<PAGE>

                                     EXHIBIT

                              ITEM 14. (a)(3) 3(d)



<PAGE>




                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                   TELMARK LLC

                  This Limited Liability  Company  Agreement  (together with the
schedules attached hereto,  this "Agreement") of Telmark LLC, a Delaware limited
liability  company (the  "Company"),  is entered into by Agway  Holdings Inc., a
Delaware  corporation,  as the sole member (the "Initial  Member").  Capitalized
terms used  herein and not  otherwise  defined  have the  meanings  set forth on
Schedule A hereto.
----------

                  The Initial Member, by execution of this Agreement, (i) hereby
forms and continues the Company as a limited  liability  company pursuant to and
in  accordance  with the  Delaware  Limited  Liability  Company  Act (6 Del.  C.
                                                                        --------
ss.18-101,  et seq.), as amended from time to time (the "Act"),  and (ii) hereby
            -- ----
agrees as follows:

         1.       Name.
                  -----

                  The name of the limited  liability  company  heretofore formed
and continued hereby is Telmark LLC.

         2.       Principal Business Office.
                  --------------------------

                  The principal  business office of the Company shall be located
at 333  Butternut  Drive,  DeWitt,  New York,  or at such other  location as may
hereafter be determined by the Member.

         3.       Registered Office.
                  ------------------

                  The  address of the  registered  office of the  Company in the
State of Delaware is The Corporation  Trust Company,  Corporation  Trust Center,
1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

         4.       Registered Agent.
                  -----------------

                  The name and  address of the  registered  agent of the Company
for  service  of  process  on  the  Company  in the  State  of  Delaware  is The
Corporation  Trust  Company,  Corporation  Trust  Center,  1209  Orange  Street,
Wilmington, New Castle County, Delaware 19801.



<PAGE>



         5.       Members.
                  --------

                  The name and the mailing address of the Initial Member are set
forth on Schedule B attached hereto.
         ----------


         6.       Certificates.
                  -------------

                  Daniel  J.  Edinger,  as an  "authorized  person"  within  the
meaning of the Act, shall execute, deliver and file the Certificate of Formation
with the  Secretary  of State of the State of  Delaware.  Upon the filing of the
Certificate  of Formation  with the Secretary of State of the State of Delaware,
his powers as an  "authorized  person"  shall  cease,  and the Member  thereupon
became the designated  "authorized  person" and shall continue as the designated
"authorized  person"  within the  meaning  of the Act.  The Member or an Officer
shall  execute,  deliver  and file any other  certificates  (and any  amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in New York State and in any other jurisdiction in which the Company may wish to
conduct business.

         7.       Purposes.
                  ---------

                  The  Company is formed for the object and  purpose of, and the
nature of the business to be conducted and promoted by the Company is,  engaging
in any lawful act or  activity  for which  limited  liability  companies  may be
formed under the Act.

         8.       Powers.
                  -------

                  The Company (i) shall have and exercise all powers  necessary,
convenient or  incidental  to accomplish  its purposes as set forth in Section 7
and (ii) shall have and  exercise  all of the powers and rights  conferred  upon
limited liability companies formed pursuant to the Act.

         9.       Management.
                  -----------

                  a. Board of Directors. The business and affairs of the Company
                     -------------------
shall be managed by or under the direction of a Board of one or more  Directors.
The Member may  determine  at any time in its sole and absolute  discretion  the
number of Directors to constitute the Board. The authorized  number of Directors
may be increased or decreased by the Member at any time in its sole and absolute
discretion.  The initial number of Directors shall be six. The initial Directors
shall be the following individuals:

                  Daniel J. Edinger
                  Andrew J. Gilbert
                  Samuel F. Minor
                  Peter J. O'Neill
                  Gary K. Van Slyke
                  William W. Young



<PAGE>



Each  Director  elected,  designated  or  appointed  shall hold  office  until a
successor  is elected and  qualified  or until such  Director's  earlier  death,
resignation  or removal.  Each Director shall execute and deliver the Management
Agreement. Directors need not be Members.

