Exhibit 4.12

Exhibit C – Federal Supply Agreement(1)

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(1) [***] indicates that text has been deleted which is the subject of a confidential treatment request.  The text has been filed separately with the SEC.

Exhibit E – Middle East Supply Agreement(1)

[***]

(1) [***] indicates that text has been deleted which is the subject of a confidential treatment request.  The text has been filed separately with the SEC.

Exhibit I – Alcatel Sublicense(1)

[***]

(1) [***] indicates that text has been deleted which is the subject of a confidential treatment request.  The text has been filed separately with the SEC.

Exhibit L – Transition Services Agreement(1)

[***]

(1) [***] indicates that text has been deleted which is the subject of a confidential treatment request.  The text has been filed separately with the SEC.

EXECUTION COPY

CONFIDENTIAL

ASSET PURCHASE AND SALE AGREEMENT(1)

BY AND AMONG

MARCONI CORPORATION PLC,

MARCONI COMMUNICATIONS, INC.,

MARCONI INTELLECTUAL PROPERTY (RINGFENCE) INC.,

MARCONI COMMUNICATIONS CANADA INC.,

MARCONI COMMUNICATIONS DE MEXICO S.A. DE C.V.,

MARCONI COMMUNICATIONS EXPORTEL, S.A. DE C.V.,

ADMINISTRATIVA MARCONI COMMUNICATIONS S.A. DE C.V.,

MARCONI POLSKA SP ZOO,

MARCONI COLOMBIA, S.A.,

EMERSUB XCII, INC.,

▇▇▇▇▇▇▇ ELECTRIC CANADA LIMITED,

▇▇▇▇▇▇▇ MEXICO CORPORATE SERVICES,
S. DE ▇.▇. DE C.V.

AND

▇▇▇▇▇▇▇ ELECTRIC CO.

Dated as of July 6, 2004

SALE OF

OUTSIDE PLANT, POWER
AND SERVICES BUSINESS
AND
TEST SYSTEMS BUSINESS

(1) [***] indicates that text has been deleted which is the subject of a confidential treatment request.  The text has been filed separately with the SEC.

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ASSET PURCHASE AND SALE AGREEMENT

THIS ASSET PURCHASE AND SALE AGREEMENT is made as of the 6^th day of July    , 2004 by and among Emersub XCII, Inc., a corporation incorporated under the laws of Delaware (the “U.S. Purchaser”), ▇▇▇▇▇▇▇ Electric Canada Limited, a corporation organized under the laws of Ontario (“Canadian Purchaser”), ▇▇▇▇▇▇▇ Mexico Corporate Services, S. de ▇.▇. de C.V., a corporation incorporated under the laws of Mexico (“Mexican Purchaser”), ▇▇▇▇▇▇▇ Electric Co., a corporation organized under the laws of Missouri (“Emerson”), ▇▇▇▇▇▇▇ Corporation plc, a public limited liability company incorporated in England and Wales (registered no. 0067307) (“Marconi”), Marconi Communications, Inc., a corporation incorporated under the laws of Delaware (“MCI”),  Marconi Intellectual Property (Ringfence) Inc., a corporation incorporated under the laws of Delaware (“Marconi IP”), Marconi Communications Canada Inc., a corporation incorporated under the laws of New Brunswick (“Marconi Canada”), Marconi Communications de Mexico S.A. de C.V., a corporation incorporated under the laws of Mexico (“Marconi Mexico”), Marconi Communications Exportel, S.A. de C.V., a corporation incorporated under the laws of Mexico (“Marconi Exportel”), Administrativa Marconi Communications S.A. de C.V., a corporation incorporated under the laws of Mexico (“Marconi Administrativa”), Marconi Polska Sp zoo, a corporation incorporated under the laws of Poland (“Marconi Polska”), and Marconi Colombia, S.A., a corporation incorporated under the laws of Colombia (“Marconi Colombia”).  Certain capitalized terms used herein are defined in Article I.

W I T N E S S E T H:

WHEREAS, the Purchasers (as defined below) desire to purchase from the Sellers (as defined below), and the Sellers desire to sell to the Purchasers, certain assets used in the conduct of the Business (as defined below) by the Sellers, and the Purchasers desire to assume from the Sellers, and the Sellers desire to assign to the Purchasers, certain obligations and liabilities relating to the Business, all upon the terms and subject to the conditions contained herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, Emerson, Marconi, the Purchasers and the Sellers hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1           Definitions.  The following terms shall have the following meanings for the purposes of this Agreement:

“Access Asset Purchase Agreement” shall mean the Asset Purchase and Sale Agreement, dated as of January 5, 2004, by and among MCI, Marconi IP, Marconi, AFC and Advanced Fibre Communications North America, Inc.

“Access Cross License Agreement” shall mean the Cross License Agreement, effective as of February 20, 2004, by and among Marconi IP, MCI, Marconi, Marconi UK Intellectual

Property Limited, Marconi Communications Spa and Marconi Communications GmbH, on the one hand, and Advanced Fibre Access Corporation, and, with respect to Section 6.15 thereof only, AFC, on the other hand.

“Access Non-Compete Restrictions” shall have the meaning set forth in Section 6.12.

“Access Transition Services Agreement” shall mean the Transition Services Agreement, dated as of January 5, 2004, by and between Advanced Fibre Access Corporation, AFC and MCI.

“Accounting Firm” shall have the meaning set forth in Section 3.2(c).

“Accounts Payable” shall have the meaning set forth in Section 2.5(d).

“Accounts Receivable” shall mean all accounts receivable, trade receivables, notes or other receivables (excluding any receivables relating to any Benefit Plan and any receivables relating to any benefit plan set forth on the Employee Exhibits) owned by the Sellers to the extent arising out of or from the operation of the Business, including receivables from suppliers but excluding receivables to the extent relating to Excluded Assets. “Accrued Compensation and Benefits” shall mean (a) payroll and bonuses (other than bonuses under the Marconi AIP) earned but not yet paid (it being understood that payroll and bonuses will be deemed “earned” in accordance with the applicable plan or policy), (b) vacation pay earned but not yet paid and (c) the Included AIP Amount; provided, however, that Accrued Compensation and Benefits shall not include any amounts specified in paragraphs (a), (b) or (c) for which a Purchaser is not assuming liability under this Agreement.

“Adjusted Purchase Price” shall have the meaning set forth in Section 3.2(f).

“AFC” shall mean Advanced Fibre Communications, Inc., a corporation incorporated under the laws of Delaware.

“Affiliate” shall mean, with respect to any specified Person, any other Person which, directly or indirectly, controls, is under common control with, or is controlled by, such specified Person. The term “control” as used in the preceding sentence means, with respect to a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such corporation, or with respect to any Person other than a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person.

“Agreement” shall mean this Asset Purchase and Sale Agreement, including all Exhibits and Schedules hereto, as it may be amended, modified or supplemented from time to time in accordance with its terms.

“Annual Balance Sheet” shall have the meaning set forth in Section 4.4(a).

“Annual Income Statement” shall have the meaning set forth in Section 4.4(a).

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“Annual Management Accounts” shall have the meaning set forth in Section 4.4(a).

“Antitrust Division” shall mean the Antitrust Division of the United States Department of Justice.

“Applicable Accounting Principles” shall have the meaning set forth in Section 4.4(b).

“Assets” shall mean the assets described in Section 2.1, the Transferable Permits and the Purchased Contracts, but excluding the Excluded Assets.

“Asset Allocation Statement” shall have the meaning set forth in Section 3.3(b).

“Assignment and Assumption Agreement” shall mean the assignment and assumption agreement substantially in the form set forth in Exhibit A.

“Assumed Obligations” shall have the meaning set forth in Section 2.5.

“BBRS” shall mean the Broadband Routing and Switching business units of MCI and any of its Affiliates.

“BBRS Business” shall mean the business of designing, developing, manufacturing, marketing and selling (a) broadband routing and switching equipment and systems and associated administrative and management software, and the provision of related technical services, field support services, repair and replacement services, installation services and ongoing maintenance services for such equipment, systems and software, and, for purposes of the foregoing, “broadband routing and switching equipment and systems” includes multi-service switch routers providing ATM switching, IP switching, IP routing, frame relay switching, Ethernet switching, MPLS switching and similar products and technologies, (b) conferencing equipment and systems and associated administrative and management software, including the collaborative conferencing technology marketed under the name “ViPr”, and the provision of related technical services, field support services, repair and replacement services, installation services and ongoing maintenance services for such equipment, systems and software and (c) integrated access devices (“IADs”) and associated administrative and management software, and the provision of related technical services, field support services, repair and replacement services, installation services and ongoing maintenance services for such IADs and software.

“Benchmark Amount” shall mean $46,300,000.

“Benefit Plans” shall mean, collectively, the Business Plans and the Seller Benefit Plans.

“▇▇▇▇ of Sale” shall mean the ▇▇▇▇ of sale substantially in the form set forth in Exhibit B.

“Business” shall mean, collectively, the OPPS Business and the Test Systems Business.

“Business Day” shall mean any day of the year other than (a) any Saturday or Sunday or (b) any other day on which banks located in London, England or New York, New York generally are closed for business.

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“Business Material Adverse Effect” shall mean an effect on the business, operations, results of operations or condition (financial or otherwise) of the Business as a whole which is or would reasonably be expected to be material and adverse, excluding effects directly or indirectly resulting from (a) matters generally affecting the economy of the United States of America, Canada, Mexico and/or any country in which the Business sells products or services which do not have a material disproportionate effect on the Business, (b) general industry developments which do not have a material disproportionate effect on the Business, (c) the disclosure of the transactions contemplated by this Agreement or (d) changes in Law which do not have a material disproportionate effect on the Business.

“Business Plans” shall mean the plans, programs, arrangements and agreements which cover only Current MCI Employees or Former MCI Employees and are identified on Schedule 4.17(a) as a Business Plan.

“Business Portion” shall have the meaning set forth in Section 2.3(c).

“Calculation Principles” shall have the meaning set forth in Section 3.2(g).

“Canadian Benefit Plans” shall mean benefit plans, programs, policies and arrangements relating to Current Canadian Employees and Former Canadian Employees, which plans, programs, policies and arrangements are listed in the applicable Schedule to Exhibit Canada.

“Canadian Purchaser” shall have the meaning set forth in the Preamble.

“Claims Proceeds” shall have the meaning set forth in Section 6.2(c)(iv).

“Clearance Certificate” shall have the meaning set forth in Section 13.15.

“Closing” shall mean the consummation of the transactions contemplated herein in accordance with Article IX.

“Closing Date” shall mean the date on which the Closing occurs or is to occur.

“Closing Working Capital” shall have the meaning set forth in Section 3.2(a).

“COBRA” shall mean all continuation group health coverage in accordance with the provisions of Section 4980B or Part 6 of Subtitle B of Title 1 of ERISA.

“Code” shall mean the United States Internal Revenue Code of 1986, as amended.

“Commercial Agreements” shall mean, collectively, (a) the Supply Agreements and (b) the Transition Services Agreement.

“Confidentiality Agreement” shall mean the confidentiality agreement dated as of April 6, 2004 entered into by ▇▇▇▇▇▇▇ in favor of MCI, Marconi and their respective Affiliates.

“Confidential Information” shall have the meaning set forth in Section 6.8(b).

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“Consent” shall mean a consent, authorization or approval of a Person, or a filing or registration with a Person.

“Contract” shall mean a contract, lease, license, sales order, purchase order, agreement, indenture, mortgage, note, bond, warrant or other similar instrument.

“Contractors” shall have the meaning set forth in Section 11.3.

“Coverage End Date” shall have the meaning set forth in Section 11.7.

“CSC” shall mean Computer Sciences Corp., a Nevada corporation.

“CSC Assets” shall have the meaning set forth in Section 6.13(b)(i).

“CSC International” shall mean CSC International Systems Management Inc., a Nevada corporation.

“CSC Outsourcing Arrangement” shall mean the series of agreements pursuant to which the Sellers or certain of the Sellers’ Affiliates have agreed to (a) outsource the provision of certain information technology services to CSC International, including information technology services for the Business, and (b) transfer certain of their equipment, contracts and other assets to CSC International and British Telecommunications PLC for the purpose of facilitating such outsourcing arrangement, including certain information technology assets formerly used in support of the Business.

“CSC Person” shall have the meaning set forth in Section 6.13(b)(ii).

“CSC Personnel” shall have the meaning set forth in Section 6.13(b)(ii).

“CSC Third Party Agreement” shall have the meaning set forth in Section 6.13(b)(iii).

“Current Canadian Employee” shall mean a Current Employee who is employed by Marconi Canada and who is listed on the applicable Schedule to Exhibit Canada.  The applicable Schedule to Exhibit Canada indicates which Current Canadian Employees are on long-term disability and such individual’s expected return date.  The applicable Schedule shall be updated as of the close of business on the fifth Business Day prior to the Closing.

“Current Employee” shall mean any individual who is employed by any Seller or any Affiliate of any Seller immediately prior to the Closing Date primarily in connection with the Business, including any such individual on leave of absence, maternity or paternity leave, vacation, sick leave, short term or long term disability, military leave, jury duty or bereavement leave.  All individuals employed by Marconi Canada shall be deemed employed primarily in connection with the Business.  Except for the individuals set forth on Schedule 1.1A, all individuals employed by Marconi Mexico, Marconi Exportel and Marconi Administrativa shall be deemed employed primarily in connection with the Business.

“Current MCI Employee” shall mean a Current Employee who is employed by MCI or any Affiliate of MCI incorporated or organized under the laws of a state of the United States.

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All such Persons are set forth on Schedule 1.1B.  Schedule 1.1B indicates which Current MCI Employees are currently on long-term disability and such individual’s expected return date.  Schedule 1.1B shall be updated as of the close of business on the fifth Business Day prior to the Closing.

“Current Mexican Employee” shall mean a Current Employee who is employed by Marconi Mexico, Marconi Exportel or Marconi Administrativa and who is listed on the applicable Schedule to Exhibit Mexico.  The applicable Schedule to Exhibit Mexico indicates which Current Mexican Employees are on long-term disability and such individual’s expected return date.  The applicable Schedule shall be updated as of the close of business on the fifth Business Day prior to the Closing.

“Dollars” or numbers preceded by the symbol “$” shall mean amounts in United States Dollars.

“▇▇▇▇▇▇▇” shall have the meaning set forth in the Preamble.

“Employees” shall mean, collectively, Current Employees and Former Employees.

“Employee Exhibits” shall mean, collectively, Exhibit Canada, Exhibit Mexico and Exhibit Costa Rica.

“End Date” shall have the meaning set forth in Section 6.13(b)(ii).

“Enforceability Limitations” shall mean limitations on enforcement and other remedies imposed by or arising under or in connection with applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws affecting creditors’ rights generally from time to time in effect or general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing with respect to those jurisdictions that recognize such concepts).

“Environmental Law” shall mean any Law, as in effect on the date hereof, including common law, that imposes liability or standards of conduct concerning, or otherwise regulates the condition of or protects, the environment, including ambient air, water, groundwater, soil or land, the effect of the environment on human health and safety, or otherwise relates to the generation, treatment, storage, disposal, cleanup, transport or handling of any pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials.

“Environmental Permit” shall mean any Permit required by or pursuant to any applicable Environmental Law.

“Environmental Warranty” shall mean a representation or warranty in Section 4.21.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

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“ERISA Affiliate” shall mean, with respect to any Person, any corporation, trade or business that, together with such Person, is treated as a single employer under Section 414 of the Code.

“Evolutions” shall mean, with respect to products, materials and services provided or performed by a business, modifications, enhancements, versions, derivatives, future implementations of and improvements to, such products, materials and services; provided, however, that no modifications, enhancements, versions, derivatives, future implementations of and improvements to, such products, materials and services shall be deemed an Evolution of a product, material or service if it does not perform substantially the same functions as such original product, material or service.

“Excluded Assets” shall have the meaning set forth in Section 2.4.

“Excluded Current Assets” shall mean, collectively, (a) any prepaid expenses or fees in connection with the CSC Outsourcing Arrangement, (b) the deposit paid by MCI in connection with MCI’s car leasing arrangement with PHH FleetAmerica Corporation, (c) the $212,000 Letter of Credit for the benefit of Ohio Bureau of Workers’ Compensation issued by Bank One on behalf of MCI and (d) any deposit or prepayment related to an Excluded Liability.

“Federal Supply Agreement” shall mean the Supply Agreement between Marconi Federal and the U. S. Purchaser substantially in the form set forth in Exhibit C.

“Final Transfer Date” shall have the meaning set forth in Section 11.9.

“Five-Year Pre-Closing Environmental Liability” or “5-Year PEL” shall mean [***].

“Former Canadian Employee” shall mean a Former Employee who was employed by Marconi Canada.

“Former Employee” shall mean any person who is not employed by any Seller or any Affiliate of any Seller immediately prior to the Closing Date and whose last day of employment with the Sellers and their Affiliates was primarily in connection with the Business.

“Former MCI Employee” shall mean a Former Employee who was employed by MCI, any Affiliate of MCI incorporated or organized under the laws of a state of the United States or a predecessor of such an entity.

“Former Mexican Employee” shall mean a Former Employee who was employed by Marconi Mexico, Marconi Exportel or Marconi Administrativa.

“FTC” shall mean the Federal Trade Commission.

“Global Patent Licenses” shall mean the patent licenses set forth on Schedule 1.1C.

“Governmental Authority” shall mean any federal, state, provincial, local or foreign government or subdivision thereof, or any entity, body or authority exercising executive,

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legislative, judicial, regulatory or administrative functions of or pertaining to any federal, state, provincial, local or foreign government, including the Pension Benefit Guaranty Corporation.

“Group Contract” shall mean any Contract under which (a) the Business and (b) at least one other business unit of any Seller or any of their respective Affiliates purchase or sell goods or services on a joint basis or otherwise have rights or obligations.

“Hazardous Substance” shall mean any pollutant, contaminant or chemical, any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including asbestos, asbestos-containing material, petroleum, its derivatives, by-products and other hydrocarbons, and any substance, waste or material regulated under any Environmental Law.

“HSR Act” shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.

“HSR Compliance” shall mean, with respect to a Person, filings by such Person under, and compliance by such Person with, the HSR Act, including forbearance by such Person from consummating the transactions contemplated by this Agreement before any applicable waiting period under the HSR Act shall have expired or been earlier terminated without action by the Antitrust Division or the FTC to prevent consummation of the transactions contemplated by this Agreement.

“Inbound Licenses” shall have the meaning set forth in Section 4.12(d).

“Included AIP Amount” shall mean the total bonuses accrued under the Marconi AIP in accordance with past practices of the Business.

“Indemnified Person” shall mean the Person or Persons entitled to, or claiming a right to, indemnification under Article XII.

“Indemnifying Person” shall mean the Person or Persons claimed by the Indemnified Person to be obligated to provide indemnification under Article XII.

“Indentures” shall mean, collectively, (a) the Indenture, dated as of May 19, 2003, between Marconi, the Initial Guarantors named therein and Law Debenture Trust Company of New York with respect to certain Guaranteed Senior Secured Notes due 2008; and (b) the Security Trust and Intercreditor Deed, dated as of May 19, 2003, between Marconi, The Law Debenture Trust Company of New York, JPMorgan Chase Bank, HSBC Bank plc, the New Bonding Facility Banks named therein, The Bank of New York, the Intra-Group Creditors named therein and the Intra Group Borrowers named therein.

“Information and Records” shall have the meaning set forth in Section 2.1(e).

“Initial Transfer Date” shall have the meaning set forth in Section 11.9.

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“Intellectual Property” shall mean intellectual property rights, whether protected, created or arising under the laws of the United States or any other jurisdiction anywhere in the world, including:

(a)           patent registrations and applications;

(b)           copyrights (including registrations and applications for registration);

(c)           trade names, trademarks, service names and service marks (including registrations and applications for registration) and all goodwill associated therewith;

(d)           Technology;

(e)           domain names; and

(f)            all other proprietary rights.

“Inventory” shall mean all supplies, materials and other inventories of raw materials, works-in-progress, finished goods and products sold prior to the Closing and returned after the Closing, in each case, owned by the Sellers (wherever located), to the extent used in or held for use in the Business, including any inventories on consignment with contract manufacturers or customers in connection with the Business. “Investment Canada Act” shall mean the Canadian Investment Canada Act, R.S., 1985, c.28 (1^st Supp.), as amended.

“June Balance Sheet” shall have the meaning set forth in Section 4.4(b).

“June Income Statement” shall have the meaning set forth in Section 4.4(b).

“Law” shall mean any law, statute, regulation, ordinance, rule, order, decree or governmental requirement enacted, promulgated or imposed by any Governmental Authority, including the federal or any state constitution.

“LIBOR Rate” shall have the meaning set forth in Section 3.2(f).

“License Agreement” shall mean the License Agreement substantially in the form set forth in Exhibit D pursuant to which the Purchasers grant in favor of the Sellers and their Affiliates a non-exclusive, royalty-free and worldwide license to use the Transferred Patents and the Transferred Technology.

