMEDIES AND WAIVERS, PARTIAL INVALIDITY

14.1     REMEDIES AND WAIVERS

         14.1.1   No failure to exercise, or any delay in exercising, on the
                  part of any party to this Deed, any right or remedy under this
                  Deed shall operate as a waiver, nor shall

                                     - 17 -

<PAGE>

                  any single or partial exercise of any right or remedy prevent
                  any further or other exercise or the exercise of any other
                  right or remedies.

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

14.2     PARTIAL INVALIDITY

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

15.      AMENDMENTS

         The provisions of this Deed may not be amended except with the written
         agreement of all the parties hereto and each Note Trustee.

16.      NOTICES

16.1     COMMUNICATIONS IN WRITING

         Any communication to be made under or in connection with this Deed
         shall be made in writing and, unless otherwise stated, may be made by
         fax or letter.

16.2     ADDRESSES

         The address and fax number (and the department or officer, if any, for
         whose attention any communication is to be made) of each party for any
         communication or document to be made or delivered under or in
         connection with this Deed is:

         16.2.1   identified with its name below; or

         16.2.2   if not originally a party on the date hereof, specified in the
                  deed of novation pursuant to which such party undertakes to
                  become a party to, and be bound by the terms and conditions of
                  this Deed,

         or any substitute details which a party may notify to the Security
         Trustee (or the Security Trustee may notify to the other parties, if a
         change is made by the Security Trustee) by not less than five London
         Business Days' notice and promptly upon receipt of any notification of
         any new or changed details, the Security Trustee shall notify the other
         parties.

16.3     DELIVERY

         16.3.1   Any communication or document made or delivered by one Person
                  to another under or in connection with this Deed will only be
                  effective:

                  (a)      if by way of fax, when received in legible form; or

                  (b)      if by way of letter, when it has been left at the
                           address specified in Clause 16.2 (Addresses) above or
                           five London Business Days after being deposited in
                           the post postage prepaid in an envelope addressed to
                           the addressee at that address,

                                     - 18 -

<PAGE>

                  and, if a particular department or officer is specified as
                  part of that address, if addressed to that department or
                  officer.

         16.3.2   Notwithstanding the provisions of sub-clause 16.3.1(b) above,
                  any communication or document to be made or delivered to the
                  Security Trustee or the Escrow Bank will be effective only
                  when actually received by the Security Trustee or the Escrow
                  Bank, as the case may be, and then only if it is expressly
                  marked for the attention of the department or officer
                  identified with such person's signature below (or any
                  substitute department or officer as such person shall specify
                  for this purpose).

16.4     ENGLISH LANGUAGE

         Any notice given under or in connection with this Deed must be in
         English.

17.      MISCELLANEOUS

17.1     SECURITY TRUST AND INTERCREDITOR DEED

         The parties hereto each acknowledge that the Security Trustee when
         acting hereunder shall be acting in accordance with and subject to the
         terms of the Security Trust and Intercreditor Deed. In the event of a
         conflict between the terms of this Deed and the Security Trust and
         Intercreditor Deed, the terms of the Security Trust and Intercreditor
         Deed shall prevail.

17.2     COUNTERPARTS

         This Deed may be executed in any number of counterparts and by the
         different parties hereto on separate counterparts, each of which, when
         executed and delivered, shall constitute an original, but all the
         counterparts shall together constitute one and the same instrument.

18.      GOVERNING LAW AND JURISDICTION

18.1     GOVERNING LAW

         This Deed and all matters arising from or connected with it are
         governed by, and shall be construed in accordance with, English law.

18.2     JURISDICTION

         18.2.1   The courts of England have exclusive jurisdiction to settle
                  any dispute (a "DISPUTE"), arising from or connected with this
                  Deed (including a dispute regarding the existence, validity or
                  termination of this Deed) or the consequences of its nullity.

         18.2.2   The parties agree that the courts of England are the most
                  appropriate and convenient courts to settle any Dispute and,
                  accordingly, that they will not argue to the contrary.

         18.2.3   This Clause 18.2 is for the benefit of the Security Trustee,
                  the New Bonding Facility Agent and the Escrow Bank only. As a
                  result, nothing in this Clause 18 prevents the Security
                  Trustee, the New Bonding Facility Agent and the Escrow Bank
                  from taking proceedings relating to a Dispute ("PROCEEDINGS")
                  in any other courts with jurisdiction. To the extent allowed
                  by law, the Security Trustee,

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<PAGE>

                  the New Bonding Facility Agent and the Escrow Bank may take
                  concurrent Proceedings in any number of jurisdictions.

18.3     THIRD PARTY RIGHTS

         18.3.1   Unless expressly provided to the contrary in this Deed, a
                  person who is not a party has no right under the Contracts
                  (Rights of Third Parties) Act 1999 to enforce or enjoy the
                  benefit of any term of this Deed.

         18.3.2   Notwithstanding any term of this Deed, the consent of any
                  person who is not a party to this Deed (other than the Note
                  Trustees) is not required to rescind or vary this Deed at any
                  time.

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

                                     - 20 -

<PAGE>

                                   SCHEDULE 1

                                   DEFINITIONS

         "ADDITIONAL AMOUNTS" has the meaning ascribed to it in the Indentures.

         "AFFILIATE" of any specified Person means any other Person directly or
         indirectly controlling or controlled by or under direct or indirect
         common control with such specified Person, and, in the case of a
         natural Person, any immediate family member of such Person. For
         purposes of this definition, "control", as used with respect to any
         Person, shall mean the possession, directly or indirectly, of the power
         to direct or cause the direction of the management or policies of such
         Person, whether through the ownership of voting securities, by
         agreement or otherwise; provided that beneficial ownership of 20% or
         more of the Voting Stock of a Person will be deemed to be control. For
         purposes of this definition, the terms "controlling", "controlled by"
         and "under common control with" have correlative meanings.

         "AGENCY AGREEMENT" means the agreement, dated on or about the date of
         this Deed, appointing the initial Paying Agent and the Registrar in
         relation to the Notes for the purposes specified therein and any other
         agreement for the time being in force appointing successor Paying
         Agents and/or Registrars in relation to the Notes, or in connection
         with their duties, the terms of which have previously been approved in
         writing by the relevant Note Trustee.

         "BOARD OF DIRECTORS" means:

         (a)      with respect to a corporation, the board of directors or other
                  equivalent body of the corporation (or any duly authorized
                  committee thereof) and, in the case of any corporation having
                  both a supervisory board and an executive or management board,
                  the supervisory board (or any duly authorized committee
                  thereof);

         (b)      with respect to a limited partnership, the board of directors
                  or other equivalent body (or any duly authorized committee
                  thereof) of the general partner of the partnership; and

         (c)      with respect to any other Person, the board or committee of
                  such Person serving a similar function.

         "CAPITAL STOCK" means:

         (a)      in the case of a corporation, any and all shares, interests,
                  participations, or other equivalent (however designated and
                  whether or not voting) of share capital;

         (b)      in the case of an association or business entity, any and all
                  shares, interests, participations, rights or other equivalent
                  (however designated and whether or not voting) of share
                  capital;

         (c)      in the case of a partnership or limited liability company,
                  partnership or membership interests (whether general or
                  limited); and

                                     - 21 -

<PAGE>

         (d)      any other interest or participation that confers on a Person
                  the right to receive a share of the profits and losses of, or
                  distributions of assets of, the issuing Person.

         "CAPTIVE INSURANCE COMPANY" means Marconi Insurance Limited, a limited
         liability company incorporated under the laws of Guernsey.

         "CASH COLLATERAL RELEASES" means all releases to, or upon the order or
         instructions of, the Company or any of its Subsidiaries of (1)
         collateral or security constituting cash or Cash Equivalents from any
         Person (other than the Company and its Subsidiaries), which collateral
         or security was provided by the Company or any of its Subsidiaries (a)
         prior to the Issue Date, (b) in the form of deposits into the Existing
         Performance Bond Escrow Accounts, (c) to the New Bonding Facility Agent
         under the New Bonding Facility Agreement, (d) to any agent, security
         trustee or lender under, or otherwise in respect of, any Replacement
         New Bonding Facility Agreement, (e) in respect of any Existing
         Performance Bond, or (f) in respect of the Interim Bonding Facilities;
         PROVIDED THAT (i) releases of collateral or security constituting cash
         or Cash Equivalents in connection with any surety bond, appeal bond,
         bid bond, performance bond, letter of credit, bank guarantee or other
         obligation of a like nature issued by or on behalf of the Captive
         Insurance Company shall not constitute a Cash Collateral Release to the
         extent that the Captive Insurance Company retains such cash and Cash
         Equivalents, (ii) releases of collateral or security constituting cash
         or Cash Equivalents by the New Bonding Facility Agent to a lender under
         the New Bonding Facility Agreement shall not constitute a Cash
         Collateral Release to the extent that such lender retains such cash and
         Cash Equivalents to secure the obligations owed to it under the New
         Bonding Facility Agreement, (iii) releases of collateral or security
         constituting cash or Cash Equivalents in connection with any Italian
         Easy Loan shall not constitute a Cash Collateral Release and (iv)
         releases of collateral or security constituting cash or Cash
         Equivalents in connection with the renewal or extension of any surety
         bond, appeal bond, bid bond, performance bond, letter of credit, bank
         guarantee or other obligation of a like nature issued under the Interim
         Bonding Facilities shall not constitute a Cash Collateral Release to
         the extent that the issuer of the renewed or extended surety bond,
         appeal bond, bid bond, performance bond, letter of credit, bank
         guarantee or like obligation retains such cash or Cash Equivalents
         under the terms of an Interim Bonding Facility; or (2) cash or Cash
         Equivalents held in escrow with respect to sales, transfers or other
         dispositions of assets or property by the Company or any of its
         Subsidiaries prior to the Issue Date. For the avoidance of doubt, any
         release of cash or Cash Equivalents that has been held in escrow
         pursuant to any of the ESOP Escrow Agreement, the Mobile ESOP Escrow
         Agreement, the Israeli ESOP Escrow Agreement or the Singapore ESOP
         Escrow Agreement shall not constitute a Cash Collateral Release.

         "CASH EQUIVALENTS" means:

         (a)      United States dollars, British pounds sterling, Euros, any
                  other currency that is freely convertible into any of the
                  foregoing or a claim on the European Central Bank;

                                     - 22 -

<PAGE>

         (b)      securities (i) issued or directly and fully guaranteed or
                  insured by the US government or any agency or instrumentality
                  of the US government (PROVIDED THAT the full faith and credit
                  of the United States is pledged in support of those
                  securities), or (ii) which are denominated in Euros or British
                  pounds sterling and are issued by, or directly and fully
                  guaranteed or insured by a member of the European Union, or
                  any agency or instrumentality thereof, and which mature, in
                  each case, within six months after the date of acquisition;

         (c)      certificates of deposit and Eurodollar time deposits issued by
                  a Highly Rated Financial Counterparty and which mature within
                  six months after the date of acquisition;

         (d)      repurchase obligations with a term of not more than seven days
                  for underlying securities of the types described in paragraphs
                  (a) and (b) above entered into with a Highly Rated Financial
                  Counterparty;

         (e)      commercial paper having the highest rating obtainable from
                  Moody's Investors Service, Inc. or Standard & Poor's Rating
                  Services (or any successor to the ratings business of either
                  of the foregoing) and which matures within six months after
                  the date of acquisition;

         (f)      marketable direct obligations of any member of the European
                  Union in each case, rated at least "AAA" or the equivalent
                  thereof by both Moody's Investors Service Inc. and Standard &
                  Poor's Rating Services (or any successor to the ratings
                  business of either of the foregoing), or obligations fully and
                  unconditionally guaranteed by one of those sovereign nations
                  (or any agency thereof), of the type and maturity described in
                  paragraph (a) through (e) above, which have ratings described
                  in such clauses or equivalent ratings from comparable foreign
                  rating agencies; and

         (g)      money market funds with at least 95% of the fund's assets
                  constituting Cash Equivalents of the kinds described in
                  paragraphs (a) through (f) of this definition.

         "CDI" means:

         (a)      in the case of DTC, a certificateless depositary interest
                  representing an interest in Global Junior Notes or the Global
                  Senior Notes; or

         (b)      in the case of Euroclear or Clearstream, Luxembourg, a
                  certificated depositary interest representing an interest in
                  Global Junior Notes or the Global Senior Notes.

         "CLEARSTREAM, LUXEMBOURG" means Clearstream Banking societe anonyme.

         "DEBT REPRESENTATIVE" means in relation to the Senior Notes, the Senior
         Note Trustee, in relation to the Junior Notes, the Junior Note Trustee
         and, in relation to the New Bonding Facility Agreement, the New Bonding
         Facility Agent.

                                     - 23 -

<PAGE>

         "DEFAULT" means any event that is, or with the passage of time or the
         giving of notice or the making of any determination or any combination
         thereof would be, an Event of Default.

         "DEFINITIVE REGISTERED JUNIOR NOTES" means Junior Notes in definitive
         registered form.

         "DEFINITIVE REGISTERED SENIOR NOTES" means Senior Notes in definitive
         registered form.

         "DELEGATE" means any delegate, agent, Attorney, co-trustee or
         additional but separate trustee, custodian, depository or Receiver
         appointed by the Security Trustee in accordance with the terms of the
         Security Documents and the Security Trust and Intercreditor Deed.

         "DEPOSIT AGREEMENT" means the deposit agreement dated as of the Issue
         Date between the Company and The Bank of New York, as Depositary.

         "DEPOSITARY" means the Person appointed as agent by the Company under
         the Deposit Agreement for the purposes of maintaining records in which
         it shall record the ownership, transfer and increases or decreases in
         the principal amount of CDIs in a Global Senior Note or a Global Junior
         Note, as the case may be which initially shall be The Bank of New York.

         "DOLLAR EQUIVALENT" means with respect to any monetary amount in a
         currency other than United States Dollars, at any time of determination
         thereof, the amount of United States Dollars obtained by translating
         the amount of such foreign currency into United States Dollars at the
         Bloomberg Composite Spot Rate for the purchase of United States Dollars
         with the applicable currency at 11.30 on the previous Business Day
         prior to such determination.

         "DTC" means The Depository Trust Company or its nominee.

         "ENFORCEMENT EVENT" means the acceleration of any Secured Obligations
         (other than the Secured Obligations arising under the New Bonding
         Facility Agreement) or any declaration that any Secured Obligation
         (other than Secured Obligations arising under the New Bonding Facility
         Agreement) are prematurely due and payable (other than solely as a
         result of it becoming unlawful for a Secured Creditor to perform its
         obligations under the Relevant Documents) or any failure by any Obligor
         to pay any principal amount in respect of any Secured Obligations
         (other than Secured Obligations arising under the New Bonding Facility
         Agreement) whether on maturity or otherwise.

         "EQUITY INTERESTS" means Capital Stock and all warrants, options or
         other rights to acquire Capital Stock (but excluding any debt security
         that is convertible into, or exercisable or exchangeable for, Capital
         Stock).

         "ESCROW ACCOUNTS" means the Existing Performance Bond Escrow Accounts
         and the Mandatory Redemption Escrow Accounts.

         "ESCROW AND DISTRIBUTION AGREEMENT" means the escrow and distribution
         agreement dated March 27, 2003 between the Company, Marconi plc, the
         security trustee named therein, The Bank of New York as distribution
         agent, The Law Debenture Trust

                                     - 24 -

<PAGE>

         Corporation p.l.c., Ancrane, Bondholder Communications Group and the
         Supervisors (as defined therein) with respect to the Restructuring.

         "ESCROW BANK FEE LETTER" means the letter dated on or about the date
         hereof from the Escrow Bank to the Company in respect of fees payable
         to the Escrow Bank pursuant to Clause 10 (Security Trustee and Escrow
         Bank Fees).

         "ESOP ESCROW AGREEMENT" means the ESOP escrow agreement dated December
         13, 2002 between Marconi plc, the Issuer, HSBC Bank plc and Barclays
         Bank PLC.

         "EURO" or "E" means the currency introduced at the start of the third
         stage of the European economic and monetary union pursuant to the
         Treaty establishing the European Community, as amended by the Treaty on
         European Union.

         "EUROCLEAR" means Euroclear Bank S.A./N.V.

         "EVENT OF DEFAULT" when used with respect to the Notes, has the meaning
         set forth in Section 6.01 (Events of Default) of the relevant
         Indentures.

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

         "EXISTING PERFORMANCE BOND ESCROW ACCOUNTS" means the escrow account or
         accounts in the name of the Company with the Escrow Bank designated as
         such and established for the purpose referred to in Clause 4.1 (Purpose
         of Existing Performance Bond Escrow Accounts), details of which are set
         out in Schedule 2 (Escrow Accounts).

         "GLOBAL JUNIOR NOTES" means each global security in bearer form,
         representing all or a part of the Junior Notes, without coupons for
         payments attached, authenticated and delivered to the Holder for such
         Notes in accordance with the Junior Note Indenture, or any other
         Holder.

