<PAGE>   1
                                                                     EXHIBIT 4.1
















                 THE DETROIT EDISON SECURITIZATION FUNDING LLC,
                      A MICHIGAN LIMITED LIABILITY COMPANY


                       LIMITED LIABILITY COMPANY AGREEMENT





















DATED:   Effective _________________, 2000


<PAGE>   2


                 THE DETROIT EDISON SECURITIZATION FUNDING LLC,
                      A MICHIGAN LIMITED LIABILITY COMPANY


                       LIMITED LIABILITY COMPANY AGREEMENT


                                TABLE OF CONTENTS


ARTICLE AND SECTION                                                         PAGE

ARTICLE I
DEFINITIONS....................................................................1

ARTICLE II
CONTINUATION AND GENERAL MATTERS WITH  RESPECT TO THE COMPANY..................5
2.1      Continuation; Filings.................................................5
2.2      Name; Ownership of Property...........................................6
2.3      Office; Resident Agent................................................6
2.4      Purposes..............................................................6
2.5      Term..................................................................7
2.6      Special Covenants.....................................................8

ARTICLE III
IDENTITY OF MEMBER; MEMBER'S CONTRIBUTIONS AND DISTRIBUTIONS..................11
3.1      Member...............................................................11
3.2      Capital Contributions................................................11
3.3      Return of Capital Contributions; Interest on Capital Contributions...12
3.4      Sale of Securitization Property......................................12
3.5      Approval of Member...................................................12
3.6      Action by Member.....................................................12
3.7      Compensation and Reimbursement of Member.............................13
3.8      Limited Liability of Member..........................................13
3.9      Activities of Member.................................................13

ARTICLE IV
MANAGEMENT....................................................................13
4.1      Management by Managers...............................................13
4.2      Number and Appointment of Managers...................................14
4.3      Independent Managers.................................................15
4.4      Resignation or Removal of Managers...................................16
4.5      Meetings of Managers.................................................16
4.6      Quorum; Voting by Managers...........................................17
4.7      Written Approval of Managers in Lieu of Meeting......................17
4.8      Managers' Positions Within the Member................................17
4.9      Managers' Compensation and Reimbursement.............................17
4.10     Managers' Duty to Devote Time........................................17
4.11     Managers' Standard of Care and Absence of Liability..................18

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS TO MEMBER;
RECORD KEEPING AND TAX MATTERS................................................18
5.1      Allocations..........................................................18
5.2      Distributions........................................................18
5.3      Expenses.............................................................18
5.4      Books and Records....................................................19
5.5      Fiscal Year; Accounting Method.......................................19
5.6      Tax Information, Financial Statements and Reports....................20


                                      (i)
<PAGE>   3

5.7      Tax Matters Partner..................................................20
5.8      Bank Accounts........................................................20

ARTICLE VI
ASSIGNMENTS OF MEMBERSHIP INTEREST............................................20
6.1      Assignment of Membership Interest....................................20
6.2      Disability Event as to Member........................................21
6.3      Admission of Substitution Member.....................................21
6.4      Admission of Additional Members......................................22
6.5      Merger or Consolidation of Member....................................22
6.6      Withdrawal...........................................................22

ARTICLE VII
EXCULPATION AND INDEMNIFICATION...............................................22
7.1      Exculpation..........................................................22
7.2      Indemnification......................................................23
7.3      Advancement of Expenses..............................................24
7.4      Indemnification of Employees and Agents..............................24
7.5      Nonexclusivity of Rights and Other Matters...........................24
7.6      Insurance............................................................24
7.7      Saving Clause........................................................25
7.8      Contribution.........................................................25

ARTICLE VIII
DISSOLUTION AND LIQUIDATION...................................................25
8.1      Term.................................................................25
8.2      Winding Up and Liquidation of the Company............................26
8.3      Certificate of Dissolution...........................................27

ARTICLE IX
MISCELLANEOUS PROVISIONS......................................................27
9.1      Offset...............................................................27
9.2      Nonpetition Covenant.................................................27
9.3      Notices..............................................................28
9.4      Construction.........................................................28
9.5      Severability.........................................................29
9.6      Waiver...............................................................29
9.7      No Conflict with Articles............................................29
9.8      Entire Agreement.....................................................29
9.9      Amendment............................................................30
9.10     Binding Agreement....................................................30
9.11     Counterparts.........................................................30



Schedule I - Schedule of Managers


                                      (ii)
<PAGE>   4


                 THE DETROIT EDISON SECURITIZATION FUNDING LLC,
                      A MICHIGAN LIMITED LIABILITY COMPANY


                       LIMITED LIABILITY COMPANY AGREEMENT




         THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into
effective as of _________________, 200_, by and among (i) THE DETROIT EDISON
SECURITIZATION FUNDING LLC, a Michigan limited liability company, whose address
is 2000 Second Avenue, Detroit, Michigan 48226 ("FUNDING"), (ii) THE DETROIT
EDISON COMPANY, a Michigan corporation, whose address is 2000 Second Avenue,
Detroit, Michigan 48226 ("DETROIT EDISON") and (iii) each of the managers of the
Company identified on Schedule I attached hereto and incorporated herein.




                                    RECITALS:


         A.       On November 20, 2000, Detroit Edison, as the sole member,
caused Articles of Organization with respect to Funding (the "ORIGINAL
ARTICLES") to be filed with the Michigan Department of Consumer and Industry
Services, Bureau of Commercial Services, Corporation Division (the
"DEPARTMENT"), thereby causing Funding to be formed as a limited liability
company (the "COMPANY") under and subject to the LLC Act (as defined below).


         B.       The parties hereto desire to set forth their agreements as to
(i) the terms and conditions of Detroit Edison's membership in the Company,
including its obligation to contribute capital to the Company, (ii) the
activities of the Company, including the issuance of the Bonds in accordance
with the Financing Order (as such terms are defined below) and the satisfaction
of the Company's obligations with respect to such Bonds, (iii) certain
indemnifications being provided by the Company and (iv) the operation and
management of the Company.


         Accordingly, the parties hereto agree as follows:




                                    ARTICLE I


                                   DEFINITIONS



         The following capitalized terms shall have the following meanings:


         "ADMINISTRATION AGREEMENT" shall mean the Administration Agreement,
dated _________________, 200_, between the Company, as issuer, and Detroit
Edison, as administrator, with respect to the provision of corporate management
services to the Company, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.


         "AFFILIATE", with respect to any specified Person, shall mean any other
Person controlling or controlled by or under common control with such specified
Person, where "CONTROL", when used with



<PAGE>   5


respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "CONTROLLING" and
"CONTROLLED" shall have meanings correlative to the foregoing; it being
acknowledged by the parties hereto that the Company is not controlled by and is
not under common control with Detroit Edison, and, accordingly, is not an
Affiliate of Detroit Edison.


         "AGREEMENT" shall mean this Limited Liability Company Agreement, as the
same may be amended, supplemented, modified or restated from time to time in
accordance with the provisions hereof.


         "ARTICLES" has the meaning set forth in Section 2.1 hereof.


         "ASSIGN," "ASSIGNEE" and "ASSIGNMENT" have the meanings set forth in
Section 6.1(b) hereof.


         "BASIC DOCUMENTS" shall mean the Formation Documents, the Indenture,
the Sale Agreement, the Bill of Sale, the Servicing Agreement, the
Administration Agreement, the Underwriting Agreement, the Hedge Agreements and
the Interest Rate Swap Agreements.


         "BILL OF SALE" shall mean the bill of sale issued by Detroit Edison to
the Company as of _________________, 200_ pursuant to the Sale Agreement.


         "BONDS" shall mean one or more Classes of securitization bonds, Series
2001-1, issued pursuant to the Indenture and the Financing Order.


         "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which banks are authorized or required by law to be closed in the
City of Detroit, Michigan.


         "CLASS" shall mean any one of the classes of Bonds, and "CLASSES" shall
mean Bonds of more than one Class.


         "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time (or any successor law).


         "COMPANY" has the meaning set forth in Recital A.


         "COMPETITION ACT" shall mean, jointly, the Customer Choice and Electric
Reliability Act, Senate Bill No. 937, 2000 PA 141 and Enrolled Senate Bill No.
1253, 2000 PA 142, both effective June 5, 2000, both with respect to the
restructuring of the electric utility business in Michigan, which acts authorize
electric utilities to (i) recover qualified costs through irrevocable
non-bypassable securitization charges, (ii) assign such securitization charges
to special purpose entities and (iii) issue or have their assignees issue debt
securities secured by such securitization charges, as amended from time to time
(and any successor laws).


         "DAY" or "DAYS" shall mean each calendar day, including Saturdays,
Sundays and legal holidays; provided, however, that if the day on which a period
of time for consent or approval or other action ends is not a business day, such
period shall end on the next business day.



                                       2
<PAGE>   6

         "DEPARTMENT" has the meaning set forth in Recital A.


         "DETROIT EDISON" has the meaning set forth in the introductory
paragraph hereof.


         "DISABILITY EVENT" has the meaning set forth in Section 6.2(a) hereof.


         "FINANCING ORDER" shall mean the order issued by MPSC on November 2,
2000 in MPSC Case No. U-12478 pursuant to the Competition Act, providing for the
creation of the Securitization Property, the collection of the Securitization
Charge and the periodic adjustment of the Securitization Charge; and authorizing
the creation of a special purpose entity to acquire title to the Securitization
Property and to issue the Bonds.


         "FORMATION DOCUMENTS" shall mean this Agreement and the Articles.