“Lien” shall mean any lien, mortgage, pledge or security interest.

“Loan Transfer End Date” shall have the meaning set forth in Section 11.10.

“Loss” or “Losses” shall mean any and all losses, liabilities, claims, damages, reasonable costs, charges, fees and reasonable expenses (including reasonable expenses of investigation and reasonable attorney’s fees and expenses in connection with any suit, action or proceeding).

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“Management Accounts” shall have the meaning set forth in Section 4.4(b).

“Marconi” shall have the meaning set forth in the Preamble.

“Marconi AIP” shall mean the OPP&S Annual Incentive Plan for the 2004/2005 financial year, as in effect on the date hereof.

“Marconi Administrativa” shall have the meaning set forth in the Preamble.

“Marconi Canada” shall have the meaning set forth in the Preamble.

“Marconi Colombia” shall have the meaning set forth in the Preamble.

“Marconi Exportel” shall have the meaning set forth in the Preamble.

“Marconi Federal” shall mean Marconi Communications Federal, Inc., a corporation incorporated under the laws of Delaware.

“Marconi 401(k) Plan” shall have the meaning set forth in Section 11.10.

“Marconi Guarantee” shall mean any guarantee, indemnity, performance bond, letter of credit, deposit or other security or contingent obligation in the nature of a financial obligation, including letters of comfort or support, that is (a) entered into or granted by any Seller or any Affiliate of any Seller in relation to or arising out of any obligations or liabilities of any Seller in connection with the Business and (b) set forth on Schedule 1.1D.

“Marconi IP” shall have the meaning set forth in the Preamble.

“Marconi Mexico” shall have the meaning set forth in the Preamble.

“Marconi Middle East” shall mean Marconi Middle East, a corporation incorporated under the laws of Saudi Arabia.

“Marconi Name” shall mean the business name, brand name, trade name, trademark, service ▇▇▇▇, and domain name “Marconi,” any business name, brand name, trade name, trademark, service ▇▇▇▇ and domain name that includes the word “Marconi”, any portion thereof, any and all other derivatives thereof and the Marconi logo (i.e., the script “M”).

“Marconi Polska” shall have the meaning set forth in the Preamble.

“MCI” shall have the meaning set forth in the Preamble.

“Mexican Benefit Plans” shall mean benefit plans, programs, policies and arrangements relating to Current Mexican Employees and Former Mexican Employees, which plans, programs, policies and arrangements are listed in the applicable Schedule to Exhibit Mexico.

“Mexican Competition Law” shall mean the Mexican Ley Federal de Competencia Económica and its regulation.

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“Mexican FCC” shall mean the Mexican Federal Competition Commission.

“Mexican FCC Filing Requirement” shall mean, with respect to a Person, filings by such Person with the Mexican FCC as required under the Mexican Competition Law.

“Mexican Purchaser” shall have the meaning set forth in the Preamble.

“Middle East Supply Agreement” shall mean the Supply Agreement between Marconi Middle East and the U.S. Purchaser substantially in the form set forth in Exhibit E.

“Net Accounts Payable” shall mean the aggregate amount of the Accounts Payable, less the amount of any Accounts Payable erroneously billed or overbilled.

“Net Accounts Receivable” shall mean the aggregate amount of the Accounts Receivable, less reserves established in accordance with the Calculation Principles.

“Net Inventory” shall mean the aggregate amount of the Inventory (other than supplies), less reserves established in accordance with the Calculation Principles.

“Non-Business Portion” shall have the meaning set forth in Section 2.3(c).

“Notice of Acceptance” shall have the meaning set forth in Section 3.2(b)(i).

“Notice of Disagreement” shall have the meaning set forth in Section 3.2(b)(ii).

“OPPS” shall mean the Outside Plant, Power and Services business units of the Sellers.

“OPPS Business” shall mean the business, as conducted by the Sellers through their Network Components business unit prior to the date hereof and at any time until the Closing Date, of (a) providing configuration, design, implementation and support services for network systems, and the provision of related technical services, field support services, repair and replacement services and ongoing maintenance services, solely to the extent that such services have been provided by the services segment of the OPPS Business prior to the date hereof (excluding in each case any services business conducted prior to the date hereof by any Other Marconi Business), (b) designing, developing, manufacturing, marketing and selling enclosures for housing both active and passive electronic systems and active and passive communications systems, and the provision of related technical services, field support services, repair and replacement services and ongoing maintenance services for such enclosures, (c) designing, developing, manufacturing, marketing and selling connection and protection products for the Local Loop and Central Office, and the provision of related technical services, field support services, repair and replacement services and ongoing maintenance services for such connection and protection products, and (d) designing, developing, manufacturing, marketing and selling power systems and power products for network systems, and the provision of related technical services, field support services, repair and replacement services and ongoing maintenance services for such power systems and power products.

“Other Current Liabilities” shall mean the aggregate of (a) advances from customers, (b) unpaid services and materials for previously invoiced projects, (c) accrued distributor

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commissions and incentives, (d) freight accruals, and (e) other miscellaneous accrued fees and costs, consistent with past practices of the Business (but excluding (i) intercompany payables, (ii) lease accruals related to the Business’ facility located in ▇▇▇▇▇▇▇▇ Heights, Ohio and (iii) the liabilities, costs and expenses under the following benefit plans and arrangements: (A) Marconi USA Employees’ Retirement Plan, (B) RELTEC Corporation Retirement Plan, (C) Reliance Comm/Tec Corporation Supplemental Retirement Plan, effective August, 1995, (D) Reliance Comm/Tec Corporation Special Retirement Program for Elected Officers effective August, 1995, (E) the Retiree Medical Plan, (F) pension and other obligations described in paragraphs 1 and 2 of Schedule Mexico-1, (G) Pension Plan for the Salaried and Management Employees of Marconi Communications Canada Inc. and (H) Pension Plan for the Hourly Employees of Marconi Communications Canada Inc.).

“Other Marconi Business” shall mean the BBRS Business, the Wireless Software and Services Business or any other business of MCI or any of its Affiliates (excluding the Business).

“Patent Assignment” shall mean the patent assignment by Marconi IP in favor of the U.S. Purchaser substantially in the form of Exhibit F.

“Permit” shall mean any permit, license, approval or other authorization affecting the Business required or granted by any Governmental Authority.

“Permitted Liens” shall mean:  (a) Liens for Taxes that are not yet delinquent or that are being contested in good faith by appropriate proceedings for which adequate reserves have been established in the Management Accounts or on the Statement of Working Capital, as applicable; (b) workers’, mechanics’, materialmen’s, repairmen’s, suppliers’, carriers’ or similar Liens arising in the ordinary course of business with respect to obligations that are not yet delinquent or that are being contested in good faith by appropriate proceedings; (c) covenants, zoning restrictions, easements, licenses, or other restrictions on the use of real property or other irregularities in title (including leasehold title) thereto that do not or would not reasonably be expected to materially impair the use of such real property, leases or leasehold estates; (d) Liens that do not materially impair the value of the property subject to such Lien or the use of such property in the conduct of the Business; (e) with respect to the transferred leases of personal property only, Liens arising from leases of personal property, (f) with respect to the Transferred Personal Property and Transferred Patents only, those Liens set forth on Schedule 4.6 (other than items 1 of Schedule 4.6) and (g) with respect to the Transferred Real Property only, those Liens set forth on Schedule 1.1E.

“Person” shall mean any individual, corporation, proprietorship, firm, partnership, limited partnership, limited liability company, trust, association or other entity.

“Personnel” shall mean all former and current employees, agents, consultants and independent contractors that have contributed to or participated in the conception or development of Transferred Technology or Transferred Patents.

“Pre-Closing Insurance Claims” shall have the meaning set forth in Section 6.2(c)(ii).

“Prepaids and Other Current Assets” shall mean all prepaid expenses and other current assets of the Business as determined and accounted for in accordance with the Applicable

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Accounting Principles, including (a) all non-trade receivables (including receivables from vendors), (b) prepaid maintenance and support fees, (c) all ▇▇▇▇▇ cash located at the operating facilities of the Business, (d) multiple billing shipped but not invoiced products, and (e) security deposits but specifically excluding (i) the Excluded Current Assets and (ii) all prepaid expenses and assets under the following benefit plans and arrangements: (A) Marconi USA Employees’ Retirement Plan, (B) RELTEC Corporation Retirement Plan, (C) Reliance Comm/Tec Corporation Supplemental Retirement Plan, effective August, 1995, (D) Reliance Comm/Tec Corporation Special Retirement Program for Elected Officers effective August, 1995, (E) the Retiree Medical Plan, (F) pension and other obligations described in paragraphs 1 and 2 of Schedule Mexico-1, (G) Pension Plan for the Salaried and Management Employees of Marconi Communications Canada Inc. and (H) Pension Plan for the Hourly Employees of Marconi Communications Canada Inc.

“Prevented Mexican Transactions” shall have the meaning set forth in Section 6.3(f).

“Proceeding” shall mean an action, suit, arbitration, proceeding or other litigation.

“Prohibited Transaction” shall mean a transaction with respect to any Benefit Plan which is subject to Title I of ERISA, which transaction is prohibited by Section 406 of ERISA or Section 4975 of the Code, excluding transactions effected pursuant to and in compliance with a statutory or administrative exemption.

“Proposed Adjustments” shall have the meaning set forth in Section 3.2(b)(ii).

“Purchase Price” shall have the meaning set forth in Section 3.1(a).

“Purchase Price Allocation Statement” shall have the meaning set forth in Section 3.3(a).

“Purchased Contracts” shall mean the Contracts and contractual rights described in Section 2.2.

“Purchaser” shall mean, individually, U.S. Purchaser, Canadian Purchaser or Mexican Purchaser, and the term “Purchasers” shall mean all such entities collectively.  For the avoidance of doubt, the term “Purchaser” does not include ▇▇▇▇▇▇▇.

“Purchaser Benefit Plans” shall have the meaning set forth in Section 11.3.

“Purchaser Defined Benefit Plan” shall have the meaning set forth in Section 11.9.

“Purchaser 401(k) Plan” shall have the meaning set forth in Section 11.10.

“Purchaser Indemnified Party” shall have the meaning set forth in Section 12.2.

“Purchasers’ knowledge,” or any similar expression with regard to the knowledge or awareness of or receipt of notice by the Purchasers, shall mean the actual knowledge of any of the Persons listed on Schedule 1.1F.

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“Registered Transferred Intellectual Property” shall have the meaning set forth in Section 4.12(a).

“Related Agreement” shall mean any Contract that is to be entered into at the Closing or otherwise pursuant to this Agreement on or prior to the Closing Date, including the Assignment and Assumption Agreement, the ▇▇▇▇ of Sale, the License Agreement, the Patent Assignment, the Release Agreement, the Special Warranty Deeds, the Supply Agreements, the Sublicense, the Trademark Assignment and the Transition Services Agreement; provided, however, that, solely for purposes of Article XII of this Agreement, the term “Related Agreement” shall not include the Commercial Agreements.  The Related Agreements executed by a specified Person shall be referred to as “such Person’s Related Agreements,” “its Related Agreements” or other similar expression.

“Release Agreement” shall mean the Release Agreement between The Law Debenture Trust Corporation p.l.c., Marconi, MCI and Marconi IP substantially in the form attached hereto as Exhibit G.

“Relevant Assurance” shall have the meaning set forth in Section 6.3(a).

“RELTEC Plan” shall have the meaning set forth in Section 11.9.

“Required Consents” shall have the meaning set forth in Section 7.10.

“Response Action” shall mean any action required by Environmental Law or ordered by a Governmental Authority or a judgment or settlement in connection with a Proceeding (including for these purposes only any administrative action) brought by an unaffiliated third party to investigate, ▇▇▇▇▇, remediate, remove, mitigate or otherwise address actual or potential violation of or liability under an Environmental Law.

“Restricted Assets” shall have the meaning set forth in Section 2.3(a).

“Restricted Business” shall mean the businesses, as conducted by the Sellers through their Network Components business unit prior to the date hereof, set forth in (i) clauses (b), (c) and (d) of the definition of the OPPS Business, other than the provision of services as described in such clauses and (ii) clause (a) of the definition of the Test Systems Business.

“Restricted Services” shall mean the engineering or installation of power equipment by the Sellers through their Network Components business unit prior to the date hereof.

“Retained IT Assets” shall mean the information technology assets, systems, networks and Contracts of any Seller that are used to administer payroll, employee benefits, financial accounting, tax and other administrative functions and that are set forth on Schedule 1.1G.

“Retained Obligations” shall have the meaning set forth in Section 2.6.

“Retiree Medical Plan” shall mean Supplement A to the Marconi Total Rewards Plan.

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“Seller” shall mean, individually, MCI, Marconi IP, Marconi Canada, Marconi Mexico, Marconi Exportel, Marconi Administrativa, Marconi Polska or Marconi Colombia, and the term “Sellers” shall mean all such entities collectively.  For the avoidance of doubt, the term “Seller” shall not include Marconi.

“Seller Benefit Plans” shall mean the plans, programs, arrangements and agreements set forth on Schedule 4.17(a) that are identified on such Schedule as a Seller Benefit Plan.

“Seller Indemnified Party” shall have the meaning set forth in Section 12.3.

“Seller Material Adverse Effect” shall mean a material and adverse effect on the ability of Marconi or the Sellers (a) to perform their obligations under this Agreement and their Related Agreements or (b) to consummate the transactions required to be effected by them as contemplated hereby and thereby.

“Sellers’ knowledge,” or any similar expression with regard to the knowledge or awareness of or receipt of notice by Marconi or any Seller, shall mean the actual knowledge of any of the Persons listed on Schedule 1.1H.

“Shared Contracts” shall mean those Group Contracts set forth on Schedule 1.1I.

“Special Warranty Deeds” shall mean the special warranty deeds, limited warranty deeds and transfers/deeds of land to be delivered at the Closing by the applicable Seller for each Transferred Owned Real Property owned by such Seller substantially in the forms set forth in Exhibits H-1 through H-2.

“Statement of Working Capital” shall have the meaning set forth in Section 3.2(a).

“Sublicense” shall mean the Sublicense Agreement substantially in the form set forth in Exhibit I.

“Subsidiary” of a Person shall mean any Person controlled by such Person.  The term “control” as used in the preceding sentence means, with respect to a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such corporation, or with respect to any Person other than a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person.

“Supplemental Plans” shall have the meaning set forth in Section 11.14.

“Supply Agreements” shall mean, collectively, (a) the Federal Supply Agreement and (b) the Middle East Supply Agreement.

“Tax Return” shall mean any report, return or other information required to be supplied to a Governmental Authority in connection with any Taxes.

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“Tax Statute of Limitations Date” shall mean the close of business on the 45th day after the expiration of the applicable statute of limitations with respect to any Tax, including any extensions thereof (or if such date is not a Business Day, the next Business Day).

“Tax Warranty” shall mean a representation or warranty in Section 4.19.

“Taxes” shall mean all taxes, charges, fees, duties, levies or other assessments (including income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, goods and services, value added, stamp, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, severance, payroll, unemployment, pension plan premiums or contributions and Social Security taxes or contributions) which are imposed by any Governmental Authority, and such term shall include any interest, penalties or additions to tax attributable thereto (or to the nonpayment thereof).

“Technology” shall mean trade secrets, confidential information, inventions, discoveries, know-how, formulae, practices, processes, procedures, ideas, specifications, engineering data, software, firmware, programs and source disks, source codes, databases and data collections.

“Test Systems Business” shall mean the business, as conducted by the Sellers through their Network Components business unit prior to the date hereof and at any time until the Closing Date, of (a) designing, developing, manufacturing, selling and installing hardware and software test systems used by telephone service providers exclusively for the purpose of maintaining copper line service to subscribers and qualifying copper lines for application of broadband technology including (i) interfacing the system’s remote measurement units with access and switching network elements deployed within a service provider’s network to perform fault analysis of the copper transport facility used for its subscriber loops, (ii) providing analysis of the loop to determine the suitability for transport of broadband services such as DSL, (iii) remote control and monitoring of test results through telephone/cell phone or cell phone displays and the internet and (iv) auxiliary hardware used in applications to facilitate connection to the network element’s test access port and (b) providing related installation, turn-up and custom engineering services for such hardware and software test systems (excluding in each case any services business conducted prior to the date hereof by any Other Marconi Business).

“Title and Authorization Warranty” shall mean a representation or warranty in Section 4.1, 4.2, 4.6, 5.1 or 5.2.

“Title Commitments” shall mean those certain commitments for title insurance for the Transferred Owned Real Property set forth on Exhibit J.

“Trademark Assignment” shall mean the Trademark Assignment by the Sellers in favor of the U.S. Purchaser substantially in the form of Exhibit K.

“Transferable Permits” shall have the meaning provided in Section 2.2.

“Transferred Copyrights” shall mean all unregistered copyrights owned by a Seller and used exclusively in the conduct of the Business.

“Transferred Employee” shall have the meaning set forth in Section 11.2.

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“Transferred Intellectual Property” shall mean, collectively, the Transferred Trademarks, the Transferred Copyrights, the Transferred Technology and the Transferred Patents.

“Transferred IT Assets” shall mean the information technology assets, systems and networks of any Seller that are (a) used to administer payroll, employee benefits, financial accounting, tax and other administrative functions and (b) set forth on Schedule 1.1J.

“Transferred IT Contracts” shall mean (a) all Contracts for the provision of software, systems, networks and services relating to the administration of payroll, employee benefits, financial accounting, tax and other administrative functions that are used primarily in the conduct of the Business and are set forth on Schedule 1.1K and (b) those certain rights under each Shared Contract set forth on Schedule 1.1I under the heading “Shared IT Contracts” to the extent used in the conduct of the Business.

“Transferred Owned Real Property” shall mean the real properties set forth on Schedule 1.1L and the buildings, fixtures and improvements erected thereon.

“Transferred Patents” shall mean all patents and patent applications which are owned by any Seller and currently used (or held for use) exclusively in the conduct of Business including (a) the patents and patent applications set forth on Schedule 1.1M, (b) any and all foreign counterparts to the foregoing and (c) all rights to ▇▇▇ for past infringement of any of the foregoing.

“Transferred Personal Property” shall mean all personal property and interests therein, including equipment, machinery, furniture, office equipment, communications equipment, vehicles, tools, spare and replacement parts, fuel, computer hardware and other items of tangible personal property that is (a) owned by any Seller and (b) located at the Transferred Real Property.

“Transferred Real Property” shall mean (a) the Transferred Owned Real Property and (b) the premises that is subject to the Transferred Real Property Leases.

“Transferred Real Property Leases” shall mean the real property leases set forth on Schedule 1.1N.

“Transferred Technology” shall mean the Technology owned by any Seller that (a) is described on Schedule 1.1O, (b) arose solely from the conduct of the Business or (c) is currently used exclusively in the Business.

“Transferred Trademarks” shall mean all (a) registered trade names, trademarks and service marks (and applications for registration of the same) which are owned by any Seller and set forth on Schedule 1.1P and (b) any other trade names, trademarks, service names and service marks which are owned by any Seller and currently used (or held for use) exclusively in the conduct of the Business.

“Transition Period” shall have the meaning set forth in Section 6.13(a).

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“Transition Services Agreement” shall mean the transition services agreement between MCI and the U.S. Purchaser substantially in the form set forth in Exhibit L.

“UKLA” shall mean the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets ▇▇▇ ▇▇▇▇ of England.

“Union Contracts” shall mean, collectively, (a) the Agreement between Marconi Canada (St. ▇▇▇▇▇▇, Ontario) and Communications, Energy and Paperworkers Union of Canada (CEP) and its Local 573 (December 7, 2003 – December 6, 2006), (b) the Labor Contract between Marconi Mexico and Trade Union of Workers From the Metallurgy Industry and Similars in the State of Mexico (2004) and (c) the Labor Contract between Marconi Exportel and Union Trade of Workers from the Metallurgy Industry and Similars in the State of Mexico (2003-2005).

“Unresolved Adjustments” shall have the meaning set forth in Section 3.2(c).

“U.S. Purchaser” shall have the meaning set forth in the Preamble.

“US Qualified Plan” shall have the meaning set forth in Section 11.9.

“Vacation Policy” shall have the meaning set forth in Section 11.8.

“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar Law.

“Welfare Plan” shall mean the Marconi Total Rewards Plan.

1.2                                 Interpretation.  The headings preceding the text of Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement.  The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement.  The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively.  Reference to any Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement.  Reference to a Person in a particular capacity excludes such Person in any other capacity or individually.  Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof.  Underscored references to Articles, Sections, paragraphs, clauses, Exhibits or Schedules shall refer to those portions of this Agreement.  The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section, paragraph or clause of, or Exhibit or Schedule to, this Agreement.