         "GLOBAL SENIOR NOTES" means each global security in bearer form,
         representing all or a part of the Senior Notes, without coupons for
         payments attached, authenticated and delivered to the Holder of such
         Senior Notes or such portion of such Senior Notes in accordance with
         the Senior Note Indenture.

         "GROUP" means all the Group Companies.

         "GROUP COMPANY" means the Company or any Subsidiary of the Company.

         "GUARANTEE" means any guarantee of any of the Secured Obligations.

         "GUARANTORS" means the companies listed in Schedule 1 (Guarantors) of
         the Security Trust and Intercreditor Deed together with any Person who
         executes a Guarantee and accedes to the Security Trust and
         Intercreditor Deed as a "GUARANTOR".

                                     - 25 -

<PAGE>

         "HIGHLY RATED FINANCIAL COUNTERPARTY" means a bank or financial
         institution whose financial obligations are rated P-1 by Moody's
         Investors Service, Inc. or A-1 by Standard and Poor's Rating Services
         (or any successor to the ratings business of either of the foregoing)
         or the equivalent rating category of another internationally recognized
         rating agency.

         "HOLDER" means (i) for so long as any Junior Notes or any Senior Notes,
         as the case may be, are represented by one or more Global Junior Notes
         or, as the case may be, Global Senior Notes, the bearer thereof which
         shall be the Depositary and (ii) in the event that Definitive
         Registered Junior Notes or Definitive Registered Senior Notes, as the
         case may be, are issued, the Person in whose name a Definitive
         Registered Junior Notes or Definitive Registered Senior Notes, as the
         case may be, is registered on the Registrar's books.

         "INDENTURES" means the Senior Note Indenture and the Junior Note
         Indenture.

         "INITIAL SECURITY DOCUMENTS" means the Guarantees guaranteeing the
         Secured Obligations and the security documents, each to be dated on or
         before the Issuing Date that are set forth in the Indentures.

         "INSTRUCTING TRUSTEE" means:

         (a)      prior to the discharge in full of the Secured Obligations
                  under the Senior Notes and the Senior Note Indenture, the
                  Senior Note Trustee acting on the instructions of the Relevant
                  Holders of the Senior Notes; and

         (b)      following the discharge in full of the Secured Obligations
                  under the Senior Notes and the Senior Note Indenture and prior
                  to the discharge in full of the Secured Obligations under the
                  Junior Notes and the Junior Note Indenture, the Junior Note
                  Trustee acting on the instructions of the Relevant Holders of
                  the Junior Notes.

         "INTERIM BONDING FACILITIES" means:

         (a)      the interim bonding facility dated 10 May 2002 (as amended)
                  among Barclays Bank PLC, HSBC Bank plc and JPMorgan Chase Bank
                  and Marconi Bonding Limited providing for the issuance of
                  surety bonds, appeal bonds, bid bonds, performance bonds,
                  letters of credit, bank guarantees or other obligations of a
                  like nature; and

         (b)      the temporary bonding facility dated 8 February 2002 among
                  Barclays Bank PLC, HSBC Bank plc and Marconi Bonding Limited,
                  providing for the issuance of surety bonds, appeal bonds, bid
                  bonds, performance bonds, letter of credit, bank guarantees or
                  other obligations of a like nature.

         "ISRAELI ESOP ESCROW AGREEMENT" means the escrow agreement dated
         October 21, 2002 between the Issuer, Marconi plc, HSBC Bank plc,
         Barclays Bank PLC, Bedell Cristin Trustees Limited and Allen & Overy.

         "ISSUE DATE" means the date on which the Notes are first originally
         issued.

                                     - 26 -

<PAGE>

         "ITALIAN EASY LOANS" means the subsidised loans existing as of the
         Issue Date granted by Italian Ministry of Productive Activities
         (formerly Ministry of Industry), either directly or through its
         authorised agents, in favour of Marconi Communications S.p.A. and
         Marconi Sub S.p.A. or any other Subsidiary of the Company incorporated
         or organised under the laws of Italy pursuant to the provisions of Law
         no. 46 date 17 February 1982 and Legislative Decree No. 297 dated 27
         July 1999.

         "JUNIOR NOTE INDENTURE" means the indenture dated as of 19 May 2003
         between and among the Company as issuer, the initial guarantors named
         therein and JPMorgan Chase Bank as trustee, governing the Junior Notes,
         as originally executed or as it may from time to time be supplemented
         or amended by one or more indentures supplemental thereto entered into
         pursuant to the applicable provisions thereof.

         "JUNIOR NOTE TRUSTEE" means JPMorgan Chase Bank or any successor
         trustee provisions of the Junior Note Indenture.

         "JUNIOR NOTES" means the Guaranteed Junior Secured Notes due 2008
         issued by the Company pursuant to the Junior Note Indenture.

         "JUNIOR PIK NOTES" means any Junior Notes issued in payment of interest
         or Additional Amounts paid in kind on outstanding Junior Notes pursuant
         to the Junior Note Indenture.

         "LIEN" means with respect to any asset or property, any mortgage or
         deed of trust, lien (statutory or otherwise), pledge, charge, security
         interest, assignment, deposit, easement, hypothecation, or other
         encumbrance of any kind upon or in respect of such asset or property,
         whether or not filed, recorded or otherwise perfected under applicable
         law, including any conditional sale, capital lease or other title
         retention agreement, any lease in the nature thereof, any agreement to
         give a charge, mortgage or other security interest in and filing of or
         agreement to give any financing statement under a statute or regulation
         of any jurisdiction.

         "LONDON BUSINESS DAY" means a day (other than a Saturday or Sunday) on
         which commercial banks in London are open for general business.

         "MANDATORY REDEMPTION ESCROW ACCOUNTS" means the MREA US Dollar Escrow
         Account, the MREA Euro Escrow Account and the MREA Sterling Escrow
         Account established for the purpose referred to in Clause 3.1 (Purpose
         of Mandatory Redemption Escrow Accounts).

         "MOBILE ESOP ESCROW AGREEMENT" means the escrow agreement dated August
         2, 2002 between the Issuer, Marconi plc, Marconi Bruton Street Limited,
         HSBC Bank plc, Barclays Bank PLC, Salomon Brothers International
         Limited, UBS AG, Bedell Cristin Trustees Limited and Slaughter and May.

         "MREA EURO ESCROW ACCOUNT" means the escrow account designated as such
         and denominated in euro with the Escrow Bank and details of which are
         set out in Schedule 2 (Escrow Accounts).

                                     - 27 -

<PAGE>

         "MREA STERLING ESCROW ACCOUNT" means the escrow account designated as
         such and denominated in British sterling with the Escrow Bank and
         details of which are set out in Schedule 2 (Escrow Accounts).

         "MREA US DOLLAR ESCROW ACCOUNT" means the escrow account designated as
         such and denominated in US dollars with the Escrow Bank and details of
         which are set out in Schedule 2 (Escrow Accounts).

         "NEW BONDING FACILITY AGREEMENT" means the L50 million committed
         revolving bonding facility agreement dated March 27, 2003 among the
         Comany, Marconi Bonding Limited, the New Bonding Facility Security
         Trustee, certain New Bonding Facility Banks and certain Non-US
         Subsidiaries providing for the issuance of surety bonds, appeal bonds,
         bid bonds, performance bonds, letters of credit, bank guarantees or
         other obligations of a like nature on behalf of the Company and/or any
         Non-US Subsidiary, as such agreement may be amended, extended,
         supplemented or otherwise modified from time to time (including,
         without limitation, any successive amendments, extensions, supplements
         or other modifications of the foregoing); provided that (1) the
         aggregate principal amount of Indebtedness (as defined in the
         Indentures) at any one time outstanding thereunder shall not exceed
         L50 million (or the Sterling Equivalent) and (2) the term of such
         facility shall not extend beyond the date that is 30 months after the
         Issue Date (but, for the avoidance of doubt, Indebtedness (as defined
         in the Indentures) and other obligations incurred or arising under such
         facility on or prior to the date that is 30 months after the Issue Date
         may extend beyond such date in accordance with the provisions of such
         facility).

         "NEW BONDING FACILITY FUNDING AMOUNT" means at any time the lesser of
         (i) L25,000,000 (or the Sterling Equivalent) and (ii) one half of the
         aggregate facility limit under the New Bonding Facility Agreement.

         "NON-US SUBSIDIARY" means any Subsidiary of the Company other than a US
         Subsidiary.

         "NOTE TRUSTEE" means each of the Senior Note Trustee and the Junior
         Note Trustee and "NOTE TRUSTEE" means either of them.

         "NOTES" means the Senior Notes and the Junior Notes, collectively.

         "OBLIGORS" means each of the Company and the Guarantors.

         "OUTSTANDING" means, as of any date of determination, in relation to
         the Notes all the Notes issued other than:

         (a)      those Notes which have been redeemed pursuant to the
                  Indentures;

         (b)      those Notes in respect of which the date for redemption in
                  accordance with the Indentures has occurred and the redemption
                  moneys (including premium (if any) and all interest and
                  Additional Amounts, if any, payable thereon) have been duly
                  paid to the relevant Note Trustee or to the Paying Agent in
                  the manner provided in the Agency Agreement (and where
                  appropriate notice to that effect has been given to the
                  relevant Holders) and remain available for payment against
                  presentation of the relevant Notes;

                                     - 28 -

<PAGE>

         (c)      those mutilated or defaced Notes which have been surrendered
                  and cancelled and in respect of which replacements have been
                  issued;

         (d)      (for the purpose only of ascertaining the principal amount of
                  the Notes outstanding and without prejudice to the status for
                  any other purpose of the relevant Notes) those Notes which are
                  alleged to have been lost, stolen or destroyed and in respect
                  of which replacements have been issued; and

         (e)      any Global Senior Note or, as the case may be, any Global
                  Junior Note to the extent that it shall have been exchanged
                  for another Global Senior Note or, as the case may be, another
                  Global Junior Note or for Definitive Registered Senior Notes
                  or, as the case may be, for Definitive Registered Junior Note
                  pursuant to its provisions or the provisions of the relevant
                  Indenture;

         PROVIDED THAT for each of the following purposes, namely:

         (i)      the right to attend and vote at any meeting of the Holders or
                  any of them;

         (ii)     the determination of how many and which Notes are for the time
                  being outstanding for the purposes of determining whether the
                  Required Holders have consented to the cessation of a Payment
                  Stop Event, the cancellation of a Standstill Notice or for the
                  purposes of the relevant and applicable sections of the
                  Indentures (as specified in the definition of "OUTSTANDING" in
                  such Indenture);

         (iii)    any discretion, power or authority (whether contained in the
                  Indentures or vested by operation of law) which the relevant
                  Note Trustee is required, expressly or impliedly, to exercise
                  in or by reference to the interests of the Holders or any of
                  them; and

         (iv)     the determination by the relevant Note Trustee whether any
                  event, circumstance, matter or thing is, in its opinion,
                  materially prejudicial to the interests of the Holders or any
                  of them,

         those Notes (if any) (1) which are for the time being held by or on
         behalf of the Company, a Guarantor, any of their respective
         Subsidiaries or any Affiliate of any of the foregoing, in each case as
         beneficial owner, and (2) which are held in escrow pursuant to the
         Escrow and Distribution Agreement for distribution to Scheme Creditors
         shall (unless and until ceasing to be so held) be deemed not to remain
         Outstanding.

         "PAYING AGENT" means initially The Bank of New York and thereafter, any
         Person (other than the Company, any Guarantor or any Affiliate of the
         Company or any Guarantor) authorised by the Company to authenticate and
         pay the principal of, premium, if any, and interest and Additional
         Amounts, if any, on any Notes on behalf of the Company in accordance
         with the Agency Agreement.

         "PAYMENT DATE" means any date on which a payment, prepayment, purchase
         or redemption (whether such payment, prepayment, purchase or redemption
         is a payment, prepayment, purchase or redemption of principal, interest
         or premium or is a payment or prepayment of Additional Amounts, fees,
         commission or otherwise) is made or is

                                     - 29 -

<PAGE>

         permitted to be made by an Obligor (including, without limitation,
         whether directly or indirectly by use of amounts standing to the credit
         of the Escrow Accounts in accordance with this Deed) in accordance and
         in compliance with the terms of the Relevant Documents.

         "PAYMENT STOP EVENT" means:

         (a)      the failure by any Obligor to pay on the due date any amount
                  payable under the Senior Notes or the Senior Note Indenture;
                  and/or

         (b)      the acceleration of amounts due under the Senior Notes or the
                  Senior Note Indenture following the occurrence of an Event of
                  Default under the Senior Notes or the Senior Note Indenture,

         PROVIDED THAT a Payment Stop Event shall cease to be continuing if:

         (i)      the relevant Default under the Senior Notes or the Senior Note
                  Indenture has been remedied or waived and, if amounts due
                  under the Senior Notes have been accelerated, any such
                  acceleration has been rescinded in accordance with the Senior
                  Note Indenture; or

         (ii)     the Required Holders of at least a majority of the principal
                  amount of the then Outstanding Senior Notes consent in writing
                  to the cessation of the relevant Payment Stop Event; or

         (iii)    the Secured Obligations arising under the Senior Notes and the
                  Senior Note Indenture have been discharged in full,

         and, in the case of (i), (ii) or (iii), the Senior Note Trustee will
         promptly issue a written notice to the other Debt Representatives, the
         Security Trustee and the Company notifying them that the relevant
         Payment Stop Event has ceased to be continuing.

         "PERSON" means any individual, corporation, partnership, joint venture,
         association, joint-stock company, trust, unincorporated organization,
         limited liability company or government or other entity.

         "POST-ACCELERATION PAYMENT PRIORITIES" as set out in the Security Trust
         and Intercreditor Deed are the priorities set out below:

         (a)      FIRST, pro rata according to the respective amounts thereof,
                  in or towards satisfaction of the liabilities (secured or
                  unsecured) and any unpaid fees, costs and expenses in each
                  case owing to, and for the account of, the Security Trustee,
                  any Receiver or Delegate, the Senior Note Trustee, the Junior
                  Note Trustee, the New Bonding Facility Agent, the Depositary,
                  the Paying Agent, the Escrow Bank and the Registrar;

         (b)      SECOND, to the New Bonding Facility Agent for application in
                  or towards satisfaction of all liabilities (secured or
                  unsecured) owing to the New Bonding Facility Banks (as defined
                  in the New Bonding Facility Agreement) under the New Bonding
                  Facility Agreement;

                                     - 30 -

<PAGE>

         (c)      THIRD, in or towards satisfaction of all liabilities (secured
                  or unsecured) owing to the Junior Note Trustee as Note Trustee
                  for the holders of the Junior Notes, to the extent of any True
                  Up Amount paid to the Senior Note Trustee and not previously
                  applied pursuant to this paragraph (c);

         (d)      FOURTH, in or towards satisfaction of all liabilities (secured
                  or unsecured) owing to the Senior Note Trustee as Note Trustee
                  for the holders of the Senior Notes;

         (e)      FIFTH, in or towards satisfaction of all liabilities (secured
                  or unsecured) owing to the Junior Note Trustee as Note Trustee
                  for the holders of the Junior Notes;

         (f)      SIXTH, any other person (other than the Company) so entitled
                  to the proceeds (including any person entitled to such
                  proceeds pursuant to mandatory rules of law of any
                  jurisdiction);

         (g)      SEVENTH, the Company.

         "PRE-ACCELERATION PAYMENT PRIORITIES" as set out in the Security Trust
         and Intercreditor Deed are the priorities set out below:

         (a)      All monies credited to the Existing Performance Bond Escrow
                  Accounts will be applied in accordance with the terms and
                  conditions of the Security Trust and Intercreditor Deed and
                  this Deed.

         (b)      All monies credited to the Mandatory Redemption Escrow
                  Accounts in accordance with the Junior Note Indenture, the
                  Senior Note Indenture, this Deed and the Security Trust and
                  Intercreditor Deed, will be applied on any Payment Date
                  strictly in accordance with the following order of priority:

                  (i)      FIRST, in or towards satisfaction of all liabilities
                           (secured or unsecured) owing to the Senior Note
                           Trustee as Note Trustee for holders of the Senior
                           Notes, to the extent of any True-Up Amount paid to
                           the Junior Note Trustee and not previously applied
                           pursuant to this paragraph (i);

                  (ii)     SECOND, in or towards satisfaction of all liabilities
                           (secured or unsecured) owing to the Junior Note
                           Trustee as Note Trustee for the holders of the Junior
                           Notes;

                  (iii)    THIRD, in or towards satisfaction of all liabilities
                           (secured or unsecured) owing to the Senior Note
                           Trustee as Note Trustee for the holders of the Senior
                           Notes;

                  (iv)     FOURTH, any other person (other than the Company) so
                           entitled to the proceeds (including any person
                           entitled to such proceeds pursuant to the mandatory
                           rules of law of any jurisdiction); and

                  (v)      FIFTH, the Company.