                  b. Powers.  The Board of Directors  shall have the power to do
                     -------
any and all acts  necessary,  convenient or incidental to or for the furtherance
of the purposes described herein,  including all powers, statutory or otherwise.
The Board of Directors has the authority to bind the Company.

                  c. Meeting of the Board of  Directors.  The Board of Directors
                     -----------------------------------
of the Company may hold  meetings,  both regular and special,  within or outside
the State of Delaware.  Regular meetings of the Board may be held without notice
at such time and at such place as shall from time to time be  determined  by the
Board.  Special meetings of the Board may be called by the President on not less
than one day's notice to each Director by telephone,  facsimile,  mail, telegram
or any other means of communication, and special meetings shall be called by the
President  or  Secretary  in like  manner and with like  notice upon the written
request of any one or more of the Directors.

                  d. Quorum;  Acts of the Board. At all meetings of the Board, a
                     ---------------------------
majority of the  Directors  shall  constitute  a quorum for the  transaction  of
business  and,  except as  otherwise  provided  in any other  provision  of this
Agreement,  the act of a majority  of the  Directors  present at any  meeting at
which there is a quorum shall be the act of the Board.  If a quorum shall not be
present at any meeting of the Board,  the Directors  present at such meeting may
adjourn the meeting from time to time, without notice other than announcement at
the meeting,  until a quorum shall be present.  Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all members of the Board or committee,  as the case may be,
consent  thereto in  writing,  and the  writing or  writings  are filed with the
minutes of proceedings of the Board or committee.

                  e.  Electronic  Communications.  Members of the Board,  or any
                      ---------------------------
committee  designated by the Board, may participate in meetings of the Board, or
any  committee,  by means of  telephone  conference  or  similar  communications
equipment  that  allows all  persons  participating  in the meeting to hear each
other, and such  participation in a meeting shall constitute  presence in person
at  the  meeting.  If  all  the  participants  are  participating  by  telephone
conference or similar communications  equipment,  the meeting shall be deemed to
be held at the principal place of business of the Company.

                  f. Committees of Directors.
                     ------------------------
                     (i) The Board may,  by  resolution  passed by a majority of
the whole Board, designate one or more committees,  each committee to consist of
one or more of the Directors of the Company. The Board may designate one or more
Directors as alternate  members of any committee,  who may replace any absent or
disqualified member at any meeting of the committee.




<PAGE>



                     (ii) In the  absence or  disqualification  of a member of a
committee,  the  member  or  members  thereof  present  at any  meeting  and not
disqualified from voting,  whether or not such members  constitute a quorum, may
unanimously  appoint  another  member of the Board to act at the  meeting in the
place of any such absent or disqualified member.

                     (iii) Any such  committee,  to the extent  provided  in the
resolution  of the  Board,  shall  have  and may  exercise  all the  powers  and
authority  of the Board in the  management  of the  business  and affairs of the
Company.  Such  committee or committees  shall have such name or names as may be
determined from time to time by resolution  adopted by the Board. Each committee
shall keep regular minutes of its meetings and report the same to the Board when
required.

                  g. Compensation of Directors;  Expenses.  The Board shall have
                     -------------------------------------
the authority to fix the  compensation  of Directors.  The Directors may be paid
their expenses,  if any, of attendance at meetings of the Board,  which may be a
fixed sum for  attendance  at each  meeting  of the Board or a stated  salary as
Director.  No such payment shall  preclude any Director from serving the Company
in any other capacity and receiving compensation therefor. Members of special or
standing  committees may be allowed like  compensation  for attending  committee
meetings.

                  h. Removal of Directors.  Unless otherwise  restricted by law,
                     ---------------------
any Director or the entire Board of  Directors  may be removed,  with or without
cause, by the Member,  and, any vacancy caused by any such removal may be filled
by action of the Member.

                  i.  Directors  as Agents.  To the  extent of their  powers set
                      --------------------- 
forth in this Agreement, the Directors are agents of the Company for the purpose
of the Company's business,  and the actions of the Directors taken in accordance
with such powers set forth in this Agreement shall bind the Company.