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ARTICLE II

SALE AND PURCHASE OF ASSETS; ASSUMPTION OF ASSUMED OBLIGATIONS

2.1                                 Purchase and Sale of Assets.  Except as provided in Sections 2.3 and 2.4 and subject to the other terms and conditions of this Agreement, at the Closing, each Seller shall sell, assign, convey, transfer and deliver to the applicable Purchaser, and the applicable Purchaser shall purchase and acquire from such Seller, and take assignment and delivery from such Seller of, all of such Seller’s right, title and interest in, to and under the following assets:

(a)                                  Transferred Owned Real Property.  The Transferred Owned Real Property;

(b)                                 Transferred Personal Property.  The Transferred Personal Property;

(c)                                  Inventory.  The Inventory;

(d)                                 Accounts Receivable.  The Accounts Receivable;

(e)                                  Information and Records.  All books, records, files and papers, whether in hard copy, computer format or other electronic format, to the extent used or held for use in the Business, including sales and promotional literature, manuals and data, sales and purchase correspondence, lists of present and former suppliers and lists of present and former customers (the “Information and Records”); provided, that, notwithstanding anything to the contrary in this Section 2.1(e), the term “Information and Records” shall be deemed not to include (i) any information or records which constitute “Technology” (except to the extent transferred pursuant to Section 2.1(g)), (ii) any Proceeding files or Contract files other than files related to the Purchased Contracts or (iii) the portion of any information or records related to an Excluded Asset or Retained Obligation; and further provided, that (A) the Sellers shall be entitled to retain copies of the Information and Records; and (B) if any particular record of any Seller contains both information to be transferred to the Purchasers pursuant to this Section 2.1(e) and other information, then such Seller can, at its option, either (1) provide a copy of such record to the Purchasers subject to the Purchasers’ obligations contained herein to keep such other information confidential or (2) create a new record that separates out the information to be transferred to the Purchasers pursuant to this Section 2.1(e) and provide a copy of such new record to the Purchasers;

(f)                                    Trademarks.  The Transferred Trademarks;

(g)                                 Technology.  The Transferred Technology;

(h)                                 Patents.  The Transferred Patents;

(i)                                     Copyrights.  The Transferred Copyrights;

(j)                                     Goodwill.  All of the customer relationships and related goodwill of each Seller to the extent resulting from the conduct of the Business by such Seller, together

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with the right to represent to third parties that the applicable Purchaser is the successor to the Assets (it being understood, for the avoidance of doubt, that such goodwill shall not include any goodwill associated with the Marconi Name or with any Other Marconi Business);

(k)                                  Credits.  All credits to the extent used or held for use in, or that primarily arose or primarily arise out of, the operation of the Business or any Asset or any Assumed Obligation;

(l)                                     Prepaids and Other Current Assets.  The Prepaids and Other Current Assets;

(m)                               Rights of Setoff. All rights, claims, causes of action or rights of set-off against third parties, other than employees of the Sellers and their Affiliates who are not Transferred Employees, arising from the Assets, including unliquidated rights under manufacturers’ and vendors’ warranties (but excluding rights, claims, causes of action or rights of set-off against third parties to the extent arising (i) under any insurance policies of any Seller or any of its Affiliates (other than pursuant to Section 6.7) or (ii) from any Excluded Asset or Retained Obligation);

(n)                                 Transferred IT Assets.  The Transferred IT Assets;

(o)                                 Claims Proceeds.  All Claims Proceeds except as provided in Sections 6.2(c)(ii) and 6.2(c)(iv); and

(p)                                 Other Assets.  All other assets of every kind and description not of a type specifically identified in this Section 2.1, wherever located, real, personal or mixed, tangible or intangible, known or unknown, which are owned, held or used primarily in or arising exclusively from the conduct of the Business as the same shall exist on the Closing Date, including (i) all assets reflected on the Annual Balance Sheet and not disposed of in the ordinary course of business or otherwise as permitted by this Agreement and (ii) all assets acquired after the date of the Annual Balance Sheet by any Seller primarily in connection with the Business, but excluding, in any case, the Excluded Assets.

2.2                                 Assignment of Permits and Contracts.  Except as provided in Sections 2.3 and 2.4 and subject to the other terms and conditions of this Agreement, at the Closing, each Seller shall assign and transfer to the applicable Purchaser, and the applicable Purchaser shall take assignment of, all of such Seller’s right, title and interest in and to (i) all Permits and all pending applications or renewals thereof related exclusively to the Business, to the extent such Permits, applications and renewals are transferable (collectively, the “Transferable Permits”), and (ii) the following Contracts and contractual rights:

(a)                                  Transferred Real Property Leases.  The Transferred Real Property Leases;

(b)                                 Personal Property Leases.  All leases of personal property that is used primarily in the conduct of the Business;

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(c)                                  Customer Contracts.  All sale orders and other Contracts for the provision of goods or services to customers to the extent relating to the conduct of the Business, including the portion of each Shared Contract set forth on Schedule 1.1I under the heading “Shared Customer Contracts” to the extent relating to the conduct of the Business after the Closing;

(d)                                 Vendor Contracts.  All purchase orders and other Contracts for the purchase of goods or services to the extent relating to the conduct of the Business, including the portion of each Shared Contract set forth on Schedule 1.1I under the heading “Shared Vendor Contracts” to the extent relating to the conduct of the Business after the Closing;

(e)                                  Distributor Contracts.  All Contracts with sales representatives, manufacturer’s representatives, distributors, dealers, brokers, sales agencies, advertising agencies or other Persons engaged in sales, distribution or promotional activities to the extent relating to the Business, and all Contracts pursuant to which the Business acts in one of the foregoing specified capacities on behalf of any Person, including the portion of each Shared Contract set forth on Schedule 1.1I under the heading “Shared Distributor Contracts” to the extent relating to the conduct of the Business after the Closing;

(f)                                    Intellectual Property Licenses.  Other than the Transferred IT Contracts, (i) all agreements for the license to any Seller of Intellectual Property to the extent relating to the conduct of the Business, including those certain rights under each Shared Contract set forth on Schedule 1.1I under the heading “Shared Intellectual Property Licenses” to the extent used in the conduct of the Business;

(g)                                 Access Cross License Agreement.  The rights granted to the Sellers under the Access Cross License Agreement solely to the extent applicable to the products, materials and services of the Business as existing on the Closing Date and Evolutions of such products, materials and services, subject to the provisions of Section 6.12;

(h)                                 Non-Disclosure Obligations.  All non-disclosure, confidentiality and similar obligations owed to any Seller to the extent related to the Business;

(i)                                     Transferred IT Contracts.  The Transferred IT Contracts;

(j)                                     Claims.  All warranties, indemnities, claims and rights against third parties, other than employees of the Sellers and their Affiliates who are not Transferred Employees, in each case to the extent arising from the conduct of the Business by any Seller (other than (i) those warranties, indemnities, claims and rights arising under any Excluded Asset, any Retained Obligation or any rights of subrogation under a Seller Benefit Plan and (ii) except as expressly set forth herein, under any insurance policy);

(k)                                  Employee Non-Compete Obligations.  All rights with respect to any obligation of any Employee owed to any Seller to refrain from competing with the Business; and

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(l)                                     Other Contracts.  (i) All Contracts set forth on Schedule 2.2(l), (ii) those certain rights under each Shared Contract set forth on Schedule 1.1I under the heading “Other Shared Contracts” to the extent pertaining to the conduct of the Business and (iii) all other Contracts of every kind and description of a type not specifically identified in this Section 2.2 to the extent relating to the Business or any Asset other than any Contracts included in the Excluded Assets.

Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement shall not include the assumption of any liability related to the Assets unless the Purchasers expressly assume that liability pursuant to Section 2.5.

2.3                                 Certain Provisions Regarding Assignments.

(a)                                  Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any Contract or other Asset or any claim, right, benefit or obligation thereunder or resulting therefrom if (i) an assignment or transfer thereof, without the Consent of a third party thereto, would constitute a breach or violation thereof or would in any way adversely affect the rights (upon transfer) of the applicable Purchaser under such Contract or other Asset or result in the loss or cancellation thereof or require a payment thereunder by reason of the assignment or transfer thereof and (ii) such Consent is not obtained at or prior to the Closing (any such Contract or other Asset is to be referred to herein as a “Restricted Asset”) (it being understood that this Section 2.3(a) shall in no way limit any party’s obligations under Section 6.3(c)).

(b)                                 If the parties are not successful in obtaining a Consent at or prior to the Closing, then (i) the applicable Seller shall continue to keep the applicable Restricted Asset in effect in accordance with its terms and shall provide the applicable Purchaser with the benefits of the Restricted Asset in question accruing after the Closing Date to the extent that such Seller may provide such benefits (A) in a manner not in violation of the terms of such Restricted Asset (subject to Section 2.3(d) below) and (B) without incurring any material expense or otherwise taking any material actions or measures (such as hiring additional employees) and (ii) if such Seller provides such benefits to such Purchaser, such Purchaser shall perform at its sole expense the obligations of such Seller to be performed after the Closing under the Restricted Asset in question.  Once a Consent for the sale, assignment, assumption, transfer, conveyance and delivery of a Restricted Asset is obtained, the applicable Seller shall promptly assign, transfer and deliver such Restricted Asset to applicable Purchaser, and such Purchaser shall assume the obligations under such Restricted Asset that relate to the period from and after the date of assignment, transfer and delivery of such Restricted Asset to such Purchaser.  The terms of this Section 2.3(b) shall not apply with respect to Shared Contracts, it being understood that the treatment of Shared Contracts is addressed in Section 2.3(c).

(c)                                  Prior to the Closing, each Seller shall use its reasonable efforts, and each Purchaser shall use its reasonable efforts to cooperate with each Seller (and, if necessary and desirable, to work with the third parties to the Shared Contracts) in an effort to (i) divide, modify and/or replicate (in whole or in part) the respective rights and obligations

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under and in respect of the Shared Contracts and (ii) if possible, novate the respective rights and obligations under and in respect of the Shared Contracts, such that, effective as of the Closing, (A) the applicable Purchaser is the beneficiary of the post-Closing rights and is responsible for the post-Closing obligations related to that portion of the Shared Contract included in the Purchased Contracts (the “Business Portion”) (so that, subsequent to the Closing, the applicable Seller shall have no post-Closing rights or post-Closing obligations with respect to the Business Portion of the Shared Contract) and (B) the applicable Seller is the beneficiary of the rights and is responsible for the obligations related to the Shared Contract other than the Business Portion (the “Non-Business Portion”) (so that, subsequent to the Closing, the applicable Purchaser shall have no rights or obligations with respect to the Non-Business Portion of the Shared Contract).  If the parties are not able to enter into an arrangement to formally divide, modify and/or replicate one or more Shared Contracts prior to the Closing as contemplated by the previous sentence, then (i) the applicable Purchaser shall be entitled to the benefits of the Business Portion of any such Shared Contract accruing after the Closing Date to the extent that the applicable Seller may provide such benefits (A) in a manner not in violation of the terms of such Shared Contract (and subject to Section 2.3(d) below) and (B) without incurring any material expense or otherwise taking any material actions or measures (such as hiring additional employees) and (ii) if the applicable Seller provides such benefits to the applicable Purchaser, such Purchaser shall perform at its sole expense the obligations of the applicable Seller to be performed after the Closing under the Business Portion of such Shared Contract.

(d)                                 In order to effect the parties’ intent as set forth in Sections 2.3(b) and (c) above, if any Consent with respect to a Restricted Asset is not obtained or any division, modification or replication with respect to a Shared Contract is not procured prior to the Closing, the applicable Seller and the applicable Purchaser shall cooperate (at their own expense) in any lawful arrangement reasonably acceptable to such Seller and such Purchaser under which such Purchaser shall obtain the economic claims, rights and benefits under the Restricted Asset or Shared Contract with respect to which the Consent has not been obtained in accordance with this Agreement.  Such reasonable arrangement may include subcontracting, sublicensing or subleasing to such Purchaser any and all rights of the applicable Seller under such Restricted Asset or Business Portion of a Shared Contract.  To the extent a Purchaser receives the economic claims, rights and benefits under a Restricted Asset or Shared Contract as set forth above, such Purchaser shall be responsible for the Assumed Obligations, if any, arising under such Restricted Asset or Business Portion of a Shared Contract.

(e)                                  Notwithstanding anything to the contrary contained in this Section 2.3 or elsewhere in this Agreement, in the case of a Transferred Real Property Lease that is a Restricted Asset, (i) if the applicable Seller is permitted to sublease the applicable premises to the applicable Purchaser without the consent of the landlord under the terms of the lease, such Seller shall sublease the premises to such Purchaser for the rent under the lease without markup or profit of any kind until the earlier to occur of (A) the date on which the landlord’s consent is obtained and the lease assigned to such Purchaser and (B) one day before the expiration of the lease and all renewal options under the lease that such Purchaser timely requests such Seller to exercise; or (ii) if the applicable Seller is

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not permitted to sublease the premises to the applicable Purchaser without the landlord’s consent under the terms of the lease, such Seller shall retain the operations of the Business conducted on the premises and the Employees located at the premises (provided that for all other purposes of this Agreement such Employees and the Assets located at such premises shall be treated as having been transferred to the Purchasers as provided in this Agreement) and shall conduct such operations on the premises for the benefit and at the expense and direction of such Purchaser until the earlier to occur of (A) the date on which the landlord’s consent is obtained and the lease assigned to such Purchaser and (B) the expiration of the lease and all renewal options under the lease that such Purchaser timely requests such Seller to exercise, and during such time such Seller shall turn over to the Purchaser all income received from such operations and such Purchaser shall pay all expenses of such operations.  During the continuance of any sublease under clause (i) above or any operation under clause (ii) above, the applicable Seller shall take any action to extend, terminate, amend or otherwise deal with the lease reasonably requested by the applicable Purchaser at such Purchaser’s expense and shall consult with such Purchaser prior to taking any such action not so requested by such Purchaser.

2.4                                 Excluded Assets.  Notwithstanding the provisions of Sections 2.1 and 2.2, no Seller shall sell, assign, convey, transfer or deliver to any Purchaser, and no Purchaser shall purchase, acquire or take assignment or delivery of, any of the following assets or Contracts, or any right, title or interest therein (collectively, the “Excluded Assets”):

(a)                                  Cash.  All cash, certificates of deposit, bank deposits, negotiable instruments, marketable securities and other cash equivalents, together with all accrued but unpaid interest thereon, except for ▇▇▇▇▇ cash located at the operating facilities of the Business;

(b)                                 Marconi Name.  The Marconi Name and all goodwill associated therewith;

(c)                                  Tax Refunds; Tax Returns.  All claims for and rights to receive refunds, rebates, or similar payments of Taxes to the extent such Taxes were paid by or on behalf of any Seller or any Affiliates of any Seller and to the extent not reflected on the final Statement of Working Capital, all Tax Returns, and all notes, worksheets, files or documents relating thereto;

(d)                                 Corporate Records.  All minute books and corporate records of the Sellers or any of their Affiliates;

(e)                                  Employee Records.  All personnel, employee compensation, medical and benefits and labor relations records relating to employees or past employees of the Sellers or any of their Affiliates; provided, however, copies of the information relating to Current Employees or Former Employees with respect to whom a liability is being expressly assumed by the Purchasers under this Agreement shall be subject to the provisions of Section 11.16;

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(f)                                    Sale Documents.  All books and records prepared or received in connection with the proposed sale of the Business, including offers received from prospective purchasers, and the right, title and interest of the Sellers under this Agreement;

(g)                                 Group Contracts.  All Group Contracts other than the respective Business Portions of the Shared Contracts;

(h)                                 Retained Real Properties.  Any real property owned, leased, or occupied by any Seller or any Affiliate of any Seller other than the Transferred Real Property;

(i)                                     Disposed Assets.  All assets sold or otherwise disposed of, and rights expiring or terminated, in the ordinary course of business and not in violation of any provisions of this Agreement during the period from the date of this Agreement until the Closing Date;

(j)                                     Insurance.  Any insurance policies or insurance coverage relating to the Assets or the Business except as otherwise provided in Section 2.1(o);

(k)                                  Intercompany Agreements.  All Contracts between any Seller (on the one hand) and any Affiliate of any Seller (on the other hand), other than Contracts referred to in Section 2.2(l);

(l)                                     Intercompany Accounts Receivable.  All accounts receivable payable by or accounts payable to any Affiliate of any Seller other than those accounts receivable and accounts payable incurred in the ordinary course of business;

(m)                               Global Patent Licenses.  The Global Patent Licenses;

(n)                                 Intellectual Property. All right, title and interest in or to any Intellectual Property or other intangible property or rights owned by, or leased or licensed to any Seller or any Affiliate of any Seller, other than as expressly set forth in Sections 2.1 and 2.2;

(o)                                 Non-Disclosure Obligations. All non-disclosure, confidentiality and similar rights or obligations to the extent related to any Other Marconi Business;

(p)                                 Employee Non-Compete Obligations. All rights with respect to any obligation of any Person to refrain from competing with any Other Marconi Business;

(q)                                 CSC Assets.  The CSC Assets;

(r)                                    Retained IT Assets.  The Retained IT Assets;

(s)                                  Assets Used by Certain Employees. All owned, leased or licensed tangible and intangible assets (including office equipment, furniture and information technology hardware and software) that are primarily or exclusively used by employees of the Sellers who (i) provide administrative support for the Business and/or (ii) are located at

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Transferred Real Property, but who are not a Current MCI Employee, a Current Canadian Employee or a Current Mexican Employee;

(t)                                    Excluded Current Assets.  The Excluded Current Assets; and

(u)                                 Other Assets. All other assets (real or personal, tangible or intangible) and Contracts of the Sellers not included in the Assets.

None of the Excluded Assets shall be included in the term “Assets,” “Purchased Contracts,” “Transferable Permits” or any other term defined in Sections 2.1 or 2.2.

2.5                                 Assumed Obligations.  At the Closing, subject to the provisions of Section 2.6, the Purchasers shall assume, and shall agree to pay, perform and discharge when due, only the following obligations and liabilities of the Sellers (the “Assumed Obligations”):

(a)                                  Purchased Contracts.  All obligations and liabilities arising under the Purchased Contracts, including the Business Portion of the Shared Contracts;

(b)                                 Product and Service Claims.  All obligations and liabilities arising with respect to the products or services of the Business, whether sold or provided prior to or after the Closing, and whether arising under warranty, contract, equity, tort, strict liability, product liability, statute or otherwise, including all obligations and liabilities arising with respect to any pending recalls of products that have been sold by the Business;

(c)                                  Employee and Benefit Obligations.  All obligations and liabilities to or with respect to the Employees and all obligations and liabilities under or with respect to employee benefit plans, programs, policies and arrangements, in each case to the extent expressly set forth in Article XI and the Employee Exhibits;

(d)                                 Accounts Payable.  All obligations and liabilities with respect to accounts payable of the Business as of the Closing (including unbilled accounts payable) to the extent set forth on the final Statement of Working Capital, other than accounts payable related to Excluded Assets (collectively, the “Accounts Payable”);

(e)                                  Permits.  All obligations and liabilities with respect to the Transferable Permits to the extent accruing from and after the Closing Date;

(f)                                    Access Transition Services Agreement.  The obligations of MCI to provide services under the Access Transition Services Agreement to the extent set forth in the Access Transition Services Agreement after the Closing Date;

(g)                                 Union Contracts.  The obligations and liabilities of the Sellers under the Union Contracts to the extent pertaining to the Employees;

(h)                                 Environmental Liabilities.  All obligations and liabilities of or relating to the Business, the Assets, or the Transferred Real Property and arising under

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Environmental Law, as in effect on the date hereof or at any time thereafter, except for any 5-Year PEL; and

(i)                                     Other Assumed Obligations.  All other obligations and liabilities specifically assumed by the Purchasers under this Agreement.

