Document:

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                                                                     EXHIBIT 4.2

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                              AMENDED AND RESTATED

                                 TRUST AGREEMENT

                                      Among

                       CHRYSLER FINANCIAL COMPANY L.L.C.,
                                  as Depositor,

                     DAIMLERCHRYSLER RETAIL RECEIVABLES LLC

                                       And

                 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                                as Owner Trustee

                          Dated as of September 1, 2001

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                                TABLE OF CONTENTS

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                                    ARTICLE I

                                   Definitions

SECTION 1.01.   Capitalized Terms.......................................................     1
SECTION 1.02.   Other Definitional Provisions...........................................     4

                                   ARTICLE II

                                  Organization

SECTION 2.01.   Name....................................................................     4
SECTION 2.02.   Office..................................................................     5
SECTION 2.03.   Purposes and Powers.....................................................     5
SECTION 2.04.   Appointment of Owner Trustee............................................     5
SECTION 2.05.   Initial Capital Contribution of Owner Trust Estate......................     5
SECTION 2.06.   Declaration of Trust....................................................     6
SECTION 2.07.   Liability of Owners.....................................................     6
SECTION 2.08.   Title to Trust Property.................................................     6
SECTION 2.09.   Situs of Trust..........................................................     6
SECTION 2.10.   Representations and Warranties of Depositor and Company.................     7

                                   ARTICLE III

                     Certificates and Transfer of Interests

SECTION 3.01.   Initial Ownership.......................................................     8
SECTION 3.02.   The Certificates........................................................     9
SECTION 3.03.   Authentication of Certificates..........................................     9
SECTION 3.04.   Registration of Transfer and Exchange of Certificates; Limitations
                on Transfer.............................................................     9
SECTION 3.05.   Mutilated, Destroyed, Lost or Stolen Certificates.......................    11
SECTION 3.06.   Persons Deemed Owners...................................................    11
SECTION 3.07.   Access to List of Certificateholders' Names and Addresses...............    11
SECTION 3.08.   Maintenance of Office or Agency.........................................    11
SECTION 3.09.   Appointment of Paying Agent.............................................    12
SECTION 3.10.   Definitive Certificates.................................................    12
SECTION 3.11.   Fixed Value Securities..................................................    12

                                   ARTICLE IV

                            Actions by Owner Trustee

SECTION 4.01.   Prior Notice to Owners with Respect to Certain Matters..................    14
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SECTION 4.02.   Action by Owners with Respect to Certain Matters........................    14
SECTION 4.03.   Action by Owners with Respect to Bankruptcy.............................    14
SECTION 4.04.   Restrictions on Owners' Power...........................................    15
SECTION 4.05.   Majority Control........................................................    15

                                    ARTICLE V

                   Application of Trust Funds; Certain Duties

SECTION 5.01.   Establishment of Deposit Account........................................    15
SECTION 5.02.   Application of Trust Funds. ............................................    15
SECTION 5.03.   Method of Payment.......................................................    16
SECTION 5.04.   Accounting and Reports to Owners, Internal Revenue Service and
                Others..................................................................    16

                                   ARTICLE VI

                      Authority and Duties of Owner Trustee

SECTION 6.01.   General Authority.......................................................    17
SECTION 6.02.   General Duties..........................................................    17
SECTION 6.03.   Action upon Instruction.................................................    17
SECTION 6.04.   No Duties Except as Specified in this Agreement or in Instructions......    18
SECTION 6.05.   No Action Except Under Specified Documents or Instructions..............    18
SECTION 6.06.   Restrictions............................................................    18

                                   ARTICLE VII

                            Concerning Owner Trustee

SECTION 7.01.   Acceptance of Trusts and Duties.........................................    19
SECTION 7.02.   Furnishing of Documents.................................................    20
SECTION 7.03.   Representations and Warranties..........................................    20
SECTION 7.04.   Reliance; Advice of Counsel.............................................    20
SECTION 7.05.   Not Acting in Individual Capacity.......................................    21
SECTION 7.06.   Owner Trustee Not Liable for Certificates or Receivables................    21
SECTION 7.07.   Owner Trustee May Own Certificates and Notes............................    22
SECTION 7.08.   Pennsylvania Motor Vehicle Sales Finance Act Licenses...................    22

                                  ARTICLE VIII

                          Compensation of Owner Trustee

SECTION 8.01.   Owner Trustee's Fees and Expenses.......................................    22
SECTION 8.02.   Indemnification.........................................................    22
SECTION 8.03.   Payments to Owner Trustee...............................................    23
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                                   ARTICLE IX