         10.      Duties of Directors.
                  --------------------

                  Except as  provided in this  Agreement,  in  exercising  their
rights and performing  their duties under this  Agreement,  the Directors  shall
have  fiduciary  duties of loyalty and care  similar to those of a director of a
business corporation organized under the General Corporation Law of the State of
Delaware.

         11.      Officers.
                  ---------

                  a.  Officers.  The Officers of the Company  shall be chosen by
                      --------- 
the  Board  and  shall  consist  of at  least a  President,  a  Secretary  and a
Treasurer.  The Board of Directors may also choose one or more Vice  Presidents,
Assistant  Secretaries  and Assistant  Treasurers.  Any number of offices may be
held by the same person.  The Board shall choose a President,  a Secretary and a
Treasurer. The Board may appoint such other Officers and agents as it shall deem
necessary  or  advisable  who shall hold their  offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.  The salaries of all Officers and agents of the Company shall

<PAGE>

be fixed by or in the  manner  prescribed  by the  Board.  The  Officers  of the
Company shall hold office until their  successors are chosen and qualified.  Any
Officer  elected or appointed  by the Board may be removed at any time,  with or
without cause, by the affirmative  vote of a majority of the Board.  Any vacancy
occurring in any office of the Company shall be filled by the Board.

                  b.  President.  The  President  shall be the  chief  executive
                      ----------
officer of the Company,  shall  preside at all meetings of the Members,  if any,
shall be  responsible  for the general and active  management of the business of
the  Company  and shall see that all  orders  and  resolutions  of the Board are
carried into effect. The President shall execute all bonds,  mortgages and other
contracts,  except:  (i) where required or permitted by law or this Agreement to
be otherwise signed and executed; (ii) where signing and execution thereof shall
be  expressly  delegated  by the  Board to some  other  Officer  or agent of the
Company; and (iii) as otherwise permitted in Section 11c.

                  c. Vice  President.  In the absence of the President or in the
                     ----------------
event of the President's inability to act, the Vice President, if any (or in the
event there be more than one Vice  President,  the Vice  Presidents in the order
designated by the Directors,  or in the absence of any designation,  then in the
order of their election), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. The Vice Presidents,  if any, shall perform such other duties and
have such other powers as the Board may from time to time prescribe.

                  d. Secretary and Assistant  Secretary.  The Secretary shall be
                     -----------------------------------
responsible for filing legal documents and maintaining  records for the Company.
The  Secretary  shall  attend all  meetings of the Board and all meetings of the
Members,  if any, and record all the  proceedings of the meetings of the Company
and of the Board in a book to be kept for that  purpose and shall  perform  like
duties for the standing  committees when required.  The Secretary shall give, or
cause to be given,  notice of all meetings of the  Members,  if any, and special
meetings of the Board,  and shall perform such other duties as may be prescribed
by the Board or the  President,  under whose  supervision  the  Secretary  shall
serve.  The  Assistant  Secretary,  or if there be more than one, the  Assistant
Secretaries  in the  order  determined  by the  Board  (or if  there  be no such
determination,  then in order of their  election),  shall, in the absence of the
Secretary  or in the event of the  Secretary's  inability  to act,  perform  the
duties and exercise  the powers of the  Secretary  and shall  perform such other
duties and have such other powers as the Board may from time to time prescribe.