2.6                                 Retained Obligations.  Notwithstanding any other provision of this Agreement, except to the extent expressly assumed by the Purchasers in Section 2.5, the Purchasers shall not assume or otherwise be liable in respect of any of the obligations and liabilities of any Seller or any Affiliates of any Seller of whatever nature, whether presently in existence or arising hereafter, and all obligations and liabilities of the Sellers and their Affiliates to the extent relating to, or arising out of, the operation or conduct of the Business prior to the Closing, except those so expressly assumed by the Purchasers, shall be retained by the Sellers and their Affiliates (the “Retained Obligations”).  The Retained Obligations shall include the following:

(a)                                  Taxes.  Any liabilities of any Seller for (i) Taxes imposed on the Assets or the Business (including any payments made pursuant to a tax indemnity or similar provision of a Purchased Contract) for taxable periods (or portions thereof) ending on or before the Closing Date, (ii) Taxes of any kind of any Seller, or any member of any consolidated, affiliated, combined or unitary group of which any Seller is or has been a member or (iii) Taxes in the nature of import duties imposed with respect to any Asset imported into its country of use or location on or prior to the Closing Date regardless of whether such Asset was properly documented as permanently imported into such country, together with all penalties and interest related thereto, in each case other than Taxes described in Sections 6.10(b) and (c) hereof which shall be paid in the manner set forth therein;

(b)                                 Employee Liabilities.  Any obligations and liabilities of any Seller to or with respect to the Employees and obligations and liabilities under or with respect to employee benefit plans, programs, policies and arrangements, all except as expressly provided in Article XI and the Employee Exhibits;

(c)                                  Excluded Assets.  Any obligations and liabilities of any Seller to the extent (i) arising out of or related to the Excluded Assets, (ii) arising out of the distribution to, or ownership or operation by, any Seller of any Excluded Asset or (iii) associated with the realization by any Seller of the benefits of any Excluded Asset;

(d)                                 Other Business.  Any liability of any Seller to the extent arising out of the operation or conduct by any Seller or any of its Affiliates of any business other than the Business;

(e)                                  Purchased Contracts.  Subject to Section 2.5(b), any liability of any Seller to the extent arising out of any actual or alleged breach of, or nonperformance under, any Contract (including any Purchased Contract or Shared Contract) prior to the Closing;

(f)                                    Proceedings.  Subject to Sections 2.5(b) and 2.5(h), any liability of any Seller to the extent arising out of any Proceeding (i) pending as of the Closing Date, (ii) based on any act or omission by any Seller occurring on or prior to the Closing or (iii)

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based on any actual or alleged violation by any Seller of any Law prior to the Closing, except to the extent arising out of or in connection with the waiver contained in Section 13.15 hereof (it being understood and agreed that this Section 2.6(f) is not intended to cover Proceedings related to environmental matters (including Proceedings related to violations of Environmental Laws) as the liabilities and obligations being retained by the Sellers with respect to environmental matters are addressed elsewhere in this Agreement);

(g)                                 Indebtedness.  Any liability or indebtedness of any Seller for borrowed money and any liabilities of any Seller relating to guarantees other than the Marconi Guarantees;

(h)                                 Injury/Disability.  Except to the extent expressly assumed by a Purchaser pursuant to Article XI or an Employee Exhibit, any liability of any Seller or any Affiliate of any Seller to the extent arising out of or related to any injury, disease or disability arising or occurring on or prior to the Closing Date, or exposure or alleged exposure on or prior to the Closing Date to any materials or chemicals in the work place by any Person (including any Transferred Employee or any other employee heretofore employed in the Business);

(i)                                     Affiliates.  Any liability of any Seller or any Affiliate of any Seller to each other or to their respective Affiliates existing as of the Closing Date, other than such liabilities referred to in Sections 2.2(k), 2.5(a) and 2.5(b);

(j)                                     5-Year PELs.  The 5-Year PELs;

(k)                                  Accounts Payable.  Any accounts payable of any Seller or any of its Affiliates to the extent of the amount not reflected in the final Statement of Working Capital;

(l)                                     Infringement.  Any liability of any Seller or any of their Affiliates for infringement or misappropriation of Intellectual Property or Technology arising out of the operation of the Business or products manufactured or sold and services provided by or on behalf of any Seller or any of its Affiliates on or prior to the Closing Date; and

(m)                               Excluded Contracts.  Any liabilities of any Seller or any Affiliate of any Seller under or with respect to any Contract that is not a Purchased Contract.

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2.7                                 Applicable Purchaser.  For purposes this Article II, unless otherwise provided in the Asset Allocation Statement, (a) all Assets and Assumed Obligations primarily related to the Business’ operations in Mexico shall be transferred to and assumed by the Mexican Purchaser, (b) all Assets and Assumed Obligations primarily related to the Business’ operations in Canada shall be transferred to and assumed by the Canadian Purchaser and (c) all other Assets and Assumed Obligations shall be transferred to and assumed by the U.S. Purchaser.

2.8                                 Prorations.

(a)                                  Except as otherwise provided in Section 6.10(b), each Seller and each Purchaser agree that all fees and charges in respect of Purchased Contracts and Transferable Permits that are payable on an annual, quarterly, monthly or other periodic basis, and which are paid in respect of any period beginning before the Closing Date and ending after the Closing Date, will be prorated as of the Closing Date, with the applicable Seller liable to the extent such items relate to any time period up to and including the Closing Date and the applicable Purchaser liable to the extent such items relate to periods subsequent to the Closing Date.

(b)                                 Marconi agrees to furnish the Purchasers with such documents and other records as the Purchasers reasonably request in order to confirm all adjustment and proration calculations made pursuant to this Section 2.8.  Final payments with respect to prorations contemplated by this Section 2.8 that are not ascertainable on or before the Closing Date shall be settled between the parties as soon as practicable after such prorations are ascertainable.  Notwithstanding the foregoing, no amounts reflected on the final Statement of Working Capital shall be taken into account in the calculation of the amounts payable by either party under this Section 2.8.

ARTICLE III

PURCHASE PRICE; ADJUSTMENT; ALLOCATION

3.1                                 Payment of Purchase Price.

(a)                                  The total consideration for the Assets shall consist of (i) the assumption by the Purchasers of the Assumed Obligations and (ii) the payment at the Closing by ▇▇▇▇▇▇▇ (on behalf of the Purchasers) of $375,000,000 (the “Purchase Price”).  The Purchase Price shall be paid to the Sellers as set forth on the Purchase Price Allocation Statement unless the Purchase Price Allocation Statement has not been agreed to prior to Closing in which case the Purchase Price shall be paid to MCI for itself and as agent for the Sellers.

(b)                                 All payments made hereunder shall be made in accordance with Section 13.4 and to such account or accounts as the receiving party shall designate in writing to the paying party.

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3.2                                 Purchase Price Adjustment.

(a)                                  The U.S. Purchaser shall, as soon as practicable, and in any event no later than ninety (90) days after the Closing Date, (i) prepare the initial draft of a statement (the “Statement of Working Capital”) setting forth, as of 12:01 a.m. (central standard time) on the Closing Date, the amount equal to (A) the aggregate of the Net Accounts Receivable, the Net Inventory and the Prepaids and Other Current Assets less (B) the aggregate of the Net Accounts Payable, the Accrued Compensation and Benefits and the Other Current Liabilities (such net amount being the “Closing Working Capital”) and (ii) deliver the same to MCI, together with a certificate from the U.S. Purchaser’s independent auditors to the effect that the initial draft Statement of Working Capital has been prepared in accordance with Section 3.2(g).

(b)                                 MCI and MCI’s independent auditors shall review the initial draft Statement of Working Capital during the sixty (60) day period commencing on the date that MCI receives the initial draft Statement of Working Capital.  At or prior to the end of such sixty (60) day period, MCI shall either:

(i)                                     deliver a notice to the U.S. Purchaser confirming that no adjustments are proposed by MCI to the initial draft Statement of Working Capital or the U.S. Purchaser’s calculation of Closing Working Capital (a “Notice of Acceptance”); or

(ii)                                  deliver a notice to the U.S. Purchaser to the effect that MCI disagrees with the initial draft Statement of Working Capital and/or the U.S. Purchaser’s calculation of Closing Working Capital (a “Notice of Disagreement”), specifying the nature of such disagreement and the adjustments that MCI seeks to the initial draft Statement of Working Capital and/or the calculation of Closing Working Capital (collectively, the “Proposed Adjustments”).

(c)                                  To the extent that there are any Proposed Adjustments, the U.S. Purchaser will, no later than thirty (30) days after receipt of the Proposed Adjustments, notify MCI which, if any, of the Proposed Adjustments it accepts or rejects.  MCI and the U.S. Purchaser shall seek in good faith to resolve any differences that remain in relation to the Proposed Adjustments and to reach agreement in writing on any Proposed Adjustments not accepted by the U.S. Purchaser.  If any of the Proposed Adjustments are not so resolved (the “Unresolved Adjustments”) within sixty (60) days after the U.S. Purchaser’s receipt of MCI’s notice of the Proposed Adjustments, the Unresolved Adjustments may be submitted at the request of either MCI or the U.S. Purchaser to the Chicago office of Ernst & Young LLP or another internationally recognized independent public accounting firm as shall be agreed upon by MCI and the U.S. Purchaser in writing (the “Accounting Firm”) for arbitration.  The scope of the review by the Accounting Firm shall be limited to a determination of (i) whether the portions of the initial draft Statement of Working Capital and the calculation of Closing Working Capital related to the Unresolved Adjustments were prepared in accordance with Section 3.2(g) and (ii) based on its determinations of the matters described in clause (i), a final calculation of the Closing Working Capital.  The Accounting Firm is not to make or be asked to make any determination other than as set forth in the previous sentence.  MCI and the U.S.

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Purchaser shall use reasonable efforts to cause the Accounting Firm to render its written decision resolving the matters submitted to it as promptly as practicable and, if at all possible, within thirty (30) days after such submission of the Unresolved Adjustments.  Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced.  The fees and expenses of the Accounting Firm incurred pursuant to this Section 3.2(c) shall be borne equally by MCI, on the one hand, and the U.S. Purchaser, on the other hand, or otherwise as the Accounting Firm may decide.  The fees and disbursements of the U.S. Purchaser’s independent auditors incurred in connection with the preparation and certification of the draft Statement of Working Capital and their review of any Proposed Adjustments or Unresolved Adjustments shall be borne by the U.S. Purchaser, and the fees and disbursements of MCI’s independent auditors incurred in connection with their review of the draft Statement of Working Capital, the working papers of the U.S. Purchaser’s independent auditors and any Proposed Adjustments or Unresolved Adjustments shall be borne by MCI.

(d)                                 The Statement of Working Capital shall become final and binding on all parties upon the earliest of (i) the date that a Notice of Acceptance is delivered to the U.S. Purchaser pursuant to Section 3.2(b)(i) (in which case the final Closing Working Capital shall be as set forth in the Statement of Working Capital delivered pursuant to Section 3.2(a)), (ii) the date that is one (1) day after the sixty (60) day review period specified in Section 3.2(b) has ended if no Notice of Disagreement has been delivered by MCI to the U.S. Purchaser pursuant to Section 3.2(b)(ii) during such sixty (60) day period (in which case the final Closing Working Capital shall be as set forth in the Statement of Working Capital delivered pursuant to Section 3.2(a)), (iii) the date of an agreement in writing by MCI and the U.S. Purchaser that the Statement of Working Capital, together with any modifications thereto agreed by MCI and the U.S. Purchaser, are final and binding (in which case the final Closing Working Capital shall be as so agreed upon by the parties) and (iv) the date on which the Accounting Firm finally resolves in writing any disputed matters (in which case the final Closing Working Capital shall be as determined by the Accounting Firm pursuant to Section 3.2(c)).

(e)                                  The U.S. Purchaser shall provide MCI and its independent auditors with reasonable access to the books, records, working papers and senior management and employees of the Business and shall cause its independent auditors to provide reasonable access to their working papers prepared for the purpose of the certificate rendered under Section 3.2(a) as MCI and its independent auditors may request in connection with the finalization of the Statement of Working Capital or calculation of Closing Working Capital.

(f)                                    In the event the final Closing Working Capital (as provided in Section 3.2(d)) is greater than or less than the Benchmark Amount, the Purchase Price shall be increased by the amount by which the final Closing Working Capital (as provided in Section 3.2(d)) exceeds the Benchmark Amount, or decreased by the amount by which the final Closing Working Capital (as provided in Section 3.2(d)) is less than the Benchmark Amount.  The Purchase Price as so increased or decreased shall hereafter be referred to as the “Adjusted Purchase Price.”  If the Purchase Price is less than the

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Adjusted Purchase Price, ▇▇▇▇▇▇▇ (on behalf of the Purchasers) shall, within two (2) Business Days after the Statement of Working Capital becomes final and binding on the parties (as provided in Section 3.2(d)), make payment by wire transfer in immediately available funds to one or more accounts designated by MCI (in accordance with the Purchase Price Allocation Statement) of the amount of such difference together with a sum equivalent to interest thereon at a rate equal to the LIBOR Rate, accrued from the Closing Date to and including the date of payment and calculated on the basis of the actual number of days elapsed divided by 360.  If the Purchase Price is more than the Adjusted Purchase Price, MCI shall, within two (2) Business Days after the Statement of Working Capital becomes final and binding on the parties (as provided in Section 3.2(d)), make payment by wire transfer in immediately available funds to an account designated by the Purchasers of the amount of such difference together with a sum equivalent to interest thereon at a rate equal to the LIBOR Rate, accrued from the Closing Date to and including the date of payment and calculated on the basis of the actual number of days elapsed divided by 360.  “LIBOR Rate” shall mean the rate of interest announced publicly by the British Bankers Association as its three (3) month LIBOR rate for U.S. dollars on the Business Day immediately following the day on which the Statement of Working Capital becomes final and binding on the parties (as provided in Section 3.2(d)).  The parties agree that any amounts paid pursuant to this Section 3.2(f) shall be allocated in a manner that is consistent with the allocation of the Purchase Price as set forth on the Purchase Price Allocation Statement and the Asset Allocation Statement.

(g)                                 The Statement of Working Capital shall be prepared in the same way and using the same accounting policies, principles, bases and methods as used in the preparation of the Annual Management Accounts, subject to the Calculation Principles referred to below.  Notwithstanding the generality of the foregoing sentence, the Statement of Working Capital shall be prepared in accordance with the rules of calculation specified on Schedule 3.2(g) (the “Calculation Principles”).

3.3                                 Allocation of Consideration for Assets.

(a)                                  The Purchase Price shall be allocated among the Sellers as set forth on a purchase price allocation statement (the “Purchase Price Allocation Statement”), which Purchase Price Allocation Statement shall be mutually agreed upon by MCI and the U.S. Purchaser at or prior to the Closing to the extent reasonably possible.  If the Purchase Price Allocation Statement is not mutually agreed upon prior to the Closing the matter shall be submitted to the Accounting Firm to resolve the disputed items.  Upon resolution of the disputed items, the allocation reflected on the Purchase Price Allocation Statement shall be adjusted to reflect such resolution.  The fees and expenses of the Accounting Firm shall be borne 50% by the U.S. Purchaser, on the one hand, and 50% by MCI, on the other hand.

(b)                                 The Purchase Price (plus Assumed Liabilities, to the extent properly taken into account under Section 1060 of the Code) shall be allocated among the Assets, in accordance with Section 1060 of the Code and any applicable provision of non-U.S. Law, as set forth on an asset allocation statement (the “Asset Allocation Statement”), which Asset Allocation Statement shall be mutually agreed upon by MCI and the U.S.

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Purchaser within 120 days after the Closing to the extent reasonably possible.  If the Asset Allocation Statement is not mutually agreed upon within such period, the U.S. Purchaser and MCI shall submit such dispute to the Accounting Firm to resolve the disputed items.  Upon resolution of the disputed items, the allocation reflected on the Asset Allocation Statement shall be adjusted to reflect such resolution.  The fees and expenses of the Accounting Firm shall be borne 50% by the U.S. Purchaser, on the one hand, and 50% by MCI, on the other hand.

(c)                                  Following the Closing, each of the U.S. Purchaser and MCI and their respective Affiliates shall file all necessary Tax Returns and other forms (including Internal Revenue Service Form 8594) to report the transactions contemplated herein for U.S. federal, state, local and non-United States income Tax purposes in accordance with the Purchase Price Allocation Statement and the Asset Allocation Statement, and shall not take any position inconsistent with such allocations.  Any adjustment to the Purchase Price for the Assets shall be allocated as provided in Treasury Regulation Section 1.1060-1 and applicable non-U.S. law, and, in the event of such adjustment, the U.S. Purchaser and MCI agree to revise and amend the Purchase Price Allocation Statement, the Asset Allocation Statement and the applicable Tax Returns and other forms as required by applicable Law.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MARCONI AND THE SELLERS

Marconi and the Sellers, jointly and severally, represent and warrant to the Purchasers as follows:

4.1                                 Due Organization.  Marconi and each Seller (a) is duly organized, validly existing and, solely with respect to those entities that are domiciled in jurisdictions that recognize the concept of good standing, in good standing under the laws of the jurisdiction of its organization, (b) has the requisite power and authority to own, operate and lease its properties and to conduct its business as presently conducted, and (c) other than such jurisdictions in which the failure to be qualified or in good standing would not reasonably be expected to have a Seller Material Adverse Effect or a Business Material Adverse Effect, is duly qualified to do business and is in good standing as a foreign entity in each jurisdiction that recognizes the concept of good standing and, other than with respect to Marconi, in which its ownership of Assets and its historic conduct of the Business makes such qualification necessary.

4.2                                 Due Authorization.  Marconi and each Seller has full corporate power and authority to execute, deliver and perform this Agreement and its Related Agreements and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by Marconi and each Seller of this Agreement and its Related Agreements and the consummation by Marconi and such Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action, including the approval of the board of directors and (if required) shareholders of Marconi and such Seller.  Marconi and each Seller has duly and validly executed and delivered this Agreement and, at or prior to the Closing, Marconi and such Seller will have duly and validly executed and delivered each of its Related

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Agreements.  Assuming the due authorization, execution and delivery of this Agreement and its Related Agreements by ▇▇▇▇▇▇▇ and each Purchaser, this Agreement constitutes, and each Related Agreement will after the Closing constitute, legal, valid and binding obligations of Marconi and each Seller party thereto, enforceable against it in accordance with their respective terms, subject to the Enforceability Limitations.

4.3                                 Consents and Approvals; Authority Relative to this Agreement.

(a)                                  Other than any Consent of or with any Governmental Authority the failure of which to be obtained would not reasonably be expected to have a Business Material Adverse Effect or a Seller Material Adverse Effect, and except (i) for the HSR Compliance and the Mexican FCC Filing Requirement by the parties hereto, (ii) as set forth on Schedule 4.3(a) and (iii) for Consents relating to Environmental Permits, no Consent of or with any Governmental Authority is necessary in connection with (A) the execution, delivery or performance of this Agreement by Marconi or any Seller or any of the applicable Related Agreements by Marconi or any Seller or (B) the consummation of any of the transactions contemplated hereby or thereby by Marconi or any Seller.

(b)                                 Other than, in the case of clauses (A), (B) and (C) below, any such items that would not reasonably be expected to have a Business Material Adverse Effect or a Seller Material Adverse Effect, and except (i) for the HSR Compliance and the Mexican FCC Filing Requirement by the parties hereto, (ii) as set forth on Schedule 4.3(b) and (iii) for Consents relating to Environmental Permits, the execution, delivery and performance of this Agreement and of the applicable Related Agreements by Marconi or any Seller, and the consummation of the transactions contemplated hereby and thereby by Marconi or any Seller, do not and will not: (A) violate any Law applicable to or binding on Marconi or any Seller or any Assets; (B) constitute a breach or default of, or permit cancellation of, or result in the creation of any Lien upon any of the assets of Marconi or any Seller, or result in or constitute a circumstance which, with or without notice or lapse of time or both, would constitute any of the foregoing under, any Contract to which Marconi or any Seller is a party or by which Marconi or any Seller or any of its respective assets is bound; (C) permit the acceleration of the maturity of any indebtedness of Marconi or any Seller or any of their respective Affiliates or indebtedness secured by any of their respective assets; or (D) violate or conflict with any provision of the certificate of incorporation or by-laws (or similar organizational documents) of Marconi or any Seller.

4.4                                 Management Accounts.

(a)                                  Schedule 4.4(a) sets forth the statement of assets and liabilities to be transferred pursuant to this Agreement as of March 31, 2004 (the “Annual Balance Sheet”) and the statement of operating profit of the Business for the year ended March 31, 2004 (the “Annual Income Statement” and, together with the Annual Balance Sheet, the “Annual Management Accounts”).

(b)                                 Except as set forth on Schedule 4.4(b)(i), the Annual Management Accounts have been prepared on the basis of accounting principles generally accepted in

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the United Kingdom at the time prepared (as modified by the exceptions set forth on Schedule 4.4(b)(i), the “Applicable Accounting Principles”).  The statement of assets and liabilities to be transferred pursuant to this Agreement as of June 30, 2004 (the “June Balance Sheet”) and the statement of operating profit of the Business for the three months ended June 30, 2004 (the “June Income Statement”, collectively with the June Balance Sheet and the Annual Management Accounts, the “Management Accounts”) to be delivered by MCI pursuant to Section 6.16 will be prepared on the basis of the Applicable Accounting Principles.  Except as set forth on Schedule 4.4(b)(ii), having regard to the purpose for which such unaudited Management Accounts have been or will be prepared, as applicable, (i) the Annual Balance Sheet fairly presents in all material respects as of March 31, 2004, the assets and liabilities of the Business to be transferred pursuant to this Agreement and (ii) the June Balance Sheet, when delivered, will fairly present in all material respects as of June 30, 2004 the assets and liabilities of the Business to be transferred pursuant to this Agreement, in each case in accordance with the Applicable Accounting Principles.  The Annual Income Statement fairly presents in all material respects the operating profit of the Business for the year ended March 31, 2004 and the June Income Statement, when delivered, will fairly present in all material respects the operating profit of the Business for the three months ended June 30, 2004, in each case in accordance with the Applicable Accounting Principles.

(c)                                  Schedule 4.4(c) sets forth a calculation of the Benchmark Amount extracted from the Annual Management Accounts as of March 31, 2004 and prepared in accordance with the principles, practices, methods and rules described in Section 3.2(g).