         "FUNDING" has the meaning set forth in the introductory paragraph
hereof.


         "GOVERNMENTAL AUTHORITY" shall mean any federal, state, local or
foreign court or governmental department, commission, board, bureau, agency,
authority, instrumentality or regulatory body.


         "HEDGE AGREEMENTS" shall mean, collectively, any agreements between the
Company and third party counterparties entered into to protect against interest
rate movements prior to the pricing of the Bonds, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.


         "INDENTURE" shall mean the Indenture, dated as of _________________,
200_, between the Company, as ____________________, and the Trustee, with
respect to the issuance of the Bonds pursuant to the Financing Order, the
repayment of the Bonds and related matters, as the same may be amended, modified
or supplemented from time to time.


         "INDEPENDENT MANAGER" shall mean, with respect to the Company, a
Manager who is not, and within the five years prior to the date of his
appointment was not (except solely by virtue of such Person's serving as, or
being an Affiliate of any other Person serving as, an independent director or
manager, as applicable, of the Member or any bankruptcy-remote special purpose
entity that is an Affiliate of the Member or the Company), (i) a stockholder,
member, partner, director, officer, employee, manager, Affiliate, customer,
supplier, creditor, contractor or independent contractor of, or any Person that
has received any benefit in any form whatever from (other than in such Manager's
capacity as a ratepayer or customer of the Member in the ordinary course of
business), or any Person that has provided any service in any form whatsoever
to, or any major creditor (or any Affiliate of any major creditor) of, the
Company, the Member, or any of their Affiliates, or (ii) a Person owning
beneficially, directly or indirectly, any outstanding shares of common stock,
any limited liability company interests or any partnership interests, as
applicable, of the Company, the Member or any of their Affiliates, or of any
major creditor (or any Affiliate of any major creditor) of any of the foregoing,
or a stockholder, member, partner, director, officer, employee, Affiliate,
customer, supplier, creditor or independent contractor of, or any Person that
has received any benefit in any form whatever from (other than in such Person's
capacity as a ratepayer or customer of the Member in the ordinary course of
business), or any Person that has provided any service in any form whatever to,
such beneficial owner or any of such beneficial owner's Affiliates, or (iii) a
member of the immediate family of any person described above; provided that, the
indirect or beneficial ownership of stock through a mutual fund or similar
diversified investment vehicle with respect to which the owner does not have
discretion or control over the investments held by such diversified investment
vehicle shall not preclude such owner from being an Independent Manager. For
purposes of this definition, "MAJOR CREDITOR" shall


                                       3


<PAGE>   7

mean a natural person or business entity to which the Company, the Member or any
of their Affiliates has outstanding indebtedness for borrowed money or credit on
open account in a sum sufficiently large as would reasonably be expected to
influence the judgment of the proposed Independent Manager adversely to the
interests of the Company when the interests of that Person are adverse to those
of the Company, and "INDEPENDENT MANAGERS" shall mean all Independent Managers,
collectively. [NOTE: THIS DEFINITION, WHICH WAS SUGGESTED BY BROWN AND WOOD IN
ITS DELAWARE LLC AGREEMENT, IS DIFFERENT THAN (AND MUCH LONGER THAN) THE
DEFINITION IN THE PROSPECTUS.]


         "INTEREST RATE SWAP AGREEMENTS" shall mean, collectively, any
agreements with respect to any Classes of floating rate Bonds between the
Company and recognized swap dealers, as swap counterparties, for interest rate
swap transactions, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.


         "LLC ACT" shall mean the Michigan Limited Liability Company Act, MCLA
450.4101 et seq, as amended from time to time (and any successor law).


         "MANAGER" and "MANAGERS" have the meanings set forth in Section 4.1
hereof.


         "MEMBER" shall mean Detroit Edison, in its capacity as a Member of the
Company, or any successor in interest of Detroit Edison which is admitted to the
Company as a substitute Member in accordance with Section 6.3 hereof, or any
additional Person which is admitted as a Member of the Company in accordance
with Section 6.4 hereof.


         "MEMBERSHIP INTEREST" shall mean all of the right, title and interest
of the Member in its capacity as a member of the Company within the meaning of
the LLC Act and this Agreement.


         "MPSC" shall mean the Michigan Public Service Commission or any
successor Governmental Authority.


         "ORIGINAL ARTICLES" has the meaning set forth in Recital A.


         "PERSON" or "PERSONS" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership (general or
limited), limited liability company, joint stock company, trust, unincorporated
organization or Governmental Authority.


         "PROCEEDING" has the meaning set forth in Section 7.2(a) hereof.


         "REPRESENTATIVE" has the meaning set forth in Section 6.2(a) hereof.


         "SALE AGREEMENT" shall mean the Securitization Property Sale Agreement,
dated as of _________________, 200_, between Detroit Edison, as seller, and the
Company, as issuer, with respect to the sale and assignment of the
Securitization Property to the Company, as the same may be amended, supplemented
or otherwise modified and in effect from time to time.


         "SECURITIZATION CHARGE" shall mean that certain non-bypassable charge
provided for in the Financing Order for the purpose of providing funds for the
full recovery of certain qualified costs of Detroit Edison, which shall be
payable pursuant to, and as set forth in, the Financing Order.



                                       4
<PAGE>   8

         "SECURITIZATION PROPERTY" shall mean the irrevocable right of Detroit
Edison to impose, collect, receive and be paid the Securitization Charge; the
right to obtain periodic adjustments of the Securitization Charge; and the
revenues, collections, payments, money and proceeds arising under or with
respect to the foregoing.


         "SERVICING AGREEMENT" shall mean the Securitization Property Servicing
Agreement, dated as of __________________, 200_, between the Company, as
_______________________ and Detroit Edison, as servicer, whereby the servicer
will manage, service, administer and effect collection of the Securitization
Charge, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.


         "SPECIAL MEMBERS" and "SPECIAL MEMBER" have the meanings set forth in
Section 6.2(b) hereof.


         "SUCCESSOR ENTITY" has the meaning set forth in Section 8.1(b) hereof.


         "TAX MATTERS PARTNER" has the meaning set forth in Section 5.7 hereof.


         "TREASURY REGULATION" shall mean a regulation, including a proposed or
temporary regulation, promulgated under the Code, or any other successor
Treasury Regulation. References herein to a specific provision of a proposed or
temporary regulation shall include the analogous provision of the final Treasury
Regulation.


         "TRUSTEE" shall mean the party named as such in the Indenture until a
successor replaces it in accordance with the applicable provisions of the
Indenture, and, thereafter, the successor.


         "UNDERWRITING AGREEMENT" shall mean the Underwriting Agreement, dated
________________, 200_, among the Company, Detroit Edison and Salomon Smith
Barney, Inc., on behalf of itself and as representative of the several
underwriters listed therein, with respect to the sale and purchase of the Bonds.




                                   ARTICLE II


                                  CONTINUATION
                            AND GENERAL MATTERS WITH
                             RESPECT TO THE COMPANY



         2.1      CONTINUATION; FILINGS.


         By execution of this Agreement, the parties hereto agree to the
continuation of the Company as a limited liability company pursuant to and in
accordance with the LLC Act. Immediately following the execution of this
Agreement, the parties agree to the filing by the Company with the Department of
a restatement of the Original Articles (the restatement of the Original
Articles, as amended and/or restated from time to time, is referred to herein as
the "ARTICLES"), amending and restating in their entirety the Original Articles.
The parties further agree to execute and deliver, or to the execution



                                       5
<PAGE>   9

and/or delivery on behalf of the Company of, such other certificates,
instruments, notices and/or documents, and to the filing, recording and
publishing of such certificates, instruments, notices and/or documents, and to
the performance of such other acts, as may be necessary or appropriate from time
to time to comply with all applicable requirements for the existence and
continuation of the Company in the State of Michigan and the carrying out of its
activities. The parties agree that the operation of the Company and the
relationship of the Member and Managers to the Company shall, subject to Section
9.7 hereof, be governed by the Formation Documents.



         2.2      NAME; OWNERSHIP OF PROPERTY.


         (a)      The name of the Company shall continue to be THE DETROIT
EDISON SECURITIZATION FUNDING LLC. The Company may use such other names as may
be selected by the Managers from time to time, and may also conduct its business
under one or more assumed names selected by the Managers from time to time.


         (b)      All business of the Company shall be conducted in the name or
assumed name(s) of the Company that have been selected by the Managers in
accordance with subsection (a) above, and all contracts, property and other
assets of the Company shall be held in such name(s). The Member shall not hold
any items of the Company in its individual name and shall not have any ownership
interest in the aforesaid contracts, property and other assets, except that the
Member may temporarily hold the collected portions of the Securitization Charge
in its accounts pending delivery in accordance with the Servicing Agreement.



         2.3      OFFICE; RESIDENT AGENT.


         (a)      The principal office of the Company and the registered office
which the Company is required to maintain under the LLC Act shall be located at
2000 Second Avenue, Detroit, Michigan 48226 or at such other places within the
State of Michigan as may be selected by the Managers from time to time.


         (b)      Susan M. Beale, whose address is 2000 Second Avenue, Detroit,
Michigan 48226-1279, or such other Person as may be selected by the Managers
from time to time, shall be the resident agent of the Company. If the resident
agent shall ever resign, the Managers shall promptly appoint a successor.