                  e. Treasurer and Assistant Treasurer. The Treasurer shall have
                     ---------------------------------- 
the custody of the Company funds and securities and shall keep full and accurate
accounts of receipts  and  disbursements  in books  belonging to the Company and
shall  deposit  all  moneys  and other  valuable  effects in the name and to the
credit of the Company in such  depositories  as may be  designated by the Board.
The Treasurer  shall  disburse the funds of the Company as may be ordered by the
Board,  taking proper vouchers for such  disbursements,  and shall render to the
President  and to the  Board,  at its  regular  meetings  or when  the  Board so
requires, an account of all of the Treasurer's transactions and of the financial
condition  of the Company  and shall have such other  duties as may from time to
time be  prescribed by the Board of Directors.  The Assistant  Treasurer,  or if
there shall be more than one, the Assistant  Treasurers in the order  determined
by the Board (or if there be no such  determination,  then in the order of their
election),  shall,  in the  absence  of the  Treasurer  or in the  event  of the
Treasurer's inability to act, perform


<PAGE>



the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board may from time to time prescribe.

                  f. Officers as Agents.  The  Officers,  to the extent of their
                     ------------------- 
powers set forth in this Agreement or otherwise  vested in them by action of the
Board not  inconsistent  with this Agreement,  are agents of the Company for the
purpose of the  Company's  business,  and, the actions of the Officers  taken in
accordance with such powers shall bind the Company.

                  g. Duties of Officers. Except to the extent otherwise provided
                     ------------------- 
herein,  each Officer shall have fiduciary duties of loyalty and care similar to
those  of  officers  of  business  corporations   organized  under  the  General
Corporation Law of the State of Delaware.

         12.      Limited Liability.
                  ------------------

                  Except as otherwise  expressly provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise,  shall  be the  debts,  obligations  and  liabilities  solely  of the
Company,  and neither any Member nor any Director shall be obligated  personally
for any such debt,  obligation  or liability of the Company  solely by reason of
being a Member or Director of the Company.

         13.      Capital Contributions.
                  ----------------------

                  The  Initial  Member was deemed  admitted as the Member of the
Company  upon the  execution  and  delivery of the Initial  LLC  Agreement.  The
Initial  Member  shall  contribute  the amount of cash to the Company  listed on
Schedule B attached hereto.

         14.      Additional Contributions.
                  -------------------------

                  The  Initial  Member is not  required  to make any  additional
capital  contribution  to the  Company.  However,  a Member may make  additional
capital  contributions  to the Company at any time upon the  written  consent of
such  Member.  To the  extent  that  the  Member  makes  an  additional  capital
contribution  to the  Company,  the  Member  shall  revise  Schedule  B of  this
                                                            -----------
Agreement.  The  provisions of this  Agreement,  including  this Section 14, are
intended  solely to benefit the Member and, to the fullest  extent  permitted by
law,  shall not be construed as conferring  any benefit upon any creditor of the
Company (and no such creditor of the Company shall be a third-party  beneficiary
of this  Agreement)  and no  Member  shall  have any duty or  obligation  to any
creditor of the Company to make any  contribution to the Company or to issue any
call for capital pursuant to this Agreement.



<PAGE>



         15.      Allocation of Profits and Losses.
                  ---------------------------------

                  The Company's profits  and  losses shall be  allocated to  the
Member.

         16.      Distributions.
                  --------------

                  Distributions  shall be made to the Member at the times and in
the aggregate amounts determined by the Board.  Notwithstanding any provision to
the contrary  contained in this Agreement,  the Company shall not be required to
make a  distribution  to any Member on account of its interest in the Company if
such  distribution  would  violate  Section  18-607  of the  Act  or  any  other
applicable law or the Basic Documents.

          17.     Books and Records.
                  ------------------

                  The Board shall keep or cause to be kept complete and accurate
books of account and records with respect to the Company's  business.  The books
of the Company shall at all times be  maintained  by the Board.  Each Member and
its duly authorized  representatives shall have the right to examine the Company
books,  records and documents during normal business hours. The Company, and the
Board on behalf of the  Company,  shall not have the right to keep  confidential
from the Member any  information  that the Board would otherwise be permitted to
keep  confidential from the Member pursuant to Section 18-305(c) of the Act. The
Company's  books of  account  shall  be kept  using  the  method  of  accounting
determined  by  the  Member.  The  Company's  independent  auditor  shall  be an
independent public accounting firm selected by the Member.