4.5                                 No Adverse Effects or Changes.  Except (i) with respect to the Excluded Assets and the Retained Obligations, (ii) as set forth on Schedule 4.5 and (iii) as otherwise contemplated by this Agreement, from March 31, 2004 until the date of this Agreement, the Business has been conducted in the ordinary course and in substantially the same manner as previously conducted, and there has not been (in relation to the Business):

(a)                                  any event, occurrence, development or state of circumstances or facts which, individually or in the aggregate, has had or would reasonably be expected to have a Business Material Adverse Effect;

(b)                                 any material change in any method of accounting or accounting practice by any Seller with respect to the Business except for any such change after March 31, 2004 required by reason of a change in Applicable Accounting Principles;

(c)                                  any (i) bonus, profit sharing, compensation, termination, stock option, stock appreciation right, restricted stock, performance unit, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan or fund entered into, adopted, amended or terminated for the benefit or welfare of any Current MCI Employee or Former MCI Employee, or (ii) increase in the compensation or benefits of any Current MCI Employee or Former MCI Employee or any Contract entered into to do any of the foregoing, except, in each case, for increases in compensation in the ordinary course of business consistent with past practice with respect to Current MCI Employees other than senior management, or as required by Law;

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(d)                                 any capital expenditure, or commitment for a capital expenditure, by any Seller or its Affiliates for additions or improvements to any Transferred Real Property;

(e)                                  any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Business, which employees were not subject to a collective bargaining agreement as of March 31, 2004, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to employees of the Business;

(f)                                    any acquisition by merger or consolidation with, or by the purchase of a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or any acquisition otherwise of any assets (other than Inventory) by any Seller or any Affiliate of any Seller the value of which exceeds $250,000 in the aggregate that relates to the Business;

(g)                                 any acceleration of the delivery of products or services under any Contract for the sale or distribution of any products manufactured or services performed by the Business other than at the request of the customer; or

(h)                                 any damage, destruction or other casualty loss (whether or not covered by insurance) or condemnation affecting any material Asset.

4.6                                 Title to Assets.  Except as set forth on Schedule 4.6, one or more of the Sellers has good title to, or a valid leasehold interest in, and is the lawful owner of, each of the Assets, free and clear of any Lien (other than Permitted Liens).  Except as set forth on Schedule 4.6 and subject to obtaining and making all applicable Consents, (a) each Seller (as applicable) has the right to sell, convey, transfer, assign and deliver the Assets owned by it to the applicable Purchaser, and (b) at the Closing, such Seller shall convey to the applicable Purchaser good title to, or a valid leasehold interest in, such Assets, free and clear of any Lien (other than Permitted Liens).  This Section 4.6 does not apply to (i) Transferred Owned Real Property and (ii) Intellectual Property, it being agreed that the sole and exclusive representations and warranties regarding Intellectual Property are set forth in Section 4.12.

4.7                                 Assets.  Except as set forth on Schedule 4.7, the Assets, together with (a) the rights and services to be provided by the Sellers (and their Affiliates) to the Purchasers under the Transition Services Agreement, (b) the Intellectual Property licensed under the Global Patent Licenses, (c) the Intellectual Property licensed under the Access Cross License Agreement, (d) the Group Contracts (including the CSC Outsourcing Arrangement), (e) the Intellectual Property licensed under the Inbound Licenses, (f) the so-called “shrink-wrap” or “click-wrap” license agreements referenced at Section 4.12(d) and (g) the administrative and support services provided by the Sellers and their Affiliates to the Business, (i) are adequate to conduct the Business as currently conducted and (ii) constitute all the properties, assets and rights currently used by the Sellers or their Affiliates to operate the Business.

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4.8                                 Owned Real Property and Leased Real Property.

(a)                                  Schedule 4.8 includes a list of all real property owned by a Seller (under the heading “Owned Real Property”) and all real property leased by a Seller (with annual aggregate lease payments in excess of $10,000) (under the heading “Leased Real Property”), in each case, used solely or primarily in connection with the operation of the Business.  The Owned Real Property and the Leased Real Property set forth on Schedule 4.8 is the only real property currently used or held for use by the Sellers in connection with the Business.

(b)                                 Except as set forth on Schedule 4.8, (i) the continued use, occupancy and operation of the Transferred Real Property as currently used, occupied and operated do not constitute a material violation of any applicable building, zoning, subdivision and other land use laws, regulations and ordinances and (ii) to the Sellers’ knowledge, the plants included in the Transferred Owned Real Property currently have access to (A) public or private roads for ingress to an egress from all such plants and (B) public or private water supply, storm and sanitary sewer facilities, telephone, gas, and electrical connections, in each case over public roads or property or valid easements over private roads or property, and in each case as is reasonably necessary for the conduct of the Business as presently conducted.

(c)                                  Except as set forth in Schedule 4.8, with respect to each Transferred Real Property Lease, (i) the Transferred Real Property Lease is valid, binding, in effect and enforceable in accordance with its terms; (ii) such Transferred Real Property Lease has not been amended, extended or otherwise modified; (iii) MCI has made available to the Purchasers copies of such Transferred Real Property Lease and all amendments, extensions and other modifications thereof (and not withheld any such documents or parts thereof for confidentiality or otherwise); (iv) as to the tenant, there does not exist under such Transferred Real Property Lease any material default or material event of default or event which with notice or lapse of time or both would constitute a material default or material event of default; (v) the transactions contemplated by this Agreement will not, under the terms of the Transferred Real Property Lease, (A) result in any default or event of default under the Transferred Real Property Lease, (B) give the landlord under the Transferred Real Property Lease a right to terminate the Transferred Real Property Lease or (C) require any payment to the landlord under the Transferred Real Property Lease; and (vi) the landlord under such Transferred Real Property Lease is not an Affiliate of any Seller.

4.9                                 Equipment; Leased Personal Property.  Schedule 4.9 includes an accurate and complete list as of March 31, 2004 of all of the equipment included in the Assets having an individual book value in excess of $10,000.  Schedule 4.9 also sets forth an accurate and complete list of each lease included in the Purchased Contracts to which any Seller is a party with respect to personal property having aggregate remaining minimum lease payments in excess of $10,000.  MCI has made available to the Purchasers true and complete copies of all the personal property leases set forth on Schedule 4.9.

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4.10                           Customers and Distributors; Suppliers.

(a)                                  Except for the customers named in Schedule 4.10(a), the Business does not have any customer to which it made more than two percent (2%) of its sales during the full fiscal year ended March 31, 2004 or during the period from March 31, 2004 to the date hereof.  Except as set forth in Schedule 4.10(a) and except for fluctuations in volume in the ordinary course of business, since March 31, 2004 there has not been (i) to the Sellers’ knowledge, any material adverse change in the relationship of the Business with any customer named in Schedule 4.10(a) or (ii) except for changes in prices in the ordinary course of business, any change in any material term (including credit terms) of the sales agreements with any such customer.  Except as set forth on Schedule 4.10(a), since January 1, 2004, no Seller or any Affiliate of any Seller has received any written complaint concerning the products and services of the Business from a purchaser thereof, nor has any Seller or any Affiliate of any Seller had any such products returned by a purchaser thereof, other than complaints and returns that, individually or in the aggregate, do not constitute a Business Material Adverse Effect.

(b)                                 MCI has made available to the Purchasers complete and correct copies of all Purchased Contracts to the extent relating to the sale of products or services by the Business to each of the customers referred to on Schedule 4.10(b).

(c)                                  Except for the suppliers set forth on Schedule 4.10(c), the Business has not purchased from any single supplier goods or services for which the aggregate purchase price exceeds five percent (5%) of the total cost of goods and services purchased by the Business during the full fiscal year ended March 31, 2004 or during the period from March 31, 2004 to the date hereof.  Except as set forth on Schedule 4.10(c) and except for fluctuations in volume in the ordinary course of business, since March 31, 2004, there  has not been (i) to the Sellers’ knowledge, any material adverse change in the relationship of the Business with any supplier set forth on Schedule 4.10(c) or (ii) except for changes in prices in the ordinary course of business, any change in any material term (including credit terms) of the supply agreements with any such supplier. MCI has made available to the Purchasers complete and correct copies of all Purchased Contracts to the extent relating to the purchase of products or services by the Business from the suppliers set forth on Schedule 4.10(c).

(d)                                 Schedule 4.10(d) sets forth a list of each material distributor or sales representative of the products of the Business and (i) indicates whether such distributor or sales representative has a written contract or oral arrangement with the Business and (ii) only with respect to such oral arrangements, contains a description of the terms of such oral arrangement with the Business with respect to territory, exclusivity and the term of the arrangement.  To the Sellers’ knowledge, no Seller has entered into any arrangements that would contractually prevent the Purchasers from distributing or selling any products of the Business anywhere in the world other than arrangements whereby a Seller has agreed not to sell any products of the Business in a particular territory in connection with such Seller’s appointment of an exclusive representative or distributor for such territory.

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4.11                           Proceedings.

(a)                                  Except as set forth on Schedule 4.11, there are no Proceedings pending, or, to the Sellers’ knowledge, threatened against any Seller (in relation to the Business) or affecting any Asset before any court or any other Governmental Authority that, individually or in the aggregate, if determined or resolved adversely in accordance with the plaintiff’s demands, would reasonably be expected to have a Business Material Adverse Effect.  Except as set forth on Schedule 4.11, the operation of the Business by each Seller is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Authority, the failure to comply with which would be reasonably expected to have a Business Material Adverse Effect.  Except as set forth on Schedule 4.11, no Seller (in relation to its conduct of the Business) has entered into any agreement which is a Purchased Contract to settle or compromise any Proceeding pending or threatened against it which has (i) involved any obligation other than the payment of money prior to the Closing Date or (ii) any continuing obligation the failure to comply with which would reasonably be expected to have a Business Material Adverse Effect.

(b)                                 There are no Proceedings pending or, to the Sellers’ knowledge, threatened, by or against Marconi or any Seller or any of their respective Affiliates with respect to this Agreement or the Related Agreements, or in connection with the transactions contemplated hereby or thereby.

4.12                           Intellectual Property.

(a)                                  Schedule 4.12(a) sets forth an accurate and complete list of all registrations and applications for registration for the Transferred Patents and Transferred Trademarks (the “Registered Transferred Intellectual Property”) including a list of all jurisdictions in which such Transferred Patents and Transferred Trademarks are registered or registrations applied for and all registration and application numbers.  There are no registered copyrights (or applications therefor) owned by any Seller and used (or held for use) in the conduct of the Business.  Except as set forth on Schedule 4.12(a), the Transferred Intellectual Property, together with (a) the Intellectual Property rights to be provided by the Sellers (and their Affiliates) to the Purchasers under the Transition Services Agreement, (b) the Intellectual Property licensed under the Global Patent Licenses, (c) the Intellectual Property licensed under the Access Cross License Agreement, (d) the Intellectual Property rights granted under the CSC Outsourcing Arrangement, (e) the Intellectual Property licensed under the Inbound Licenses and (f) the so-called “shrink-wrap” or “click-wrap” license agreements referenced at Section 4.12(d), is sufficient for the conduct of the Business by the Purchasers following the Closing in substantially the same manner as currently conducted.

(b)                                 With respect to all Registered Transferred Intellectual Property, Schedule 4.12(b)(i) lists all administrative actions that must be taken by the Purchasers within one hundred eighty (180) days after the Closing Date, including the payment of any registration, maintenance, renewal fees, annuity fees and taxes or the filing of any documents, applications or certificates, for the purposes of maintaining, perfecting or

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preserving or renewing such Registered Transferred Intellectual Property.  Except as set forth in Schedule 4.12(b)(ii), all of the Transferred Intellectual Property is in full force and effect, and the Sellers and their respective Affiliates, to the extent applicable, have, in a timely manner (including extensions), taken those necessary administrative actions (including the payment of any applicable fees) that would reasonably be expected to ensure that all applications filed by or on behalf of the Sellers and their respective Affiliates for the Transferred Intellectual Property remain in full force and effect.

(c)                                  Except as set forth in Schedule 4.12(c), the Sellers are and the applicable Purchaser or the applicable Purchaser’s designated Affiliate will be, the sole and exclusive owner of, and the Sellers have, and on the Closing Date the applicable Purchaser will have, in connection with the Business, all rights that accrue to a sole and exclusive owner, without payment to any other Person, to all of the Transferred Intellectual Property.  The consummation of the transactions contemplated by this Agreement do not and will not conflict with, alter or impair any such sole and exclusive ownership rights.

(d)                                 Schedule 4.12(d) sets forth an accurate and complete list of all licenses, sublicenses and other agreements pursuant to which the Sellers or any of their Affiliates are authorized or licensed to use any third party Intellectual Property or third party Technology that is used in connection with the Business as currently conducted, except for so-called “shrink-wrap” or “click-wrap” license agreements relating to off-the-shelf computer software licensed in the ordinary course of business which are not material to the Business (“Inbound Licenses”).

(e)                                  Except as set forth in Schedule 4.12(e), to the Sellers’ knowledge, the conduct of the Business as currently conducted and as conducted on the Closing Date does not violate, conflict with or infringe or misappropriate the Intellectual Property of any other Person that would result in any material liability or have any Business Material Adverse Effect.  Except as set forth in Schedule 4.12(e), (i) no claims are pending or, to the Sellers’ knowledge, threatened, against any of the Sellers or any of their Affiliates by any Person with respect to the ownership, validity (excluding administrative actions received in the normal course of business in connection with pending patent applications), enforceability or use in the Business of any Intellectual Property and (ii) during the past three (3) years, the Sellers and their Affiliates have not received any written or, to the Sellers’ knowledge, oral communication alleging that the Sellers or any of their Affiliates have in the conduct of the Business violated any rights relating to the Intellectual Property of any Person.  During the past two (2) years, neither the Sellers nor their Affiliates have received any written or, to the Sellers’ knowledge, oral communication from any Person asserting any ownership interest in, or requesting that the Sellers obtain a license to, any of the Transferred Intellectual Property.  Schedule 4.12(e) contains a complete and accurate list of any pending challenges or adversarial proceedings before any patent or trademark authority to which the Sellers and any of their Affiliates is a party (including any pending applications for reexamination of a patent) with respect to the Transferred Patents or Transferred Trademarks, a description of the subject matter of each proceeding, and the current status of each proceeding, including interferences, priority contests, opposition and protests.  Except as set forth in Schedule

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4.12(e), to the Sellers’ knowledge, no third party is infringing, misappropriating or violating any of the Transferred Intellectual Property.

(f)                                    The Sellers have used all reasonable efforts to maintain all material Transferred Technology that constitutes confidential or trade secret information in confidence in accordance with protection procedures customarily used in the industry to protect rights of like importance.  Since January 1, 2001, no claim has been asserted or, to the Sellers’ knowledge, has been threatened, against any of the Sellers or any of their Affiliates asserting that any Personnel owns the Transferred Intellectual Property.  To the Sellers’ knowledge, none of the current officers and employees of the Sellers (in connection with the Business) has any patents issued or applications pending for any device, process, design or invention of any kind that was conceived or developed within the scope of such officers’ or employees’ employment by the Sellers or their Affiliates in the furtherance of the Business, which patents or applications have not been assigned to Sellers or such Affiliates, with such assignment duly recorded in the United States Patent and Trademark Office.

(g)           Neither (i) the execution and delivery of this Agreement by the Sellers, (ii) the execution and delivery of the License Agreement by the Sellers nor (iii) the consummation of the transactions contemplated hereby or thereby by the Sellers as applicable, will result in (A) a loss of, or encumbrance or lien on, any of the Transferred Intellectual Property (B) the grant, assignment, or transfer to any other person or entity of any license or other right or interest under, to, or in any of the Transferred Intellectual Property or (C) the Purchasers being obligated under the terms of the applicable license agreement to pay any royalties to any third party licensor in excess of those payable by the Sellers prior to the Closing, other than an increase in payments due to a change in product sales, gross revenues or the number of users where such amounts are calculated on a per seat basis.

4.13                           Contracts.  Schedule 4.13 is an accurate and complete list of all the Purchased Contracts of the following types:

(a)                                  any collective bargaining agreement;

(b)                                 any Contract with a sales representative, manufacturer’s representative, distributor, dealer, broker, sales agency, advertising agency or other Person currently engaged in sales, distribution or promotional activities for or on behalf of the Business, or any Contract to act in one of the foregoing specified capacities on behalf of any Person;

(c)                                  any Contract pursuant to which any Seller has made or will make loans or advances, or has incurred, or is obligated to incur, indebtedness for borrowed money or has become a guarantor or surety or pledged its credit for or otherwise become responsible with respect to any undertaking of another Person (except for the negotiation or collection of negotiable instruments in transactions in the ordinary course of business);

(d)                                 any Contract with (i) any Affiliate of any Seller (including any Contract between one or more Sellers but excluding any Contract with any Benefit Plan, any

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Canadian Benefit Plan or any Mexican Benefit Plan) or (ii) any officer or director of any Seller (other than employment agreements or similar arrangements relating to their employment);

(e)                                  any Contract (including a purchase order) with any supplier with whom the Sellers have entered into Contracts (including purchase orders) which, individually or in the aggregate, have a commitment of more than $100,000 on an annual basis;

(f)                                    any Contract involving a partnership, joint venture or other cooperative undertaking;

(g)                                 any Contract relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise);

(h)                                 any Contract involving any restrictions with respect to the geographical area of operations or scope or type of business of any Seller; or

(i)                                     any Contract granting to any Person a right of first refusal or option to purchase or acquire any Assets.

MCI has made available to the Purchasers true and complete copies of each Contract that is listed on Schedule 4.13.  Except as set forth on Schedule 4.13, all Contracts listed on Schedule 4.13 are valid and binding agreements and are in full force and effect (in accordance with their terms) and are enforceable against the applicable Seller and, to the Sellers’ knowledge, against the other party thereto, in accordance with their terms, subject to the Enforceability Limitations.  This Section 4.13 shall not apply to the Transferred Real Property Leases.

4.14                           Permits.  Except as set forth on Schedule 4.14(a), each Seller possesses or has applied for all material Permits required by applicable Law, as in effect on the date hereof, for such Seller to conduct the Business as currently conducted.  Schedule 4.14(b) is an accurate and complete list of all Permits (other than Environmental Permits) held by the Sellers affecting or relating to the Business, and (a) all such Permits are valid and in full force and effect (in accordance with their terms) and (b) no Seller is in material default, and no condition exists that with notice or lapse of time or both would constitute a material default by any Seller, under such Permits.  This Section 4.14 does not relate to matters specifically covered by other representations and warranties specified in this Article IV, including any representations and warranties with respect to compliance with Laws or compliance with Environmental Laws or possession of Environmental Permits, each of which matters are addressed solely and exclusively in Section 4.20 and 4.21, respectively.

4.15                           Insurance.  The Sellers currently maintain policies of fire and casualty, liability and other forms of insurance (and/or participate in insurance arrangements made by one or more of their Affiliates) with respect to the Business in such amounts, with such deductibles and against such risks and losses as are, in the Sellers’ judgment, reasonable for the Business.  To the Sellers’ knowledge, all such policies are in full force and effect, and, except as set forth on Schedule 4.15, no written notice of cancellation or termination has been received by any Seller  with respect to any such policy.

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4.16                           Finders’ Fees.  Except for ▇.▇. ▇▇▇▇▇▇ Securities, Inc., whose fees will be paid by the Sellers, there is no investment banker, broker, finder or other intermediary performing similar functions which has been retained by or is authorized to act on behalf of the Sellers who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

4.17                           Employee Benefit Plans and Employment Agreements.

(a)                                  General.  Except as listed on Schedule 4.17(a), no Seller is a party to or a participant in:

(i)                                     any “employee benefit plan” (as defined in section 3(3) of ERISA);

(ii)                                  any retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay, severance pay, bonus or benefit arrangement, insurance or hospitalization program or any other fringe benefit arrangements for any Current MCI Employee or Former MCI Employee, which does not constitute an employee benefit plan and which is not an individual agreement with a Current MCI Employee or a Former MCI Employee;

(iii)                               any written employment agreement or any written severance agreement with any Current MCI Employee that provides for a severance payment in excess of six (6) months’ base annual salary; or

(iv)                              any written agreement with any Contractor.

Nothing in this Section 4.17(a) shall require that Schedule 4.17(a) include (A) any plans, policies, programs, arrangements or agreements unless the plan, policy, program, arrangement or agreement is sponsored by any Seller and covers or has been entered into with any Current MCI Employee or Former MCI Employee (other than those specified in clause (B)) or unless the plan, policy, program, arrangement, or agreement covers other persons with respect to which a liability is expressly being assumed by the Purchasers pursuant to Article XI, (B) any individual agreement with a Current MCI Employee providing for the payment of certain amounts to such Current MCI Employee based on the transactions contemplated by this Agreement and for which liability is not assumed by the Purchasers pursuant to Article XI or (C) any agreement with any Contractor which is not assumed by the Purchasers pursuant to Article XI.  Canadian Benefit Plans and applicable representations with respect thereto are set forth on Exhibit Canada.  Mexican Benefit Plans and applicable representations with respect thereto are set forth on Exhibit Mexico.  Costa Rican Benefit Plans and applicable representations with respect thereto are set forth on Exhibit Costa Rica.  Except as set forth on Schedule 4.17(a), MCI has made available to the Purchasers true and complete copies of each Benefit Plan listed on Schedule 4.17(a).