         2.4      PURPOSES.


         The Company has been formed exclusively for the following purposes:

                  (1) to purchase, hold, own, manage, administer, service,
         collect amounts due on and otherwise deal with the Securitization
         Property; the Company's rights in any funds held by the Trustee; any
         other assets to be acquired pursuant to the Basic Documents; and any
         proceeds and rights associated therewith;


                  (2) to authorize, issue, sell and deliver the Bonds under the
         Indenture;




                                       6
<PAGE>   10

                  (3) to create security interests in and pledge the
         Securitization Property and the other collateral of the Company to the
         Trustee pursuant to the terms of the Competition Act, the Financing
         Order and the Indenture;


                  (4) to enter into Hedge Agreements and Interest Rate Swap
         Agreements and obtain credit enhancement for the Bonds;


                  (5) to negotiate, authorize, execute, deliver, assume the
         obligations under, and perform, the Basic Documents and any other
         agreement or instrument or document relating to the activities set
         forth in items (1), (2), (3) and (4) above; provided that, each party
         to any agreement with the Company shall covenant that it shall not,
         prior to the date which is one year and one day after the termination
         of the Indenture and the payment in full of the Bonds and any other
         amounts owed under the Indenture, including, without limitation, any
         amounts owed to third-party credit enhancers, and any amounts owed
         under the Hedge Agreements or Interest Rate Swap Agreements, acquiesce,
         petition or otherwise invoke or cause the Company to invoke the process
         of any court or government authority for the purpose of commencing or
         sustaining a case against the Company under any Federal or State
         bankruptcy, insolvency or similar law, or appointing a receiver,
         liquidator, assignee, trustee, custodian, sequestrator or other similar
         official of the Company or any substantial part of the property of the
         Company, or order the winding up or liquidation of the affairs of the
         Company; and, provided further, that the Company shall be permitted to
         incur additional indebtedness or other liabilities payable to service
         providers and trade creditors in the ordinary course of business in
         connection with the foregoing activities;


                  (6) to invest the proceeds from the Securitization Property
         and the Company's other assets, capital and income in accordance with
         the Basic Documents, or otherwise in a manner not inconsistent with the
         Basic Documents;


                  (7) to sell, exchange or otherwise dispose of all or any part
         of the Securitization Property and its other assets and property, and,
         in connection therewith, to accept, collect, hold, sell, exchange or
         otherwise dispose of evidences of indebtedness received pursuant
         thereto, subject to the Basic Documents, as applicable; and


                  (8) to engage in and perform any activity and exercise any
         powers permitted to be exercised by limited liability companies under
         the laws of the State of Michigan that are related or incidental to the
         foregoing and necessary, suitable or convenient to accomplish the
         foregoing,


and for no other purposes.



         2.5      TERM.


         The term of the Company commenced on November 20, 2000 and shall
continue until it is dissolved and liquidated in accordance with the provisions
of the Formation Documents.




                                       7
<PAGE>   11

         2.6      SPECIAL COVENANTS.


         (a)      The Company covenants as follows:

                  (1)  the Company shall (i) act and conduct business solely in
         its limited liability company name or assumed name(s) and through its
         duly authorized Member or Managers, (ii) take all reasonable steps to
         continue its identity as, and at all times hold itself out to other
         Persons as, a legal entity separate from the Member and any other
         Person and make it apparent to other Persons that it is an entity with
         assets and liabilities distinct from the Member and other Persons,
         (iii) conduct its business so as not to mislead others as to its
         identity or its assets, (iv) make it apparent to other Persons that,
         except for federal and state tax purposes and certain internal
         accounting purposes, it is not a division of the Member or any of the
         Affiliates of the Member or any other Person and (v) correct any known
         misunderstanding regarding its separate identity;


                  (2)  the Company shall observe all formalities required by
         this Agreement;


                  (3)  the Company shall maintain an arm's-length relationship
         with its Affiliates and Detroit Edison;


                  (4)  the Company shall not form, or cause to be formed, any
         subsidiaries;


                  (5)  except as otherwise provided in the Basic Documents, the
         funds and other assets of the Company shall not be commingled with
         those of any other Person, and the books and records (including the
         business and accounting records) of the Company shall be maintained
         separately from those of the Member and shall reflect the Company's
         separate identity and its separate ownership of the Securitization
         Property;


                  (6)  the Company shall pay its own liabilities out of its own
         funds, including the fees and expenses of the administrator and
         servicer pursuant to the Administration Agreement and the Servicing
         Agreement, respectively;


                  (7)  the Company shall use its own separate stationery,
         invoices, checks and other business forms;


                  (8)  the Company shall allocate fairly and reasonably any
         overhead for office space, personnel and facilities shared with the
         Member or any other Person;


                  (9)  the Company shall not (i) except as set forth in the
         Basic Documents, own, purchase, repurchase, acquire or agree to acquire
         any stock, obligations, assets or securities, or any interest in the
         Member or any Person (other than Eligible Investments as defined in the
         Basic Documents), or any other interest in, or make capital
         contributions to, any other Person or (ii) make any expenditure for
         capital assets or lease any capital assets other than the
         Securitization Property purchased pursuant to the Sale Agreement;


                  (10) the Company shall not (i) issue, incur or assume any
         indebtedness or any other obligations except for the Bonds and expenses
         related thereto, except as otherwise contemplated by the Basic
         Documents, (ii) guaranty, become obligated for or hold itself out as
         being liable for (whether contingently or otherwise) the debts of the
         Member or any other Person, otherwise hold out its credit as being
         available to satisfy the obligations of the




                                       8
<PAGE>   12

         Member or any other Person, (iii) pledge its assets for the benefit of
         any Person other than the Trustee or (iv) make loans or advances or
         extend credit to any Person;


                  (11) the Company shall at all times ensure that its
         capitalization is adequate in light of its business and purpose;


                  (12) the business and affairs of the Company shall be managed
         and operated in strict conformity with the Basic Documents;


                  (13) the Company shall (i) not permit the lien of the
         Indenture not to constitute a continuing valid first priority security
         interest in the collateral identified in the Indenture, (ii) take any
         action necessary or advisable to maintain and preserve the lien and
         security interest, and priority thereof, of the Indenture, (iii) not
         permit the validity of the Indenture to be impaired or the lien of the
         Indenture to be amended, subordinated, terminated or discharged, (iv)
         not permit any lien, charge, claim, security interest, mortgage or
         other encumbrance, other than the lien and security interest created by
         the Indenture, to be created on or to extend to or otherwise arise upon
         or burden the collateral or any part thereof identified in the
         Indenture, any interest therein or any proceeds thereof, (v) not permit
         any Person to be released from any covenants or obligations with
         respect to the Indenture except as expressly permitted by the Indenture
         and (vi) not, except as expressly permitted by Basic Documents, sell,
         transfer, exchange or dispose of any of the collateral identified in
         the Indenture unless directed to do so by the Trustee in accordance
         with the Indenture;


                  (14) the Bonds shall be secured by a security interest in all
         assets of the Company and shall be paid solely from the Securitization
         Charges and other assets of the Company; and there shall be no recourse
         to the Member for payments of principal, interest or any other amount
         owed or due under or in connection with the Bonds by bondholders, the
         Trustee, the Company or any other Person;


                  (15) the Company shall be operated in such a manner as the
         Managers deem reasonable and necessary or appropriate to preserve (i)
         the limited liability of Detroit Edison (or its successor) as the
         Member in the Company and (ii) until the expiration of the period of
         one year and one day after the termination of the Indenture and the
         payment in full of the Bonds, the bankruptcy-remote status of the
         Company; and


                  (16) the Company shall not make any payments, distributions or
         dividends to the Member in respect of its Membership Interest other
         than the amount released to the Company by the Trustee in accordance
         with the Indenture except as otherwise provided in the Indenture.


         (b)      The Member covenants as follows:

                  (1) except as otherwise provided in the Basic Documents, the
         funds and other assets of the Member shall not be commingled with those
         of the Company and the books and records of the Company shall be
         maintained separately from those of the Member and shall be clear and
         accurate so that another Person would have no difficulty in
         ascertaining the assets and liabilities of the Company and in
         segregating all of such assets and liabilities from those of the
         Member;


                  (2) the Member shall not (i) guaranty or become liable on or
         hold itself out as being liable for the debts of, or pledge its assets
         on behalf of, the Company, (ii) seek or obtain credit or incur any
         obligation to any Person based on the assets of the Company, (iii)
         induce



                                       9
<PAGE>   13



         any third party to rely on the creditworthiness of the Company, (iv)
         maintain or publish consolidated financial statements with the Company
         unless the financial statements include footnotes indicating that the
         Securitization Property has been irrevocably sold to the Company and is
         not available to creditors of the Member under any circumstances, (v)
         finance the operations of the Company, (vi) borrow any money from or
         lend any money to the Company or (vii) fail to correct any known
         misunderstanding or misrepresentation with respect to any of the
         foregoing;


                  (3)  the Member shall at all times (i) act in a way that
         insures that its creditors reasonably expect and rely upon the Member's
         assets being available to secure, or serve as the source of payment of
         the obligations of the Member only and (ii) not act in a way that would
         lead any creditor to reasonably expect that the assets of the Member
         would be available to satisfy the obligations of the Company;


                  (4)  the Member shall have no liability and shall incur no
         expense with respect to the credit enhancement obtained by the Company
         with respect to the Bonds;


                  (5)  the capital contribution described in Section 3.2(a)
         hereof shall be made from the Member's separate funds and not from the
         proceeds of the sale of the Bonds;