         "RECEIVER" means a receiver or manager or administrative receiver of
         the whole or any part of the Transaction Security.

                                     - 31 -

<PAGE>

         "REDEMPTION CERTIFICATE" means a certificate in substantially the form
         set out in Schedule 4 (Form of Redemption Certificate) delivered by the
         Company to the Security Trustee.

         "REDEMPTION PRICE" means a redemption price in cash in the Relevant
         Currency of 110% of the principal amount of the Junior Notes or the
         Senior Notes, as the case may be, plus in each case accrued and unpaid
         interest thereon and Additional Amounts in respect thereof, if any, to
         the Repayment Date.

         "REGISTRAR" means any Person appointed by the Company to maintain an
         office or agency where Definitive Registered Senior Notes or Definitive
         Registered Junior Notes, as the case may be, may be presented for
         transfer, exchange or payment under the relevant Indentures, which
         initially shall be The Bank of New York.

         "RELEASE CERTIFICATE" means a certificate in substantially the form set
         out in Schedule 3 (Form of Release Certificate) delivered to the
         Security Trustee by the Company.

         "RELEVANT CURRENCY" means United States dollars, PROVIDED THAT in the
         event the Company elects to pay a redemption amount in British pounds
         sterling in accordance with the Indentures, the Relevant Currency of
         such redemption amount shall be British pounds sterling.

         "RELEVANT DOCUMENT" means the Security Trust and Intercreditor Deed,
         any Agent/Trustee/New Bonding Facility Bank Accession Letter (as
         defined in the Security Trust and Intercreditor Deed), any Guarantor
         Accession Letter (as defined in the Security Trust and Intercreditor
         Deed), the Indentures, this Deed, the Notes, the New Bonding Facility
         Agreement, the Security Documents, (including the Guarantee of the
         Senior Notes, the Guarantee of the Junior Notes and the Composite
         Guarantee (as defined in the Indentures) the Escrow Agreement the Fee
         Letter (as defined in the Security Trust and Intercreditor Deed) and
         any Additional Remuneration Fee Letter (as defined in the Security
         Trust and Intercreditor Deed) and any notices issued and any other
         documents or agreements entered into in connection with or relating to
         such documents.

         "RELEVANT HOLDER" means in relation to any tranche of Notes, the
         Required Holders of at least 25 per cent. of the principal amount of
         the then outstanding Notes in such tranche, PROVIDED THAT if in
         relation to any instruction to any Note Trustee, no instructions
         inconsistent with such instructions have been given to the relevant
         Note Trustee by the holders of a majority of the principal amount of
         the then outstanding applicable Notes, then the holders of such
         majority shall be the "RELEVANT HOLDERS".

         "REPAYMENT DATE" means each date upon which the Company redeems all or
         part of the Outstanding Senior Notes or the Outstanding Junior Notes,
         as the case may be.

         "REPLACEMENT NEW BONDING FACILITY AGREEMENTS" means any facility
         agreement or agreements entered into on or after the Issue Date between
         or among the Company and/or any Non-US Subsidiary with any bank,
         insurance company or other financial institution providing for the
         issuance of surety bonds, appeal bonds, bid bonds, performance bonds,
         letters of credit, bank guarantees or other obligations of a like
         nature on behalf of the Company and/or any Non-US Subsidiary, as such
         agreement or agreements may be amended, extended, supplemented or
         otherwise modified from time

                                     - 32 -

<PAGE>

         to time (including, without limitation, any successive amendments,
         extensions, supplements or other modifications of the foregoing);
         PROVIDED THAT (1) the term of each such facility shall not extend
         beyond the date that is 30 months after the Issue Date (but, for the
         avoidance of doubt, Indebtedness (as defined in the Indentures) and
         other obligations incurred or arising under any such facility on or
         prior to the date that is 30 months after the Issue Date may extend
         beyond such date in accordance with the provisions of any such
         facility) and (2) no such facility agreement shall require the Company
         and/or any Non-US Subsidiary to cash-collateralize any instrument
         issued thereunder, or otherwise require the Company and/or any Non-US
         Subsidiary to grant any Lien to secure any instrument issued thereunder
         on any property or asset having a value, in excess of 50% of the
         aggregate face or principal amount of any such instrument.

         "REQUIRED HOLDERS" means at any time, the Holder or Holders of at least
         the specified percentage of the aggregate principal amount of the
         relevant Notes at the time Outstanding.

         "RESPONSIBLE OFFICER", when used with respect to a Note Trustee, means
         any officer of that Note Trustee assigned to or working in the
         Corporate Trust Department of that Note Trustee or, with respect to a
         particular corporate trust matter, any other officer to whom such
         matter is referred because of his or her knowledge of and familiarity
         with the particular subject and who shall have direct responsibility
         for the administration of the relevant Indenture.

         "RESTRUCTURING" means the Scheme of Arrangement under Section 425 of
         the Companies Act 1985 between the Company and its Scheme Creditors in
         the High Court of Justice of England and Wales.

         "SCHEME CREDITORS" means the creditors of the Company and Marconi plc
         in respect of the Restructuring.

         "SECURED CREDITORS" means the Security Trustee, any Receiver or
         Delegate, the Depositary, the Paying Agent, the Registrar, the Senior
         Note Trustee (for itself and as trustee for the holders of the Senior
         Notes), the Junior Note Trustee (for itself and as trustee for the
         holders of the Junior Notes), the New Bonding Facility Agent the Escrow
         Bank and each of the New Bonding Facility Banks (as defined in the New
         Bonding Facility Agreement) and their successors and assigns.

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

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

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

         (c)      any claim for damages or restitution; and

                                     - 33 -

<PAGE>

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

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

         "SECURITY" means a mortgage, charge, pledge, lien or other security
         interest securing any obligation of any person or any other agreement
         or any guarantee, indemnity or assurance against loss or arrangement
         having a similar effect.

         "SECURITY DOCUMENTS" means (1) the Initial Security Documents securing
         the Secured Obligations, (2) any other pledge agreements, security
         agreements, mortgages, deeds of trust and other agreements, instruments
         and documents entered into from time to time by the Issuer or any
         Subsidiary of the Issuer creating or granting any Guarantee, indemnity
         or Security in favour of any of the Secured Creditors or the Security
         Trustee, as trustee for the Secured Creditors, as security for any of
         the Secured Obligations and (3) any other agreements, instruments and
         documents executed and delivered pursuant to any of the foregoing, in
         the case of each of clauses (1) through (3), as amended, modified,
         restated or supplemented from time to time.

         "SECURITY TRUST AND INTERCREDITOR DEED" means the security trust and
         intercreditor deed dated on or about the date of this Deed between, the
         Company, the Security Trustee, the Guarantors referred to therein, the
         Senior Note Trustee, the Junior Note Trustee, the New Bonding Facility
         Agent, the New Bonding Facility Banks referred to therein, the
         Depositary, the Paying Agent, the Registrar, the Intra-Group Creditors
         referred to therein, and the Intra-Group Borrowers referred to therein,
         as amended, modified, restated or supplemented from time to time.

         "SECURITY TRUSTEE ESCROW FEE LETTER" means the letter dated on or about
         the date hereof from the Security Trustee to the Company in respect of
         fees payable to the Security Trustee pursuant to Clause 10 (Security
         Trustee and Escrow Bank Fees).

         "SENIOR NOTE INDENTURE" means the indenture dated as of 19 May, 2003
         between the Company as issuer, the initial guarantors named therein and
         Law Debenture Trust Company of New York as Senior Note Trustee,
         governing the Senior Notes, as originally executed or as it may from
         time to time be supplemented or amended by one or more indentures
         supplemental thereto entered into pursuant to the applicable provisions
         thereof.

         "SENIOR NOTE TRUSTEE" means Law Debenture Trust Company of New York or
         any successor appointed pursuant to the applicable provisions of the
         Senior Note Indenture.

         "SENIOR NOTES" means the euro or US dollar denominated Guaranteed
         Senior Secured Notes due 2008 issued or to be issued by the Company.

         "SERIES" means each of the Convertible Euro Senior Notes, the Euro
         Senior Notes and the Dollar Senior Notes.

                                     - 34 -

<PAGE>

         "SINGAPORE ESOP ESCROW AGREEMENT" means the escrow agreement dated
         November 12, 2002 between the Issuer, Marconi plc, Metapath Software
         International Limited, HSBC Bank plc, Barclays Bank PLC, Bedell Cristin
         Trustees Limited and Allen & Overy.

         "STANDSTILL EVENT" means the occurrence of a Default under the Senior
         Notes except as provided in Clause (2) of Section 6.02 of the Senior
         Note Indenture.

         "STANDSTILL NOTICE" means a notice delivered to the Security Trustee
         (with a copy to the Company and the other Debt Representatives) by the
         Senior Note Trustee in accordance with the provisions of Security Trust
         and Intercreditor Deed, notifying the Security Trustee of a Standstill
         Event.

         "STANDSTILL PERIOD" means the period from the date of the issuance of a
         Standstill Notice by the Senior Note Trustee and ending on the earlier
         of:

         (a)      the expiration of a period of 179 days after the date of the
                  issuance of such Standstill Notice by the Senior Note Trustee;

         (b)      the date on which the Senior Note Trustee has confirmed in
                  writing to the Security Trustee (with a copy to the Company
                  and the other Secured Creditors) that the Default under the
                  Senior Notes in respect of which that Standstill Notice was
                  issued is no longer continuing;

         (c)      the date on which the Senior Note Trustee has confirmed in
                  writing to the Security Trustee (with a copy to the Company
                  and the other Secured Creditors) that the Standstill Notice
                  has been cancelled by the Senior Note Trustee acting on the
                  instructions of the Required Holders of at least a majority of
                  the aggregate principal amount of the then Outstanding Senior
                  Notes; and

         (d)      the date on which the Senior Note Trustee has confirmed in
                  writing to the Security Trustee (with a copy to the Company
                  and the other Secured Creditors) that the Secured Obligations
                  under the Senior Notes and the Senior Note Indenture have been
                  discharged in full and there are no further liabilities under
                  the Senior Notes or the Senior Note Indenture.

         "STERLING EQUIVALENT" means with respect to any monetary amount in a
         currency other than British pounds sterling, at any time of
         determination thereof, the amount of British pounds sterling obtained
         by translating the amount of such foreign currency into British pounds
         sterling at the spot rate for the purchase of British pounds sterling
         with the applicable currency as published in the Financial Times on the
         date that is two London Business Days prior to such determination.

         "SUBSIDIARY" means with respect to any specified Person:

         (a)      any corporation, association or other business entity of which
                  more than 50% of the total voting power of its Capital Stock
                  entitled (without regard to the occurrence of any contingency)
                  to vote in the election of directors, managers or trustees of
                  the corporation, association or other business entity is at
                  the time owned or controlled, directly or indirectly, by that
                  Person or one or more of the other Subsidiaries of that Person
                  (or a combination thereof); and

                                     - 35 -

<PAGE>

         (b)      any partnership (a) the sole general partner or the managing
                  general partner of which is such Person or a Subsidiary of
                  such Person, or (b) the only general partners of which are
                  that Person or one or more Subsidiaries of that Person (or any
                  combination thereof).

         Unless otherwise specified herein, or the context otherwise requires, a
         reference to a "Subsidiary" herein is to a Subsidiary of the Company.

         "TAX" and "TAXES" means any tax, duty, levy, impost, assessment or
         other governmental charge of whatever nature (including penalties,
         interest and other liabilities related thereto).

         "TRANSACTION SECURITY" means any guarantee (including the Guarantees)
         guaranteeing the payment of the Secured Obligations and any Security
         created or expressed to be created in favour of the Security Trustee or
         any Secured Creditor under the Security Documents.

         "US GUARANTOR" means each of:

         Marconi Communications, Inc. and any other US Parent

         (a)

                  (i)      Marconi Networks Worldwide, Inc.

                  (ii)     Marconi Communications Technology, Inc.

                  (iii)    Marconi Communications Federal, Inc.

                  (iv)     Marconi Acquisition Corp.

                  (v)      Marconi Intellectual Property (Ringfence) Inc.

                  (vi)     Marconi Communications Limited (a private limited
                           company incorporated under the laws of the Republic
                           of Ireland)

                  (vii)    Marconi Communications Optical Networks Limited

                  (viii)   Marconi Communications, S.A. de C.V.

                  (ix)     Marconi Communications de Mexico, S.A. de C.V.

                  (x)      Marconi Communications Exportel, S.A. de C.V.

                  (xi)     Administrativa Marconi Communications, S.A. de C.V.

                  (xii)    Marconi Communications B.V.; and

                  (xiii)   Marconi Communications GmbH a private company
                           incorporated under the laws of Switzerland;

         (b)      any other US Subsidiary that executes (a) a Guarantee of the
                  Senior Notes pursuant to this Indenture and (b) a Guarantee of
                  the Junior Notes pursuant to the Junior Note Indenture; and

                                     - 36 -

<PAGE>

         (c)      each of their respective successors and assigns.

         "US PARENT" means either (1) Marconi Communications Inc. or (2) a
         Wholly-Owned Subsidiary of the Company which: (a) is incorporated after
         the Issue Date; (b) becomes a US Guarantor; and (c) acquires the Equity
         Interests in Marconi Communications Inc.

         "US SUBSIDIARY" means each of US Parent and each of its Subsidiaries,
         PROVIDED THAT they constitute a Subsidiary of the Company.

         "VAT" means value added tax as provided for in the Value Added Tax Act
         1994 and any other tax of a similar nature.

         "VOTING STOCK" of any Person as of any date means the Capital Stock of
         such Person that is at the time entitled to vote in the election of the
         Board of Directors of such Person.

         "WHOLLY-OWNED SUBSIDIARY" of any specified person means a Subsidiary of
         such Person all of the outstanding Capital Stock or other ownership
         interests of which (other than directors' qualifying shares) are at the
         time owned by such Person or by one or more Wholly-Owned Subsidiary of
         such Person.

                                     - 37 -

<PAGE>

                                   SCHEDULE 2

                                 ESCROW ACCOUNTS

                                     PART A

                      MANDATORY REDEMPTION ESCROW ACCOUNTS

<TABLE>
<CAPTION>
                                                                                    ACCOUNT
                                                                   ACCOUNT            NAME/
ACCOUNT NAME            BANK           CURRENCY      SORT CODE      NUMBER          REFERENCE       SWIFT CODE
<S>                   <C>              <C>           <C>           <C>          <C>                 <C>
1.  MREA                HSBC           US Dollar      40-05-15     57850236     USD Call Account     MIDLGB22
    US Dollar         Bank plc
    Escrow
    Account

2.  MREA                HSBC             Euros        40-05-15     57850201     EUR Call Account     MIDLGB22
    Euro              Bank plc
    Escrow
    Account

3.  MREA                HSBC            British       40-05-30     73666654     GPB Deposit          MIDLGB22
    Sterling          Bank plc         Sterling                                 Account
    Escrow
    Account
</TABLE>

                                     - 38 -

<PAGE>

                                     PART B

                    EXISTING PERFORMANCE BOND ESCROW ACCOUNTS

<TABLE>
<CAPTION>
                                                                                     ACCOUNT
                                                                   ACCOUNT            NAME/
                        BANK           CURRENCY      SORT CODE      NUMBER          REFERENCE       SWIFT CODE
<S>                   <C>              <C>           <C>           <C>              <C>             <C>
1.  GBP                 HSBC           British       40-05-30      73666662          GPB Deposit      MIDLGB22
    Deposit           Bank plc         Sterling                                      Account
    Account

2.  EUR Call            HSBC             Euros       40-05-15      57850228          EUR Call         MIDLGB22
    Account           Bank plc                                                       Account

3.  USD Call            HSBC           US Dollar     40-05-15      57850244          USD Call         MIDLGB22
    Account           Bank plc                                                       Account
</TABLE>

                                     - 39 -

<PAGE>

                                   SCHEDULE 3

                           FORM OF RELEASE CERTIFICATE

To:      The Law Debenture Trust Corporation plc (the "SECURITY TRUSTEE")

From:    Marconi Corporation plc

                                                                          [Date]

Dear Sirs

ESCROW AGREEMENT DATED [    ] BETWEEN THE SECURITY TRUSTEE, THE NEW BONDING
FACILITY AGENT, THE NEW BONDING FACILITY AGENT, THE ESCROW BANK AND MARCONI
CORPORATION PLC (THE "ESCROW AGREEMENT")

1.       We refer to the Escrow Agreement. Terms defined in the Escrow Agreement
         shall have the same meaning when used herein. This is a Release
         Certificate.