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(b)                                 Compliance With Laws; Liabilities.  Except as set forth on Schedule 4.17(b):

(i)                                     All Benefit Plans comply, and have been administered in compliance, in all material respects, with the terms thereof and with all requirements of Law applicable thereto.

(ii)                                  Each Benefit Plan which is an employee pension benefit plan (as defined in section 3(2) of ERISA) and which is intended to be qualified under section 401 (a) of the Code is the subject of a favorable determination letter issued by the Internal Revenue Service and, to the Sellers’ knowledge, is qualified under section 401(a) of the Code, and no event has occurred since the date of the last determination letter that is reasonably likely to adversely affect such determination.  MCI has made available to the Purchasers a copy of the most recent determination letter from the Internal Revenue Service relating to each such Benefit Plan.

(iii)                               None of MCI or any of its ERISA Affiliates has engaged in any Prohibited Transaction which has or will cause the U.S. Purchaser or any of its ERISA Affiliates to incur any material liability under ERISA, the Code or otherwise and, to the knowledge of MCI, no other person has engaged in any Prohibited Transaction.

(iv)                              No “accumulated funding deficiency,” as defined in Section 412 of the Code, has been incurred with respect to any Benefit Plan subject to such Section 412, whether or not waived.

(v)                                 No material “reportable event,” within the meaning of Section 4043 of ERISA and no event described in Section 4062 or 4063 of ERISA, has occurred in connection with any Benefit Plan for which Purchaser or any of its ERISA Affiliates may be liable.

(vi)                              None of the Sellers or any of their ERISA Affiliates has (A) engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA or (B) incurred, or reasonably expects to incur prior to the Closing Date, (1) any liability under Title IV of ERISA arising in connection with the termination of any Benefit Plan which is subject to Title IV of ERISA, or (2) any liability under Section 4971 of the Code, that in any case could become a liability of the U.S. Purchaser or any of its ERISA Affiliates after the Closing Date.

(vii)                           None of the Benefit Plans is a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) and none of MCI nor any of its ERISA Affiliates has any liability with respect to any such multiemployer plan that could become a liability of Purchaser or any of its ERISA Affiliates after the Closing Date.

(c)                                  Post-Employment Liabilities and Plans.  Except as set forth on Schedule 4.17(c), no Current MCI Employee or Former MCI Employee is entitled to post-employment or post-retirement health or medical or life insurance benefits under any Benefit Plan other than as required by Section 4980B of the Code or similar provisions of

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applicable state law.  Each Benefit Plan listed on Schedule 4.17(c) provides by its current terms that it may be amended or terminated.

(d)                                 Deductibility.  None of the payments under the Benefit Plans could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G or 162(m) of the Code.

(e)                                  Contingent Entitlements.  Except as set forth on Schedule 4.17(e), no Current MCI Employee or Former MCI Employee will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated hereby.

(f)                                    Termination of Contractor Agreements.  Each of the agreements or arrangements with Contractors that are assumed by the Purchasers pursuant to Article XI may be terminated by the Purchasers upon not more than 30 days notice without any material liability.

4.18         Employment and Labor Matters.  MCI has made available to the Purchasers an accurate and complete list as of June 1, 2004 of the names and titles of all Employees of the Sellers (involved primarily in the Business), which list shall be updated as of the close of business on the fifth Business Day prior to the Closing.  Except as set forth on Schedule 4.18, there is, and since January 1, 2003 there has been, no labor strike, material labor dispute, material labor slow-down, material work stoppage or other material labor difficulty pending or, to the Sellers’ knowledge, threatened, against any Seller and primarily relating to the  Business.  Except as set forth on Schedule 4.18, no Current Employee is covered by any collective bargaining agreement, and, to the Sellers’ knowledge, no representation petition has been filed by any Current Employee or is pending before the National Labor Relations Board, or since January 1, 2003, no union organizing campaign has been in progress or has been threatened.  To the Sellers’ knowledge, there is no pending or threatened liability pursuant to WARN or any similar state or local law with respect to the Business.  MCI has complied in all material respects with WARN or any similar state or local law in connection with its operation of the Business.

4.19                           Taxes.  Except as set forth on Schedule 4.19, all Tax Returns with respect to (a)  the Business or (b) the Assets or, in each case, the income attributable thereto, that are required by applicable Law to be filed on or before the Closing Date by the Sellers have been filed or will be filed in a timely manner (within any applicable extension periods).  The information provided on such Tax Returns is or will be correct and complete in all material respects and all Taxes shown to be due on such Tax Returns have been timely paid in full or will be timely paid in full.  There are no material Liens for Taxes with respect to any of the Assets (other than Permitted Liens).  Marconi Canada is resident in Canada for the purposes of the Income Tax Act (Canada).  No agreements relating to Taxes exist between the Sellers or any of their Affiliates and any Governmental Authority, which agreement could have an effect on the Business, the Assets, the Purchasers or any of their Affiliates after the Closing Date.  None of the Assets is subject to a tax benefit transfer lease executed in accordance with Section 168(f)(8) of the Code.  None of the Assets is “tax-exempt use property” within the meaning of Section 168(h) of the Code.  No Seller or any Affiliate of any Seller has received an audit adjustment relating to the amount paid

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or received for goods or services provided by or to another Seller or Affiliate of any Seller with respect to the Business or the Assets.

4.20                           No Defaults or Violations.  Except as set forth on Schedule 4.20:

(a)                                  since January 1, 2003, no Seller has breached in any material respect the provisions of, and no Seller is in material default under the terms of, any material Contract (relating primarily to the Business) (including the Transferred Real Property Leases) to which it is a party and, to the Sellers’ knowledge, no other party to any such material Contract has, since January 1, 2003, breached in any material respect the provisions thereof, or is in material default thereunder, except, in each case, (i) where such breach or default has been remedied and (ii) for product change notices issued in the ordinary course of business pursuant to industry standards;

(b)                                 excluding (i) matters relating to Taxes (as the sole and exclusive representations and warranties regarding Taxes are set forth in Section 4.19), (ii) environmental matters (as the sole and exclusive representations and warranties regarding environmental matters are set forth in Section 4.21), (iii) matters relating to Intellectual Property (as the sole and exclusive representations and warranties regarding Intellectual Property are set forth in Section 4.12), (iv) matters relating to Permits (as the sole and exclusive representations and warranties regarding Permits are set forth in Section 4.14), and (v) employee benefits (as the sole and exclusive representations and warranties regarding employee benefits are set forth in Section 4.17), the Sellers are, and since January 1, 2003 the Sellers have been  (solely in relation to the Business), in compliance with all Laws applicable to or binding on them or any of the Assets, except where the failure to so comply would not reasonably be expected to have a Business Material Adverse Effect; and

(c)                                  since January 1, 2002, no Seller (solely in relation to the Business) has received any written notice from a Governmental Authority that alleges that any Seller is not in compliance with any Law applicable to the conduct of the Business, except for instances of noncompliance that would not reasonably be expected to have a Business Material Adverse Effect.

4.21                           Environmental Matters.  Except as set forth on Schedule 4.21(a):

(a)                                  to the Sellers’ knowledge, the Sellers (solely in relation to the Assets, the Business and the Transferred Real Property) are in compliance with all applicable Environmental Laws, except where the failure to so comply would not reasonably be expected to have a Business Material Adverse Effect;

(b)                                 the Sellers are in possession of all Environmental Permits required for their operation of the Business as currently conducted and, to the Sellers’ knowledge, are in compliance with all of the requirements and limitations included in such Environmental Permits except where the failure to possess such Environmental Permits or to so comply would not reasonably be expected to have a Business Material Adverse

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Effect, and a true, accurate and complete list of such Environmental Permits is set forth on Schedule 4.21(b);

(c)                                  in the ordinary course of the conduct of the Business, the Sellers receive, store and use Hazardous Substances at the Transferred Real Property, but, to the Sellers’ knowledge, there are no Hazardous Substances in, on, at or under any of the Transferred Real Property or the Assets the amount and location of which would reasonably be expected to result in a material violation of or liability under Environmental Law;

(d)                                 no written notice, that is either unresolved or is resolved but was received after January 1, 2003, from any Governmental Authority or other party has been received by any Seller claiming that (i) the operation of the Business, the Assets or the Transferred Real Property is in violation of or has potential liability under any Environmental Law or Environmental Permit, or (ii) any Seller is responsible or potentially responsible for the investigation or cleanup of any Hazardous Substances at any Transferred Real Property or in connection with Hazardous Materials generated at the Transferred Real Property, except, in each case, for such violations, investigations or cleanups that would not reasonably be expected to have a Business Material Adverse Effect;

(e)                                  no Seller (solely in relation to the Business, the Assets or the Transferred Real Property) is the subject of any pending, or, to the Sellers’ knowledge, threatened litigation or proceeding in any forum, judicial or administrative, involving a demand for damages, injunctive relief, penalties or other potential remedy with respect to liability under or violations of any Environmental Law, except for such violations that would not reasonably be expected to have a Business Material Adverse Effect;

(f)                                    the Sellers (solely in relation to the Business, the Assets or the Transferred Real Property) have timely filed all reports and notifications required to be filed by them with respect to their properties and facilities and have generated and maintained all required records and data under all applicable Environmental Laws, except where the failure to so file, generate or maintain would not reasonably be expected to have a Business Material Adverse Effect; and

(g)                                 to the Sellers’ knowledge, MCI has made available to the Purchasers all Phase I and Phase II Environmental Site Assessments for the Transferred Owned Real Property.

Notwithstanding any other provision of this Agreement, the representations and warranties set forth in this Section 4.21 are the only representations and warranties relating to Environmental Laws or Environmental Permits made by Marconi and the Sellers under this Agreement.

4.22                           Effect of Transactions.  Except as set forth on Schedule 4.22, to the Sellers’ knowledge, no executive officer, people manager or engineer of the Business intends to terminate his or her employment with the Business.  Except as set forth on Schedule 4.22, to the Sellers’ knowledge, no customer identified on Schedule 4.10(a) or supplier identified on Schedule 4.10(c) intends to terminate, or otherwise change in a manner materially adverse to the

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Business, its relationship with the Business on account of the ownership of the Business by the Purchasers or the consummation of any transactions contemplated hereby.

4.23                           Solvency.  On the Closing Date and immediately after the consummation of the transactions contemplated hereby and under the Related Agreements:  (a) neither Marconi nor MCI shall intend, whether by virtue of the transactions contemplated hereby and under the Related Agreements or otherwise, to hinder, defraud, or delay any of its present or future creditors, (b) MCI shall be solvent (as such term is determined for purposes of Section 548 of Title 11 of the United States Code and under any applicable state Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act), (c) MCI shall not be engaged in business or a transaction, and shall not be about to be engaged in business or a transaction, for which any property remaining with MCI shall be an unreasonably small capital, and (d) MCI shall not intend to incur, and shall not believe that it is about to incur, debts that would be beyond MCI’s ability to pay as such debts matured.

4.24                           Products; Product Liabilities.

(a)                                  In each of fiscal year 2003 and 2004, the aggregate amount of charges to the Sellers’ reserve in connection with product liability or warranty matters of the Business in the United States and Canada did not exceed 1.5% of the aggregate equipment revenues for the Business in the United States and Canada in such fiscal year.

(b)                                 Except as set forth in Schedule 4.24, (i) since January 1, 2001, there has been no material safety recall of any product manufactured by the Business and (ii) since January 1, 2004, to the Seller’s knowledge, no such safety recall has been threatened.

(c)                                  Since January 1, 2001, no asbestos or asbestos containing materials have been used in the products of the Business.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ AND THE PURCHASERS

▇▇▇▇▇▇▇ and the Purchasers, jointly and severally, represent and warrant to the Sellers as follows:

5.1                                 Due Incorporation.  ▇▇▇▇▇▇▇ and each Purchaser is duly organized, validly existing and, solely with respect to those entities that are domiciled in jurisdictions that recognize the concept of good standing, in good standing under the laws of the jurisdiction of its organization, and has all requisite power and authority to own, operate and lease its assets and to conduct its business as presently conducted.

5.2                                 Due Authorization.  ▇▇▇▇▇▇▇ and each Purchaser has full corporate power and authority to execute, deliver and perform this Agreement and its Related Agreements and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by ▇▇▇▇▇▇▇ and each Purchaser of this Agreement and its Related Agreements and the consummation by ▇▇▇▇▇▇▇ and such Purchaser of the transactions contemplated hereby and

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thereby have been duly authorized by all necessary corporate action, including the approval of the board of directors of ▇▇▇▇▇▇▇ and such Purchaser and (if required) shareholders of ▇▇▇▇▇▇▇ and such Purchaser.  ▇▇▇▇▇▇▇ and each Purchaser has duly and validly executed and delivered this Agreement and, at or prior to the Closing, will have duly and validly executed and delivered each of its Related Agreements.  Assuming the due authorization, execution and delivery of this Agreement and the Related Agreements by Marconi and each Seller (as applicable), this Agreement constitutes, and each of the Related Agreements will after the Closing constitute, ▇▇▇▇▇▇▇’▇ and each Purchaser’s legal, valid and binding obligation, enforceable against it in accordance with their respective terms, subject to Enforceability Limitations.  The Canadian Purchaser is a “WTO Investor” within the meaning of the Investment Canada Act.

5.3                                 Consents and Approvals; Authority Relative to this Agreement.

(a)                                  Except for the HSR Compliance, the Mexican FCC Filing Requirement and as set forth on Schedule 5.3, no Consent of or with any Governmental Authority is necessary in connection with the execution, delivery or performance by ▇▇▇▇▇▇▇ or any Purchaser of this Agreement or any of its Related Agreements or the consummation by ▇▇▇▇▇▇▇ or any Purchaser of the transactions contemplated hereby or thereby.

(b)                                 Except for the HSR Compliance, the Mexican FCC Filing Requirement and as set forth on Schedule 5.3, the execution, delivery and performance by ▇▇▇▇▇▇▇ and each Purchaser of this Agreement and its Related Agreements, and the consummation by ▇▇▇▇▇▇▇ or any Purchaser of the transactions contemplated hereby and thereby, do not and will not:  (i) violate any Law applicable to or binding on ▇▇▇▇▇▇▇ or any Purchaser or any of its assets; (ii) constitute a breach or default of, or permit cancellation of, or result in the creation of any Lien upon any of the assets of ▇▇▇▇▇▇▇ or any Purchaser under, or result in or constitute a circumstance which, with or without notice or lapse of time or both, would constitute any of the foregoing under, any Contract to which ▇▇▇▇▇▇▇ or any Purchaser or any of its Affiliates is a party or by which ▇▇▇▇▇▇▇ or any Purchaser or any of its Affiliates or any of their respective assets is bound; (iii) permit the acceleration of the maturity of any indebtedness of ▇▇▇▇▇▇▇ or any Purchaser or any of their Affiliates or indebtedness secured by any of their respective assets; or (iv) violate or conflict with any provision of the certificate of incorporation or by-laws (or similar organizational documents) of ▇▇▇▇▇▇▇ or any Purchaser.

5.4                                 Proceedings..  There are no Proceedings pending, or, to the Purchasers’ knowledge, threatened, by or against ▇▇▇▇▇▇▇ or any Purchaser or any of their Affiliates with respect to this Agreement or the Related Agreements, or in connection with the transactions contemplated hereby or thereby.

5.5                                 Financing..  ▇▇▇▇▇▇▇ has sufficient cash, available lines of credit or other sources of immediately available funds to enable it to make payment of the Purchase Price and any other amounts to be paid by the Purchasers hereunder.

5.6                                 Independent Investigation..  In making the decision to enter into this Agreement and the Related Agreements and to consummate the transactions contemplated hereby and thereby, other than reliance on the representations, warranties, covenants and obligations of

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Marconi and the Sellers (as applicable) set forth in this Agreement and in the Related Agreements, ▇▇▇▇▇▇▇ and the Purchasers have relied solely on their own independent investigation, analysis and evaluation of the Business and the Assets (including the Purchasers’ own estimate and appraisal of the value of the business, financial condition, operations and prospects of the Business and the Assets).  ▇▇▇▇▇▇▇ and the Purchasers confirm to Marconi and the Sellers that they are sophisticated and knowledgeable about the Business and are capable of evaluating the matters set forth above.

5.7                                 Taxes.  The Canadian Purchaser is a registrant for purposes of the tax imposed under Part IX of the Excise Tax Act (Canada).  The Canadian Purchaser’s GST registration number is 896659695RT0001.

5.8                                 Controlled Group Representation.  The U.S. Purchaser is a wholly-owned, direct or indirect, subsidiary of ▇▇▇▇▇▇▇.

ARTICLE VI

COVENANTS

6.1                                 Access to Information.  From and after the date of this Agreement until the Closing Date, each Seller shall afford to the Purchasers and their accountants, counsel, financial advisors and other representatives reasonable access, upon reasonable notice during normal business hours, to all the offices, personnel, properties, books, contracts, commitments, Tax Returns and records to the extent relating to the Business or the Assets (but not including Tax Returns in respect of income generated by such Assets) and during such period shall furnish to the Purchasers and their accountants, counsel, financial advisors and other representatives any information to the extent relating to the Business or the Assets which is reasonably available to the Sellers as the Purchasers may reasonably request; provided that nothing herein will obligate any Seller to (a) take any actions that would unreasonably interrupt the normal course of business of the Business or (b) violate any Law or the terms of any Contract to which any Seller or any Affiliate of any Seller is a party or to which any assets of any Seller or any Affiliate of any Seller are subject, and provided, further, that if any particular document or other item containing information to which the Purchasers have the right of access pursuant to this Section 6.1 contains both (y) information related to the Business and (z) other information, then the applicable Seller may, at its option, either (i) provide a copy of such document or item to the Purchasers subject to the Purchasers’ obligations contained herein to keep such other information confidential or (ii) create a new form of such document or item and provide the Purchasers with access to such new form of document or item (which new form of document or item shall incorporate all information that the Purchasers have the right to access  pursuant to this Section 6.1).

6.2                                 Preservation of Business.

(a)                                  From the date of this Agreement until the Closing Date, except as set forth on Schedule 6.2 or as contemplated by this Agreement, each Seller shall operate the Business in the ordinary course of business and in a manner consistent with past practice and each Seller shall use its reasonable efforts and take such actions as the Purchasers

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reasonably requests in order to keep intact the Business, keep available the services of the Current Employees and preserve the relationships of the Business with material customers, suppliers, licensors, licensees and distributors; provided, however, that in no event shall any Seller be required to take any action that would require such Seller to incur any out-of-pocket expenses which such Seller would not have otherwise incurred in the ordinary course of business.

(b)                                 Without limiting the generality of Section 6.2(a), except as set forth on Schedule 6.2 or as contemplated by this Agreement, prior to the Closing no Seller shall (in relation to the Business), without the prior written consent of ▇▇▇▇▇▇▇, which shall not be unreasonably withheld or delayed:

(i)                                     sell, transfer, convey or otherwise dispose of any of the Assets having a value in the aggregate in excess of $250,000 except for the sale of inventory and obsolete equipment in the ordinary course of business and consistent with past practice;

(ii)                                  acquire any material assets having a value in the aggregate in excess of $250,000, except for the acquisition of inventory in the ordinary course of business and consistent with past practice;

(iii)                               make any material changes in the accounting principles or practices of the Business except for any such change after the date hereof required by reason of a concurrent change in the Applicable Accounting Principles;

(iv)                              other than supply arrangements in the ordinary course of business, enter into any material transaction with any Affiliate of any Seller (including another Seller);

(v)                                 except as required by Law, (A) enter into, adopt, amend or terminate any bonus, profit sharing, compensation, termination, stock option, stock appreciation right, restricted stock, performance unit, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan or fund for the benefit or welfare of any Current MCI Employee or Former MCI Employee, or (B) increase the compensation or benefits of any Current MCI Employee or Former MCI Employee, or enter into any Contract to do any of the foregoing, except, in each case, for increases in compensation or any other actions in the ordinary course of business consistent with past practice with respect to Current MCI Employees other than senior management;

(vi)                              make any commitment for a capital expenditure, for additions or improvements to the Transferred Real Property that would constitute a Purchased Contract;

(vii)                           enter into, adopt, extend, renew or amend any collective bargaining agreement or other Contract with any labor organization, union or association, except in each case as required by Law;

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(viii)                        permit or allow any Asset to become subject to any Lien of any nature whatsoever, other than Permitted Liens;

(ix)                                enter into any transaction, commitment, contract or agreement relating to the Business or any Asset (including the acquisition or disposition of any assets) or any relinquishment of any contract or other right, in either case, material to the Business, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement;

(x)                                   acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;

(xi)                                acquire fee simple title to, or an ownership interest in, any real property that would be an Asset or, enter into any lease (or renewal of any lease) of real property that would be an Asset;

(xii)                             enter into, amend in a manner materially adverse to the Business, terminate or extend any material license, material option or other material agreement pertaining to the Transferred Intellectual Property with any Person;

(xiii)                          enter into any Contract containing a covenant not to compete or any other covenant restricting the development, manufacture, marketing or distribution of the products and services of the Business or amend or extend in a manner adverse to the Business any such covenant in any Purchased Contract;

(xiv)                         make any purchase commitment with terms and conditions not in the ordinary course of business consistent with past practice or for a period of greater than six months;

(xv)                            accelerate (A) the delivery of products or services under any Contract for the sale or distribution of any products manufactured or services performed by the Business other than at the request of the customer or (B) the collection of any outstanding Accounts Receivable;

(xvi)                         waive or surrender any material rights related to any pending or threatened Proceeding to the extent affecting the Business or Assets; or

(xvii)                      agree or commit to do any of the foregoing.