                         Termination of Trust Agreement

SECTION 9.01.   Termination of Trust Agreement..........................................    23

                                    ARTICLE X

                Successor Owner Trustees and Additional Owner Trustees

SECTION 10.01.  Eligibility Requirements for Owner Trustee..............................    24
SECTION 10.02.  Resignation or Removal of Owner Trustee.................................    24
SECTION 10.03.  Successor Owner Trustee.................................................    25
SECTION 10.04.  Merger or Consolidation of Owner Trustee................................    25
SECTION 10.05.  Appointment of Co-Trustee or Separate Trustee...........................    25

                                   ARTICLE XI

                                  Miscellaneous

SECTION 11.01.  Supplements and Amendments..............................................    27
SECTION 11.02.  No Legal Title to Owner Trust Estate in Owners..........................    28
SECTION 11.03.  Limitations on Rights of Others.........................................    28
SECTION 11.04.  Notices.................................................................    28
SECTION 11.05.  Severability............................................................    29
SECTION 11.06.  Separate Counterparts...................................................    29
SECTION 11.07.  Successors and Assigns..................................................    29
SECTION 11.08.  Covenants of Company....................................................    29
SECTION 11.09.  No Petition.............................................................    29
SECTION 11.10.  No Recourse.............................................................    30
SECTION 11.11.  Headings................................................................    30
SECTION 11.12.  GOVERNING LAW...........................................................    30
SECTION 11.13.  Certificate Transfer Restrictions.......................................    30
SECTION 11.14.  Depositor Payment Obligation............................................    30

                                    EXHIBITS

EXHIBIT A       Form of Certificate.....................................................   A-1
EXHIBIT B       Form of Certificate of Trust of
                DaimlerChrysler Auto Trust 2001-C.......................................   B-1
EXHIBIT C       Form of Transferor Certificate..........................................   C-1
EXHIBIT D       Form of Investment Letter...............................................   D-1
EXHIBIT E       Form of Rule 144A Letter................................................   E-1
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      AMENDED AND RESTATED TRUST AGREEMENT dated as of September 1, 2001, among
      CHRYSLER FINANCIAL COMPANY L.L.C., a Michigan limited liability company,
      as depositor (the "Depositor"), DAIMLERCHRYSLER RECEIVABLES LLC (the
      "Company"), a Michigan limited liability company, and CHASE MANHATTAN BANK
      USA, NATIONAL ASSOCIATION, a Delaware banking corporation, as owner
      trustee.

      WHEREAS, the Owner Trustee and the Company entered into a Trust Agreement
dated August 8, 2001 (the "Trust Agreement");

      WHEREAS, the Trust Agreement is being amended and restated as of September
1, 2001;

      WHEREAS, the Depositor and the Company have entered into a Purchase
Agreement dated as of September 1, 2001 (the "Purchase Agreement"), pursuant to
which the Depositor will assign to the Company any and all of the Depositor's
rights and interests with respect to the receipt of amounts from the Reserve
Account; and

      WHEREAS, in connection therewith, the Company is willing to assume certain
obligations pursuant hereto;

      NOW, THEREFORE, the Depositor, the Company and the Owner Trustee hereby
agree as follows:

                                   ARTICLE I

                                  Definitions

      SECTION 1.01 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:

      "Administration Agreement" shall mean the Administration Agreement dated
as of September 1, 2001, among the Trust, the Indenture Trustee and CFC, as
Administrator.

      "Agreement" shall mean this Amended and Restated Trust Agreement, as the
same may be amended and supplemented from time to time.

      "Basic Documents" shall mean the Purchase Agreement, the Sale and
Servicing Agreement, the Indenture, the Administration Agreement, the Note
Depository Agreement and the other documents and certificates delivered in
connection therewith.

      "Benefit Plan" shall have the meaning assigned to such term in Section
11.13.

      "Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.

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      "Certificate" shall mean a certificate evidencing the beneficial interest
of an Owner in the Trust, substantially in the form attached hereto as Exhibit
A.

      "Certificate Balance" shall initially equal $60,350,000, reduced (but not
below zero) by all amounts previously distributed pursuant to Section
5.05(a)(ii)(E) to Certificateholders.

      "Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.

      "Certificate Register" and "Certificate Registrar" shall mean the register
mentioned in and the registrar appointed pursuant to Section 3.04.