                  (6)  the capital contribution made by the Member to the
         Company shall be reflected on the books of the Member and the Company
         as a capital contribution and not as an obligation from the Company to
         the Member; there shall be no contractual obligation or legal
         compulsion on the part of the Company to repay the capital or any
         earnings thereon or any equivalent amount to the Member; and the
         Company shall have no legal or contractual obligation to pay any funds
         which were theretofore in the Capital Subaccount, the
         Overcollateralization Account and the Reserve Account (as those terms
         are defined in the Indenture) and earnings thereon not used to pay debt
         service on the Bonds and released to the Company, to the Member;


                  (7)  the amounts payable to the Member for acting as a
         servicer under the Servicing Agreement and as the administrator under
         the Administration Agreement are fair and reasonable compensation for
         the services to be provided by it under those agreements; and prior to
         the remittance of the Securitization Charge by the Member to the
         Company, the Securitization Charge shall be accounted for in the books
         and records of the Member as being the property of the Company;


                  (8)  the Member shall retain certain tax charges identified in
         the Financing Order and the rights and interests arising under the
         Financing Order related thereto; the Member does not intend its
         retention of such tax charges to affect the treatment of the sale of
         the Securitization Property as a true sale and the absolute transfer to
         the Company of all the Member's rights to such property;


                  (9)  the Member believes that the purchase price paid or
         payable by the Company for the Securitization Property, consisting of
         the net proceeds of the sale of the Bonds, is fair consideration for
         the absolute sale of such property by the Member and constitutes
         reasonably equivalent value therefor; the Member was not insolvent
         prior to the sale of the Securitization Property, was not rendered
         insolvent as a result of such sale, was not engaged in business or a
         transaction, nor was it about to engage in business or a transaction,
         for which any property remaining after such sale was an unreasonably
         small capital, and did not intend to incur debts that would be beyond
         the Member's ability to pay as such debts matured after such sale;



                                       10
<PAGE>   14


                  (10) the Member shall not amend, modify or otherwise change
         the Formation Documents in a manner which shall adversely affect the
         existence of the Company as a single purpose entity;


                  (11) the Member has not and the Company shall not encumber the
         Securitization Property except for the security interest granted to the
         Trustee for the holders of the Bonds;


                  (12) the Member expects the securitization transaction
         described in the Basic Documents to be classified on its financial
         statements as a financing, with the Bonds represented as either debt or
         deferred revenue. This accounting treatment is necessary to satisfy
         requirements of the United States Securities and Exchange Commission;
         however, in its financial statements, the Member shall include
         footnotes and/or textual discussion indicating that the Securitization
         Property has been irrevocably sold to a bankruptcy-remote entity and
         that it shall not be available to the Member or its creditors under any
         circumstances; and


                  (13) the Member has not formed the Company or entered into the
         securitization transaction described in the Basic Documents with any
         intention of hindering, delaying or defrauding either present or future
         creditors.


         (c)      The Company and the Member shall use reasonable efforts to
cause the covenants set forth in subsections (a) and (b) hereof to be fulfilled.
Failure of the Company, the Member or any Manager on behalf of the Company to
comply with any of the foregoing covenants or any of the other covenants
contained in this Agreement shall not affect the status of the Company as a
separate legal entity or the limited liability of the Member or any Manager.




                                   ARTICLE III


                               IDENTITY OF MEMBER;
                             MEMBER'S CONTRIBUTIONS
                                AND DISTRIBUTIONS



         3.1      MEMBER.


         Detroit Edison is, as of the date hereof, the sole member of the
Company.



         3.2      CAPITAL CONTRIBUTIONS.


         (a)      Contemporaneously with the issuance of the Series 2001-1
Bonds, the Member shall contribute cash to the Company in the amount of $[.50%
OF THE PRINCIPAL AMOUNT OF THE BONDS].


         (b)      The Member shall not have the obligation to make additional
contributions to the Company; however, at the option of the Member and with the
consent of the Managers, the Member may make additional capital contributions to
the Company from time to time.



                                       11
<PAGE>   15


         3.3      RETURN OF CAPITAL CONTRIBUTIONS; INTEREST ON CAPITAL
CONTRIBUTIONS.


         (a)      The Member shall not have the right to withdraw its capital
contributions or to demand or receive the return of its capital contributions or
any part thereof except as otherwise expressly provided in this Agreement.


         (b)      To the extent that the Member shall ever have the right to
withdraw its capital contributions or to demand or receive the return of its
capital contributions, or any part thereof, neither the Company nor any other
member shall be personally liable or responsible for the return of such capital
contributions, and such return shall be made solely from the assets of the
Company.


         (c)      No interest shall be paid by the Company on any of the
Member's capital contributions to the Company.



         3.4      SALE OF SECURITIZATION PROPERTY.


         Contemporaneously with the execution of this Agreement, the Member and
the Company shall execute and deliver the Sale Agreement providing for the sale
and conveyance of the Securitization Property to the Company.



         3.5      APPROVAL OF MEMBER.


         The approval of the Member shall be required as to each of the
following matters:

                  (1)      a change in the business of the Company;


                  (2)      the sale, exchange, lease, transfer or other
         disposition of all or substantially all of the assets of the Company;


                  (3)      the consolidation or merger of the Company with
         another business entity; and


                  (4)      the amendment of the Articles.



         3.6      ACTION BY MEMBER.


         All actions of the Member shall be taken by means of the execution of a
written resolution of the Member, which resolution shall be signed on behalf of
the Member by an authorized officer of the Member and filed with the minutes and
permanent records of the Company.



                                       12
<PAGE>   16

         3.7      COMPENSATION AND REIMBURSEMENT OF MEMBER.


         (a)      The Member shall not be entitled to any compensation from the
Company for its services to the Company, except that while the Member is the
servicer under the Servicing Agreement or the administrator under the
Administration Agreement, it shall be entitled to the fees payable under those
agreements, which fees shall, (i) except as otherwise provided for therein, be
determined without regard to the income of the Company, (ii) not be deemed to
constitute distributions to the recipient of any profit, loss or capital of the
Company, and (iii) be considered as operating expenses of the Company.


         (b)      The Member shall be entitled to reimbursement for the
reasonable out of pocket costs and expenses incurred by it for or on behalf of
the Company or in furtherance of the Company's business, including, without
limitation, the fees paid to legal counsel, accountants, consultants,
contractors and other providers of services to the Company.



         3.8      LIMITED LIABILITY OF MEMBER.


         Except as otherwise provided by the LLC Act or expressly assumed, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and the Member shall not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Member of the
Company.



         3.9      ACTIVITIES OF MEMBER.


         The Member and its Affiliates may engage in or possess an interest in
other business ventures of every kind and description, independently or with
others, unconnected with the Company. The Company shall not have any rights in
or to such independent ventures or the income or profit therefrom.




                                   ARTICLE IV


                                   MANAGEMENT



         4.1      MANAGEMENT BY MANAGERS.


         (a)      The business and affairs of the Company shall be managed by
and under the direction of managers (collectively, the "MANAGERS" and
individually, a "MANAGER"), who shall be the "managers" of the Company for
purposes of the LLC Act, and who shall have the full, exclusive and absolute
right, power and authority to manage and control the Company and the property,
assets and business thereof, to make all decisions affecting the Company, and to
do all acts necessary, convenient or incidental to or for the furtherance of the
purposes described herein, except for those decisions which pursuant to the LLC
Act, the Articles or this Agreement are required to be approved by the Member.
The Member acknowledges that all actions, decisions, determinations,
designations, directions, appointments, consents, approvals, selections and the
like made by the Managers in accordance with




                                       13
<PAGE>   17

the authority granted herein are intended to and shall be controlling and
binding upon the Company and the Member in its capacity as a member of the
Company.


         (b)      The Managers are the agents of the Company for the purpose of
the Company's business, and the acts of the Managers shall bind the Company as
set forth in, and in accordance with the provisions of, the LLC Act and the
Articles.


         (c)      All documents, contracts, agreements including, without
limiting the generality of the foregoing, deeds, leases, easements, rights of
way, assignments, bonds, debentures, notes, obligations, evidences of
indebtedness, checks, drafts, mortgages, and assignments, contracts, agreements
and/or documents necessary or appropriate to be executed on behalf of and in the
name of the Company, including those providing for the acquisition or
disposition of the property of the Company, shall be executed by any one (1) of
the Managers without the joinder of any other Managers, and, if so executed,
shall be valid and binding on the Company.


         (d)      It is hereby specifically agreed that the Managers, on behalf
of the Company, may enter into and perform the Basic Documents and, except as
provided in item (2) of Section 3.5 hereof, make all decisions of the Company
concerning the Securitization Property, and shall execute and deliver all
documents, agreements, certificates and financing statements contemplated
thereby and related thereto, all without further act, vote or approval of the
Member.


         (e)      By accepting their appointment as Managers of the Company,
each of the Managers covenants that in directing the business and affairs of the
Company, he will act independently in the interests of the Company, free of any
undue or excessive control exercised by the Member.



         4.2      NUMBER AND APPOINTMENT OF MANAGERS.


         (a)      The number of Managers of the Company shall not be less than
three (3) nor more than five (5), as may be determined by the Member from time
to time; provided, however, that no decrease in the number of Managers shall
have the effect of shortening the term of any incumbent Manager. Except with
respect to Independent Managers, Managers may be employees or officers of the
Member; however, no Manager may be a member of the Board of Directors of the
Member. The Managers of the Company shall be appointed by the Member and shall
be deemed to have become Managers upon the execution of this Agreement, in the
case of the initial Managers appointed by the Member, or a counterpart of this
Agreement, in the case of Managers subsequently appointed by the Member. A list
of the initial Managers of the Company and their addresses is attached to this
Agreement as Schedule I. It is hereby acknowledged that Schedule I shall be
updated from time to time, as appropriate, to identify additional or replacement
Managers, so that it shall at all times set forth the identity of all the then
current Managers of the Company.