2.       We hereby certify as at the date hereof that (a) [insert amount] (the
         "COLLATERAL AMOUNT") is required to collateralise [describe performance
         bond] (the "PERFORMANCE BOND") in accordance with sub-clause 4.2.1 of
         Clause 4.2 (Payments out of the Existing Performance Bond Escrow
         Accounts) of the Escrow Agreement, and (b) such amount having been
         validly demanded pursuant to an enforceable right for cash collateral
         by the [bank(s)/insurance companies) other financial institutions]
         listed in the schedule to this Release Certificate as the issuer(s) of
         the Performance Bonds.

3.       We further certify that the above-mentioned [describe performance bond]
         is an Existing Performance Bond.

4.       We hereby certify that we determine in good faith that the amount
         needed to satisfy our obligations and the obligations of our
         Subsidiaries under all Existing Performance Bonds including the amount
         referred to in Paragraph 2 of this Release Certificate is [insert
         amount].

5.       This Release Certificate is governed by English law.

Yours faithfully

_______________________

for and on behalf of
MARCONI CORPORATION PLC

                                     - 40 -

<PAGE>

                                   SCHEDULE 4

                         FORM OF REDEMPTION CERTIFICATE

To:      Law Debenture Trust Corporation plc (the "SECURITY TRUSTEE")
         Law Debenture Trust Company of New York (the "SENIOR NOTE TRUSTEE")
         JPMorgan Chase Bank (the "JUNIOR NOTE TRUSTEE")
         The Bank of New York (the "REGISTRAR", the "DEPOSITARY"
         and the "PAYING AGENT")

From:    Marconi Corporation plc

                                                                          [Date]

Dear Sirs,

ESCROW AGREEMENT DATED [    ] BETWEEN THE SECURITY TRUSTEE, THE NEW BONDING
FACILITY AGENT, THE ESCROW BANK AND MARCONI CORPORATION PLC (THE "ESCROW
AGREEMENT")

1.       We refer to the Escrow Agreement. Terms defined in the Escrow Agreement
         shall have the same meaning when used herein. This is a Redemption
         Certificate.

2.       We hereby notify you that the next Repayment Date in relation to the
         [Junior Notes / Senior Notes] shall fall on [    ].

3.       We are obliged to redeem the [Junior Notes / Senior Notes] at the
         Redemption Price on the Repayment Date stated above.

4.       The Redemption Price is $[    ], and we hereby certify the calculations
         enclosed with this Redemption Certificate comply with the provisions of
         the relevant Indenture stating the method of calculating the Redemption
         Price.

5.       We hereby request that pursuant to Clause 3.2 (Payments out of the
         Mandatory Redemption Escrow Accounts) of the Escrow Agreement the
         Security Trustee instructs the Escrow Bank to release sums equal to the
         lesser of (i) the balance of the Mandatory Redemption Escrow Accounts
         or (ii) the Redemption Price and to transfer such sums to the following
         accounts: [    ].

6.       This Redemption Certificate is governed by English law.

Yours faithfully

_______________________

for and on behalf of
MARCONI CORPORATION PLC

                                     - 41 -

<PAGE>

EXECUTION

THE COMPANY

EXECUTED AS A DEED

by MARCONI CORPORATION PLC

acting by two authorised signatories:       M SKELLY          C HOLDEN

Address for notices:    338 Euston Road
                        London NW1 3BT

Fax:                    +44 207 409 1947
Attention:              Company Secretary, Marconi Corporation plc

THE SECURITY TRUSTEE

EXECUTED AS A DEED

by THE LAW DEBENTURE TRUST CORPORATION P.L.C.

JULIAN MASON JEBB       Director

Representing Law Debenture Corporate Services Limited

R D RANCE               Secretary

Address for notices:    Fifth Floor
                        100 Wood Street
                        London EC2V 7EX

Fax:                    44-20-76965271
Attention:              The Manager, Treasury Management Department

<PAGE>

THE ESCROW BANK

HSBC BANK PLC

Signed as a Deed         )   M BROWN
by: Mark Brown           )
                         )
As attorney of           )   T SAUNDERS
HSBC BANK PLC            )
in the presence of:      )

Trevor Saunders
Address for notices:     City Corporate Banking Centre
                         27-32 Poultry
                         London EC2P 2BX

Fax:                     020 7800 5031
Attention:               Trevor Saunders

THE NEW BONDING FACILITY AGENT

HSBC BANK PLC

Signed as a Deed         )   I MCMILLAN
by: Ian McMillan         )
                         )
As attorney of           )   C WALTERS
HSBC BANK PLC            )
in the presence of:      )
Chelsea Walters

Address for notices:     8 Canada Square
                         London E14 5HQ

Fax:                     020 7991 4346
Attention:               Chris Merrett<PAGE>

                                                                     EXHIBIT 4.6

                                                                  CONFORMED COPY

                             DATED 19 DECEMBER, 2002

                      RT GROUP TELECOM SERVICES LIMITED (1)

              RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION) (2)

                           MARCONI CORPORATION PLC (3)

                              ULTRAMAST LIMITED (4)

                                      -and-

                         JAMES ROBERT DRUMMOND SMITH AND
                            NICHOLAS JAMES DARGAN (5)

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

                                 SETTLEMENT DEED

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

                                  ALLEN & OVERY
                                     London

                               SH/IRT/BK:1071686.1

<PAGE>

THIS AGREEMENT is made by way of deed on 19 December, 2002

BETWEEN:

(1)      RT GROUP TELECOM SERVICES LIMITED, a company incorporated in England
         and Wales (registered number 3963596) whose registered office is at
         20-22 Bedford Row, London WC1R 4JS ("RTS");

(2)      RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION), a company
         incorporated in England and Wales (registered number 2904614) whose
         registered office is at 20-22 Bedford Row, London WC1R 4JS ("RG")
         acting by its joint liquidators James Robert Drummond Smith and
         Nicholas James Dargan of Deloitte & Touche, 180 Strand, London WC2R 1WL
         (the "LIQUIDATORS");

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

(4)      ULTRAMAST LIMITED, a company incorporated in England and Wales
         (registered number 4042640) whose registered office is at City Point,
         One Ropemaker Street, London EC2Y 9SS ("ULTRAMAST"); and

(5)      THE LIQUIDATORS.

WHEREAS:

(A)      Ultramast has an issued share capital of L1,000 divided into 1,000
         Ordinary Shares, all of which have been issued fully paid.

(B)      On 14th December, 2000, Marconi and RTS entered into the Ultramast
         Agreement. Following completion of the Ultramast Agreement on 26th
         April, 2001, Marconi was and is the registered holder of and is
         beneficially entitled to 500 Ordinary Shares and RTS was and is the
         registered holder of and is beneficially entitled to 500 Ordinary
         Shares.

(C)      On 1st February, 2002, RTS exercised its rights under the Easynet Put
         Option in respect of the Easynet Shares. Marconi refused to accept
         delivery of the Easynet Shares or to pay the consideration of
         L20,000,000 payable for the Easynet Shares under the Easynet Put Option
         on the basis that it alleged that it was entitled to set-off against
         its obligation to pay for the Easynet Shares a number of claims against
         RTS.

(D)      On 25th March, 2002, RTS commenced the Action seeking payment of sums
         alleged to be due under the Easynet Put Option and on 19th April, 2002,
         RTS made an application for summary judgment. The application was heard
         on 25th July, 2002, when Morison J declined to grant summary judgment
         in the light of Marconi's counterclaims but ordered Marconi to pay the
         sum of L20,000,000, together with accrued interest, into Court.

(E)      This agreement sets out in full the terms of the agreement between the
         parties to settle the Action, to end their arrangements in relation to
         Ultramast, to provide for the completion of the acquisition by Marconi
         of the Easynet Shares, to write off against the share premium account
         of Ultramast the deficit on the profit and loss reserve on its balance
         sheet, to provide for the cancellation of the Marconi Reduction Shares
         and (if applicable) the RTS Reduction Shares through a reduction of
         capital and share premium account of Ultramast and a subsequent
         repayment of capital to Marconi and (if applicable) RTS and to
         terminate the Ultramast Agreement, the relevant part of the Ipsaris
         Agreement and other related agreements.

<PAGE>

                                        4

(F)      On 28th November, 2002, Ultramast increased its authorised share
         capital through the creation of 126 Deferred Shares and adopted new
         articles of association containing the rights attached to those
         Deferred Shares.

(G)      Ultramast has, by virtue of regulation 34 of the Companies (Tables A to
         F) Regulations 1985, which applies to Ultramast, power and authority to
         reduce its share capital in any way.

NOW IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      In this agreement, unless the context otherwise requires, the following
         words and expressions shall have the following meanings:

         "ACCOUNTS"                 accounts of Ultramast for the financial
                                    period ended 31st March, 2002, in the agreed
                                    form;

         "ACTION"                   the action currently proceeding in the
                                    Queen's Bench Division, High Court of
                                    Justice, Commercial Court with Claim Number
                                    2002 Folio 309;

         "AFFILIATE"                in relation to any party, any subsidiary
                                    undertaking or parent undertaking of that
                                    party or any subsidiary undertaking of that
                                    parent undertaking but, for the avoidance of
                                    doubt, neither Ipsaris nor Easynet shall be
                                    taken for the purposes of this agreement as
                                    being an Affiliate of Marconi;

         "AGREED FORM"              in relation to any document, the form of
                                    that document which has been initialled for
                                    the purposes of identification by Marconi's
                                    Solicitors and RTS's Solicitors;

         "APPROVAL TIME"            the time at which the Reduction Order is
                                    made and delivered to Ultramast;

         "APT AGREEMENT"            an agreement for acquisition, management and
                                    construction management services dated 26th
                                    April, 2001 between Albany Partnership
                                    Limited and Ultramast (as varied by a letter
                                    agreement dated 28th November, 2002 made
                                    between Albany Partnership Limited and
                                    Ultramast);

         "CAPITAL REDUCTION"        has the meaning given in sub-clauses
                                    5.1.1(a), 5.1.1(b) and 5.1.1(c);

         "CLAIM"                    each and any claim, counter-claim, cause or
                                    right of action or proceedings, whether at
                                    law or in equity, in any jurisdiction
                                    whatsoever, whether secured, proprietary, by
                                    way of tracing, priority or otherwise,
                                    whether by way of contribution or
                                    subrogation or

<PAGE>

                                       5

                                    otherwise, 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 agreement arising out
                                    of or relating to the Joint Venture
                                    Arrangements including, for the avoidance of
                                    doubt, any claim made in the Action but
                                    excluding any claims in respect of :

                                    (a)      any invoices properly raised by RTS
                                             or Marconi (or their respective
                                             Affiliates) on or prior to 30th
                                             September, 2002; or

                                    (b)      any Purchase Orders; or

                                    (c)      this agreement; or

                                    (d)      the APT Agreement; or

                                    (e)      the Participation Agreement;

         "COMPLETION"               the Reduction Order being filed with the
                                    Registrar and completion of the other
                                    matters contemplated by this agreement in
                                    accordance with clause 7;

         "CONDITIONS"               the conditions precedent to Completion set
                                    out in sub-clause 2.1;

         "CONSENT ORDER"            the consent order in the form set out in
                                    Schedule 1 and signed by each of Marconi and
                                    RTS (through Marconi's Solicitors and RTS's
                                    Solicitors respectively) on the date of this
                                    agreement in accordance with sub-clause 6.1;

         "CREDITORS' COMMITTEES"    (a)      the co-ordination committee of the
                                             syndicate banks who have provided
                                             loans to Marconi or its Affiliates;
                                             and

                                    (b)      the informal committee of holders
                                             of bonds issued by Marconi or its
                                             Affiliates;

         "D&T REPORT"               a report dated 26th November, 2002 prepared
                                    by Deloitte & Touche addressed to Ultramast
                                    for the purposes of the Capital Reduction;

         "DEFERRED SHARES"          deferred shares of L1 each in the capital of
                                    Ultramast having the rights and obligations
                                    set out in Schedule 6 (such rights and
                                    obligations being set out in the articles of
                                    association of Ultramast adopted on 28th
                                    November, 2002);

         "EASYNET"                  Easynet Group plc, a company registered in
                                    England and Wales (registered number
                                    3137522) whose

<PAGE>

                                       6

                                    registered office is at 44 Whitfield Street,
                                    London W1P 5RF;

         "EASYNET PUT OPTION"       the put option granted by Marconi to RTS
                                    under clause 11 of the Ipsaris Agreement;

         "EASYNET SHARES"           1,324,054 ordinary shares of 4 pence each in
                                    the capital of Easynet;

         "EMPLOYEES"                Andrew Elliman and Simon Ralph;

         "EMPLOYMENT COSTS"         the properly incurred costs relating to the
                                    employment of the Employees and recharged to
                                    Ultramast under the Secondment Arrangement;

         "ENGLISH MAST AGREEMENT"   an agreement dated 26th April, 2001 between
                                    Marconi and Ultramast relating to the
                                    identification of suitable sites for masts
                                    in England and Wales and the grant of mast
                                    leases;

         "FURTHER MARCONI DEFERRED  has the meaning set out in sub-clause 9.2;
         SHARES"

         "IMPLEMENTATION AGREEMENT" an implementation agreement dated 26th June,
                                    2001 between Marconi, RTS and Ipsaris;

         "INITIAL MARCONI DEFERRED  that number of Deferred Shares the aggregate
         SHARES"                    nominal value of which will constitute not
                                    less than 10 per cent. of the nominal value
                                    of all of the shares in the capital of
                                    Ultramast immediately following the Capital
                                    Reduction (but no more than 63 Deferred
                                    Shares and on the assumption that the
                                    Initial RTS Deferred Shares will be issued
                                    to RTS at the same time) and to be issued by
                                    Ultramast to Marconi in accordance with
                                    sub-clause 4.10;

         "INITIAL RTS DEFERRED      that number of Deferred Shares the aggregate
         SHARES"                    nominal value of which will constitute not
                                    less than 10 per cent. of the nominal value
                                    of all of the shares in the capital of
                                    Ultramast immediately following the Capital
                                    Reduction (but no more than 63 Deferred
                                    Shares and on the assumption that the
                                    Initial Marconi Deferred Shares will be
                                    issued to Marconi at the same time) and to
                                    be issued by Ultramast to RTS in accordance
                                    with sub-clause 4.10;

         "IPSARIS"                  Easynet Telecommunications Limited (formerly
                                    Ipsaris Limited), a company incorporated in
                                    England and Wales (registered number
                                    2883980) whose registered office is at 44
                                    Whitfield Street, London W1P 5RF;

<PAGE>

                                       7

         "IPSARIS AGREEMENT"        the subscription and shareholders agreement
                                    dated 14th December, 2000 between Marconi,
                                    RTS and Ipsaris as amended by a variation
                                    agreement dated 26th April, 2001 between
                                    Marconi, RTS and Ipsaris and as further
                                    amended by the Implementation Agreement;

         "JOINT VENTURE             all of the agreements and other arrangements
         ARRANGEMENTS"              (written or unwritten) in relation to
                                    Ultramast or Ipsaris or shareholdings in
                                    either of them, entered into prior to the
                                    date of this agreement:

                                    (a)      by Marconi (or any of its
                                             Affiliates) on the one hand and
                                             RTS, RG or Ultramast (or any of
                                             their Affiliates) on the other
                                             hand; or

                                    (b)      by Ultramast on the one hand and
                                             RTS or RG (or any of their
                                             Affiliates) on the other hand,

                                    including, without limitation, the Ultramast
                                    Agreement, the Ipsaris Agreement, the
                                    Easynet Put Option, the English Mast
                                    Agreement and the Scottish Mast Agreement;

         "MARCONI REDUCTION AMOUNT" a sum equal to L26,139,000;

         "MARCONI REDUCTION SHARES" the 500 Ordinary Shares registered in the
                                    name of Marconi;

         "MARCONI'S SOLICITORS"     Allen & Overy of One New Change, London
                                    EC4M 9QQ;

         "MARCONI SUBSCRIPTION      a sum equal to the nominal value of the
         MONIES"                    Initial Marconi Deferred Shares;

         "ORACLE AGREEMENT"         an employee licence agreement dated 24th
                                    May, 2001 between Marconi and Oracle
                                    Corporation UK Limited;

         "ORDINARY SHARES"          ordinary shares of L1 each in the capital of
                                    Ultramast;

         "PARENT UNDERTAKING"       has the meaning given in section 258 of the
                                    Companies Act 1985;

         "PARTICIPATION AGREEMENT"  a participation agreement dated 24th
                                    September, 2001 between Marconi and
                                    Ultramast in relation to the allocation of
                                    Oracle software licences granted to Marconi
                                    under the Oracle Agreement;

<PAGE>

                                       8

         "PURCHASE ORDERS"          those purchase orders authorised by
                                    Ultramast as at the date of this agreement
                                    or subsequently in respect of goods or
                                    services provided or to be provided by
                                    Marconi or, as the case may be, RTS (or
                                    their respective Affiliates);

         "RAILTRACK AGREEMENTS"     an agreement dated 26th April, 2001 between
                                    Railtrack plc and RTS relating to the
                                    identification of suitable sites for masts
                                    in Scotland and the grant of mast leases and
                                    an agreement dated 26th April, 2001 between
                                    Railtrack plc and RTS relating to the
                                    identification of suitable sites for masts
                                    in England and Wales and the grant of mast
                                    leases;

         "REDUCTION ORDER"          the order of the Court confirming the
                                    Capital Reduction;

         "REDUCTION TIMETABLE"      the timetable for the Capital Reduction set
                                    out in Schedule 2;

         "REGISTRAR"                the registrar of companies at Companies
                                    House in Cardiff;

         "RTS REDUCTION AMOUNT"     a sum equal to L19,186,026 or such lower
                                    amount as may be required under sub-clause
                                    5.5.1;

         "RTS REDUCTION SHARES"     367 Ordinary Shares registered in the name
                                    of RTS or such lower number of Ordinary
                                    Shares registered in the name of RTS as may
                                    be required under sub-clause 5.5.2;

         "RTS'S SOLICITORS"         Ashurst Morris Crisp of Broadwalk House,
                                    Appold Street, London EC2A 2HA;

         "RTS SUBSCRIPTION MONIES"  a sum equal to the nominal value of the
                                    Initial RTS Deferred Shares;

         "SCOTTISH MAST AGREEMENT"  an agreement dated 26th April, 2001 between
                                    Marconi and Ultramast relating to the
                                    identification of suitable sites for masts
                                    in Scotland and the grant of mast leases;

         "SEALED CONSENT ORDER"     the Consent Order duly sealed by the Court;

         "SECONDMENT ARRANGEMENT"   the unwritten, informal secondment
                                    arrangement under which the Employees are
                                    and have been seconded from Marconi (or its
                                    wholly owned subsidiary Albany Partnership
                                    Limited) to Ultramast;

         "SUBSIDIARY UNDERTAKING"   has the meaning given in section 258 of the
                                    Companies Act 1985; and

<PAGE>

                                       9

         "ULTRAMAST AGREEMENT"      an agreement dated 14th December, 2000
                                    between RTS and Marconi relating to the
                                    subscription for shares and the regulation
                                    of the exercise of their rights in relation
                                    to Ultramast.