          17.1    Fiscal Year.
                  ------------

                  The fiscal year of the Company shall begin on the first day of
July in each year, unless otherwise provided by the Board of Directors.

          18.     Exculpation and Indemnification.
                  --------------------------------

                  a. No  Member,  Officer,  Director,  employee  or agent of the
Company  and no  employee,  representative,  agent or  Affiliate  of the  Member
(collectively,  the  "Covered  Persons")  shall be liable to the  Company or any
other  Person who has an interest in or claim  against the Company for any loss,
damage or claim  incurred by reason of any act or omission  performed or omitted
by such  Covered  Person in good faith on behalf of the  Company and in a manner
reasonably  believed to be within the scope of the  authority  conferred on such
Covered Person by this  Agreement,  except that a Covered Person shall be liable
for any such loss,  damage or claim incurred by reason of such Covered  Person's
gross negligence or willful misconduct.

                  b. To the  fullest  extent  permitted  by  applicable  law,  a
Covered  Person  shall be entitled to  indemnification  from the Company for any
loss,  damage or claim  incurred by such Covered  Person by reason of any act or
omission  performed or omitted by such Covered Person in good faith on behalf of
the Company and in a manner reasonably believed to be within the


<PAGE>



scope of the  authority  conferred  on such  Covered  Person by this  Agreement,
except that no Covered  Person shall be entitled to be indemnified in respect of
any loss,  damage or claim  incurred  by such  Covered  Person by reason of such
Covered  Person's gross  negligence or willful  misconduct  with respect to such
acts or omissions;  provided,  however, that any indemnity under this Section 18
shall be provided out of and to the extent of Company assets only, and no Member
shall have personal liability on account thereof.

                  c. To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person defending any claim, demand,
action,  suit or proceeding shall, from time to time, be advanced by the Company
prior to the final disposition of such claim, demand, action, suit or proceeding
upon  receipt by the  Company of an  undertaking  by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is
not entitled to be indemnified as authorized in this Section 18.

                  d. A Covered  Person  shall be fully  protected  in relying in
good faith upon the records of the Company and upon such information,  opinions,
reports or  statements  presented to the Company by any Person as to matters the
Covered Person reasonably  believes are within such other Person's  professional
or expert  competence  and who has been selected with  reasonable  care by or on
behalf of the Company, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, or any other facts pertinent
to the  existence  and amount of assets from which  distributions  to the Member
might properly be paid.

                  e. To the extent that, at law or in equity,  a Covered  Person
has duties (including  fiduciary duties) and liabilities relating thereto to the
Company or to any other  Covered  Person,  a Covered  Person  acting  under this
Agreement  shall not be liable to the Company or to any other Covered Person for
its good faith  reliance on the  provisions of this Agreement or any approval or
authorization granted by the Company or any other Covered Person. The provisions
of this  Agreement,  to the extent that they restrict the duties and liabilities
of a Covered Person  otherwise  existing at law or in equity,  are agreed by the
Member to replace such other duties and liabilities of such Covered Person.

                  f. The  foregoing  provisions of this Section 18 shall survive
any termination of this Agreement.

        19.       Assignments.
                  ------------

                  The  Member  may  assign  in  whole  or in  part  its  limited
liability  company  interest in the Company.  If the Member transfers all of its
limited  liability  company interest in the Company pursuant to this Section 19,
the transferee  shall be admitted to the Company as a member of the Company upon
its execution of an instrument signifying its agreement to be bound by the terms
and  conditions  of  this  Agreement,  which  instrument  may  be a  counterpart
signature  page to this  Agreement.  Such  admission  shall be deemed  effective
immediately prior to the transfer,  and,  immediately  following such admission,
the transferor Member shall cease to be a member of the Company.