      "Certificateholder" or "Holder" shall mean a Person in whose name a
Certificate is registered.

      "CFC" shall mean Chrysler Financial Company L.L.C., a Michigan limited
liability company, and any successor in interest.

      "Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.

      "Company" shall mean DaimlerChrysler Retail Receivables LLC, a Michigan
limited liability company, and any successor in interest.

      "Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at c/o JP
Morgan Chase, 500 Stanton Christiana Road, Fl. 3/OPS4, Newark, Delaware 19713,
Attention: Corporate Trustee Department, or at such other address as the Owner
Trustee may designate by notice to the Owners, the Depositor and the Company, or
the principal corporate trust office of any successor Owner Trustee at the
address designated by such successor Owner Trustee by notice to the Owners, the
Depositor and the Company.

      "Depositor" shall mean CFC in its capacity as depositor hereunder.

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

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

      "Expenses" shall have the meaning assigned to such term in Section 8.02.

      "Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.

      "Indenture" shall mean the Indenture dated as of September 1, 2001 between
the Trust and Citibank, N.A., as Indenture Trustee.

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      "Note Depository Agreement" shall mean the agreement dated September 17,
2001, among the Trust, the Indenture Trustee, the Administrator and The
Depository Trust Company, as the initial Clearing Agency, relating to the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, as
the same may be amended and supplemented from time to time.

      "Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Seller, the Company or the Servicer,
which counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or
the Rating Agencies, as applicable.

      "Owner" shall mean each Holder of a Certificate.

      "Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time in
the Deposit Account and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the Sale and
Servicing Agreement and the Administration Agreement.

      "Owner Trustee" shall mean Chase Manhattan Bank USA, National Association,
a Delaware banking corporation, not in its individual capacity but solely as
owner trustee under this Agreement, and any successor Owner Trustee hereunder.

      "Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.09 and shall initially be the Indenture Trustee.

      "Percentage Interest" means, as to any Certificate, the percentage
interest, specified on the face thereof, in the distributions on the
Certificates pursuant to this Agreement.

      "Record Date" shall mean, with respect to any Payment Date, the 15th day
of the month preceding such Payment Date.

      "Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
dated as of September 1, 2001, between the Trust, as issuer, and the Depositor,
as seller and servicer, as the same may be amended or supplemented from time to
time.

      "Secretary of State" shall mean the Secretary of State of the State of
Delaware.

      "Treasury Regulations" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

      "Trust" shall mean the trust continued pursuant to this Agreement.

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      SECTION 1.02 Other Definitional Provisions. (a) Capitalized terms used and
not otherwise defined herein have the meanings assigned to them in the Sale and
Servicing Agreement or, if not defined therein, in the Indenture.

      (b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

      (c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.

      (d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" and its
variations shall mean "including without limitation".

      (e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.

      (f) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

                                   ARTICLE II

                                  Organization

      SECTION 2.01. Name. The Trust created hereby shall be known as
"DaimlerChrysler Auto Trust 2001-C," in which name the Owner Trustee may conduct
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.

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      SECTION 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners, the
Depositor and the Company.

      SECTION 2.03. Purposes and Powers. The purpose of the Trust is to engage
in the following activities:

            (i) to issue the Notes pursuant to the Indenture and the
      Certificates pursuant to this Agreement and to sell the Notes and the
      Certificates;

            (ii) with the proceeds of the sale of the Notes and the
      Certificates, to purchase the Receivables, to fund the Reserve Account, to
      pay the organizational, start-up and transactional expenses of the Trust
      and to pay the balance to the Depositor pursuant to the Sale and Servicing
      Agreement;

            (iii) to assign, grant, transfer, pledge, mortgage and convey the
      Trust Estate pursuant to the Indenture and to hold, manage and distribute
      to the Owners pursuant to the terms of the Sale and Servicing Agreement
      any portion of the Trust Estate released from the Lien of, and remitted to
      the Trust pursuant to, the Indenture;

            (iv) to enter into and perform its obligations under the Basic
      Documents to which it is to be a party;

            (v) to sell the Fixed Value Payments to the Depositor and, if
      requested by the Company (as assignee of the Depositor), subsequently to
      acquire the Fixed Value Payments and to issue and sell the Fixed Value
      Securities;

            (vi) to engage in those activities, including entering into
      agreements, that are necessary or suitable to accomplish the foregoing or
      are incidental thereto or connected therewith; and

            (vii) subject to compliance with the Basic Documents, to engage in
      such other activities as may be required in connection with conservation
      of the Owner Trust Estate and the making of distributions to the Owners
      and the Noteholders and in respect of the Fixed Value Securities.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.