         (b)      A Manager appointed in accordance with this Agreement shall
serve in such capacity unless and until his successor has been selected by the
Member, as aforesaid, and qualified, or until he resigns, dies, becomes
incapacitated, is removed or such position otherwise become vacant. The Member
shall appoint a replacement in the event a Manager resigns, dies, becomes
incapacitated, is removed or his position otherwise becomes vacant.



                                       14
<PAGE>   18


         4.3      INDEPENDENT MANAGERS.


         (a)      Prior to the issuance of the Bonds, the Member shall cause to
be appointed at least two (2) Independent Managers. While the Bonds are
outstanding, at least two (2) Managers shall continue to be Independent
Managers. Schedule I shall, in addition to identifying the then current
Managers, also set forth which of them constitute Independent Managers.
Independent Managers may not delegate their duties, authorities or
responsibilities hereunder. If an Independent Manager resigns, dies, is removed
or becomes incapacitated, or his position otherwise becomes vacant, no action
hereunder requiring the unanimous affirmative vote of the Managers shall be
taken until a successor Independent Manager has been appointed by the Member and
qualified, and such successor Independent Manager has approved such action.


         (b)      Notwithstanding any other provision of this Agreement or any
provision of law that otherwise so empowers the Company, the Member, any Manager
or any other Person, the Company shall not, and neither the Member nor any
Manager nor any other Person on behalf of the Company shall do any of the
following without the unanimous consent of all Managers voting on such matter
(such consent to include the consent of both Independent Managers):

                  (1)      consummate any of the items set forth in Section 3.5
         which have been approved by the Member;


                  (2)      engage in any business or activity other than that
         set forth in Article II;


                  (3)      except as provided in the Basic Documents, incur any
         indebtedness other than (A) the Bonds, (B) any obligations under
         agreements with third party credit enhancers and swap or hedge
         agreement counterparties relating to the Bonds, and (C) any ordinary
         course expenses set forth in Section 5.3 hereof;


                  (4)      assume or guarantee the indebtedness of any other
         Person;


                  (5)      make a general assignment for the benefit of
         creditors or admit in writing the Company's inability to pay its debts
         generally as they come due, or take action in furtherance of any such
         action;


                  (6)      file a voluntary petition for relief under the
         federal bankruptcy code;


                  (7)      file a petition or answer seeking consolidation,
         reorganization, arrangement, composition, readjustment, liquidation,
         dissolution or similar relief under any statute, law or regulation;


                  (8)      seek the appointment of a trustee, receiver or
         liquidator of the Company or of all or a substantial part of its
         assets;


                  (9)      file an answer or other pleading consenting to,
         admitting or failing to contest the material allegations of a petition
         filed against the Company in any proceeding petitioning for, or
         otherwise consent to or acquiesce in, an involuntary bankruptcy or any
         action seeking consolidation, reorganization, arrangement, composition,
         readjustment, liquidation, dissolution or similar relief under any
         statute, law or regulation, or the entry of any order appointing a
         trustee, liquidator or receiver of the Company or of its assets or any
         substantial portion thereof;



                                       15
<PAGE>   19

                  (10)     amend this Agreement or take action in furtherance of
         any such amendment; or


                  (11)     dissolve, liquidate or wind up the Company.



         4.4      RESIGNATION OR REMOVAL OF MANAGERS.


         (a)      A Manager shall be entitled to resign as a Manager by means of
the delivery of a written notice of resignation to the Company. The resignation
of a Manager shall be effective as of the date of the delivery of his written
notice of resignation, unless the notice sets forth a later date, in which event
the resignation shall be effective as of that later date.


         (b)      A Manager may be removed with or without cause by the Member.
Removal of a Manager by a Member shall be effective on the date of delivery of a
written notice of removal from the Member to the Manager being removed; provided
that, an Independent Manager removed without cause shall continue to serve in
that capacity until a replacement Independent Manager has been selected,
qualified and entered into a conformed copy of this Agreement.



         4.5      MEETINGS OF MANAGERS.


         (a)      Any matters subject to the approval of the Managers shall be
decided at a meeting of the Managers.


         (b)      Meetings of Managers may be held at the principal office of
the Company or at such other location, and at such time, as may be agreed upon
by the Managers.


         (c)      Meetings of Managers shall be called by means of a written
notice of meeting issued by the Member or a Manager, stating the place, date and
time of the meeting and the purpose for which it is being called. The notice of
meeting shall be given to each Manager at the address set forth on Schedule I
not less than two (2) business days prior to the date of such meeting. When a
notice is required to be given to the Managers hereunder, a waiver thereof in
writing signed by the Managers entitled to such notice, whether before, at or
after the time stated herein, shall be equivalent to the giving of such notice.


         (d)      Managers may be present at a meeting in person or by means of
conference telephone or similar communications equipment through which all
Persons participating in the meeting may communicate with the other participants
and all participants are advised of the communications equipment and the names
of the participants in the conference.


         (e)      If fewer than all Managers are present at a meeting, the
business transacted at any such meeting shall be confined to the business or
purposes stated in the aforesaid notice. If all Managers are present at a
meeting, then, in addition to the matters set forth in the notice, the Managers
may discuss and vote on any matters relating to the business of the Company
subject to the vote of Managers, whether or not such matters were set forth in
the notice.




                                       16
<PAGE>   20

         4.6      QUORUM; VOTING BY MANAGERS.


         (a)      At all meetings of the Managers, a majority in number of the
Managers shall constitute a quorum for the transaction of business. If a quorum
shall not be present at any meeting of the Managers, the Managers present at
such meeting shall adjourn the meeting from time to time, without notice other
than announcement at the meeting until a quorum is present.


         (b)      Except as otherwise provided in Section 4.2 hereof or in any
other specific provision of this Agreement, the act of a majority in number of
the Managers shall be the act of the Managers.



         4.7      WRITTEN APPROVAL OF MANAGERS IN LIEU OF MEETING.


         Any action required or permitted to be taken at a meeting of the
Managers may be taken without a meeting, without prior notice, and without a
vote if approvals in writing, setting forth the action so taken, are executed by
a majority in number of the Managers (or such other number as may be required
pursuant to Section 4.2 hereof). Every written approval shall bear the date and
signature of the Manager signing it and shall be filed with the records of the
Company. Prompt notice of the taking of an action shall be given to all Managers
who did not execute a written approval of such action.



         4.8      MANAGERS' POSITIONS WITHIN THE MEMBER.


         The employment of Managers by the Member or its Affiliates shall not be
deemed a conflict of interest as to any Manager.



         4.9      MANAGERS' COMPENSATION AND REIMBURSEMENT.


         The Company may provide reasonable compensation to Independent Managers
(but not to Managers who are not Independent Managers) for their services on
behalf of the Company, from the revenues of the Company, in such amounts and at
such times as may be authorized by the Member. In addition, the Independent
Managers shall be entitled to reimbursement by the Company for the reasonable
out of pocket costs and expenses paid or incurred by them for or on behalf of
the Company or in furtherance of the Company's business, including, without
limitation, expenses and disbursements of such agents, representatives, experts
and counsel (including legal counsel and accountants) as they may employ in
connection with the exercise and performance of their rights and duties under
the Formation Documents, the Indenture, the Sale Agreement and the Servicing
Agreement. Such amounts shall be treated as expenses of the Company and shall
not be deemed to constitute distributions of any profit, loss or capital of the
Company.



         4.10     MANAGERS' DUTY TO DEVOTE TIME.


         A Manager shall devote such time, attention and effort to the Company
as he deems reasonably necessary for the proper management of the business of
the Company.




                                       17
<PAGE>   21


         4.11     MANAGERS' STANDARD OF CARE AND ABSENCE OF LIABILITY.


         (a)      A Manager shall discharge his duties with respect to the
Company's business and affairs in good faith, with the care an ordinary prudent
person in a like position would exercise under similar circumstances, and in a
manner he reasonably believes to be in the best interests of the Company.


         (b)      Except as otherwise expressly provided by the LLC Act, no
Manager shall be liable for the debts, obligations, or liabilities of the
Company (whether arising in contract, tort or otherwise), including, without
limitation, under a judgment, decree or order of a court, by reason of being a
manager of the Company.




                                    ARTICLE V


                    ALLOCATIONS AND DISTRIBUTIONS TO MEMBER;
                         RECORD KEEPING AND TAX MATTERS



         5.1      ALLOCATIONS.


         Except as may be required by section 704(c) of the Code and Treasury
Regulation ss.1.704-1(b)(2)(iv)(f)(4) issued thereunder, all items of income,
gain, loss, deduction, and credit of the Company for each fiscal year shall be
allocated to the Member.



         5.2      DISTRIBUTIONS.


         Subject to Section 8.2(a) below, distributions to the Member shall be
made as, when and to the extent that the Managers determine that the Company's
cash on hand exceeds the current and anticipated needs of the Company to fulfill
its business purposes. Notwithstanding the foregoing, no distribution shall be
declared or made (i) if a default has occurred or is otherwise continuing under
the Indenture or any Bonds then outstanding, (ii) such distribution shall result
in a reduction or withdrawal of the then current rating of any outstanding Class
of Bonds by any Rating Agency (as defined in the Indenture), (iii) such
distribution shall otherwise violate any of the Basic Documents or (iv) after
giving it effect, the Company shall not be able to pay its debts as they become
due in the usual course of business or the Company's total assets shall be less
than the sum of its total liabilities.