<PAGE>



         20.      Resignation.
                  ------------

                  A Member may resign from the Company with the written  consent
of the  Initial  Member.  If a Member is  permitted  to resign  pursuant to this
Section  20,  an  additional  member of the  Company  shall be  admitted  to the
Company,  subject to Section 21, upon its execution of an instrument  signifying
its agreement to be bound by the terms and conditions of this  Agreement,  which
instrument may be a counterpart signature page to this Agreement. Such admission
shall be deemed effective immediately prior to the resignation, and, immediately
following such admission, the resigning Member shall cease to be a member of the
Company.

         21.      Admission of Additional Members.
                  --------------------------------

                  One or more additional  members of the Company may be admitted
to the Company with the written consent of the Member.

         22.      Dissolution.
                  ------------

                  a. The Company  shall be  dissolved,  and its affairs shall be
wound  up upon  the  first  to  occur  of the  following:  (i)  the  retirement,
resignation  or  dissolution  of the Member or the occurrence of any other event
which  terminates  the continued  membership of the Member in the Company unless
the  business of the Company is  continued  in a manner  permitted by the Act or
(ii) the entry of a decree of judicial  dissolution  under Section 18-802 of the
Act.

                  b. The bankruptcy (as defined in Section 18-101(1) of the Act)
of the Member  shall not cause the Member to cease to be a member of the Company
and upon the  occurrence  of such an event,  the  business of the Company  shall
continue without dissolution.

                  c. In the event of dissolution, the Company shall conduct only
such  activities as are necessary to wind up its affairs  (including the sale of
the assets of the Company in an orderly  manner),  and the assets of the Company
shall be  applied  in the  manner,  and in the order of  priority,  set forth in
Section 18-804 of the Act.

         23.      Waiver of Partition; Nature of Interest.
                  ----------------------------------------

                  Except as otherwise  expressly provided in this Agreement,  to
the fullest extent permitted by law, each Member hereby  irrevocably  waives any
right or power that such  Member  might have to cause the  Company or any of its
assets to be partitioned,  to cause the appointment of a receiver for all or any
portion of the assets of the  Company,  to compel any sale of all or any portion
of the  assets  of the  Company  pursuant  to any  applicable  law or to  file a
complaint  or to  institute  any  proceeding  at law or in  equity  to cause the
dissolution,  liquidation,  winding up or termination of the Company.  No Member
shall have any  interest in any specific  assets of the  Company,  and no Member
shall have the status of a creditor with respect to any distribution pursuant to
Section 16 hereof.  The  interest  of the  Members  in the  Company is  personal
property.



<PAGE>



         24.      Benefits of Agreement; No Third-Party Rights.
                  ---------------------------------------------

                  None of the  provisions  of this  Agreement  shall  be for the
benefit of or  enforceable  by any creditor of the Company or by any creditor of
any Member. Nothing in this Agreement shall be deemed to create any right in any
Person (other than Covered Persons) not a party hereto, and this Agreement shall
not be  construed  in any  respect to be a contract  in whole or in part for the
benefit of any third Person.

         25.      Severability of Provisions.
                  ---------------------------

                  Each provision of this Agreement shall be considered severable
and if for any reason any  provision or provisions  herein are  determined to be
invalid,  unenforceable  or  illegal  under any  existing  or future  law,  such
invalidity,  unenforceability or illegality shall not impair the operation of or
affect those portions of this Agreement which are valid, enforceable and legal.

         26.      Entire Agreement.
                  -----------------

                  This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof.

         27.      Governing Law.
                  --------------

                  This  Agreement  shall be governed by and construed  under the
laws of the State of Delaware  (without regard to conflict of laws  principles),
all rights and remedies being governed by said laws.

         28.      Amendments.
                  -----------

                  This Agreement may not be modified,  altered,  supplemented or
amended  except  pursuant to a written  agreement  executed and delivered by the
Member.

         29.      Counterparts.
                  -------------

                  This Agreement may be executed in any number of  counterparts,
each of which  shall be deemed an original  of this  Agreement  and all of which
together shall constitute one and the same instrument.

