Document:

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[CLIFFORD CHANCE LOGO]                             LIMITED LIABILITY PARTNERSHIP

                                                                    EXHIBIT 4.01

                                                                  CONFORMED COPY

                             MARCONI CORPORATION PLC

                                   MARCONI PLC

                                  HSBC BANK PLC

                                       AND

                                BARCLAYS BANK PLC

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                              ESOP ESCROW AGREEMENT

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                                    CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BETWEEN:

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

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

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

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

RECITALS

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

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

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

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

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

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

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

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

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

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

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

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      In this Agreement:

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

         "BCT" means Bedell Cristin Trustees Limited;

         "CHARGED ESCROW CASH" means the aggregate of:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         "ESCROW CASH" means the aggregate of:

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

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

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

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

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

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

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

         where:

         A    =   the Escrow Cash Claim of that ESOP Bank

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

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         C    =   the Interest Rate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         "INTERESTED PARTIES" means:

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

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

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

         "INVESTMENTS" means, at any time:

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

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

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

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

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

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

         "MET" has the meaning given in Recital A;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         "SALOMON" means Salomon Brothers International Limited;

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

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

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

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

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

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

         "TRIGGER DATE" means the Effective Date provided:

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

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

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

         "UBS" means UBS AG; and

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

1.2      In this Agreement, a reference to:

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

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

                                      - 9 -

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

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

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

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

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

         1.2.8    times of the day is to London time.

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

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

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

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

2.       ESCROW AGENT

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

                                     - 10 -

<PAGE>

3.      CREATION OF THE ESCROW

3.1     ESCROW CASH ARRANGEMENTS

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

3.2      CHARGED ESCROW CASH ARRANGEMENTS

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

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

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

         3.2.2    In circumstances where clause 3.2.1 applies:

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

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

3.3      RELEASE OF CLAIMS

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

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

                                     - 11 -

<PAGE>

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

4.       TERMS OF ESCROW

4.1      DURATION

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

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

4.2      RIGHTS OF THE PARTIES

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

4.3      INTEREST ON THE ESCROW CASH

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

4.4      PAYMENT MECHANISM

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

                                     - 12 -

<PAGE>

5.       ESCROW CASH ENTITLEMENT

5.1      ESCROW CASH ENTITLEMENT - AGREEMENT

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

5.2      ESCROW CASH CLAIM - COURT DETERMINATION

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

5.3      WAIVER OF RIGHTS

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

6.       CHARGED ESCROW CASH ENTITLEMENT

6.1      CLAIMS AGAINST PARTICIPATING OPCOS

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

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

                                     - 13 -

<PAGE>

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

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

6.2      TERMS OF CLAIMS

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

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

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

                  (iii)    the Company shall keep such report confidential.

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

                                     - 14 -

<PAGE>

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

6.3      ABANDONMENT, COMPROMISE, SETTLEMENT

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

6.4      CHARGED ESCROW CASH ENTITLEMENT - COURT DETERMINATION

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

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

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

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

6.5      WAIVER OF RIGHTS

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

7.       RELEASE FROM ESCROW

7.1      ESCROW CASH BALANCE - PAYMENT INSTRUCTION OR FINAL JUDGMENT

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

                                     - 15 -

<PAGE>

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

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

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

7.2      ESCROW CASH BALANCE - PAYMENT TERMS

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

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

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

7.3      AGGREGATE RECOVERIES BY EACH ESOP BANK

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

7.4      CHARGED ESCROW CASH BALANCE - PAYMENT INSTRUCTION OR FINAL JUDGMENT

                                     - 16 -

<PAGE>

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

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

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

7.5      CHARGED ESCROW CASH BALANCE - PAYMENT TERMS

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

         7.5.1

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

         (b)      secondly:

                                     - 17 -

<PAGE>

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

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

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

7.6      AGGREGATE CHARGED ESCROW CASH RECOVERIES BY EACH ESOP BANK

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

8.       THE MOBILE ESCROW AGREEMENT

8.1      PLC AND THE COMPANY UNDERTAKINGS - MOBILE OPCOS

         PLC and the Company each undertake:

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

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

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

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

                                     - 18 -

<PAGE>

8.2      DISTRIBUTION OF MOBILE ESCROW MONIES

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

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

8.3      MOBILE OPCOS

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

8.4      NO AMENDMENT

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

9.       THE SUBSEQUENTLY SOLD OPCOS ESCROW AGREEMENTS

9.1      PLC AND THE COMPANY UNDERTAKINGS - SUBSEQUENTLY SOLD OPCOS

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

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

                                     - 19 -

<PAGE>

9.2      TERMS OF SUBSEQUENTLY SOLD OPCO ESCROW AGREEMENTS

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

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

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

10.      NON-PARTICIPATING ESOP BANKS

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

11.      DUTIES AND LIABILITY OF ESCROW AGENT

11.1     INVESTMENT INSTRUCTIONS

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

11.2     DUTIES OF THE ESCROW AGENT

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

                                     - 20 -

<PAGE>

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

11.3     RESIGNATION OF THE ESCROW AGENT

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

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

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

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

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

                                     - 21 -

<PAGE>

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

11.4     COMPANY INDEMNITY

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

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

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

11.5     TAXATION

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

12.      REIMBURSEMENT OF ESCROW AGENT

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

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

                                     - 22 -

<PAGE>

13.      ACKNOWLEDGEMENT OF EVENT OF DEFAULT AND UNDERTAKINGS

13.1     PLC AND THE COMPANY ACKNOWLEDGEMENT

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

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

         13.1.2   they waive any right to argue otherwise.