         5.3      EXPENSES.


         Except as otherwise provided in this Agreement, and subject to the
provisions of the Basic Documents, the Company shall be responsible for all
expenses and the allocation thereof, including, without limitation:

                  (1)      all expenses related to the issuance of the Bonds;



                                       18
<PAGE>   22


                  (2)      all expenses related to the payment of the principal
         of and interest on the Bonds;


                  (3)      all amounts payable to Detroit Edison as the
         administrator and servicer under the Administration Agreement and the
         Servicing Agreement, respectively, or any successor(s) to Detroit
         Edison under such agreements;


                  (4)      all expenses related to the business of the Company
         and all routine administrative expenses of the Company, including the
         maintenance of books and records of the Company, and the preparation
         and dispatch to the Member of checks, financial reports, tax returns
         and notices required pursuant to this Agreement;


                  (5)      all expenses incurred in connection with any
         litigation or arbitration involving the Company (including the cost of
         any investigation and preparation) and the amount of any judgment or
         settlement paid in connection therewith;


                  (6)      all expenses for indemnity or contribution payable by
         the Company to any Person;


                  (7)      all expenses incurred in connection with the
         collection of amounts due to the Company from any Person;


                  (8)      all expenses incurred in connection with the
         preparation of amendments to this Agreement;


                  (9)      all expenses incurred in connection with the
         liquidation, dissolution and winding up of the Company; and


                  (10)     all expenses otherwise allocated in good faith to the
         Company by the Managers.



         5.4      BOOKS AND RECORDS.


         The Company shall maintain complete, accurate and separate books and
records of its business and affairs, which shall reflect all Company
transactions and which shall be appropriate and adequate for the Company's
business, including minutes of the meetings and other proceedings of the
Managers and the Member. Such books and records shall be kept at the Company's
principal office. The Member and its duly authorized representatives shall have
complete access to all books and records of the Company at the Company's
principal office, and the right to inspect and copy them, during normal business
hours.



         5.5      FISCAL YEAR; ACCOUNTING METHOD.


         The fiscal year of the Company for financial reporting and federal
income tax purposes shall, unless the Managers determine otherwise pursuant to
the requirements of the Code, be the calendar year. The Company shall utilize
the accrual method of accounting.



                                       19
<PAGE>   23


         5.6      TAX INFORMATION, FINANCIAL STATEMENTS AND REPORTS.


         As soon as practicable following the end of each fiscal year, the
Managers shall cause to be prepared and shall furnish to the Member (i) all
information relating to the Company that is necessary for the preparation of the
Member's Federal income tax return for such fiscal year and (ii) a balance
sheet, an income statement and a statement of changes in the Member's capital
account. The aforesaid financial statements shall be prepared in accordance with
the accounting method selected by the Managers, consistently applied (except as
therein noted), and shall be accompanied by an audit report from a nationally
recognized accounting firm. The Managers also may cause to be prepared or
delivered such other reports as they may deem appropriate. The Company shall
bear the cost of all financial statements and reports.



         5.7      TAX MATTERS PARTNER.


         The Member is hereby designated as "TAX MATTERS PARTNER" for the
Company, with full power and authority to act as such for the Company, and with
all the rights and responsibilities of that position described in Sections 6222
through 6232 of the Code.



         5.8      BANK ACCOUNTS.


         The Managers or an authorized signatory designated by the Managers may
open and maintain one or more bank and/or investment accounts in the name of the
Company with such financial institutions and/or firms as the Managers shall
determine; may rent and obtain access to safety deposit boxes or vaults; may
purchase certificates of deposit; and may sign checks, written directions or
other instruments to withdraw all or any part of the funds belonging to the
Company and on deposit in any such bank or investment accounts.




                                   ARTICLE VI


                       ASSIGNMENTS OF MEMBERSHIP INTEREST



         6.1      ASSIGNMENT OF MEMBERSHIP INTEREST.


         (a)      The Member may assign all or any portion of its Membership
Interest to another Person so long as, and only so long as, (i) such assignment
is not prohibited by and does not cause a breach under the Basic Documents or
under any other agreement by which the Member or the Company or any properties
of the Company is/are bound or affected and (ii) each Rating Agency (as defined
in the Indenture) then rating the Bonds of any Class shall have confirmed in
writing to the Trustee and the Company that such transfer shall not result in a
reduction or withdrawal of the then current rating by such Rating Agency of any
outstanding Class of Bonds. An assignment accomplished in accordance with this
provision shall be deemed to have occurred upon the execution by the Member of a
written assignment assigning its Membership Interest to the assignee, and the
assignee's written acceptance of such assignment. An assignment accomplished in
accordance with


                                       20

<PAGE>   24
the first two (2) sentences of this subsection (a) shall entitle the assignee
to the distributions to which the Member had been entitled prior to the
assignment, but shall not vest any other rights in the assignee, including any
right to consent to or otherwise control any matters subject to the consent of
the Member, unless the assignee is admitted as a member of the Company in
accordance with Section 6.3 hereof, and the Member shall continue to remain
liable for all of its obligations and liabilities with respect to its Membership
Interest. An attempted assignment by the Member which is not in compliance with
this subsection (a) shall be null and void ab initio and the Company shall not
be required to recognize any such assignment.


         (b)      For purposes of this Article VI, "ASSIGNMENT" means any
assignment, sale, conveyance, transfer, mortgage, pledge, encumbrance,
hypothecation or other disposition of any type or kind, (ii) "ASSIGN" means the
making of an assignment and (iii) "ASSIGNEE" means a person to whom or for whose
benefit an assignment is made.



         6.2      DISABILITY EVENT AS TO MEMBER.


         (a)      The occurrence of a dissolution, bankruptcy, insolvency,
receivership or other similar proceeding by, as to or against the Member (a
"DISABILITY EVENT") shall not constitute a withdrawal of the Member from the
Company and shall not cause the Member to cease to be a member of the Company,
and, upon the occurrence of such a Disability Event, the liquidator, trustee or
other representative of the Disabled Member (the "REPRESENTATIVE") shall be its
agent and attorney-in-fact to exercise the Disabled Member's rights and powers
with respect to the Company, including its right and power to assign its
Membership Interest to an assignee subject to and in accordance with Section 6.1
hereof and to cause such assignee to be admitted to the Company as a substitute
Member in accordance with Section 6.3 hereof.


         (b)      Notwithstanding the foregoing, if, under any of the Basic
Documents or otherwise, a Disability Event as to the Member shall be deemed to
have caused or to constitute a withdrawal or resignation of the Member from the
Company, so that there is then no member of the Company, then it is hereby
agreed that contemporaneously with the occurrence of such Disability Event, the
Independent Managers of the Company shall, without any further action of any
Person, be automatically admitted to the Company as special members
(collectively, the "SPECIAL MEMBERS" and individually, a "SPECIAL MEMBER"). The
Special Members shall be Members of the Company until the Representative has
assigned all of the Disabled Member's Membership Interest to an assignee and the
assignee has been admitted to the Company as a substitute Member in accordance
with the provisions of Section 6.3 hereof. By executing this Agreement or a
counterpart thereof in accordance with Section 4.2 hereof, each current and
future Independent Manger hereby acknowledges and agrees to his admission as a
Special Member of the Company subject to and in accordance with the provisions
of this Section 6.2. A Special Member shall have no interest in the profits,
losses and capital of the Company, shall have no right to receive any
distributions of Company assets, shall not be required to make any capital
contributions to the Company and shall not receive a limited liability company
interest in the Company. Each Special Member shall, however, have the right as
the Member to vote on, approve or otherwise consent to any action by, or matter
relating to, the Company in accordance with the LLC Act. Immediately upon the
admission of the assignee of the Disabled Member as a substitute Member in
accordance with Section 6.3 hereof, the Special Members shall be deemed to have
withdrawn from, and shall no longer be deemed to be, members of the Company.



         6.3      ADMISSION OF SUBSTITUTE MEMBER.


         The assignee of the Member's Membership Interest pursuant to Section
6.1 hereof may be admitted to the Company as a substitute Member in the place of
the assigning Member. Such admission shall be accomplished by means of the
assignee's execution and delivery to the Company of



                                       21
<PAGE>   25

a counterpart of this Agreement. Upon such admission, the assignee, as a
substitute Member, shall be deemed to have all of the rights and powers, and
shall be subject to all of the restrictions, obligations and liabilities, of the
assigning Member.



         6.4      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; provided that, notwithstanding
the foregoing, so long as the Basic Documents are in effect, no additional
Member may be admitted to the Company unless Detroit Edison or its successors or
assigns which have been admitted to or are otherwise Members of the Company,
retain a majority interest in the Company and any Rating Agency Condition (as
defined in the Indenture) has been satisfied.



         6.5      MERGER OR CONSOLIDATION OF MEMBER.


         Any successor to the Member upon the merger or consolidation of the
Member into or with another Person, which is not in violation of the Basic
Documents, shall, without further act, be deemed to be the Member hereunder, and
such merger or consolidation shall not constitute an assignment for purposes of
this Agreement.



         6.6      WITHDRAWAL.


         Except as otherwise set forth herein, the Member does not have the
right to withdraw from the Company. Any attempted withdrawal in violation of
this provision shall be null and void ab initio and the Company shall not be
obligated to recognize any such attempted withdrawal.