         30.      Notices.
                  --------

                  Any notices  required to be  delivered  hereunder  shall be in
writing and personally delivered,  mailed or sent by telecopy,  electronic mail,
or other  similar form of rapid  transmission,  and shall be deemed to have been
duly given upon  receipt (a) in the case of the  Company,  to the Company at its
address in Section 2, (b) in the case of a Member, to such Member at its address


<PAGE>



as listed on  Schedule B attached  hereto and  (c) in the case of  either of the
              ----------
foregoing,  at such other address as may be designated by written notice to  the
other party.

         31.      Enforcement by Director.
                  ------------------------

                  Notwithstanding  any other  provision of this  Agreement,  the
Member  agrees  that this  Agreement  constitutes  a legal,  valid  and  binding
agreement of the Member, and is enforceable against the Member by the Directors,
in accordance with its terms.

         IN WITNESS  WHEREOF,  the  undersigned,  intending to be legally  bound
hereby, has duly executed this Agreement as of the 1st day of July, 1998.


                                     MEMBER:
                               AGWAY HOLDINGS INC.


                                                    By: /s/PETER J. O'NEILL
                                                        ------------------------
                                                        Name:  Peter J. O'Neill
                                                        Title:    Vice President



<PAGE>



                                   SCHEDULE A

                                   Definitions
                                   ----------- 
A.       Definitions
         -----------

         When used in this Agreement,  the following terms not otherwise defined
herein have the following meanings:

              "Act" has the meaning set forth in the preamble to this Agreement.
               ---
 
              "Affiliate"  means,  with respect to any Person,  any other Person
               ---------
directly or indirectly  Controlling or Controlled by or under direct or indirect
common Control with such Person.

              "Agreement"  means this Limited Liability Company Agreement of the
               ---------
Company,  together with the schedules  attached hereto, as amended,  restated or
supplemented form time to time.

              "Board" or "Board of  Directors"  means the Board of  Directors of
               -----      -------------------
the Company.

              "Certificate  of Formation"  means the Certificate of Formation of
               -------------------------
the Company to be filed with the  Secretary of State of the State of Delaware on
June 25, 1998, as amended or amended and restated from time to time.

              "Control"  means the  possession,  directly or indirectly,  or the
               ------- 
power to  direct or cause the  direction  of the  management  or  policies  of a
Person,   whether  through  the  ownership  of  voting   securities  or  general
partnership   or  managing   member   interests,   by  contract  or   otherwise.
"Controlling" and "Controlled" shall have correlative meanings. Without limiting
the generality of the  foregoing,  a Person shall be deemed to Control any other
Person in which it owns,  directly or  indirectly,  a majority of the  ownership
interests.

              "Covered Persons" has the meaning set forth in Section 18a.
               ---------------

              "Directors"  means the directors elected to the Board of Directors
               ---------
from time to time by the Member,  including the Independent Director. A Director
is hereby designated as a "manager" of the Company within the meaning of Section
18-101(10) of the Act.

              "Initial   Member"   means  Agway   Holdings   Inc.,   a  Delaware
               ---------------- 
corporation, as the sole member of the Company.

                  "Management Agreement" means the agreement of the Directors in
                   --------------------
the form attached hereto as Schedule C.
                            ----------   



<PAGE>




              "Member" means the Initial Member and includes any Person admitted
               ------
as an  additional  member of the Company or a  substitute  member of the Company
pursuant to the provisions of this Agreement.

              "Officer" means an officer of the Company described in Section 11.
               ------- 
The initial Officers are listed on Schedule D hereto.

              "Person" means any  individual,  corporation,  partnership,  joint
               ------
venture, limited liability company, limited liability partnership,  association,
joint-stock company, trust, unincorporated organization,  or other organization,
whether or not a legal entity, and any governmental authority.

B.       Rules of Construction
         ---------------------

         Definitions  in this  Agreement  apply equally to both the singular and
plural forms of the defined terms. The words "include" and "including"  shall be
deemed to be followed by the phrase  "without  limitation."  The terms "herein,"
"hereof"  and  "hereunder"  and  other  words of  similar  import  refer to this
Agreement  as  a  whole  and  not  to  any  particular  Section,   paragraph  or
subdivision. The Section titles appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All Section, paragraph, clause,
Exhibit or Schedule  references not attributed to a particular document shall be
references to such parts of this Agreement.