1.2      In this agreement, unless the context otherwise requires:

         1.2.1    words denoting persons shall include bodies corporate and
                  unincorporated associations of persons;

         1.2.2    any reference to the singular shall include the plural and
                  vice versa;

         1.2.3    a reference to a clause, sub-clause or Schedule is a reference
                  to a clause, sub-clause or schedule to this agreement; and

         1.2.4    any reference to an enactment includes reference to that
                  enactment as amended, extended or applied by or under any
                  other enactment before, on or after the signature of this
                  agreement.

1.3      The headings in this agreement are for convenience only and do not
         affect its interpretation.

2.       CONDITIONS PRECEDENT

2.1      Completion is conditional on:

         2.1.1    the Court making an order confirming the repayment to Marconi
                  out of Ultramast's capital of the MARCONI REDUCTION AMOUNT and
                  any condition or undertaking imposed by the Court in that
                  order being satisfied, no later than 15th February, 2003 or
                  such later date as Marconi and RTS may agree, such agreement
                  not to be unreasonably withheld or delayed; and

         2.1.2    the Consent Order having been sealed by the Court, no later
                  than 28th February, 2003, or such later date as Marconi and
                  RTS may agree, such agreement not to be unreasonably withheld
                  or delayed.

2.2      Marconi and RTS agree that the Consent Order shall not be lodged with
         the Court for sealing until the Approval Time has occurred.

2.3      Each of the parties shall use all reasonable endeavours to procure the
         satisfaction of these Conditions, including the passing of all
         appropriate resolutions and execution of all reasonably necessary
         documents. If all these Conditions are not fulfilled by the time given
         for their satisfaction and Marconi and RTS do not agree to extend the
         time for satisfaction of these Conditions:

         2.3.1    except for this sub-clause, clauses 1, 11 and 12 and
                  sub-clauses 4.6, 18.1, 18.4 and 18.5, all the other clauses of
                  this agreement shall lapse and cease to have effect; but

         2.3.2    the lapsing of these provisions shall not affect any accrued
                  rights or liabilities of any party.

<PAGE>

                                       10

3.       SETTLEMENT

3.1      Subject to Completion having occurred and subject to the remainder of
         this clause 3, this agreement is in full and final settlement of:

         3.1.1    all and any Claims by Marconi against RTS, RG or Ultramast;

         3.1.2    all and any Claims by RTS against Marconi or Ultramast;

         3.1.3    all and any Claims by RG against Marconi or Ultramast; and

         3.1.4    all and any Claims by Ultramast against RG, RTS or Marconi,

         and, subject to Completion having occurred and subject to the remainder
         of this clause 3, each of the parties mutually irrevocably releases and
         covenants not to sue or threaten to sue each other, or their present or
         former agents, Affiliates, partners, directors or employees in relation
         to any such Claim, provided that this covenant shall not extend to any
         Claim that any party may have against Railtrack plc.

3.2      Subject to Completion having occurred, each party agrees to procure, so
         far as it is able, that none of its Affiliates shall pursue any Claim
         that it may have against any other party or their present or former
         agents, Affiliates, partners, directors or employees.

3.3      Each of RTS and Marconi, in its capacity as a shareholder of Ultramast,
         hereby irrevocably consents to and approves the release of Claims in
         accordance with the terms of this agreement by Ultramast against RTS,
         RG and Marconi and further irrevocably consents to and approves the
         Capital Reduction in accordance with the terms of this agreement. The
         consent and approval given by RTS and Marconi by this sub-clause
         extends for the benefit of Ultramast and the directors of Ultramast.

3.4      In respect of any Claim that Ultramast may have against RG or RTS, this
         clause 3 shall only have effect in relation to any Claim which has or
         may have accrued to Ultramast at the date of Completion, and shall not
         operate to terminate any agreements or arrangements between Ultramast
         on the one hand and RTS or RG (or their respective Affiliates) on the
         other hand. This clause 3 shall not affect any Claim that Ultramast may
         have against RTS or RG (or any of their Affiliates) to the extent that
         such a Claim arises as a result of a breach by Railtrack plc of any
         agreement between Railtrack plc on the one hand and RTS or RG (or any
         of their Affiliates) on the other hand, provided that Ultramast
         undertakes to RTS that, pending Completion, it will not without the
         prior written consent of RTS take or threaten to take any action in
         respect of any such Claim.

3.5      Nothing in this agreement shall affect the obligation or ability of
         Ultramast to discharge any invoice properly raised by RTS or Marconi
         (or any of their respective Affiliates) on or prior to 30th September,
         2002 or any sums payable pursuant to Purchase Orders or any sums
         payable pursuant to clause 10.

4.       PERIOD BETWEEN SIGNING AND COMPLETION

4.1      In the period from the date of this agreement until Completion, each of
         Marconi and RTS shall exercise all rights and powers available to it to
         procure that Ultramast shall:

<PAGE>

                                       11

         4.1.1    carry on its business in the ordinary and usual course; and

         4.1.2    not take any action which would have or might reasonably be
                  expected to have the effect of increasing either the number of
                  its creditors or the amounts owed to those creditors, save in
                  respect of bona fide arms length transactions with creditors
                  in the ordinary and usual course of trading.

4.2      Without prejudice to the generality of sub-clause 4.1 and without
         prejudice to the terms of the Ultramast Agreement, in the period from
         the date of this agreement until Completion, each of Marconi and RTS
         shall exercise all rights and powers available to it to procure that
         Ultramast shall not, without the prior consent (in writing or by
         e-mail) of both Marconi and RTS:

         4.2.1    incur any single item of capital expenditure or any series of
                  items of capital expenditure in excess of L10,000; or

         4.2.2    dispose of or grant any option or right of pre-emption in
                  respect of any part of its assets except in the ordinary
                  course of trading; or

         4.2.3    borrow any money or make any payments out of or drawings on
                  its bank accounts other than in the ordinary course of trading
                  or in accordance with the terms of this agreement; or

         4.2.4    enter into any onerous, unusual, abnormal or long-term
                  contract or commitment including, without limitation, operator
                  agreements, contractor agreements and, to the extent that they
                  are onerous, unusual, abnormal or long-term, supply
                  agreements; or

         4.2.5    make any loan or advance or give any credit to any person
                  other than loans, advances or credit given to persons (not
                  being Affiliates of RTS or Marconi) in the ordinary course of
                  trading; or

         4.2.6    enter into any leasing, vendor finance, hire-purchase, or
                  other agreement or arrangement for payment on deferred terms;
                  or

         4.2.7    enter into any lease, licence or commitment to enter into any
                  lease or licence of land whether for the purposes of erecting
                  telecommunications masts or otherwise; or

         4.2.8    grant or issue any mortgage, charge, debenture or other
                  security or give any guarantee, bond or indemnity; or

         4.2.9    make any change in the terms and conditions of employment of
                  any of its directors or employees or terminate (except for
                  good cause) the employment of any person; or

         4.2.10   make, or announce to any person any proposal to make, any
                  change or addition to any retirement, death or disability
                  benefit of or in respect of any of its current or former
                  directors or employees, or grant or create any additional or
                  new retirement, death or disability benefit; or

         4.2.11   permit any of its insurances to lapse or do anything which
                  would make any policy of insurance void or voidable but, for
                  the avoidance of doubt, shall not take out any new or extend
                  any current policy of insurance for a period in excess of one
                  month; or

<PAGE>

                                       12

         4.2.12   take any action in relation to any contract with British
                  Waterways or Ente Sardo Acquedottie Fognature or any other
                  contract material (or which might reasonably be expected to be
                  material) to the business of Ultramast; or

         4.2.13   bring any claim, action or proceeding against Marconi, RTS or
                  RG; or

         4.2.14   agree, conditionally or otherwise, to do any of the foregoing;
                  or

         4.2.15   take any action which might reasonably be expected adversely
                  to affect the ability of the Court to approve the Capital
                  Reduction.

4.3      Ultramast undertakes to Marconi and RTS that it shall not, without the
         prior consent (in writing or by e-mail) of both of them, take any
         action of the kind described in sub-clause 4.1 or 4.2 above or in
         clause 11.1 of the Ultramast Agreement.

4.4      Within two days of the date of this agreement, Ultramast shall:

         4.4.1    pay to RTS (and, if applicable, its Affiliates) the aggregate
                  sum of L1,641,000 in respect of goods or services provided by
                  RTS or its Affiliates up to and including 30th September, 2002
                  and validly invoiced prior to the date of this agreement; and

         4.4.2    pay to Marconi (and, if applicable, its Affiliates) the
                  aggregate sum of Y60,000 in respect of goods or services
                  provided by Marconi or its Affiliates up to and including 30th
                  September, 2002 and validly invoiced prior to the date of this
                  agreement,

         and, in either such case, receipt by RTS or, as the case may be,
         Marconi (or, if applicable, their respective Affiliates), shall be a
         sufficient discharge by Ultramast of its obligations to pay such sums.

4.5      Notwithstanding the terms of this clause 4, in the period from the date
         of this agreement until Completion, Ultramast shall discharge promptly
         any invoices (other than those invoices referred to in sub-clause 4.4)
         properly raised pursuant to Purchase Orders or pursuant to sub-clause
         10.2.

4.6      Each of Marconi and RTS shall use all reasonable endeavours to procure
         in so far as it is able that the Accounts are audited, approved by the
         board of directors of Ultramast and signed by a director of Ultramast
         by not later than the date of this agreement. For the avoidance of
         doubt only, the approval by the board of directors of Ultramast of the
         Accounts shall not constitute or be deemed to constitute an approval of
         such Accounts by RTS or Marconi or admission by RTS or Marconi of any
         counter claim or claim previously raised by either of them or
         Ultramast.

4.7      In the period from the date of this agreement until Completion, RTS may
         engage in discussions with third parties in relation to the acquisition
         of the Ordinary Shares registered in the name of RTS and may pass
         confidential information relating to Ultramast and its business
         (including, to the extent lawfully permitted by their terms, copies of
         agreements between Ultramast on the one hand and third parties on the
         other) in connection with such discussions to such third parties,
         provided always that such discussions do not adversely affect the
         ability of Ultramast either to carry out the Capital Reduction in
         accordance with the Reduction Timetable or to conduct its business in
         the ordinary course and provided further that any such third party is
         required to enter into confidentiality undertakings for the benefit of
         Ultramast in respect of any confidential information so passed to it.

<PAGE>

                                       13

4.8      Ultramast shall make any request for the consent of Marconi and RTS
         under sub-clause 4.2 or 4.3 in writing or by e-mail, followed on the
         same day by a confirmatory telephone call:

         4.8.1    in the case of Marconi, to Tony Robinson (or, in his absence,
                  to Will Johnson or, in his absence, to Chris Chapple); and

         4.8.2    in the case of RTS, to Richard Womersley-Smith (or, in his
                  absence, to Simon Osborne).

4.9      Each of Marconi and RTS shall reply to any request for consent given in
         accordance with sub-clause 4.8.1 or 4.8.2 (as the case may be) within
         three business days of receipt of that request. In the event that
         Marconi or RTS fails to reply within this period, Marconi or RTS (as
         the case may be) shall be deemed to have consented to that request.

4.10     Each of Marconi and RTS shall procure that Ultramast shall, conditional
         upon the Court making the Reduction Order, allot and issue to Marconi
         at par fully paid the Initial Marconi Deferred Shares and allot and
         issue to RTS at par fully paid the Initial RTS Deferred Shares.

4.11     At any time in the period from the date of this agreement until
         Completion, RTS may, provided that it has complied with clause 22.1 of
         the Ultramast Agreement, transfer all, but not some only, of the
         Ordinary Shares registered in the name of RTS to another company within
         its group (as defined in section 170 of the Taxation of Chargeable
         Gains Act 1992) (an "RTS GROUP COMPANY") provided always that such
         transfer does not adversely affect the ability of Ultramast either to
         carry out the Capital Reduction in accordance with the Reduction
         Timetable or to conduct its business in the ordinary course and further
         provided that the RTS Group Company and the other parties to this
         agreement have entered into a deed of adherence substantially in the
         form set out in Schedule 7 and that RTS procures that the RTS Group
         Company complies with its obligations under that deed of adherence. The
         parties to this agreement hereby undertake and agree to enter into the
         deed of adherence immediately following the entry into such deed by the
         RTS Group Company.

5.       CAPITAL REDUCTION

5.1      Each of Marconi and RTS shall:

         5.1.1    as soon as reasonably practicable after the date of this
                  agreement but, in any event, not later than 20th December,
                  2002, sign a shareholders' written resolution of Ultramast to
                  authorise Ultramast, in accordance with sections 135 to 141 of
                  the Companies Act 1985, to:

                  (a)      reduce the amount standing to the credit of its share
                           premium account for the purpose of creating a reserve
                           against which to write off the accumulated deficit on
                           the profit and loss reserve on its balance sheet;

                  (b)      reduce its share capital and share premium account
                           through the cancellation of the Marconi Reduction
                           Shares and, subject to sub-clause 5.5, the RTS
                           Reduction Shares; and

                  (c)      repay to Marconi out of Ultramast's share capital and
                           its share premium account the MARCONI REDUCTION
                           AMOUNT and repay, subject to sub-clause

<PAGE>

                                       14

                           5.5, to RTS out of Ultramast's share capital and its
                           share premium account the RTS Reduction Amount

                  (the "CAPITAL REDUCTION"); and

         5.1.2    exercise all powers and rights available to it to procure that
                  Ultramast makes an application to the Court pursuant to
                  section 136 of the Companies Act 1985 for an order confirming
                  the Capital Reduction,

         provided that the timing of the compliance by Marconi and RTS with
         their respective obligations under sub-clause 5.1 shall be conditional
         upon the Accounts having been audited and signed as referred to in
         sub-clause 4.6.

5.2      Marconi and RTS shall use their respective reasonable endeavours to
         procure (insofar as they are able) that, in furtherance of the Capital
         Reduction, Ultramast shall take the steps set out in the Reduction
         Timetable and shall use all reasonable endeavours to ensure that those
         steps are taken in accordance with the Reduction Timetable including,
         without limitation, instructing professional advisers to deal with all
         aspects of the Capital Reduction in accordance with the Reduction
         Timetable and undertaking all necessary due diligence into the creditor
         position of Ultramast.

5.3      The day to day legal aspects of the Capital Reduction shall be dealt
         with by RTS's Solicitors (as instructed by Ultramast) in consultation
         with Marconi's Solicitors. RTS shall notify Marconi as soon as it
         becomes aware of any reason why the Capital Reduction may not take
         place either at all or in accordance with the Reduction Timetable. In
         the event of such a notification, Marconi and RTS shall work together
         in good faith with a view to ensuring (insofar as is possible) that the
         Capital Reduction is nevertheless completed and in accordance with, or
         as nearly as is reasonably practicable in accordance with, the
         Reduction Timetable.