                                   ARTICLE VII


                         EXCULPATION AND INDEMNIFICATION



         7.1      EXCULPATION.


         (a)      Neither the Member nor any director, officer, stockholder,
controlling person or employee of the Member other than a Manager (all of which,
collectively, are included within the definition of "MEMBER" for purposes of
this Article VII) shall be liable to the Company, any other member of the
Company or any other Person (and the interest of the Member in the Company, and
in the property and assets of the Company, shall be free of any claims by the
Company, any other member of the Company or any other Person) for any act
performed by it for or on behalf of the Company or in furtherance of the
Company's business or for any omission to act that does not constitute (i)
willful misconduct or gross negligence by the Member, (ii) the its receipt of
distributions from the Company in violation of the distribution provisions of
the LLC Act, (iii) its knowing violation of law or (iv) its violation of state
or federal securities law.



                                       22

<PAGE>   26

         (b)      No Manager shall be liable to the Company, the Member or any
other Person for any act performed by him for or on behalf of the Company or in
furtherance of the Company's business or for any omission to act that does not
constitute (i) willful misconduct or gross negligence by the Manager, (ii) his
approval of distributions from the Company in violation of the distribution
provisions of the LLC Act, (iii) his knowing violation of law or (iv) his
receipt of a financial benefit to which he is not entitled.



         7.2      INDEMNIFICATION.


         (a)      To the fullest extent permitted by law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide greater or broader
indemnification rights than such law permitted the Company to provide prior to
such amendment), the Member shall be fully protected and indemnified by the
Company against all liabilities, losses, expenses, claims and demands (including
amounts paid in respect of judgments, fines, penalties, expenses or settlement
of litigation and legal fees and expenses reasonably incurred) in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative or investigative (individually, a
"PROCEEDING"), or any appeal in such a Proceeding, or any inquiry or
investigation that could lead to such a Proceeding, for any act performed by it
for or on behalf of the Company or in furtherance of the Company's business, or
for any omission to act, except for liabilities, losses, expenses, claims and
demands resulting from (i) willful misconduct or gross negligence by the Member,
(ii) its receipt of distributions from the Company in violation of the
distribution provisions of the LLC Act, (iii) its knowing violation of law or
(iv) its violation of state or federal securities law. Detroit Edison
acknowledges that the aforesaid indemnification is not intended to apply to
those matters for which Detroit Edison has indemnified the Company under any of
the Basic Documents.


         (b)      To the fullest extent permitted by agency law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide greater or
broader indemnification rights than such law permitted the Company to provide
prior to such amendment), each Manager shall be fully protected and indemnified
by the Company against all liabilities, losses, expenses, claims and demands
(including amounts paid in respect of judgments, fines penalties, expenses or
settlement of litigation and legal fees and expenses reasonably incurred in
connection with any Proceeding, or any appeal in such a Proceeding, or any
inquiry or investigation that could lead to such a Proceeding, for any act
performed by him for or on behalf of the Company or in furtherance of the
Company's business, or any omission to act, except for liabilities, losses,
expenses, claims and demands resulting from (i) willful misconduct or gross
negligence by the Manager, (ii) his approval of distributions from the Company
in violation of the distribution provisions of the LLC Act, (iii) his knowing
violation of law and (iv) his receipt of a financial benefit to which he is not
entitled.


         (c)      Notwithstanding anything herein to the contrary, for so long
as any Bonds are outstanding, no payment from funds of the Company (as distinct
from funds from other sources, such as insurance) with respect to any indemnity
under this Section 7.2 shall be payable except out of funds available for
payment of Company expenses as provided in the Indenture. Thereafter, an
indemnity under this Section 7.2 shall be provided out of and to the extent of
Company assets only, and the Member shall not have any personal liability on
account thereof. The indemnity provided under this Section 7.2 shall survive the
liquidation, dissolution and termination of the Company and the termination of
this Agreement.



                                       23
<PAGE>   27

         7.3      ADVANCEMENT OF EXPENSES.


         Expenses incurred by a Person which are of the type entitled to be
indemnified under Section 7.2 in defending any Proceeding shall be paid or
reimbursed by the Company in advance of the final disposition of the Proceeding,
without any determination as to such Person's ultimate entitlement to
indemnification under Section 7.2 hereof, upon receipt of a written affirmation
by such Person of such Person's good faith belief that such Person has met the
standard of conduct necessary for indemnification under applicable law and a
written undertaking by or on behalf of such Person to repay all amounts so
advanced if it shall ultimately be determined that such Person is not entitled
to be indemnified by the Company as authorized in Section 7.2 or otherwise. The
written undertaking shall be an unlimited general obligation of the Person but
need not be secured and shall be accepted without reference to financial ability
to make repayment.



         7.4      INDEMNIFICATION OF EMPLOYEES AND AGENTS.


         The Company shall indemnify and pay and advance expenses to an employee
or agent of the Company to the same extent and subject to the same conditions
under which it may indemnify and pay and advance expenses to a Manager under
this Article VII; and the Company shall indemnify and pay and advance expenses
to any Person who is or was an employee or agent of the Company and who is or
was serving at the request of the Company as a member, manager, director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic limited liability company,
partnership, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against such Person and incurred by such Person in such a capacity or arising
out of such Person's status as such, to the same extent and subject to the same
conditions that the Company may indemnify and pay and advance expenses to the
Manager under this Article VII.



         7.5      NONEXCLUSIVITY OF RIGHTS AND OTHER MATTERS.


         The indemnification and advancement and payment of expenses provided by
this Article VII (i) shall not be deemed exclusive of any other rights to which
the Member, Manager or other Person seeking indemnification and advancement of
payment of expenses may be entitled under any statute, agreement, or otherwise,
both as to actions in such Person's official capacity and as to actions in
another capacity while holding such position, (ii) shall continue as to any such
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity and advancement and payment of expenses and (iii) shall
inure to the benefit of the heirs, executors, administrators, successors and
assigns of such Member, Manager or other Person.



         7.6      INSURANCE.


         The Company may purchase and maintain insurance or another arrangement,
or both, at its expense, on behalf of itself or any Person who is or was serving
as the Member, Manager, employee or agent of the Company, or who is or was
serving at the request of the Company as a member, manager, director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic limited liability company, partnership,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, against any liability, expense or loss,
whether or not the Company would have had the power to indemnify such Person
against such liability under the provisions of this Article VII.




                                       24
<PAGE>   28

         7.7      SAVING CLAUSE.


         If this Article VII or any portion of this Agreement shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless the Member, each Manager
or any other Person indemnified pursuant to this Article VII as to costs,
charges and expenses (including, without limitation, attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
fullest extent permitted by any applicable portion of this Article VII which was
not invalidated, to the fullest extent permitted by applicable law.



         7.8      CONTRIBUTION.

         If the indemnification in favor of a Manager set forth in Section
7.2(b) hereof is for any reason deemed to be illegal or unenforceable, then, to
the fullest extent permitted by law, such Manager shall be entitled to
contribution from the Company for any matter for which such indemnification is
deemed to be illegal or unenforceable.




                                  ARTICLE VIII


                           DISSOLUTION AND LIQUIDATION



         8.1      TERM.


         (a)      The term of the Company shall end, and the Company shall
dissolve, upon the occurrence of any of the following events (subject, however,
to the receipt of the consent of the Managers to the extent required by Article
IV hereof):

                  (1)      the decision of the Member to dissolve the Company;


                  (2)      the sale or other disposition of all or substantially
         all of the assets of the Company; or


                  (3)      the occurrence of any event which, under the LLC Act,
         results in dissolution of the Company.


It is hereby affirmed that the commencement of a bankruptcy, insolvency,
receivership or other similar proceeding by or against the Company or the Member
shall not result in the dissolution of the Company.


         (b)      Notwithstanding anything in subsection (a) hereof or elsewhere
in this Agreement to the contrary, the Member and Managers shall only be
entitled to vote on and approve the Company's consolidation with or merger into
another entity or the sale of substantially all of the Company's assets to
another entity, and dissolution, if and only if:




                                       25
<PAGE>   29

                  (1)      the entity formed or surviving the consolidation or
         merger or to whom substantially all of the Company's assets are sold
         (the "SUCCESSOR ENTITY") is organized and existing under the laws of
         the United States or any state thereof and expressly assumes by a
         supplemental indenture the due and punctual payment of the principal of
         and interest on the Bonds and the performance of the Company's
         obligations under the Indenture;


                  (2)      the Successor Entity expressly assumes all
         obligations and succeeds to all rights of the Company under the Sale
         Agreement, the Administration Agreement, the Servicing Agreement, the
         Hedge Agreements and the Interest Rate Swap Agreements pursuant to an
         assignment and assumption agreement executed and delivered to the
         Trustee;


                  (3)      no default or event of default under the Indenture
         shall have occurred and be continuing immediately after giving effect
         to the merger, consolidation or sale;


                  (4)      the Rating Agency Condition (as defined in the Basic
         Documents) is satisfied;


                  (5)      the Company receives an opinion of counsel to the
         effect that the consolidation, merger or sale shall have no material
         adverse tax consequences to the Company or any holder of Bonds, the
         consolidation, merger or sale complies with the Indenture and all
         conditions precedent provided in the Indenture relating to the
         consolidation, merger or sale shall have been satisfied and the
         consolidation, merger or sale will result in the Trustee maintaining a
         continuing valid first priority security interest in the collateral
         identified in the Indenture;


                  (6)      none of the Securitization Property, the Financing
         Order, or the seller's, the Company's or the issuer's rights under the
         Competition Act or the Financing Order are impaired thereby;


                  (7)      any action that is necessary to maintain the lien and
         security interest created by the Indenture has been taken; and


                  (8)      the Successor Entity is bankruptcy remote and not
         subject to consolidation for bankruptcy or insolvency purposes with the
         Member, its Affiliates or any other Person.