      SECTION 2.04. Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.

      SECTION 2.05. Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof,

                                        5
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the sum of $1. The Owner Trustee hereby acknowledges receipt in trust from the
Depositor, as of the date hereof, of the foregoing contribution, which shall
constitute the initial Owner Trust Estate and shall be deposited in the Deposit
Account. The Depositor shall pay organizational expenses of the Trust as they
may arise or shall, upon the request of the Owner Trustee, promptly reimburse
the Owner Trustee for any such expenses paid by the Owner Trustee.

      SECTION 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Trust under the Basic Documents. It is the intention of the
parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, (i) so long as there is a sole Owner, the
Trust shall be treated as a security arrangement, with the assets of the Trust
being the Receivables and other assets held by the Trust, the owner of the
Receivables being the sole Owner and the Notes being non-recourse debt of the
sole Owner and (ii) if there is more than one Owner, the Trust shall be treated
as a partnership for income and franchise tax purposes, with the assets of the
partnership being the Receivables and other assets held by the Trust, the
partners of the partnership being the Owners (including the Company as assignee
of the Depositor pursuant to the Purchase Agreement, in its capacity as
recipient of distributions from the Reserve Account) and the Notes being debt of
the partnership. The parties agree that, unless otherwise required by
appropriate tax authorities, the Trust will file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of the Trust as provided in the preceding sentence for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.

      SECTION 2.07. Liability of Owners. The Owners (including the Company)
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the general
corporation law of the State of Delaware.

      SECTION 2.08. Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.

      SECTION 2.09. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. The Trust shall not have any employees in any state other than
Delaware; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Corporate Trust Office in Delaware.

                                        6
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      SECTION 2.10. Representations and Warranties of Depositor and Company. (a)
The Depositor hereby represents and warrants to the Owner Trustee that:

            (i) The Depositor is duly organized and validly existing as a
      limited liability company in good standing under the laws of the State of
      Michigan, with power and authority to own its properties and to conduct
      its business as such properties are currently owned and such business is
      presently conducted.

            (ii) The Depositor is duly qualified to do business as a foreign
      limited liability company in good standing and has obtained all necessary
      licenses and approvals in all jurisdictions in which the ownership or
      lease of its property or the conduct of its business shall require such
      qualifications.

            (iii) The Depositor has the power and authority to execute and
      deliver this Agreement and to carry out its terms; the Depositor has full
      power and authority to sell and assign the property to be sold and
      assigned to and deposited with the Trust and the Depositor has duly
      authorized such sale and assignment and deposit to the Trust by all
      necessary corporate action; and the execution, delivery and performance of
      this Agreement have been duly authorized by the Depositor by all necessary
      action of a limited liability company.

            (iv) The consummation of the transactions contemplated by this
      Agreement and the fulfillment of the terms hereof do not conflict with,
      result in any breach of any of the terms and provisions of, or constitute
      (with or without notice or lapse of time) a default under, the articles of
      organization or operating agreement of the Depositor, or any indenture,
      agreement or other instrument to which the Depositor is a party or by
      which it is bound; nor result in the creation or imposition of any Lien
      upon any of its properties pursuant to the terms of any such indenture,
      agreement or other instrument (other than pursuant to the Basic
      Documents); nor violate any law or, to the best of the Depositor's
      knowledge, any order, rule or regulation applicable to the Depositor of
      any court or of any federal or state regulatory body, administrative
      agency or other governmental instrumentality having jurisdiction over the
      Depositor or its properties.

            (v) To the Depositor's best knowledge, there are no proceedings or
      investigations pending or threatened before any court, regulatory body,
      administrative agency or other governmental instrumentality having
      jurisdiction over the Depositor or its properties: (A) asserting the
      invalidity of this Agreement, (B) seeking to prevent the consummation of
      any of the transactions contemplated by this Agreement or (C) seeking any
      determination or ruling that might materially and adversely affect the
      performance by the Depositor of its obligations under, or the validity or
      enforceability of, this Agreement.

            (vi) The representations and warranties of the Company and the
      Depositor in Sections 3.01 and 3.02 of the Purchase Agreement are true and
      correct.

      (b) The Company hereby represents and warrants to the Owner Trustee that:

                                        7
<PAGE>   12
            (i) The Company has been duly organized and is validly existing as a
      limited liability company in good standing under the laws of the
      jurisdiction of its organization, with the power and authority to own its
      properties and to conduct its business as such properties are currently
      owned and such business is presently conducted.