5.4      Subject to Ultramast having complied with its obligations under
         sub-clauses 4.4 and 4.5, each of Marconi, RTS and RG shall, and in
         respect of its Affiliates (other than, in the case of Marconi, Marconi
         Communications SpA) shall exercise all powers and rights available to
         it to procure that those Affiliates shall, consent in its capacity as
         creditor to Ultramast to the Capital Reduction and shall take all such
         action and sign all such documents as may reasonably be required to
         satisfy the requirements of the Court under section 137(1) of the
         Companies Act 1985 including, without limitation, agreeing to
         subordinate any claims it may have against Ultramast to the claims of
         any other creditor of Ultramast who does not give such a consent.

5.5      If the level of the actual or contingent creditors of Ultramast is such
         that the Capital Reduction cannot, or is unlikely (based on the advice
         of Queen's Counsel instructed in relation to the Capital Reduction) to,
         be confirmed by the Court:

         5.5.1    the RTS Reduction Amount shall be reduced to such sum, being a
                  multiple of L52,278, as shall allow the Capital Reduction to
                  be confirmed by the Court (based on the advice of Queen's
                  Counsel instructed in relation to the Capital Reduction); and

         5.5.2    the RTS Reduction Shares shall be reduced to the number of
                  Ordinary Shares registered in the name of RTS as would be
                  cancelled on a repayment to RTS of the RTS Reduction Amount
                  (as reduced in accordance with sub-clause 5.5.1) on the basis
                  of L52,278 per Ordinary Share.

<PAGE>

                                       15

5.6      Ultramast undertakes that it shall, to the extent contemplated by this
         agreement, progress the Capital Reduction with all due care and in
         accordance so far as is practicable with the Reduction Timetable.

5.7      Upon receipt of the Reduction Order, Ultramast undertakes that it shall
         not lodge the sealed Reduction Order with the Registrar until
         Completion.

5.8      Notwithstanding any other provision of clause 5, each of Marconi, RTS
         and Ultramast shall take all steps, measures and actions available to
         it to procure (so far as it is able) that Condition 2.1.1 is satisfied
         within the time specified for its satisfaction and that Marconi is paid
         the MARCONI REDUCTION AMOUNT in full under the Capital Reduction in
         accordance with the Reduction Timetable.

6.       CONSENT ORDER

6.1      On the date of this agreement, each of Marconi and RTS shall sign
         (through Marconi's Solicitors and RTS's Solicitors respectively) the
         Consent Order, which shall be held by Marconi's Solicitors to the joint
         order of Marconi and RTS until the Approval Time, whereupon Marconi's
         Solicitors shall lodge it with the Court for the Court's approval (if
         required) and sealing. A copy of the signed Consent Order (marked as
         such) shall be provided to Ultramast and RTS.

6.2      If the Court requires a hearing prior to sealing the Consent Order,
         Marconi and RTS shall use all reasonable endeavours to arrange such
         hearing in accordance with the Reduction Timetable.

6.3      Upon receipt by Marconi's Solicitors of the Sealed Consent Order, it
         shall be copied by Marconi's Solicitors to RTS's Solicitors. Marconi
         and RTS agree that no request for payments out of Court in accordance
         with the Sealed Consent Order shall be made by either of them other
         than at Completion and in accordance with sub-clauses 7.3.1 and 7.4.2
         or as Marconi and RTS otherwise agree.

6.4      Marconi and RTS each acknowledge that, of the L19,186,026 which
         will become payable to Marconi pursuant to the terms of the Consent
         Order, L4,000,000 will, if Completion occurs, be payable in full
         and final settlement of Marconi's counterclaims in the Action in
         respect of sums payable and damages claimed under the Ultramast
         Agreement and L15,186,026 will, if Completion occurs, be payable
         in full and final settlement of Marconi's counterclaims in the Action
         in respect of sums payable and damages claimed under the Ipsaris
         Agreement.

6.5      In accordance with the terms of the Easynet Put Option, RTS covenants
         with Marconi that, subject to the provisions of the Easynet Put Option
         and subject to any disposal effected by Marconi and any encumbrance
         arising as a result of any action on the part of Marconi, as at the
         Approval Time and immediately prior to Completion, it will have the
         right to sell and transfer to Marconi the full legal and beneficial
         interest in the Easynet Shares, free from liens, charges, equities and
         encumbrances and together with all rights attaching to them.

6.6      Marconi covenants with Ultramast that as at the Approval Time and
         immediately prior to Completion it will have full legal and beneficial
         title to the Marconi Reduction Shares free from liens, charges,
         equities and encumbrances. RTS covenants with Ultramast that as at the
         Approval Time and immediately prior to Completion it will have full
         legal and beneficial title to the RTS Reduction Shares free from liens,
         charges, equities and encumbrances.

<PAGE>

                                       16

7.       COMPLETION

7.1      Completion shall take place at the offices of Marconi's Solicitors on
         the business day following the date on which all of the Conditions are
         satisfied or at such other time and place as Marconi and RTS may agree.

7.2      At Completion Ultramast shall:

         7.2.1    lodge the Reduction Order with the Registrar;

         7.2.2    upon notification that the Registrar has registered the
                  Reduction Order, pay to Marconi the MARCONI REDUCTION AMOUNT
                  and pay to RTS the RTS Reduction Amount;

         7.2.3    pay to RTS (or, as the case may be, its Affiliates) all sums
                  outstanding from Ultramast to RTS or any of its Affiliates
                  under invoices properly raised pursuant to Purchase Orders;

         7.2.4    pay to Marconi (or, as the case may be, its Affiliates) all
                  sums outstanding from Ultramast to Marconi or any of its
                  Affiliates under invoices properly raised pursuant to Purchase
                  Orders and any sums owing pursuant to sub-clause 10.2;

         7.2.5    deliver to Marconi a share certificate representing the
                  Initial Marconi Deferred Shares and deliver to RTS a share
                  certificate representing the Initial RTS Deferred Shares; and

         7.2.6    lodge with the Registrar a Form 88(2) in respect of the
                  Initial Marconi Deferred Shares and the Initial RTS Deferred
                  Shares.

7.3      At Completion, RTS shall:

         7.3.1    authorise Marconi's Solicitors to lodge the Sealed Consent
                  Order with the Court together with a request for payment in
                  accordance with its terms;

         7.3.2    pay to Ultramast the RTS Subscription Monies;

         7.3.3    deliver to Ultramast the share certificates representing the
                  RTS Reduction Shares; and

         7.3.4    to the extent necessary, irrevocably release to Marconi the
                  stock transfer form transferring the Easynet Shares to Marconi
                  and the share certificate in respect of the Easynet Shares.

7.4      At Completion, Marconi shall:

         7.4.1    deliver to Ultramast the share certificates representing the
                  Marconi Reduction Shares;

         7.4.2    authorise Marconi's Solicitors to lodge the Sealed Consent
                  Order with the Court together with a request for payment in
                  accordance with its terms;

         7.4.3    pay to Ultramast the Marconi Subscription Monies; and

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                                       17

         7.4.4    deliver to Ultramast the resignations of Tony Robinson and, if
                  requested by RTS, Andrew Elliman and/or any other director of
                  Ultramast appointed by Marconi under the Ultramast Agreement
                  as a director of Ultramast, in each case acknowledging under
                  seal that he has no claim against Ultramast whether for loss
                  of office or otherwise.

7.5      All payments to be made under this agreement to RTS shall be made,
         without deduction or set-off, by telegraphic transfer to the client
         account of RTS's Solicitors and all payments to be made under this
         agreement to Marconi shall be made, without deduction or set-off, by
         telegraphic transfer to the bank account of Marconi which has been
         notified to RTS, RG or Ultramast (as the case may be), save for any
         payment due to Marconi to be received from the Court which shall be
         made to the client account of Marconi's Solicitors.

7.6      Ultramast covenants to Marconi that it shall not, and RTS covenants to
         Marconi that it shall procure that Ultramast shall not, sell, transfer
         or otherwise dispose of the whole or substantially the whole of its
         business and undertaking to a person which is not an Affiliate of
         Ultramast or of Marconi plc prior to 30th September, 2004. RTS
         undertakes that prior to any transfer of any interest in the shares
         held by it in Ultramast it shall secure, for the benefit of Marconi, a
         covenant and undertaking from the transferee in identical terms,
         mutatis mutandis, to the covenant and undertaking imposed on it under
         this clause, whereupon it shall be released from its covenant under
         this clause, provided that where RTS transfers an interest in some but
         not all of the shares held by it in Ultramast, it shall secure a
         covenant and undertaking from each separate transferee in identical
         terms, mutatis mutandis, and shall only be released from its covenant
         under this clause once it has transferred all shares (other than
         Deferred Shares) held by it in Ultramast.

7.7      Marconi and RTS each acknowledge that, subject to the parties having
         complied with their respective obligations at Completion, Marconi shall
         be deemed to have satisfied the price payable to RTS under the Easynet
         Put Option in respect of the Easynet Shares and Marconi shall be
         entitled to be registered as the registered holder of the Easynet
         Shares.

8.       TERMINATION OF CERTAIN AGREEMENTS

8.1      Upon each of the parties having complied with its obligations at
         Completion:

         8.1.1    the Ultramast Agreement shall terminate and be of no further
                  effect save that, notwithstanding any other provision of the
                  Ultramast Agreement or this agreement and regardless of any
                  continuation of any Marconi shareholding in Ultramast, the
                  provisions of clause 14.2 of the Ultramast Agreement, together
                  with any other provisions of the Ultramast Agreement necessary
                  for the interpretation, operation or enforcement of that
                  clause, shall continue to apply until 31st December, 2004
                  (provided that the words "own or" shall be deemed to have been
                  deleted from sub-clause 14.2(B) of the Ultramast Agreement),
                  whereupon those clauses shall terminate and be of no further
                  effect;

         8.1.2    as between Marconi and RTS, the Ipsaris Agreement shall
                  terminate and be of no further effect;

         8.1.3    the English Mast Agreement shall terminate and be of no
                  further effect; and

         8.1.4    the Scottish Mast Agreement shall terminate and be of no
                  further effect.

<PAGE>

                                       18

8.2      On Completion, Marconi shall use its reasonable endeavours to cause
         Easynet to procure that Ipsaris agrees to the termination, without
         liability to Ultramast or RTS, of all the agreements entered into
         between Ipsaris and Ultramast or RTS, provided that Marconi shall not
         be required to take any action which may constitute a breach of:

         8.2.1    paragraph 3.12 or 9.34 of the listing rules issued from time
                  to time by the United Kingdom Listing Authority for the
                  purposes of Part VI of the Companies Act 1985; or

         8.2.2    a relationship agreement dated 26th June, 2001 between Marconi
                  and Easynet.

8.3      Marconi confirms that the relationship agreement referred to in
         sub-clause 8.2.2 provides that Marconi shall exercise all powers of
         control in relation to itself and its associates so as to ensure to the
         extent it is able through its exercise of such powers that at all times
         Easynet and Ipsaris are capable of carrying on, and do carry on, their
         business independently of Marconi and any of its associates.

8.4      For the avoidance of doubt, nothing in this agreement shall affect any
         agreement between Ipsaris on the one hand and RTS, RG or Ultramast on
         the other hand.

8.5      On and after Completion, Marconi undertakes to RTS and Ultramast that
         it shall not, and shall procure that its Affiliates shall not,
         knowingly seek to exert any influence or control it may have, pursuant
         to any contract with British Waterways, over British Waterways in
         relation to Ultramast provided that this sub-clause shall not have any
         effect in relation to a letter dated 26th April, 2001 from Marconi plc
         to British Waterways.

8.6      Marconi shall no later than 5 days from the date of this agreement
         notify (in accordance with the Oracle Agreement) Oracle Corporation UK
         Limited of the transaction contemplated by this agreement and shall use
         its reasonable endeavours to procure (including expressly requesting
         the same) that Oracle Corporation UK Limited treats the 30 software
         licences which are the subject of the Participation Agreement as
         Transferable Licences (within the meaning of the Oracle Agreement) and
         grants to Ultramast a New License Agreement (as defined in the Oracle
         Agreement) at no cost to Ultramast (other than the payment of any
         charges for Services (within the meaning of the Oracle Agreement) for
         the next following annual support period, it being agreed as between
         Marconi and Ultramast that, other than the aggregate sum of
         L20,000 (part of which was invoiced in November, 2002 and part of
         which is to be invoiced in February, 2003) together with the sum of
         approximately L2,000 to be invoiced in December, 2003, Ultramast
         has paid for support in the period up to and including 31st December,
         2002). On and after Completion, notwithstanding any other provision of
         this agreement, the Participation Agreement shall continue in full
         force and effect for a period of 12 months from the date of Completion
         (or, if earlier, until the grant of the New License Agreement),
         whereupon it shall terminate and be of no further effect, save in
         respect of any rights of Marconi or Ultramast accrued under it.

8.7      RTS and RG shall each use all reasonable endeavours to procure that
         Railtrack plc agrees that the exclusivity provisions contained in the
         clauses headed "non-competition" in each of the Railtrack Agreements
         shall remain in full force and effect notwithstanding that Marconi may
         cease to hold 10 per cent. of the share capital of Ultramast.

8.8      On Completion, Marconi undertakes that it shall not (and shall procure
         that its Affiliates shall not), until 31st December, 2004, either on
         its own account or in conjunction with or on behalf of any person, firm
         or company, solicit or endeavour to entice away from Ultramast any

<PAGE>

                                       19

         person who is an officer, manager or employee of the operational
         telecoms staff of Ultramast, whether or not such a person would commit
         a breach by reason of leaving service or office, provided that this
         sub-clause shall not apply in respect of Andrew Elliman or Simon Ralph,
         except to the extent that either of them becomes an employee of
         Ultramast or an Affiliate of Ultramast on or after Completion.

9.       DEFERRED SHARES

9.1      For the purposes of this clause, a "REORGANISATION" shall mean:

         9.1.1    a sub-division or consolidation of the Ordinary Shares;

         9.1.2    a distribution or other capital reorganisation (whether by way
                  of bonus, capitalisation or otherwise) by Ultramast; or

         9.1.3    any event in relation to the Ordinary Shares or the Deferred
                  Shares having a dilutive effect in the proportion of the
                  Deferred Shares in relation to the total number of shares in
                  the capital of Ultramast.

9.2      In the event of a Reorganisation following Completion, such that
         Marconi would cease to hold 10 per cent. of the nominal value of all
         the shares in the capital of Ultramast, Marconi shall subscribe at par
         for such further number of Deferred Shares as would result in Marconi
         continuing to hold 10 per cent. of the nominal value of all the shares
         in the capital of Ultramast (the "FURTHER MARCONI DEFERRED SHARES"),
         provided that:

         9.2.1    RTS shall pay to Marconi a sum equal to the subscription price
                  of the Further Marconi Deferred Shares;

         9.2.2    Marconi shall not be obliged to subscribe the Further Marconi
                  Deferred Shares where such a subscription would have any
                  adverse tax or accounting consequences for Marconi or its
                  Affiliates; and

         9.2.3    RTS shall reimburse Marconi for all of its legal and other
                  professional costs and expenses incurred in dealing with the
                  subscription for the Further Marconi Deferred Shares.

9.3      RTS grants to Marconi an option to require RTS to purchase all of the
         Deferred Shares from time to time issued to Marconi on the terms and
         subject to the conditions set out in Schedule 3 (the "PUT OPTION") and
         Marconi grants to RTS an option to purchase from Marconi all of the
         Deferred Shares from time to time issued to Marconi on the terms and
         subject to the conditions set out in Schedule 3 (the "CALL OPTION").
         The Put Option and the Call Option shall both lapse and cease to be of
         any further effect on the date being the thirtieth anniversary of the
         date of this agreement.

10.      SECONDMENT ARRANGEMENT

10.1     The Secondment Arrangement shall terminate on Completion and be of no
         further effect.

10.2     Marconi shall recharge to Ultramast the Employment Costs which accrue
         up to Completion on exactly the same basis it has done to date under
         the Secondment Arrangement. Ultramast

<PAGE>

                                       20

         shall not be responsible for any Employment Costs in relation to the
         Employees other than the Employment Costs which accrue up to
         Completion.

10.3     With effect from Completion and unless the Employees take up employment
         with Ultramast and/or its Affiliates following Completion, Marconi
         shall perform and discharge all obligations in respect of the Employees
         arising on or after Completion and shall be responsible for all costs
         and liabilities in relation to the Employees arising on or after
         Completion including all costs and liabilities (whether or not these
         costs or liabilities relate to the period of the Secondment
         Arrangement) in relation to any termination of the Employees'
         employment with Marconi or its Affiliates and termination of the
         Secondment Arrangement; and

10.4     Marconi hereby undertakes to indemnify Ultramast against those costs
         and liabilities which it is obliged to discharge under sub-clause 10.3.