(c)                                  From the date of this Agreement until the Closing, each Seller shall, in relation to its conduct of the Business (other than in relation to Excluded Assets or Retained Obligations) or its ownership of the Assets:

(i)                                     use reasonable efforts to maintain the Assets in all material respects in good working order, in accordance with the past practice of the Business;

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(ii)                                  upon acquiring knowledge of any damage (other than immaterial damage), destruction or loss to, or condemnation of, any material Asset, (A) promptly notify the Purchasers, (B) make all available claims against insurance policies covering such Asset (the “Pre-Closing Insurance Claims”) and (C) consult with the Purchasers as to the application of any and all insurance proceeds with respect thereto to repair, replace or restore such Asset;

(iii)                               use reasonable efforts to maintain its level and quality of Accounts Receivable, Inventory and spare parts in the ordinary course of business so as to be sufficient for the conduct of the Business by the Purchasers following Closing in substantially the same manner as conducted on March 31, 2004 and as currently conducted by each Seller; and

(iv)                              segregate any proceeds received prior to the Closing from any insurance claims (the “Claims Proceeds”) into a separate account and retain any such Claims Proceeds in such account until the Closing; provided, however, that (A) any Claims Proceeds received under an insurance policy as a result of damage to or destruction of an Asset (other than Inventory) may, subject to Section 6.2(c)(ii), be used to replace the damaged or destroyed Asset and (B) any Claims Proceeds received under an insurance policy as a result of damage to or destruction of Inventory need not be segregated into a separate account and may be used or disbursed in each Seller’s sole discretion.

(d)                                 From the date hereof until the Closing:

(i)                                     promptly after any Seller or any Affiliate of any Seller acquires knowledge of any such matter, such Seller or its Affiliates shall advise the U.S. Purchaser in writing of (A) any material failure of Marconi or any Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder and (B) the occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of which would reasonably be likely to cause any condition to the obligations of the Purchasers to effect the Closing hereunder not to be satisfied or that calls into question the ability of Marconi or any Seller or their Affiliates to enter into or enforce any of the Related Agreements; and

(ii)                                  promptly after any Purchaser or any Affiliate of any Purchaser acquires knowledge of any such matter, the Purchasers shall advise MCI in writing of (A) any material failure of ▇▇▇▇▇▇▇ or any Purchaser to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder and (B) the occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of which would reasonably be like to cause any condition to the obligations of any Seller to effect the Closing hereunder not to be satisfied or that calls into question the ability of ▇▇▇▇▇▇▇ or any Purchaser to enter into or enforce any of the Related Agreements.

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6.3                                 Consents and Approvals.

(a)                                  On the terms and subject to the conditions of this Agreement, each party shall use its reasonable best efforts to cause the Closing to occur, including taking all reasonable actions necessary (i) to comply promptly with all legal requirements that may be imposed on it or any of its Affiliates with respect to the Closing, including complying with the HSR Compliance and the Mexican FCC Filing Requirement, and (ii) to obtain or make each other Consent of or with a Governmental Authority which if not obtained or made would reasonably be expected to have a material adverse effect on the ability of the parties to consummate the transactions contemplated hereby.  For purposes of this Section 6.3, the “reasonable best efforts” of the Purchasers and ▇▇▇▇▇▇▇ shall include, as applicable, (i) opposing any motion or action for a temporary, preliminary or permanent injunction against or other prohibition of the Closing and (ii) entering into a consent decree, other order or other agreement, or giving an assurance, commitment or undertaking, containing the applicable Purchaser’s or ▇▇▇▇▇▇▇’▇ agreement to hold separate and divest (pursuant to any terms as may be required by any Governmental Authority) the business, products and assets of any product or service lines of the Business and/or any other business, product line, service line, division or Subsidiary of such Purchaser or ▇▇▇▇▇▇▇ and/or any Affiliate of such Purchaser or ▇▇▇▇▇▇▇ and otherwise to take such other action as may be required by any Governmental Authority; provided, however, that, subject to Section 6.3(f), neither any Purchaser nor ▇▇▇▇▇▇▇ shall be required to hold separate and divest any assets, business, product line, service line or subsidiary if such divestiture would reasonably be expected to have (x) a material adverse effect on the Purchasers and ▇▇▇▇▇▇▇, as a whole or (y) a Business Material Adverse Effect.  Subject to the foregoing proviso, for these purposes, and without limiting the foregoing, if in the opinion of MCI or ▇▇▇▇▇▇▇ acting in good faith, any Governmental Authority will only, or is only likely to, give any Consent promptly, or at all, if such Governmental Authority shall receive assurances, commitments, undertakings or consent decrees (each, a “Relevant Assurance”) from the Purchasers or ▇▇▇▇▇▇▇, then the Purchasers or ▇▇▇▇▇▇▇ shall, in consultation with MCI, as soon as practicable, prepare and submit for approval to such Governmental Authority all such Relevant Assurances, having afforded MCI the opportunity to review any such draft Relevant Assurance before submission, execution, publication or release to the relevant Governmental Authority and with a view to there being as much time as possible available for review, comment and agreement with MCI.  The Purchasers shall be responsible for transferring, applying for, or otherwise obtaining (in the name of the Purchasers or any Affiliate of the Purchasers) all Permits that are required for the conduct of the Business by the Purchasers from and after the Closing, including the Permits set forth on Schedule 4.14 and the Environmental Permits set forth on Schedule 4.21(b), within the period of time required by any Law or Governmental Authority.

(b)                                 In furtherance and not limitation of the provisions of Section 6.3(a), each Seller and each Purchaser shall cooperate with the other parties with respect to obtaining and making the Consents of Governmental Authorities.  Each Seller and each Purchaser shall promptly provide drafts to the other parties, allow reasonably adequate time for comment by the other parties and consult promptly with the other parties with respect to the contents of all notifications, filings, submissions, further documentation and evidence

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to be submitted to all relevant Governmental Authorities.  Each Seller and each Purchaser shall, in each case where permitted by the relevant Governmental Authority, allow Persons nominated by the other parties to attend all meetings with Governmental Authorities and, where appropriate, to make oral submissions at such meetings.  Each Purchaser and each Seller shall (i) furnish to the other such necessary information and reasonable assistance as the other may require in connection with its preparation of any notification, filing, submission or further documentation or evidence that is necessary in obtaining and making Consents of Governmental Authorities and (ii) promptly disclose to the other all correspondence received from or sent to any relevant Governmental Authority in connection herewith and shall keep the other fully informed of any other related communication in whatever form with any of the relevant Governmental Authorities.  Each Purchaser and each Seller shall comply promptly with any inquiry or request for additional information from any relevant Governmental Authority in connection herewith and shall promptly provide any supplemental information requested in connection with the notifications, filings and/or submissions made hereunder for the purposes of obtaining and making the Consents of Governmental Authorities.

(c)                                  Each party shall, and shall cause its Affiliates to, use its reasonable best efforts (at its own expense) to obtain, and to cooperate in obtaining, all Consents from third parties in respect of Purchased Contracts to the extent such Purchased Contracts require such Consents as a result of the transactions contemplated hereby; provided, however, that the parties shall not be required to pay or commit to pay any amount to (or incur any obligation in favor of) any Person from whom any such Consent may be required (other than nominal filing or application fees) except that the parties shall share equally the consent or transfer fees applicable to the contracts set forth on Schedule 4.3(b) under the heading “IT Contracts”.  The Purchasers acknowledge that certain Consents with respect to the transactions contemplated by this Agreement may be required from parties to Contracts and that such consents and waivers have not been obtained.  Subject to Section 2.3, no Seller or any of their respective Affiliates shall have any liability whatsoever to the Purchasers arising out of or relating to the failure to obtain any Consents that may be required in connection with the transactions contemplated by this Agreement or because of the termination of any Purchased Contract as a result thereof.

(d)                                 Without limiting the terms of this Section 6.3, MCI and the U.S. Purchaser shall (i) within ten (10) days after the date of this Agreement file with the Antitrust Division and the FTC the notification and report form, if required by the HSR Act, for the transactions contemplated hereunder, requesting early termination of the waiting period thereunder, (ii) respond promptly to inquiries from the Antitrust Division or the FTC in connection with such filings, including providing any supplemental information that may be requested by the Antitrust Division or the FTC, and (iii) provide to the other party copies of any filings made under the HSR Act at the time they are filed with the Antitrust Division or the FTC.

(e)                                  Without limiting the terms of this Section 6.3, the applicable Seller and the applicable Purchaser will (i) within ten (10) days after the date of this Agreement file with the Mexican FCC the notification, if required by the Mexican Competition Law, for

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the transactions contemplated hereunder, and (ii) respond promptly to inquiries from the Mexican FCC in connection with such filings, including providing any supplemental information that may be requested by the Mexican FCC, and (iii) provide to the other party copies of any filings made under the Mexican Competition Law at the time they are filed with the Mexican FCC.

(f)                                    Notwithstanding anything in this Agreement to the contrary, ▇▇▇▇▇▇▇ and the Purchasers acknowledge and agree that ▇▇▇▇▇▇▇ and the Purchasers bear the sole responsibility to obtain any approvals required under the Mexican Competition Law.  ▇▇▇▇▇▇▇ and the Purchasers further acknowledge and agree that neither the absence of such approvals nor any action taken or required by the Mexican FCC or any other Governmental Authority in Mexico shall:

(i)                                     reduce the amount of the Purchase Price; or

(ii)                                  prevent or delay the Closing of the transactions contemplated herein, except that, in the case of an injunction or other legal restraint issued after the date hereof by a Governmental Authority preventing consummation of those transactions (or portions of transactions) with substantive effects in Mexico (the “Prevented Mexican Transactions”), (A) ▇▇▇▇▇▇▇ (on behalf of the Purchasers) shall nevertheless pay the full amount of the Purchase Price to the Sellers at the Closing in accordance with Section 3.1, (B) the Prevented Mexican Transactions shall be consummated upon the expiration of such injunction or other legal restraint or as soon as practicable thereafter and (C) the Closing Working Capital shall be determined in accordance with the terms of this Agreement as if the Prevented Mexican Transactions had been consummated at the Closing.

6.4                                 Marconi Name.

(a)                                  The Purchasers acknowledge that the Marconi Name is and shall remain the property of the Sellers or their Affiliates and that nothing in this Agreement shall transfer or shall operate as an agreement to transfer any right, title or interest in the Marconi Name to the Purchasers or any Affiliate of the Purchasers.

(b)           Subject to Sections 6.4(c) and 6.4(d), no Seller is granting any Purchaser a license to use, and neither the Purchasers nor any of their Affiliates shall have any title, right or interest in or to, the Marconi Name after the Closing.

(c)                                  The Purchasers agree:

(i)                                     that, as soon as reasonably practicable following the Closing, but in any event, within sixty (60) days following the Closing Date, no stationery, purchase order, invoice, receipt or other similar document containing any reference to the Marconi Name shall be printed, ordered or produced by or on behalf of the Purchasers or any of their Affiliates and that the Purchasers shall, and shall cause all of their applicable Affiliates to, (A) cease to use any stationery, purchase order, invoice, receipt or other similar document containing any reference to the Marconi Name or (B) only use such

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stationery, purchase order, invoice, receipt or other similar document after having deleted, pasted over or placed a sticker over such references;

(ii)                                  as soon as reasonably practicable following the Closing, and in any event no later than one hundred twenty (120) days after the Closing Date, to remove the Marconi Name from all premises, signs and vehicles which are included in the Assets or made available to the Purchasers in connection herewith;

(iii)                               that following the Closing, no brochures, leaflets or similar documents and no packaging containing any reference to the Marconi Name shall be printed, ordered or produced by or on behalf of the Purchasers or any of their Affiliates and, with respect to existing brochures, leaflets or similar documents and packaging containing a reference to the Marconi Name, that the Purchasers shall use their reasonable efforts to ensure that, as soon as reasonably practicable but in no event later than sixty (60) days following the Closing Date, such references are deleted, pasted over or a sticker is put over such references; and

(iv)                              that they shall use their reasonable efforts to ensure that, from and following the Closing, no stocks, goods, products, services or software are manufactured, produced or provided by or on behalf of the Purchasers or any of their Affiliates showing, having marked thereon or using the Marconi Name.

(d)                                 The Purchasers shall have the right to continue to use “▇▇▇▇▇▇▇.▇▇▇” as an e-mail address for Transferred Employees for a period of three (3) months following the Closing.

(e)                                  Notwithstanding any other provision of this Agreement, it is understood and agreed that the remedy of indemnity payments pursuant to Article XII and other remedies at law would be inadequate in the case of any breach of the covenants contained in this Section 6.4.  Accordingly, each Seller shall be entitled, without limiting its other remedies and without the necessity of proving actual damages or posting any bond, to equitable relief, including the remedy of specific performance or injunction, with respect to any breach or threatened breach of such covenants and each Purchaser (on behalf of itself and its Affiliates) consents to the entry thereof.

6.5                                 Brokers.  Regardless of whether the Closing shall occur, (a) Marconi shall indemnify each Purchaser and its Affiliates against, and hold each Purchaser and its Affiliates harmless from, any and all liability for any brokers’ or finders’ fees or other commissions arising with respect to brokers or finders retained or engaged by MCI or any of its Affiliates in respect of the transactions contemplated by this Agreement, and (b) ▇▇▇▇▇▇▇ shall indemnify each Seller and its Affiliates against, and hold each Seller and its Affiliates harmless from, any and all liability for any brokers’ or finders’ fees or other commissions arising with respect to brokers or finders retained or engaged by such Purchaser or any of its Affiliates in respect of the transactions contemplated by this Agreement.

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6.6                                 Preservation of Books and Records; Access and Assistance.

(a)                                  Upon reasonable request and during normal business hours, the Purchasers and the Sellers shall reasonably cooperate with each other, and shall cause their respective representatives to reasonably cooperate with each other, after the Closing to ensure the orderly transition of the Business from the Sellers to the Purchasers and to minimize any disruption to the Business and the other respective businesses of the Sellers and the Purchasers that might result from the transactions contemplated hereby.  Notwithstanding the previous sentence, no party shall be required to incur material out-of-pocket expenses of any kind in connection with complying with this Section 6.6(a).

(b)                                 For a period of ten (10) years after the Closing Date, the Purchasers shall preserve and retain all Information and Records and other accounting, legal, auditing and other books and records (including any documents relating to any governmental or non-governmental claims, actions, suits, proceedings or investigations with respect to any Seller) relating to (i) the conduct of the Business or (ii) the ownership of the Assets on or prior to the Closing Date.  Notwithstanding the foregoing, during such ten (10) year period, the Purchasers may dispose of any such books and records which are offered to, but not accepted by, MCI.

(c)                                  After the Closing Date, the Purchasers shall permit each Seller and its authorized representatives to have reasonable access to, and to inspect and copy, all Information and Records and other books and records referred to in Section 6.6(b) and to meet with officers and employees of the Purchasers on a mutually convenient basis in order to obtain explanations with respect to such Information and Records and books and records and to obtain additional information.

(d)                                 In the event and for so long as any party hereto is contesting or defending against any third-party charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving any Asset or the Business, each other party hereto shall use its reasonable best efforts to, in a timely manner, (A) fully cooperate with it and its counsel in, and assist it and its counsel with, the contest or defense, (B) make available its personnel (including for purposes of fact finding, consultation, interviews, depositions and, if required, as witnesses), and (C) provide such information, testimony and access to its books and records, in each case as shall be reasonably requested in connection with the contest or defense, all at the sole cost and expense (not including employee compensation and benefits costs) of the contesting or defending party (unless the contesting or defending party is entitled to indemnification therefor under Article XII).  For the avoidance of doubt, this Section 6.6(d) shall not apply with respect to disputes between the parties hereto.

6.7                                 Insurance.  Subject to the following two sentences, the Purchasers acknowledge that (a) all of the insurance policies maintained by MCI or any of its Affiliates prior to the Closing Date will be terminated with respect to the Business effective as of the Closing Date and

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(b) upon such termination, the  Business will cease to be covered under such policies and the Purchasers will have to obtain replacement coverage (including coverage as the Purchasers deem appropriate for the Assets, the operation of the Business and the satisfaction of the Assumed Obligations).  Upon the written request of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and the Sellers shall use their reasonable efforts to cooperate with ▇▇▇▇▇▇▇ and its Affiliates in efforts ▇▇▇▇▇▇▇ and its Affiliates undertake to investigate and pursue potential claims under policies of insurance of Marconi or third parties in effect at any time prior to the Closing Date which may relate to the Assumed Obligations.  ▇▇▇▇▇▇▇ shall bear all out-of-pocket expenses (including all deductibles and/or retentions) incurred by Marconi and any Seller in connection with such cooperation and shall reimburse Marconi and any Seller for any increase in insurance premiums imposed on Marconi or such Seller that can reasonably be attributed to the use by ▇▇▇▇▇▇▇ or its Affiliates of Marconi’s or its Affiliate’s insurance under this Section 6.7.

6.8                                 Confidentiality.

(a)                                  Each Purchaser acknowledges that the information being provided to it in connection with the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement, the terms of which are incorporated herein by reference.  Effective upon, and only upon, the Closing, the Confidentiality Agreement shall terminate with respect to information relating solely to (i) the Business and/or (ii) the Assets.  Each Purchaser acknowledges that any and all other information provided to it prior to the Closing by MCI or any of its Affiliates or representatives shall remain subject to the terms and conditions of the Confidentiality Agreement after the Closing.

(b)                                 Each Purchaser acknowledges that, subsequent to the Closing, it may be furnished with, receive or otherwise have access to, information associated with the Other Marconi Businesses, including information contained in Intellectual Property of the Other Marconi Businesses (collectively, “Confidential Information”).  Each Purchaser further acknowledges that certain Transferred Employees that such Purchaser will hire in connection with the transactions contemplated hereby may have obtained Confidential Information, and that these employees have previously signed confidentiality agreements which contain covenants prohibiting the use or disclosure of such Confidential Information.

(c)                                  Subsequent to the Closing, the Purchasers shall not disclose, and shall maintain the confidentiality of, all Confidential Information, except to the extent such information can be shown to have been (i) previously and lawfully known on a nonconfidential basis by the Purchasers, (ii) in the public domain through no fault of the Purchasers or (iii) later lawfully acquired by the Purchasers from sources other than the Sellers or their Affiliates which are not prohibited from disclosing such information by a legal, contractual, fiduciary or other obligation.  If any Purchaser is requested or required (by oral questions, interrogatories, requests for information, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, it is agreed that such Purchaser will provide MCI with prompt written notice of such request(s) so that MCI may seek an appropriate protective order and/or waive compliance with the provisions of this Section 6.8.  If, failing the entry of a protective order or the receipt of a waiver hereunder, such Purchaser is, in the opinion of counsel, legally compelled to

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disclose the Confidential Information under pain of liability for contempt or other censure or penalty, such Purchaser may disclose only that portion of such information as is legally required without liability hereunder; provided, that such Purchaser agrees to exercise its reasonable best efforts to obtain assurance that confidential treatment will be accorded such information.  Each Purchaser shall use at least the same degree of care to safeguard and to prevent the disclosure, publication, dissemination, destruction, loss or alteration of the Confidential Information as it employs to avoid unauthorized disclosure, publication, dissemination, destruction, loss, or alteration of its own information (or information of its customers) of a similar nature, but in no case less than reasonable care.  The Purchasers shall not (i) use any Confidential Information in any manner, (ii) make any copies of any Confidential Information, (iii) acquire any right in or assert any Lien against any Confidential Information, (iv) sell, assign, transfer, lease, license or otherwise dispose of any Confidential Information to third parties or commercially exploit any Confidential Information, including through derivative works, or (v) refuse for any reason (including a default or breach of this Agreement or any Related Agreement by any Seller) to promptly provide any tangible embodiments of the Confidential Information (including copies thereof) to MCI if requested to do so, in the form reasonably requested.  The Purchasers agree to respect the terms and conditions of the confidentiality agreements referenced in Section 6.8(b) above, including by not seeking or requiring the disclosure of any Confidential Information by such employees in breach of such confidentiality agreements.