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

13.3     Documents

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

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

                           (a)      30 days after the Trigger Date; or

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

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

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

                                     - 23 -

<PAGE>

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

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

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

14.      ARBITRATION

14.1     NO COURT DETERMINATION

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

14.2     LCIA RULES

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

14.3     OTHER MATTERS RELATING TO ARBITRATION

         For the purpose of the arbitration:

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

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

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

                                     - 24 -

<PAGE>

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

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

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

15.      COSTS

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

16.      TERMINATION

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

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

17.      NOTICES

17.1     COMMUNICATION IN WRITING AND DELIVERY

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

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

         17.1.2   if by facsimile, when transmitted.

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

17.2     ADDRESSES

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

                                     - 25 -

<PAGE>

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

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

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

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

         Contact:           Chris Merrett/Khalid Raja

         Facsimile:         020 7991 4351

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

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

         New Century Park
         Box 53
         Coventry
         Warwickshire
         CV3 1HJ

         Contact:           Charlie Shepherd

         Facsimile:         020 7409 7748

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

17.5     NOTIFICATION OF ADDRESS AND FAX NUMBER

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

18.      ANNOUNCEMENTS

18.1     NO ANNOUNCEMENTS

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

                                     - 26 -

<PAGE>

18.2     PERMITTED ANNOUNCEMENTS

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

19.      FURTHER ASSURANCE

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

20.      REMEDIES AND PARTIAL INVALIDITY

20.1     REMEDIES AND WAIVERS

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

20.2     CUMULATIVE RIGHTS

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

20.3     PARTIAL INVALIDITY

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

21.      RIGHTS OF THIRD PARTIES

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

22.      ASSIGNMENT

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

23.      AMENDMENT

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

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

                                     - 27 -

<PAGE>

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

24.      COUNTERPARTS

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

25.      GOVERNING LAW AND JURISDICTION

25.1     GOVERNING LAW

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

25.2     JURISDICTION OF THE ENGLISH COURTS

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

25.3     ACKNOWLEDGEMENT OF ENGLISH COURTS

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

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

                                     - 28 -

<PAGE>

                                   SCHEDULE 1

                       DETERMINATION OF ESCROW CASH CLAIM

1.       THE ESCROW CASH CLAIM

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

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

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

2.       MODELLING THE HYPOTHETICAL INSOLVENCY

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

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

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

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

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

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

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

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

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

                                     - 29 -

<PAGE>

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

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

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

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

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

         (a)      the construction of the Model;

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

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

3.       SOLD OPCOS

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

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

                                     - 30 -

<PAGE>

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

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

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

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

4.       COMPETING CLAIMS

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

5.       NO RELEASE

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

6.       ARBITRATION

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

                                     - 31 -

<PAGE>

                                   SCHEDULE 2

                           THE ESOP SWAP TRANSACTIONS

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

                                     - 32 -

<PAGE>

                                   SCHEDULE 3

                           FORM OF PAYMENT INSTRUCTION

[Date]

To:     [          ] (as Escrow Agent)

Dear Sirs,

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

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

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

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

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

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

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

Yours faithfully

[Signatures of all Interested Parties to the Escrow Agreement]

                                     - 33 -

<PAGE>

                                   SCHEDULE 4

              SOLD OPCOS, MOBILE OPCOS AND SUBSEQUENTLY SOLD OPCOS

                                  SCHEDULE 4.1

                                   SOLD OPCOS

<TABLE>
<CAPTION>

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

                                     - 34 -

<PAGE>

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

                                     - 35 -

<PAGE>

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

                                     - 36 -

<PAGE>

                                  SCHEDULE 4.2

                                  MOBILE OPCOS

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

                                     - 37 -

<PAGE>

                                  SCHEDULE 4.3

                             SUBSEQUENTLY SOLD OPCOS

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

                                     - 38 -

<PAGE>

                                   SCHEDULE 5

                               PARTICIPATING OPCOS

                                     - 39 -

<PAGE>

                                   SCHEDULE 6

                                DEED OF ADHERENCE

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

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

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

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

[                        ]

Contact:

Facsimile:

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

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

Signed as a Deed on behalf of

[name of Acceding Institution]

Director

Director/Secretary

* Delete as appropriate

                                     - 40 -

<PAGE>

                                   SCHEDULE 7

                          FORM OF ESOP BANK CERTIFICATE

[Date]

To:     [              ] (as Escrow Agent)

Dear Sirs,

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

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

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

This amount is calculated on the basis of:

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

[Our Escrow Cash Entitlement is calculated as follows:

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

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

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

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

        [                                                    ]

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

Yours faithfully

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

                                     - 41 -

<PAGE>

EXECUTED by the Parties

Signed on behalf of
MARCONI CORPORATION PLC

Name:                  M.SKELLY

Signed on behalf of
MARCONI PLC

Name:                  M.SKELLY

Signed on behalf of
HSBC BANK PLC

Name:                  IAN MCMILLAN

Signed on behalf of
BARCLAYS BANK PLC

Name:                  BARRY COLE

                                     - 42 -<PAGE>

                                                                    EXHIBIT 4.02

                                                                  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

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                                       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.

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                                       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:

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                                       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.

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                                       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-00056-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00056-of-00352.parquet"}]]