10.5     The total aggregate liability of Marconi under sub-clauses 10.3 and
         10.4 shall not exceed the sum of L300,000.

11.      CONFIDENTIALITY

11.1     The terms of this agreement shall be held in complete confidence by
         each of the parties and shall not be disclosed to any other person
         except:

         11.1.1   to the auditors and to the legal advisers of that party to
                  whom the confidentiality obligations set out in this agreement
                  shall extend; or

         11.1.2   where that party is under a legal or regulatory obligation to
                  make such disclosure, but limited to the extent of that legal
                  or regulatory obligation; or

         11.1.3   to the extent that it is already in the public domain (other
                  than as a result of a party's breach of this agreement) or to
                  the extent required by a Court of competent jurisdiction; or

         11.1.4   with the prior written consent of the other parties to this
                  agreement, such consent not to be unreasonably withheld; or

         11.1.5   to the Creditors' Committees who may, for the avoidance of
                  doubt, disclose the terms to any lender to Marconi or any
                  holder of any bond issued by Marconi; or

         11.1.6   to the shareholders of a party, in response to a specific
                  question raised by such a shareholder at a general meeting of
                  that party; or

         11.1.7   to the extent required for the purposes of the Court
                  considering or hearing the Capital Reduction.

11.2     The parties shall take all reasonable steps to make their employees and
         agents aware of the terms of sub-clause 11.1 and to instruct them to
         observe those terms.

11.3     If none of the exceptions at sub-clauses 11.1.1 to 11.1.7 apply and a
         party is asked about the Action or this agreement, the party shall
         respond in accordance with the questions and answers in the agreed form
         and no more.

<PAGE>

                                       21

12.      NON-ADMISSION OF LIABILITY

         Save for sub-clause 6.4, none of the parties makes any admission of
         liability whether by entering into this agreement or otherwise and no
         party shall claim that any other party has admitted any liability by
         entering into this agreement.

13.      PRESS RELEASE

         Marconi and RTS shall each release a press release in the agreed form
         following signature of this agreement.

14.      BREACH

         Each of the parties individually and severally acknowledges, having
         regard to the nature of this settlement, that damages would not be an
         adequate remedy for any breach of this agreement and that the remedies
         of injunction, specific performance and other equitable relief for any
         threatened or actual breach of this agreement should lie to enforce any
         of the obligations herein. Notwithstanding the provisions of this
         clause but without prejudice to the provisions of clause 2, no party
         shall have any right to rescind or otherwise to terminate this
         agreement.

15.      WARRANTY OF AUTHORITY

         Each of the parties warrants to the others that this agreement
         constitutes its legal, valid and binding obligation and that it has
         full power and authority to enter into and perform, and has taken all
         necessary action to authorise its entry into and performance of this
         agreement.

16.      THIRD PARTY RIGHTS

         Save in respect of clause 3, a person who is not a party to this
         agreement shall have no right under the Contracts (Rights of Third
         Parties) Act 1999 to enforce any of its terms. Clause 3 may be varied
         or terminated by agreement between the parties without the consent of
         any person.

17.      FURTHER ASSURANCE

17.1     Each party shall execute and do (or procure to be executed and done by
         any other necessary party) all such deeds, documents, acts and things
         and exercise all rights and powers available to it in respect of any
         other person as may from time to time reasonably be required in order
         to give full effect to this agreement.

17.2     Each party hereby gives all consents necessary to the transactions
         contemplated by this agreement including, without limitation, all
         consents required under the Ultramast Agreement.

<PAGE>

                                       22

18.      GENERAL

18.1     Each party shall bear its own costs in connection with the negotiation,
         execution and implementation of this agreement.

18.2     This agreement shall be binding on the parties, their successors and
         assigns and the name of a party appearing herein shall be deemed to
         include the names of any such successor or assign.

18.3     Each party confirms that this agreement sets out the entire agreement
         and understanding between the parties in relation to the subject matter
         hereof. Each of the parties acknowledges that no representation
         (including pre-contractual negligent and innocent misrepresentations)
         of any nature has been made to that party or relied upon by that party
         in connection with or in relation to this settlement, except as set out
         in this agreement and each of the parties irrevocably waives all rights
         and remedies which, but for this sub-clause, might otherwise be
         available to it in respect of any such representation. This clause
         shall not limit or exclude any liability for fraud.

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

18.5     This agreement shall be governed by and shall be construed in
         accordance with English law. The parties submit to the exclusive
         jurisdiction of the English Courts for the purpose (but solely for the
         purpose) of any action to enforce the terms of this agreement.

18.6     Save as may be specifically provided by this agreement, none of the
         rights or obligations under this agreement may be assigned,
         transferred, held on trust or otherwise dealt with in any way without
         the prior written consent of all of the parties.

18.7     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 any
         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 any
         other party under any of the provisions of this agreement.

18.8     The invalidity, illegality or unenforceability of any of the provisions
         of this agreement shall not affect the validity, legality or
         enforceability of the remaining provisions of this agreement.

19.      THE LIQUIDATORS

19.1     The Liquidators are entering into and signing this agreement as agents
         of RG and have been acting in that capacity in the negotiation,
         preparation and implementation of this agreement.

19.2     The Liquidators and their staff, employees, advisers and agents shall
         incur no personal liability whatsoever in respect of any matter
         referred to in this agreement or any other deed, instrument or document
         entered into pursuant to it and, without prejudice to the generality of
         the foregoing, in respect of any of the obligations undertaken by RG or
         in respect of any failure on the part of RG to observe, perform or
         comply with any such obligations or in relation to any associated
         arrangements or negotiations whether such liability would arise under
         the Insolvency Act 1986 or otherwise howsoever and any liability to
         which the

<PAGE>

                                       23

         Liquidators or their staff, employees, advisers and agents would
         otherwise be subject (whether in contract, tort or otherwise) is
         expressly excluded.

19.3     Without prejudice to clause 15 and sub-clause 18.3, in favour of the
         Liquidators and RG, all representations (including pre-contractual
         negligent and innocent misrepresentations) and warranties express or
         implied, and whether statutory or otherwise, relating to the subject
         matter of this agreement are excluded.

19.4     Any claim against RG and/or against the Liquidators, or their firm or
         their partners, employees, agents advisers or representatives shall, in
         any event, notwithstanding the above exclusions of liability, be
         irrevocably waived unless made in writing by notice to the Liquidators
         not later than 90 days after the date hereof, the first day of such 90
         days' period to be the day immediately following the date hereof.

19.5     The exclusion of liability in this agreement shall:

         19.5.1   arise and continue notwithstanding the termination of the
                  Liquidators' agency before or after the signing of this
                  agreement and shall operate as waivers of any claims in tort
                  as well as under the law of contract;

         19.5.2   be in addition to and not in substitution for and
                  notwithstanding any right of indemnity or relief otherwise
                  available; and

         19.5.3   continue after Completion.

19.6     The parties further acknowledge and agree that the Liquidators are
         parties to this agreement in their personal capacities only for the
         purposes of receiving the benefit of the exclusions and limitations in
         their favour in this agreement.

19.7     Nothing in this agreement shall operate to restrict or affect in any
         way any right of the Liquidators to an indemnity or to a lien whether
         under section 234 of the Insolvency Act 1986 or otherwise howsoever.

19.8     The Liquidators shall be entitled to retain all such records and
         documents relating to RG or its business or any of its assets as are
         necessary to perform and complete their duties as Liquidators and the
         other parties to the agreement shall render such assistance to the
         Liquidators and their representatives and agents as the Liquidators may
         reasonably require to perform and complete such duties in so far as
         they relate specifically to this settlement deed and directly related
         matters.

19.9     The exclusions and limitations contained in this agreement shall not
         apply in the case of any fraudulent misrepresentation made by RG or the
         Liquidators or their respective agents or insofar as any action against
         any of them is based upon the fraud of RG or the Liquidators or their
         respective agents (and for these purposes "fraud" includes the
         deliberate concealment (to be construed by reference to section 32(2)
         of the Limitation Act 1980) of any fact relevant to any right of action
         against RG or the Liquidators) save insofar as they satisfy the
         requirement of reasonableness as stated in the Unfair Contract Terms
         Act 1977 or, where applicable, would satisfy the requirement of
         reasonableness were references to periods of time to be construed as
         running from the discovery of the fraud or concealment (as the case may
         be) in which event such references shall be so construed.

<PAGE>

                                       24

20.      INDEMNITIES

20.1     Marconi shall indemnify and hold harmless each of Ultramast and RTS or
         the New Party (as defined in the Form of Deed of Adherence in Schedule
         7) and, to the extent applicable, their respective Affiliates against
         all actual costs, claims, demands and expenses (including reasonable
         legal costs and expenses) of whatever nature incurred or suffered by
         it, and arising out of any claim, action or proceeding taken or issued
         by or on behalf of British Waterways (or its predecessors) against
         Ultramast, RTS, Marconi or Marconi plc solely to the extent that such
         claim, action or proceeding is in respect of a letter dated 26th April,
         2001 from Marconi plc to British Waterways or in connection with the
         relationship between Marconi plc and British Waterways created by that
         letter (a "BW CLAIM"), provided always that:

         20.1.1   Ultramast and/or RTS (as the case may be) shall promptly, and
                  in any event within seven days, notify Marconi in writing of
                  any BW Claim of which it becomes aware;

         20.1.2   Marconi shall, at its expense, be entitled to have the conduct
                  of and/or settle all negotiations and litigation arising from
                  any BW Claim to the extent that such negotiations and
                  litigation relate to the BW Claim;

         20.1.3   Ultramast and/or RTS shall, and shall procure so far as they
                  are able that their Affiliates shall, at Marconi's request and
                  with Marconi reimbursing Ultramast, RTS and/or any Affiliate
                  (as the case may be) for all costs and expenses (including
                  reasonable legal costs and expenses) reasonably incurred, give
                  Marconi all assistance reasonably requested by Marconi
                  (including, without limitation, giving access to such
                  employees, documents and records as Marconi may reasonably
                  require provided that such access would not result in RTS
                  and/or Ultramast and/or their respective Affiliates waiving or
                  losing the benefit of any legal privilege they would otherwise
                  have in respect of such employees, documents and records);

         20.1.4   if a BW Claim does not include RTS, Ultramast or any of their
                  Affiliates as a named party to any such claim, action or
                  proceeding, Marconi shall not be obliged to pay the costs,
                  claims, demands or expenses of Ultramast, RTS and/or any of
                  their Affiliates unless it has first received notification of
                  the intention to incur such amounts and Marconi has given its
                  prior written consent to the incurrence of such amounts (such
                  consent not to be unreasonably withheld or delayed);

         20.1.5   neither Ultramast nor RTS shall make any admission of
                  liability or agree to any settlement or compromise of any BW
                  Claim or incur any costs or expenses in relation to a BW Claim
                  except with the prior written consent of Marconi;

         20.1.6   the Liquidators will, while Marconi has conduct of claims as
                  contemplated in this sub-clause 20.1, be kept fully informed
                  of the process and progress of any such negotiation and/or
                  litigation and will be permitted reasonable access to the
                  legal counsel(s) conducting such negotiation and/or litigation
                  for or on behalf of Marconi; and

         20.1.7   the total aggregate liability of Marconi under this sub-clause
                  20.1 shall not exceed L10,000,000.

20.2     RTS, Marconi and Ultramast shall use their respective reasonable
         endeavours to procure, insofar as they are respectively able, that Ente
         Sardo Acquedottie e Fognature ("ESAF") agrees to the termination of an
         agreement dated 30th July, 2002 between ESAF and

<PAGE>

                                       25

         Ultramast (the "CONVENTION") without any liability on the part of
         Ultramast. In using their respective reasonable endeavours to procure
         termination of the Convention, none of RTS, Marconi or Ultramast shall
         make any payment to ESAF without the prior written consent of both RTS
         and Marconi (such consent not to be unreasonably withheld). RTS,
         Marconi and Ultramast shall consult each other with regard to actions
         to be taken to achieve such termination, and shall co-operate with each
         other in good faith with a view to securing, insofar as the parties are
         respectively able, such termination prior to Completion.

20.3     If such termination in a manner reasonably satisfactory to both RTS and
         Marconi (the "REQUIRED TERMINATION") is not achieved prior to
         Completion and Ultramast is required to pay any sum to ESAF (other than
         sums specifically provided for in respect of ESAF in the witness
         statement prepared in connection with the Capital Reduction) in respect
         of the Convention or any leases required to be entered into pursuant to
         it, including as a result of breach or otherwise non-compliance with
         the terms of the Convention (an "ESAF PAYMENT"), Marconi shall
         indemnify and hold harmless RTS against 50 per cent. of all such ESAF
         Payments, provided always that:

         20.3.1   Ultramast and/or RTS (as the case may be) shall promptly, and
                  in any event within seven days, notify Marconi in writing of
                  any ESAF Payment of which it becomes aware;

         20.3.2   RTS, Marconi and Ultramast agree that no steps will be taken
                  by any of them in relation to the Convention or Ultramast's
                  relationship with ESAF, without the prior written consent of
                  both RTS and Marconi (such consent not to be unreasonably
                  withheld);

         20.3.3   in no event shall Marconi's liability under this indemnity,
                  whether in relation to one or more ESAF Payments, exceed in
                  aggregate L1.68 million;

         20.3.4   this indemnity shall only subsist so long as Ultramast remains
                  a subsidiary of either RTS or the New Party (as defined in the
                  Form of Deed of Adherence in Schedule 7); and

         20.3.5   this indemnity shall lapse and cease to have effect if the
                  Required Termination is subsequently achieved or if either of
                  Ultramast or RTS build any mast sites pursuant to the terms of
                  the Convention or otherwise take any other material action
                  with respect to their purported obligations thereunder other
                  than seeking the Required Termination.

20.4     Insofar and to the extent that RTS receives a payment from Marconi
         pursuant to the indemnity provided for in sub-clause 20.3, RTS shall
         forward such sum received to Ultramast subject to the deduction of all
         reasonable costs and expenses (including legal costs and expenses)
         incurred in the process of obtaining such payment from Marconi,
         provided always that this sub-clause shall not have the effect of
         increasing the liability of Marconi under sub-clause 20.3 in any way
         whatsoever.

<PAGE>

                                       26

IN WITNESS whereof the parties hereto have caused this deed to be duly executed
and delivered on the date first written above.

EXECUTED as a DEED by                      )
RT GROUP TELECOM SERVICES LIMITED          )       SIMON OSBORNE
acting by                                  )
and                                        )       PAUL WORTHINGTON

EXECUTED as a DEED by                      )
RT GROUP PLC                               )
(IN MEMBERS' VOLUNTARY LIQUIDATION)        )
acting by James Robert Drummond Smith
one of the Liquidators
(as its agent without personal liability)
in the presence of:
                                                              JAMES SMITH
Signature of witness LOUIS ATTRILL
                                                     AS JOINT LIQUIDATION
                                                         RT GROUP PLC
LOUIS ATTRILL                                 (IN MEMBERS VOLUNTARY LIQUIDATION)
Name of Witness
ASHURST MORRIS CRISP
BROADWALK HOUSE
5 APPORD STREET
LONDON, EC2A 2HA
Address

TRAINEE SOLICITOR
Occupation

<PAGE>

                                       27

EXECUTED as a DEED by                      )
RT GROUP TELECOM SERIVCES                  )
LIMITED                                    )       SIMON OSBORNE
acting by A DIRECTOR                       )
and ITS SECRETARY                          )       PAUL WORTHINGTON

EXECUTED as a DEED by RT                   )
GROUP PLC                                  )       JAMES SMITH
(IN MEMBERS' VOLUNTARY                     )
LIQUIDATION                                )
acting by James Robert Drummond Smith      )
one of the liquidators
(as its agent without personal liability)
in the presence of:

Signature of witness

___________________________________
Name of Witness

___________________________________
___________________________________
___________________________________
Address

___________________________________
Occupation

<PAGE>

EXECUTED as a DEED by                                  )
MARCONI CORPORATION PLC                                )       MICHAEL PARTON
acting by                                              )
and                                                    )       CHRIS HOLDEN

EXECUTED as a DEED by                                  )
ULTRAMAST LIMITED                                      )       SIMON OSBORNE
acting by                                              )
and                                                    )       TONY ROBINSON

EXECUTED as a DEED by                                  )
James Robert Drummond Smith                            )            JAMES SMITH
for and on behalf of himself and Nicholas James Dargan )
in the presence of:

LOUIS ATTRILL
Signature of witness

LOUIS ATTRILL
Name of Witness
ASHURST MORRIS CRISP
BROADWALK HOUSE.
5 APPORD STREET
LONDON, EC2A 2HA
Address

TRAINEE SOLICITOR
Occupation

<PAGE>

EXECUTED as a DEED by MARCONI                          )
CORPORATION PLC                                        )        MIKE PARTON
acting by                                              )
and                                                    )

EXECUTED as a DEED by                                  )
ULTRAMAST LIMITED                                      )        SIMON OSBORNE
acting by A DIRECTOR                                   )
and A DIRECTOR                                         )        TONY ROBINSON

EXECUTED as a DEED by                                  )
by James Robert Drummond Smith                         )        JAMES SMITH
one of the liquidators                                 )
for and on behalf of himself and Nicholas James Dargan )
in the presence of:

Signature of witness

___________________________________
Name of Witness

___________________________________
___________________________________
___________________________________
Address

___________________________________
Occupation

<PAGE>

IN THE HIGH COURT OF JUSTICE                            CLAIM NO. 2002 FOLIO 309

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

CLAIMANT                   RAILTRACK TELECOM SERVICES LIMITED

                                       and

DEFENDANT                  MARCONI CORPORATION PLC

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

                                  CONSENT ORDER

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

The Claimant and Defendant having agreed terms of settlement

BY CONSENT

IT IS ORDERED that:

1.       L19,186,026 of the L20,558,903.90 paid into Court by the Defendant on
         15th August, 2002 pursuant to the Order of Morison J dated 25th, July
         2002 shall be paid to the Defendant's solicitors, Allen & Overy;

2.       the balance of the L20,558,903.90 so paid into Court, together with all
         accrued interest on that L20,558,903.90 shall be paid to the Claimant's
         solicitors, Ashurst Morris Crisp;

3.       this action is hereby discontinued; and

4.       there be no order for costs.