(d)                                 Nothing contained in this Agreement shall be construed as obligating MCI or any of its Affiliates to disclose any Confidential Information to the Purchasers, or as granting to or conferring on the Purchasers, expressly or impliedly, any right, title, interest or license to any Confidential Information or any components thereof.  Nothing in this Agreement shall preclude the Sellers from providing a copy of this Agreement to the Pension Benefit Guaranty Corporation.

(e)                                  Notwithstanding any other provision of this Agreement, it is understood and agreed that the remedy of indemnity payments pursuant to Article XII and other remedies at law may be inadequate in the case of any breach of the covenants contained in this Section 6.8.  Accordingly, each Seller shall be entitled to seek equitable relief, including the remedies of specific performance and injunction, with respect to any breach or attempted breach of such covenants.

6.9                                 Guarantees.  The Purchasers will cooperate with the Sellers in obtaining, and use their respective reasonable best efforts to obtain, a full and unconditional release of all Marconi Guarantees, including by agreeing to enter into a replacement guarantee in favor of any third party creditor who is a beneficiary of such Marconi Guarantee.

6.10                           Taxes.

(a)                                  Cooperation.  After the Closing, each Seller and each Purchaser shall reasonably cooperate in preparing and filing all Tax Returns to the extent such filing requires providing necessary information, records and documents relating to (i) the

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Assets or (ii) the Business.  Each Seller and each Purchaser shall cooperate in the same manner in defending or resolving any audit, examination or litigation relating to Taxes.

(b)                                 Property Taxes.  All real estate, personal property, and ad valorem Taxes relating to the Assets for all taxable periods ending on or before the Closing Date shall be paid by the Sellers.  All such Taxes for a taxable period which includes (but does not end on) the Closing Date shall be prorated to the Closing Date taking into account any payments of such Taxes by any party.  In connection with such proration, in the event the actual Tax figures for the year in which the Closing occurs are not available at the Closing Date, proration of Taxes shall be based on the actual Taxes for the preceding year for which actual Tax figures are available and, when the actual Taxes for the year in which the Closing occurs become available, the parties shall readjust the proration in question and the party that received a credit or payment in excess of its proper share shall promptly pay the other appropriate party the amount of the excess.  The amount due a party as a result of such proration shall be paid to the other party at the Closing.  At such time that the actual Tax figures are available, such Taxes shall be prorated based on such actual figures and the party who paid less than its prorated share of such Taxes shall pay the other appropriate party such deficiency within ten (10) days of the determination of the actual proration.

(c)                                  Taxes Related to Transaction.  The Purchasers, on the one hand, and the Sellers, on the other hand, shall equally bear the cost of all sales, use, value-added or transfer Taxes, arising out of the transfer of the Assets pursuant to this Agreement; provided, however, that any value-added Taxes imposed by a Governmental Authority in Mexico for which the Mexican Purchaser is entitled to a credit shall be borne solely by the Mexican Purchaser (it being agreed that the Sellers shall reimburse the Mexican Purchaser one-half of such Taxes to the extent the Mexican Purchaser has not received a refund or other credit of such Taxes within one year after the Mexican Purchaser has filed for a refund or credit, the Mexican Purchaser being required to reimburse the Sellers one half of any refund or credit subsequently received).  The Sellers shall pay all costs and expenses incurred in connection with transferring the Assets, except for the Purchasers’ share of the Taxes referred to in the preceding sentence, and except that the Purchasers shall pay the costs and expenses (except for the Sellers’ share of the Taxes referred to in the preceding sentence) incurred to record the documents.  The sales, use, value-added and transfer Tax Returns required by reason of said transfer shall be timely prepared by the party legally obligated to make such filing.  The parties agree to cooperate with each other in connection with the preparation and filing of such Tax Returns, in obtaining all available exemptions from such sales, use,  value-added and transfer Taxes and in timely providing each other with resale certificates and any other documents necessary to satisfy any such exemptions.

(d)                                 Canadian Taxes.  Marconi Canada and the Canadian Purchaser agree to make a joint election under Section 167 of the Excise Tax Act (Canada) and any provincial equivalent.  Furthermore, Marconi Canada and the Canadian Purchaser agree to make a joint election, under Section 22 of the Income Tax Act (Canada) and any provincial equivalent, with respect to any or all of the Accounts Receivable owned by Marconi Canada and included in the Assets.

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6.11                           Agreement Not to Compete.

(a)                                  For a period of five (5) years from the Closing Date, the Sellers shall not, and shall cause their Affiliates not to, directly or indirectly:

(i)                                     engage either as a principal or for its own account or solely or jointly with others or as a stockholder of any corporation or joint stock association, in competition with the Purchasers, in the Restricted Business anywhere in the world; or

(ii)                                  engage either as a principal or for its own account or solely or jointly with others or as a stockholder of any corporation or joint stock association, in competition with the Purchasers, in the Restricted Services in North or South America; or

(iii)                               solicit or encourage any Transferred Employee, whose base salary at the date hereof is in excess of $75,000, to leave the employment of a Purchaser or any of its Affiliates, except for a person who responds to a public advertisement which is not solely aimed at such employee or Transferred Employees or who is first approached when no longer an employee of a Purchaser or any of its Affiliates.

(b)                                 Notwithstanding the terms of Section 6.11(a), nothing in Section 6.11(a) shall prohibit or otherwise restrict any Seller or its Affiliates from:

(i)                                     carrying on or developing any business (including the Other Marconi Businesses), other than the Restricted Business and the Restricted Services, anywhere in the world;

(ii)                                  reselling any products that compete with the products of the Restricted Business; provided, that (A) such products are not designed, developed or manufactured by any Seller or its Affiliates and (B) the resale of such products is carried on pursuant to Contracts relating primarily to the provision by any Seller or its Affiliates of (x) any services other than the Restricted Services or (y) any products that are not included in the Restricted Business;

(iii)                               solely with respect to Marconi Federal and Marconi Middle East, reselling any OPPS products or any products that compete with the products included in the Restricted Business; provided, that such products are not designed, developed or manufactured by Marconi Federal or Marconi Middle East (as applicable);

(iv)                              solely with respect to Marconi Federal, engaging in the Restricted Services;

(v)                                 designing, developing, manufacturing, marketing or selling enclosures (A) as a component part of the electronic systems sold by any Seller or its Affiliates or (B) pursuant to any warranty obligation;

(vi)                              designing, developing, manufacturing, marketing or selling connection or protection products (A) as a component part of the electronic systems sold by any Seller or its Affiliates or (B) pursuant to any warranty obligation;

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(vii)                           designing, developing, manufacturing, marketing or selling power systems or power products (A) as a component part of the electronic systems sold by any Seller or its Affiliates or (B) pursuant to any warranty obligation;

(viii)                        designing, developing, manufacturing, selling or installing hardware or software test systems for the purpose of maintaining line service to subscribers and qualifying lines for application of broadband technology; provided, that (A) such hardware or test systems are used for diagnostic, interoperability or test purposes with respect to any products of any Seller or its Affiliates or (B) such hardware or test systems are sold (x) as a component part of the electronic systems sold by any Seller or its Affiliates or (y) pursuant to any warranty obligation; or

(ix)                                owning (A) less than an aggregate of five percent (5%) of any class of stock of a Person engaged, directly or indirectly, in all or a portion of the Restricted Business; or (B) less than ten percent (10%) in value of the indebtedness of a Person engaged, directly or indirectly, in all or a portion of the Restricted Business.

(c)                                  Notwithstanding any other provision of this Agreement, it is understood and agreed that the remedy of indemnity payments pursuant to Article XII and other remedies at Law may be inadequate in the case of any breach of the covenants contained in Section 6.11(a).  Accordingly, the Purchasers shall be entitled to seek equitable relief, including the remedy of specific performance, with respect to any breach or attempted breach of such covenants.

(d)                                 Notwithstanding anything to the contrary, Section 6.11(a) shall not apply to any third party which (i) acquires a majority equity interest in Marconi or in any of the Affiliates of Marconi or (ii) acquires all or a portion of the business or assets of Marconi or any of the Affiliates of Marconi, regardless of the form of such transaction, and Section 6.11(a) shall not apply to any of the Affiliates of such third party (other than the entity Marconi and the entities which were Affiliates of Marconi prior to such acquisition).

(e)                                  The Sellers acknowledge that the Purchasers would not have entered into this Agreement absent the provisions of this Section 6.11.

6.12                           Access Non-Compete Restrictions.  In accordance with Section 4.4 of the Access Cross License Agreement and Section 6.11 of the Access Asset Purchase Agreement, the Purchasers hereby agrees that, for a period commencing on the Closing Date and terminating on February 20, 2009, the Purchasers shall be subject to, and the Purchasers shall comply with, Section 6.11 of the Access Asset Purchase Agreement (the “Access Non-Compete Restrictions”); provided, however, that the Access Non-Compete Restrictions shall apply to the Purchasers to the extent and only to the extent of the products, materials and services of the Business or the Assets (or Evolutions thereof) that after the Closing continue to be subject to the licenses under the Access Cross License Agreement.

6.13                           CSC.  [***].

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6.14                           Notices of Certain Events.  Between the date hereof and the Closing, MCI and the U.S. Purchaser, upon becoming aware thereof, each shall promptly notify the other party of:

(a)                                  any written notice or other written communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(b)                                 any written notice or other written communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;

(c)                                  any Proceedings commenced or, to its knowledge threatened against, such party (i) relating to or involving or otherwise affecting the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.11 or (ii) relating to the consummation of the transactions contemplated by this Agreement; and

(d)                                 the damage or destruction by fire or other casualty of any Asset or part thereof or in the event that any Asset or part thereof becomes the subject of any proceeding or, to the Sellers’ knowledge, threatened proceeding for the taking thereof or any part thereof or of any right relating thereto by condemnation, eminent domain or other similar governmental action.

6.15                           Release of Liens.

(a)                                  Marconi, MCI and Marconi IP shall take all actions required of Marconi, MCI and Marconi IP under the Indentures and the applicable security agreements related thereto to cause the Liens encumbering the Assets owned by MCI and Marconi IP under the Indentures and the applicable security agreements related thereto to be terminated and released at the Closing.

(b)                                 Each Seller shall take all actions required of such Seller to cause any other Liens encumbering the Assets (other than Permitted Liens) to be terminated and released at the Closing.  Each Seller shall use its respective reasonable efforts to cause all other actions necessary for such Liens to be terminated and released at the Closing to be taken at or prior to the Closing.  Within one Business Day after the Closing Date, each Seller, as applicable, shall make all filings (including UCC-3s), or use their reasonable efforts to cause the holders of the Liens encumbering the Assets (other than Permitted Liens) to make such filings, in all local, state and foreign jurisdictions necessary to publicly notice the termination and release of such Liens.  All such releases and filings shall be in the form and substance reasonably acceptable to the Purchasers.

6.16                           Quarterly Management Accounts.  MCI shall deliver to the Purchasers the June Balance Sheet and June Income Statement as soon as available and in any event no later than July 15, 2004.

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6.17                           Employee IP Agreements.  Prior to the Closing, the Sellers shall use their respective reasonable best efforts to obtain appropriate executed intellectual property assignment agreements with the employees listed on Schedule 4.12(c).

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF ▇▇▇▇▇▇▇ AND THE PURCHASERS

The obligations of ▇▇▇▇▇▇▇ and the Purchasers under Articles II, III, and IX are subject to the satisfaction or waiver by ▇▇▇▇▇▇▇ of the following conditions precedent on or before the Closing Date:

7.1                                 Warranties True.  The representations and warranties of Marconi and each Seller contained in this Agreement and in any certificate delivered by Marconi or any Seller pursuant hereto (a) that are qualified by materiality or Business Material Adverse Effect shall be true at and as of the Closing Date as if made at and as of such date (except to the extent that any such representation or warranty is made solely as of the date hereof or as of another date earlier than the Closing Date, in which case such representation or warranty shall be true as of such date), and (b) that are not qualified by materiality or Business Material Adverse Effect shall be true in all material respects at and as of the Closing Date as if made at and as of such time (except to the extent that any such representation or warranty is made solely as of the date hereof or as of another date earlier than the Closing Date, in which case such representation and warranty shall be true in all material respects as of such date).

7.2                                 Compliance with Agreements and Covenants.  Marconi and each Seller shall have in all material respects performed and complied with all of its respective covenants and obligations contained in this Agreement to be performed and complied with by it on or prior to the Closing Date.

7.3                                 Certificate of Compliance.  Marconi shall have delivered to the Purchasers a certificate of Marconi dated as of the Closing Date, executed by a duly authorized officer of Marconi, certifying as to the satisfaction of the conditions set forth in Section 7.1 and Section 7.2.

7.4                                 HSR Act.  Any applicable waiting period under the HSR Act shall have expired or been earlier terminated without action by the Antitrust Division or the FTC to prevent consummation of the transactions contemplated by this Agreement.

7.5                                 Mexican FCC Filing Requirement.  Any Mexican FCC Filing Requirement relating to the transactions contemplated by this Agreement shall have been made.

7.6                                 No Injunctions or Other Legal Restraints.  No injunction or other legal restraint or prohibition enacted, entered, promulgated, enforced or issued by any Governmental Authority in the United States of America or Canada preventing the consummation of the Closing shall have come into effect after the date of this Agreement and continue to be in effect.

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7.7                                 Absence of Proceedings.  There shall not be instituted or pending any Proceeding brought by any Governmental Authority in the United States of America or Canada challenging or seeking to restrain or prohibit the Closing or any other transaction contemplated by this Agreement or the Related Agreements or seeking to obtain from the Purchasers or any of their Affiliates in connection with the Closing any damages that are material in relation to the Purchasers and their Affiliates, taken as a whole.

7.8                                 Related Agreements.  The Purchasers shall have received from Marconi, each Seller,  Marconi Federal and Marconi Middle East (as applicable) a duly executed copy of each Related Agreement to which such Person is a party.

7.9                                 Release of Liens.  The Liens on the Assets, other than Permitted Liens, shall have been terminated and released and the Release Agreement shall have been executed by the parties thereto and delivered to the Purchasers.

7.10                           Required Consents.  The Sellers shall have received all Consents set forth on Schedule 7.10 (the “Required Consents”) and no such Required Consents shall have been withdrawn.

7.11                           Title Insurance.  The Purchasers shall have received at their own cost owner’s title insurance policies, or binders to issue the same (or the equivalent thereof in the applicable State or country), effective as of the Closing Date issued as of the date of recording of the Special Warranty Deeds, respectively, and in amounts reasonably satisfactory to the Purchasers insuring or committing to insure, at customary or market premium rates, good and marketable title to (or title opinion or other evidence as applicable in the applicable State or country evidencing title to) the estates described in the Title Commitments, respectively, subject only to the Permitted Liens.  Notwithstanding the foregoing, in no event may an act or omission of any Purchaser cause the failure of the condition precedent set forth in this Section 7.11.

7.12                           Additional Governmental Consents.  All actions by or in respect of or filings with any Governmental Authority in the United States of America or Canada required to permit the consummation of the Closing shall have been taken, made or obtained other than such actions or filings which, if not taken or made, would not reasonably be expected to have a Business Material Adverse Effect.

7.13                           No Divestiture of Assets.  In connection with the transactions contemplated hereby, there shall not be instituted or pending any action or proceeding by any Person before any Governmental Authority, in the United States of America or Canada, seeking, nor shall any injunction or other legal restraint or prohibition be enacted, entered, promulgated, enforced or issued by any such Governmental Authority the effect of which is, (a) to restrain, prohibit or otherwise interfere with the ownership or operation by any Purchaser or any of its Affiliates of all or any material portion of the Assets or the business or assets of any Purchaser or any of its Affiliates which restraint, prohibition or interference would reasonably be expected to (i) have a material adverse effect on ▇▇▇▇▇▇▇ and the Purchasers, as a whole or (ii) a Business Material Adverse Effect or (b) to compel any Purchaser or any of its Affiliates to dispose of all or any material portion of the Assets or the business or assets of any Purchaser or any of its Affiliates

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which disposal would reasonably be expected to (i) have a material adverse effect on ▇▇▇▇▇▇▇ and the Purchasers, as a whole, or (ii) a Business Material Adverse Effect.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF MARCONI AND THE SELLERS

The obligations of Marconi and each Seller under Articles II, III and IX are subject to the satisfaction or waiver by Marconi of the following conditions precedent on or before the Closing Date:

8.1                                 Warranties True.  The representations and warranties of ▇▇▇▇▇▇▇ and each Purchaser contained in this Agreement and in any certificate delivered by ▇▇▇▇▇▇▇ or any Purchaser pursuant hereto (a) that are qualified by materiality shall be true at and as of the Closing Date as if made at and as of such date (except to the extent that any such representation or warranty is made solely as of the date hereof or as of another date earlier than the Closing Date, in which case such representation or warranty shall be true as of such date), and (b) that are not qualified by materiality shall be true in all material respects at and as of the Closing Date as if made at and as of such time (except to the extent that any such representation or warranty is made solely as of the date hereof or as of another date earlier than the Closing Date, in which case such representation and warranty shall be true in all material respects as of such date).

8.2                                 Compliance with Agreements and Covenants.  ▇▇▇▇▇▇▇ and each Purchaser shall have in all material respects performed and complied with all of its covenants and obligations contained in this Agreement to be performed and complied with by it on or prior to the Closing Date.

8.3                                 Certificate of Compliance.  ▇▇▇▇▇▇▇ shall have delivered to the Sellers a certificate of ▇▇▇▇▇▇▇ dated as of the Closing Date, executed by ▇▇▇▇▇▇▇, certifying as to the satisfaction of the conditions set forth in Sections 8.1 and 8.2.

8.4                                 HSR Act.  Any applicable waiting period under the HSR Act shall have expired or been earlier terminated without action by the Antitrust Division or the FTC to prevent the consummation of the transactions contemplated by this Agreement.

8.5                                 Mexican FCC Filing Requirement.  Any Mexican FCC Filing Requirement relating to the transactions contemplated by this Agreement shall have been made.

8.6                                 No Injunctions or Other Legal Restraints.  No injunction or other legal restraint or prohibition enacted, entered, promulgated, enforced or issued by any Governmental Authority preventing the consummation of the Closing shall have come into effect after the date of this Agreement and continue to be in effect.

8.7                                 Absence of Proceedings.  There shall not be instituted or pending any Proceeding brought by any Governmental Authority challenging or seeking to restrain or prohibit the Closing or any other transaction contemplated by this Agreement or the Related Agreements or

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seeking to obtain from any Seller or any of its Affiliates in connection with the Closing any damages that are material in relation to the Sellers and their Affiliates, taken as a whole.

8.8                                 Related Agreements.  The Sellers shall have received from ▇▇▇▇▇▇▇ and each Purchaser a duly executed copy of each Related Agreement to which such Purchaser is a party.

8.9                                 Purchase Price.  The Sellers shall have received from ▇▇▇▇▇▇▇ (on behalf of the Purchasers) its respective portion of the Purchase Price as provided in Section 3.1(a) in accordance with the Purchase Price Allocation Statement.

8.10                           Consent of PBGC.  MCI shall have received the consent of the Pension Benefit Guaranty Corporation in connection with the transactions contemplated hereby if such consent is required pursuant to the Memorandum of Understanding, dated February 13, 2004, by and between Marconi plc, Marconi and the Pension Benefit Guaranty Corporation.

8.11                           Additional Governmental Consents.  All actions by or in respect of or filings with any governmental body, agency, official or authority in the United States of America or Canada required to permit the consummation of the Closing shall have been taken, made or obtained other than such actions or filings which, if not taken or made, would not reasonably be expected to have a Business Material Adverse Effect.

ARTICLE IX

CLOSING

9.1                                 Closing.  Subject to Articles VII and VIII, the Closing shall take place at the offices of Mayer, Brown, ▇▇▇▇ & Maw LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. (central standard time) on the third Business Day after all the conditions set forth in Articles VII and VIII have been satisfied (or, to the extent permitted, waived by the parties entitled to the benefits thereof), or such other day as may be mutually agreed by ▇▇▇▇▇▇▇ and Marconi.  Once the Closing occurs, the Closing, and all transactions to occur at the Closing, shall be deemed to have taken place at, and shall be effective as of, 12:01 a.m. (central standard time) on the Closing Date.

9.2                                 Deliveries by the Sellers.  At the Closing, Marconi and each Seller (as applicable) shall, and MCI and its Affiliates shall cause Marconi Federal and Marconi Middle East (as applicable) to, deliver to the Purchasers the following:

(a)                                  the ▇▇▇▇ of Sale duly executed by each Seller;

(b)                                 the Assignment and Assumption Agreement duly executed by each Seller;

(c)                                  the Special Warranty Deeds duly executed by MCI or Marconi Canada (as applicable), for each Transferred Owned Real Property;

(d)                                 the Patent Assignment duly executed by Marconi IP;

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(e)                                  the Trademark Assignment duly executed by the Sellers;

(f)                                    the Transition Services Agreement duly executed by MCI;

(g)                                 the License Agreement duly executed by Marconi IP and MCI;