         8.2      WINDING UP AND LIQUIDATION OF THE COMPANY.


         (a)      Upon the dissolution of the Company, the Managers shall
proceed to wind up the affairs and liquidate the property and assets of the
Company, and shall apply and distribute the proceeds of such liquidation in the
following priority:

                  (1)      to the expenses of liquidation;


                  (2)      to the payment of all debts and liabilities of the
         Company;


                  (3)      to the establishment of such reserves as the Managers
         deem necessary or advisable to provide for any contingent or unforeseen
         liabilities or obligations of the Company, provided, however, that
         after the expiration of such period of time as the Managers deem



                                       26
<PAGE>   30


         appropriate, the balance of such reserves remaining after payment of
         such contingencies shall be distributed in the manner hereinafter set
         forth; and


                  (4)      any remaining proceeds shall be distributed to the
         Member.


         (b)      A reasonable time shall be allowed for the orderly liquidation
of the property and assets of the Company and the payment of the debts and
liabilities of the Company in order to minimize the normal losses attendant upon
a liquidation.


         (c)      Anything contained in this Section 8.2 to the contrary
notwithstanding, if the Managers shall determine that a complete liquidation of
all the property and assets of the Company would involve substantial losses or
be impractical or ill-advised under the circumstances, the Managers shall
liquidate that portion of the assets of the Company sufficient to pay the
expenses of liquidation and the debts and liabilities of the Company (excluding
the debts and liabilities of the Company to the extent that they are adequately
secured by mortgages on or security interests in the assets of the Company), and
the remaining property and assets shall be distributed to the Member.



         8.3      CERTIFICATE OF DISSOLUTION.


         After the affairs of the Company have been wound up and the Company
terminated, a certificate of dissolution shall be executed and filed with the
Department.




                                   ARTICLE IX


                            MISCELLANEOUS PROVISIONS



         9.1      OFFSET.


         Whenever the Company is to pay any sum to the Member, any amounts the
Member owes the Company may be deducted from such sum before payment.



         9.2      NONPETITION COVENANT.


         (a)      The Member and each Manager hereby covenants and agrees that,
prior to the date which is one year and one day after the termination of the
Indenture and the payment in full of the Bonds, any other amounts owed under the
Indenture, including, without limitation, any amounts owed to third-party credit
enhancers, and any amounts owed under the Hedge Agreements or Interest Rate Swap
Agreements, it (he) shall not (i) acquiesce, petition or otherwise invoke or
cause the Company to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Company under any
Federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Company, (ii)
consent to or approve, or make application for, or constitute or maintain any
action for the dissolution of the Company under MCLA 450.4801 or 450.4802 of the
LLC Act or otherwise or (iii) order the winding up or liquidation of the



                                       27
<PAGE>   31

affairs of the Company; provided, however, that nothing in this subsection (a)
shall constitute a waiver of any right to indemnification, reimbursement or
other payment from the Company pursuant to this Agreement.


         (b)      In the event that the Member or any Manager takes any action
in violation of subsection (a) hereof, the Company agrees that it shall file an
answer with the court or otherwise properly contest the taking of such action
and raise the defense that the Member or the Manager, as the case may be, has
agreed in writing not to take such action and should be estopped and precluded
therefrom, and such other defenses, if any, as its counsel advises that it may
assert.


         (c)      The provisions of this Section 9.2 shall survive the
termination of this Agreement and the resignation, withdrawal or removal of the
Member or any Manager. Nothing herein contained shall preclude participation by
the Member or a Manager in the assertion or defense of its claims in any such
proceeding involving the Company.



         9.3      NOTICES.


         Any notice, offer, demand, consent or other communication required or
permitted to be given under any provision of this Agreement shall be deemed to
have been sufficiently given for all purposes if it is in writing, addressed to
the party to whom the same is directed at the address set forth below and (i)
delivered in person, (ii) sent by registered or certified United States mail
return receipt requested, postage and charges prepaid, (iii) sent by receipted
overnight courier, or (iv) sent by facsimile transmission. Any such notice or
other communication shall be deemed to be delivered (i) upon personal delivery
to the Person to whom it is sent; (ii) on the second business day after the date
on which the same was deposited in a regularly maintained receptacle for the
deposit of the United States' mail; (iii) one business day following delivery to
the overnight courier; (iv) upon notification of receipt by the facsimile
machine to which it is directed. All notices, requests, and consents to be sent
to the Member shall be sent to or made to: The Detroit Edison Company, 2000
Second Avenue, Detroit, Michigan 48226-1279, Attention: Treasurer. All notices,
requests and consents to be sent to the Company shall be sent to or made to: The
Detroit Edison Securitization Funding LLC, 2000 Second Avenue, Detroit, Michigan
48226-1279, Attention: Susan M. Beale. All notices, requests and consents to a
Manager should be sent to the address set forth on Schedule I. Any party may
change his address for purposes of this Agreement by giving the other parties
notice of such change in the manner hereinabove provided for the giving of
notices.



         9.4      CONSTRUCTION.


         (a)      The headings in this Agreement are inserted for convenience
and identification only, and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any of the
provisions hereof.


         (b)      Any agreement, instrument, statute, law, regulation or rule
defined or referred to herein shall be deemed to mean such agreement,
instrument, statute, law, regulation or rule as from time to time amended,
modified or supplemented, and includes in the case of agreements and
instruments, references to all attachments thereto and instruments incorporated
therein.


         (c)      Whenever the singular number is used herein, the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders.



                                       28
<PAGE>   32


         (d)      If any language is stricken or deleted from this Agreement,
such language shall be deemed never to have appeared herein and no other
implication shall be drawn therefrom.


         (e)      References to a Person are also to its permitted successors
and assigns.


         (f)      The parties hereto having participated fully and equally in
the negotiation and preparation hereof, this Agreement shall not be more
strictly construed nor any ambiguities within this Agreement resolved against
any party hereto.


         (g)      This Agreement shall be construed and enforced in accordance
with, and governed by, the laws and decisions of the State of Michigan,
excluding any conflict of laws rule or principle that might refer the governance
or other construction of this Agreement to the law of another jurisdiction.



         9.5      SEVERABILITY.


         If any provision hereof shall be judicially determined to be illegal,
or if the application thereof to any person or in any circumstance shall, to any
extent, be judicially determined to be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to persons or in
circumstances other than those to which it has been judicially determined to be
invalid or unenforceable, shall not be affected thereby, and each provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.



         9.6      WAIVER.


         A waiver or consent, express or implied, to or of any breach or default
by any Person in the performance by such Person of its obligations with respect
to the Company shall not be a consent or waiver to or of any other breach or
default in the performance by such Person of the same or any other obligations
of such Person with respect to the Company.



         9.7      NO CONFLICT WITH ARTICLES.


         The provisions of this Agreement shall govern and control unless there
is a specific conflict with either the LLC Act or the Articles, in which event
the LLC Act or the Articles, as the case may be, shall govern and control.



         9.8      ENTIRE AGREEMENT.


         This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof. All prior agreements among the
parties hereto with respect to the subject matter hereof, whether written or
oral, are merged herein and shall be of no force or effect. This Agreement
cannot be modified or changed orally, but only by an agreement in writing.



                                       29
<PAGE>   33

         9.9      AMENDMENT.


         This Agreement may not be amended, except (i) by means of a writing
signed by the Member, the Company and the Managers and filed with the records of
the Company and (ii) while the Bonds are in effect, upon prior approval of the
Trustee and receipt of notification in writing by each Rating Agency (as defined
in the Indenture) then rating the Bonds of any Class, to the Trustee and the
Company that such amendment will not result in a reduction or withdrawal of the
then current rating by any such Rating Agency of any outstanding Class of Bonds.



         9.10     BINDING AGREEMENT.


         This Agreement shall inure to the benefit of and be binding upon, the
parties hereto, and their heirs, successors and assigns.



         9.11     COUNTERPARTS.


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




         IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives effective the
date first above stated.


                                   "Company"

                                   THE DETROIT EDISON SECURITIZATION
                                   FUNDING LLC


                                   By:
                                      ------------------------------------------

                                          ----------------------------
                                   Its:   Manager


                               and By:
                                      ------------------------------------------

                                          ----------------------------
                                   Its:   Manager



                                   "Member"

                                   THE DETROIT EDISON COMPANY, a Michigan
                                   corporation


                                   By:
                                      ------------------------------------------

                                          ----------------------------
                                   Its:
                                          ----------------------------


                                       30
<PAGE>   34

                                   "Managers"


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


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


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


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


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


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













                                       31
<PAGE>   35


                                   SCHEDULE I


                                    MANAGERS



[NAME OF MANAGER]                                      Independent Manager
------------------------------------
[ADDRESS OF MANAGER]
------------------------------------

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


[NAME OF MANAGER]                                      Independent Manager
------------------------------------
[ADDRESS OF MANAGER]
------------------------------------

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


[NAME OF MANAGER]
------------------------------------
[ADDRESS OF MANAGER]
------------------------------------

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


[NAME OF MANAGER]
------------------------------------
[ADDRESS OF MANAGER]
------------------------------------

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


[NAME OF MANAGER]
------------------------------------
[ADDRESS OF MANAGER]
------------------------------------

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