<PAGE>



                                   SCHEDULE B

                                     Members
                                     -------



                                            Agreed Value of           Percentage
Name                 Mailing Address        Capital Contribution      Interest
-------------------  ---------------        --------------------      ----------

Agway Holdings Inc.  c/o Agway Inc.         $1000                     100%
                     P. O. Box 4933
                     Syracuse, NY 13221



<PAGE>



                                   SCHEDULE C

                              Management Agreement
                              --------------------




                                                As of June 30, 1998





Telmark LLC
333 Butternut Drive
DeWitt, New York  13214

                  Re:      Management Agreement
                           Telmark LLC
                           -----------

Ladies and Gentlemen:

                  For good and valuable  consideration,  each of the undersigned
persons, who have been designated as directors of Telmark Lease Funding I LLC, a
Delaware  limited  liability  company (the  "Company"),  in accordance  with the
Limited Liability  Company Agreement of the Company,  dated as of June __, 1998,
as it may be amended or restated from time to time (the "LLC Agreement"), hereby
agree as follows:

         1. Each of the  undersigned  accepts such person's rights and authority
as a Director  (as defined in the LLC  Agreement)  under the LLC  Agreement  and
agrees to perform  and  discharge  such  person's  duties and  obligations  as a
Director  under  the  LLC  Agreement,  and  further  agrees  that  such  rights,
authorities, duties and obligations under the LLC Agreement shall continue until
such  person's  successor  as a Director is  designated  or until such  person's
resignation or removal as a Director in accordance with the LLC Agreement.  Each
of the  undersigned  agrees and  acknowledges  that it has been  designated as a
"manager" of the Company  within the meaning of the Delaware  Limited  Liability
Company Act.

         2. THIS  MANAGEMENT  AGREEMENT  SHALL BE GOVERNED BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE,  AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS  WITHOUT  REGARD TO  PRINCIPLES  OF  CONFLICTS OF
LAWS.



<PAGE>



                  IN  WITNESS  WHEREOF,   the  undersigned  have  executed  this
Management Agreement as of the day and year first above written.



                                                     /S/DANIEL J. EDINGER
                                                     ----------------------
                                                     Name: Daniel J. Edinger



                                                     /S/ANDREW J. GILBERT
                                                     -----------------------
                                                     Name: Andrew J. Gilbert



                                                     /S/SAMUEL F. MINOR
                                                     --------------------
                                                     Name: Samuel F. Minor



                                                     /S/PETER J. O'NEILL
                                                     --------------------
                                                     Name:  Peter J. O'Neill



                                                     /S/GARY K. VAN SLYKE
                                                     ----------------------
                                                     Name: Gary K. Van Slyke



                                                     /S/WILLIAM W. YOUNG
                                                     -----------------------
                                                     Name: William W. Young





<PAGE>


                                   SCHEDULE D

                     to Limited Liability Company Agreement
                     --------------------------------------

                                INITIAL OFFICERS
                                ----------------

Name                                                  Title
----                                                  ----- 

Daniel J. Edinger                                     President
Peter J. O'Neill                                      Vice President & Treasurer
Herbert E. Gerhart                                    Secretary
Stacey M. Button                                      Assistant Secretary
Brenda J. Craner                                      Assistant Secretary
Patricia A. Edwards                                   Assistant Secretary
Raymond G. Fuller                                     Assistant Secretary
Richard A. Kalin                                      Assistant Secretary
Gwen M. McGraw                                        Assistant Secretary
Kipp R. Weaver                                        Assistant Secretary
Mary H. Bowen                                         Assistant Treasurer
Martin P. Frankenfield                                Assistant Treasurer
Karen A. Johnson                                      Assistant Treasurer
George F. Lott                                        Assistant Treasurer