Dated this 21st day of February, 2003

<PAGE>

                                                       CLAIM NO. 2002 FOLIO 309

                                                   IN THE HIGH COURT OF JUSTICE

                                                          QUEEN'S BENCH DIVISION

                                                                COMMERCIAL COURT

                                           CLAIMANT    RAILTRACK TELECOM
                                                       SERVICES LIMITED

                                                                  AND

                                           DEFENDANT   MARCONI CORPORATION
                                                       PLC

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

                                                   CONSENT ORDER

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

                                                   Ashurt Morris Crisp
                                                   Broadwalk House
                                                   5 Appold Street
                                                   London EC2A 2HA

                                                   Ref: JRL
                                                   SOLICITORS FOR THE CLAIMANT

                                                   Allen & Overy
                                                   One New Change
                                                   London EC4M 9QQ

                                                   Ref: SH/IRT
                                                   SOLICITORS FOR THE DEFENDANT

<PAGE>

                                    SCHEDULE 2
                               REDUCTION TIMETABLE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          DATE                               ACTION(S)                                   DOCUMENT(S)                  RESPONSIBILITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                                              <C>                                      <C>
DATE OF THIS AGREEMENT      (1)   Marconi and RTS sign Consent Order (but    (1)   D&T Report                          D&T/U/AMC
UNTIL 20TH DECEMBER, 2002         held by A&O to the order of the parties
                                  pending receipt of the court order         (2)   Instructions to Counsel             AMC
                                  approving the Capital Reduction)
                                                                             (3)   Petition                            AMC/U
                            (2)   Fully investigate the position of
                                  creditors of Ultramast as at date of       (4)   Witness statement                   AMC
                                  witness statement
                                                                             (5)   Certificate of Incorporation and
                            (3)   Draft all court documentation and                Certificates of Incorporation on
                                  circulate to all parties for comment             changes of name                     AMC

                            (4)   Instruct counsel (Martin Moore QC) to      (6)   Memorandum and Articles of
                                  settle all documentation                         Association (including any
                                                                                   changes)                            D&T/U

                                                                             (7)   Accounts

                                                                             (8)   Latest management accounts
                                                                                   (30.09.02)                          U

                                                                             (9)   Evidence of cash balances (e.g.
                                                                                   balance sheet, bank statements)     U

                                                                             (10)  Evidence of how and when loss
                                                                                   arose for purposes of loss
                                                                                   reduction                           AMC

                                                                             (11)  Reduction Order                     AMC/U
</TABLE>

<PAGE>

                                       33

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          DATE                               ACTION(S)                                   DOCUMENT(S)                  RESPONSIBILITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                             <C>                                      <C>
                                                                             (12)  Advertisements (one for hearing
                                                                                   and one confirming approval of
                                                                                   reduction)                               AMC

                                                                             (13)  Consent Order (see Schedule 1)           A&O

                                                                             (14)  Application Notice                       AMC

                                                                             (15)  Order for directions                     AMC

                                                                             (16)  Letters of consent to reduction          AMC
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                       34

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          DATE                               ACTION(S)                                   DOCUMENT(S)                  RESPONSIBILITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                                              <C>                                      <C>
20TH DECEMBER, 2002         (1)   Marconi and RTS to sign shareholders'      (1)   Shareholders' written resolution
(A.M.)                            written resolution to approve the                (in duplicate)                      AMC
                                  Capital Reduction and amend Articles of
                                  Association                                (2)   Board minutes including
                                                                                   resolutions to approve Accounts,
                            (2)   Board meeting of Ultramast                       management accounts, Capital
                                                                                   Reduction and one director (A.
                            (3)   Director of Ultramast (A. Elliman) to            Elliman) swearing witness
                                  sign witness statement                           statement                           AMC

                                                                             (3)   Witness statement (see above)       AMC

                                                                             (4)   Articles of Association             AMC/ A&O

------------------------------------------------------------------------------------------------------------------------------------
20TH DECEMBER, 2002         (1)   Issue application notice for directions    (1)   Application Notice (see above)      AMC
(P.M.)                            for the Capital Reduction, lodge
                                  petition, witness statement and
                                  supporting papers with Court

                            (2)   File shareholders' written resolution                                                AMC
                                  and amended Articles of Association with
                                  the Registrar
------------------------------------------------------------------------------------------------------------------------------------
16TH JANUARY, 2003          (1)   Hearing of application notice for the                                                AMC/Counsel
                                  Capital Reduction before the court
                                  registrar (in chambers)

                            (2)   Court registrar settles form of order                                                Court/Counsel
                                  for directions and advertisement of
                                  hearing

                            (3)   Book advertisement space in national                                                 AMC
                                  newspaper
------------------------------------------------------------------------------------------------------------------------------------
28TH JANUARY, 2003          (1)   Advertise hearing of petition in           (1)   Advertisement                       AMC
                                  national daily newspaper
------------------------------------------------------------------------------------------------------------------------------------
5TH FEBRUARY, 2003          (1)   Court hearing of petition to confirm                                                 AMC/Counsel
                                  Capital Reduction
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                       35

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          DATE                             ACTION(S)                                   DOCUMENT(S)                    RESPONSIBILITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                                            <C>                                        <C>
                            (2)   Lodge Consent Order at court for
                                  sealing                                                                              A&O
------------------------------------------------------------------------------------------------------------------------------------
7TH FEBRUARY, 2003          (1)   Hearing (if necessary) of the Court to                                               AMC/Counsel
                                  approve the Consent Order

                            (2)   Sealed Consent Order issued by Court
------------------------------------------------------------------------------------------------------------------------------------
10TH FEBRUARY, 2003         (1)   Completion                               (1)   Board resolutions                     AMC/A&O
                                                                           (2)   Application for Deferred Shares       AMC
                            (2)   Registrar registers Reduction Order      (3)   Deferred Share certificate
                                 whereupon Capital Reduction is effective  (4)   APT agreement                         AMC/U
                                                                           (5)   Share certificate re Marconi          AMC
                                                                                 Reduction Shares                      Marconi
                                                                           (6)   Share certificate re RTS Reduction
                                                                                 Shares                                AMC
                                                                           (7)   Letter to Companies House enclosing
                                                                                 Reduction Order                       AMC
------------------------------------------------------------------------------------------------------------------------------------
BY 25TH FEBRUARY, 2003    Advertise registration of Reduction Order        (1)   Advertisement (see above)             AMC
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                   SCHEDULE 3
                                PUT & CALL OPTION

1.       INTERPRETATION

In this Schedule, unless the context otherwise requires, the following words and
expressions shall have the following meanings:

"CALL EXERCISE NOTICE"     a notice substantially in the form set out in
                           Schedule 4;

"EXERCISE NOTICE"          a Call Exercise Notice or a Put Exercise Notice (as
                           the context may require);

"OPTION"                   either or both of the Put Option and the Call Option
                           (as the context may require);

"OPTION COMPLETION"        completion of the exercise of an Option as described
                           in paragraph 4;

"OPTION CONSIDERATION"     the consideration payable upon Option Completion as
                           set out in paragraph 3;

"PUT EXERCISE NOTICE"      a notice substantially in the form set out in
                           Schedule 5.

2.       EXERCISE OF THE OPTIONS

2.1      RTS may exercise the Call Option by serving a Call Exercise Notice on
         Marconi at any time after 30th September, 2004.

2.2      Marconi may exercise the Put Option by serving a Put Exercise Notice on
         RTS at any time after the date being the fifteenth anniversary of the
         date of this agreement or, if earlier, upon Railtrack plc agreeing to
         the changes to the Railtrack Agreements contemplated by sub-clause 8.7.

2.3      An Option may be exercised only in respect of all of the Deferred
         Shares issued to Marconi at the time of the relevant Exercise Notice
         (the "OPTION SECURITIES").

2.4      Exercise of an Option shall oblige Marconi to sell and RTS to purchase
         the Option Securities.

2.5      The Option Securities shall be sold free from all liens, charges,
         equities and encumbrances and together with all rights attaching to the
         Option Securities at the date of service of the relevant Exercise
         Notice.

3.       OPTION CONSIDERATION

3.1      The consideration for the acquisition of the Option Securities shall be
         paid by RTS at Option Completion and shall be as provided in paragraph
         3.2.

3.2      The consideration for the acquisition of the Option Securities upon the
         exercise of an Option shall be the sum of L1 for each of the Option
         Securities.

<PAGE>

                                       37

4.       OPTION COMPLETION

4.1      Option Completion of the sale and purchase of the Option Securities
         following the exercise of an Option shall take place at the offices of
         RTS's Solicitors on the date which is the fifth business day after the
         date of service of the Exercise Notice.

4.2      At Option Completion:

         4.2.1    Marconi shall deliver to RTS a transfer or transfers in
                  respect of the Option Securities duly completed in favour of
                  RTS (or as it may direct) together with the certificate(s) for
                  the Option Securities; and

         4.2.2    following delivery of the documents referred to in paragraph
                  4.2.1, RTS shall pay the Option Consideration to Marconi (or
                  to such other person as Marconi may direct).

5.       NON-DISPOSAL

5.1      Until Option Completion, Marconi shall not, without the prior written
         consent of RTS sell, transfer or otherwise dispose of (or agree to do
         so) any of the Option Securities (or any interest in them).

<PAGE>

                                       38

                                   SCHEDULE 4
                          FORM OF CALL EXERCISE NOTICE

                        [ON THE HEADED NOTEPAPER OF RTS]

To:      [Marconi]                                            [DATE]

Dear Sirs

RE: SETTLEMENT AGREEMENT, DATED - DECEMBER, 2002, AND MADE BETWEEN, INTER ALIA,
MARCONI CORPORATION PLC AND RT GROUP TELECOM SERVICES LIMITED (THE "AGREEMENT")

We refer to the Agreement and to the Call Option (as defined in the Agreement)
granted by you to us under clause 9.3 of the Agreement.

We hereby give notice pursuant to paragraph 2 of schedule 3 to the Agreement
that we exercise the Call Option granted by you in respect of all of the Option
Securities (as defined in the Agreement).

Yours faithfully

---------------------------------------
For and on behalf of
RT Group Telecom Services Limited

<PAGE>

                                       39

                                   SCHEDULE 5
                           FORM OF PUT EXERCISE NOTICE
              [ON THE HEADED NOTEPAPER OF MARCONI CORPORATION PLC]

To:      [RTS]                                                [DATE]

Dear Sirs

RE: SETTLEMENT AGREEMENT, DATED - DECEMBER, 2002, AND MADE BETWEEN, INTER ALIA,
MARCONI CORPORATION PLC AND RT GROUP TELECOM SERVICES LIMITED (THE "AGREEMENT")

We refer to the Agreement and to the Put Option (as defined in the Agreement)
granted by you to us under clause 9.3 of the Agreement.

We hereby give notice pursuant to paragraph 2 of schedule 3 to the Agreement
that we exercise the Put Option granted by you in respect of all of the Option
Securities (as defined in the Agreement).

Yours faithfully

----------------------------------------
For and on behalf of
Marconi Corporation plc

<PAGE>

                                       40

                                   SCHEDULE 6
                          RIGHTS OF THE DEFERRED SHARES

The rights attached to and imposed on the Deferred Shares are as follows:

1.       Income and Capital

         Subject to paragraph 2 below, the Deferred Shares shall not confer on
         the holders thereof any entitlement to any participation in the profits
         or the assets of Ultramast.

2.       Winding Up

         The Deferred Shares shall confer on the holders thereof the right, in
         the event of a winding up of Ultramast or other return of capital, to
         receive an amount equal to the nominal value of such Deferred Shares
         but only after the holders of all other shares have received in
         aggregate a distribution in the sum or to the value of L1,000,000,000
         in respect of their holdings.

3.       Voting

         The Deferred Shares shall not confer on the holders thereof any
         entitlement to receive notice of or to attend or vote at any general
         meeting of Ultramast.

<PAGE>

                                       41

                                   SCHEDULE 7
                            FORM OF DEED OF ADHERENCE

         THIS DEED is made on [           ]

         BETWEEN:

(1)      [           ] of [           ] (the NEW PARTY);

(2)      RT GROUP TELECOM SERVICES LIMITED, a company incorporated in England
         and Wales (registered number 3963596) whose registered office is at
         20-22 Bedford Row, London WC1R 4JS ("RTS");

(3)      RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION), a company
         incorporated in England and Wales (registered number 2904614) whose
         registered office is at 20-22 Bedford Row, London WC1R 4JS ("RG")
         acting by its joint liquidators James Robert Drummond Smith and
         Nicholas James Dargan of Deloitte & Touche, 180 Strand, London WC2R 1WL
         (the "LIQUIDATORS");

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

(5)      ULTRAMAST LIMITED, a company incorporated in England and Wales
         (registered number 4042640) whose registered office is at City Point,
         One Ropemaker Street, London EC2Y 9SS ("ULTRAMAST"); and

(6)      THE LIQUIDATORS.

WHEREAS:

(A)      RTS, RG, Marconi, Ultramast and the Liquidators (together the
         "CONTINUING PARTIES") are parties to a settlement deed dated [ ]th
         December, 2002 (the "AGREEMENT"). Words and expressions defined in the
         Agreement shall have the same meaning in this deed.

(B)      The New Party proposes to purchase all of the Ordinary Shares
         registered in the name of RTS from RTS.

(C)      This deed is made by the New Party in compliance with clause 4.11 of
         the Agreement.

THIS DEED WITNESSES as follows:

1.       The New Party confirms that it has been supplied with a copy of the
         Agreement.

2.       Subject to clauses 4 and 5 of this deed, the New Party undertakes to
         each of the Continuing Parties to be bound by the Agreement in all
         respects as if the New Party was a party to the Agreement and named in
         it as RTS and to observe and perform all the provisions and obligations
         of the Agreement applicable to or binding on RTS under the Agreement
         insofar as they fall to be observed or performed on or after the date
         of this deed.

3.       Subject to clauses 4 and 5 of this deed, the Continuing Parties
         undertake to the New Party to observe and perform all the provisions
         and obligations of the Agreement applicable to or

<PAGE>

                                       42

         binding on them under the Agreement and acknowledges that the New Party
         shall be entitled to the rights and benefits of the Agreement as if the
         New Party were named in the Agreement as RTS with effect from the date
         of this deed.

4.       The New Party shall not be bound by, and shall not be entitled to
         exercise any rights in relation to, the rights and obligations of RTS
         set out in sub-clauses 2.1.2, 2.2, 3.5, 4.10, 4.11, 6, 7.2.3, 7.2.5,
         7.2.6, 7.3.1, 7.3.2, 7.3.4, 7.7, 8.1.2 or clause 9 of or schedule 3 to
         the Agreement (but, for the avoidance of doubt, these clauses,
         sub-clauses and that schedule shall continue to apply to and be binding
         on RTS).

5.       Nothing in this agreement shall affect the rights of RTS under the
         Agreement or the obligation of RTS to comply with the terms of the
         Agreement, save in respect of sub-clauses 2.1.1, 3.3, 4.1, 4.2, 4.3,
         4.4, 4.7, 4.8, 4.9, 5.1, 5.5, 7.1, 7.2.2, 7.3.3, 8.2 and 8.5 which
         shall no longer apply to RTS but, for the avoidance of doubt, shall
         apply to the New Party.

6.       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.       This deed shall be governed by and shall be construed in accordance
         with English law. The parties submit to the exclusive jurisdiction of
         the English Courts for the purpose (but solely for the purpose) of any
         action to enforce the terms of this deed.

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

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"}]]