            (ii) The Company is duly qualified to do business as a foreign
      limited liability company in good standing and has obtained all necessary
      licenses and approvals in all jurisdictions in which the ownership or
      lease of its property or the conduct of its business shall require such
      qualifications.

            (iii) The Company has the power and authority to execute and deliver
      this Agreement and to carry out its terms; the Company has full power and
      authority to purchase the Certificates; and the execution, delivery and
      performance of this Agreement has been duly authorized by the Company by
      all necessary action.

            (iv) The consummation of the transactions contemplated by this
      Agreement and the fulfillment of the terms hereof do not conflict with,
      result in any breach of any of the terms and provisions of, or constitute
      (with or without notice or lapse of time) a default under, the articles of
      organization or operating agreement of the Company, or any indenture,
      agreement or other instrument to which the Company is a party or by which
      it is bound; nor result in the creation or imposition of any Lien upon any
      of its properties pursuant to the terms of any such indenture, agreement
      or other instrument (other than pursuant to the Basic Documents); nor
      violate any law or, to the best of the Company's knowledge, any order,
      rule or regulation applicable to the Company of any court or of any
      federal or state regulatory body, administrative agency or other
      governmental instrumentality having jurisdiction over the Company or its
      properties.

            (v) There are no proceedings or investigations pending or, to the
      Company's best knowledge, threatened before any court, regulatory body,
      administrative agency or other governmental instrumentality having
      jurisdiction over the Company or its properties: (A) asserting the
      invalidity of this Agreement, (B) seeking to prevent the consummation of
      any of the transactions contemplated by this Agreement or (C) seeking any
      determination or ruling that might materially and adversely affect the
      performance by the Company of its obligations under, or the validity or
      enforceability of, this Agreement.

                                  ARTICLE III

                     Certificates and Transfer of Interests

      SECTION 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.

                                        8
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      SECTION 3.02. The Certificates. The Certificates shall be issued in
minimum denominations of a one percent Percentage Interest in the Trust. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates.

      A transferee of a Certificate shall become a Certificateholder and shall
be entitled to the rights and subject to the obligations of a Certificateholder
hereunder upon such transferee's acceptance of a Certificate duly registered in
such transferee's name pursuant to Section 3.04.

      SECTION 3.03. Authentication of Certificates. On the Closing Date, the
Owner Trustee shall cause the Certificates in an aggregate Percentage Interest
equal to 100% to be executed on behalf of the Trust, authenticated and delivered
to or upon the written order of the Depositor, signed by its chairman of the
board, its president, any vice president, secretary or any assistant treasurer,
without further corporate action by the Depositor, in the respective authorized
denominations. No Certificate shall entitle its Holder to any benefit under this
Agreement or be valid for any purpose unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee or The Chase Manhattan Bank, as the
Owner Trustee's authenticating agent, by manual signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.

      SECTION 3.04. Registration of Transfer and Exchange of Certificates;
Limitations on Transfer. The Certificate Registrar shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Owner Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Chase Manhattan
Bank shall be the initial Certificate Registrar.

      The Certificates have not been and will not be registered under the
Securities Act and will not be listed on any exchange. No transfer of a
Certificate shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a transfer is
to be made in reliance upon an exemption from the Securities Act and state
securities laws, in order to assure compliance with the Securities Act and such
laws, the Holder desiring to effect such transfer and such Holder's prospective
transferee shall each certify to the Owner Trustee in writing the facts
surrounding the transfer in substantially the forms set forth in Exhibit C (the
"Transferor Certificate") and either Exhibit D (the "Investment Letter") or
Exhibit E (the "Rule 144A Letter"). Except in the case of a transfer as to which
the proposed transferee has provided a

                                        9
<PAGE>   14
Rule 144A Letter, there shall also be delivered to the Owner Trustee an Opinion
of Counsel that such transfer may be made pursuant to an exemption from the
Securities Act and state securities laws, which Opinion of Counsel shall not be
an expense of the Trust or the Owner Trustee; provided that such Opinion of
Counsel in respect of the applicable state securities laws may be a memorandum
of law rather than an opinion if such counsel is not licensed in the applicable
jurisdiction. The Depositor shall provide to any Holder of a Certificate and any
prospective transferee designated by any such Holder, information regarding the
Certificates and the Receivables and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A.
Each Holder of a Certificate desiring to effect such a transfer shall, and does
hereby agree to, indemnify the Trust, the Owner Trustee, and the Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with federal and state securities laws. The Owner Trustee
shall cause each Certificate to contain a legend in the form set forth on the
form of Certificate attached hereto as Exhibit A.

      Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.08 and subject to the
satisfaction of the preceding paragraph, the Owner Trustee shall execute,
authenticate and deliver (or shall cause The Chase Manhattan Bank as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Certificates of like tenor and in
authorized denominations of a like aggregate Percentage Interest, dated the date
of authentication by the Owner Trustee or any authenticating agent; provided
that prior to such execution, authentication and delivery, the Owner Trustee
shall have received an Opinion of Counsel to the effect that the proposed
transfer will not cause the Trust to be characterized as an association (or a
publicly traded partnership) taxable as a corporation or alter the tax
characterization of the Notes for federal income tax purposes or Michigan income
and single business tax purposes. At the option of a Holder, Certificates may be
exchanged for other Certificates of like tenor and of authorized denominations
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.08.

      Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice.

      No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

                                       10
<PAGE>   15
      The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Certificates for a period of 15 days preceding the
due date for any payment with respect to the Certificates.

      SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate has been acquired by a protected purchaser, the
Owner Trustee on behalf of the Trust shall execute and the Owner Trustee or The
Chase Manhattan Bank, as the Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section, the Owner Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of ownership in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

      SECTION 3.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar or any Paying Agent may treat the Person in whose name any Certificate
is registered in the Certificate Register as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.02 and for all
other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or any Paying Agent shall be bound by any notice to the contrary.

      SECTION 3.07. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Servicer and the
Depositor, within 15 days after receipt by the Owner Trustee of a written
request therefor from the Servicer or the Depositor, a list, in such form as the
Servicer or the Depositor may reasonably require, of the names and addresses of
the Certificateholders as of the most recent Record Date. If a Certificateholder
applies in writing to the Owner Trustee, and such application states that the
applicant desires to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates, then the Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such applicant access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold any of the Depositor, the Company, the
Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.

      SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Owner Trustee
in respect of the Certificates and the

                                       11
<PAGE>   16
Basic Documents may be served. The Owner Trustee initially designates The Chase
Manhattan Bank, 55 Water Street, New York, New York 10041 as its office for such
purposes. The Owner Trustee shall give prompt written notice to the Company and
to the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.

      SECTION 3.09. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Deposit Account pursuant to Section
5.02 and shall report the amounts of such distributions to the Owner Trustee.
Subject to the provisions of Section 5.05 of the Sale and Servicing Agreement,
any Paying Agent shall have the revocable power to withdraw funds from the
Deposit Account for the purpose of making the distributions referred to above.
The Owner Trustee may revoke such power and remove the Paying Agent if the Owner
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect
or that it is in the interest of the Certificateholders to do so. The Paying
Agent initially shall be the Indenture Trustee, and any co-paying agent chosen
by the Indenture Trustee and acceptable to the Owner Trustee. The Person acting
as Indenture Trustee shall not be permitted to resign as Paying Agent so long as
such Person is acting as the Indenture Trustee. The Owner Trustee shall cause
such successor Paying Agent or any additional Paying Agent appointed by the
Owner Trustee to execute and deliver to the Owner Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with the
Owner Trustee that, as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. The Paying
Agent shall return all unclaimed funds to the Owner Trustee and upon removal of
a Paying Agent such Paying Agent shall also return all funds in its possession
to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall
apply to the Owner Trustee also in its role as Paying Agent, for so long as the
Owner Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.

      SECTION 3.10. Definitive Certificates. The Certificates, upon original
issuance, will be issued in definitive, fully registered form.

      SECTION 3.11. Fixed Value Securities. Pursuant to the Sale and Servicing
Agreement and the Purchase Agreement, promptly following the sale of the
Standard Receivables and Fixed Value Receivables to the Trust on the Closing
Date, the Trust will sell to the Depositor the Fixed Value Payments and Fixed
Value Finance Charges in accordance with Section 2.02 of the Sale and Servicing
Agreement. Neither the Depositor nor the Company (as assignee of the Depositor)
shall transfer such Fixed Value Payments and Fixed Value Finance Charges to any
Person other than the Trust and except as contemplated by the Purchase
Agreement. At any time after the Trust sells the Fixed Value Payments and Fixed
Value Finance Charges to the Depositor, at the option of the Company (as
assignee of the Depositor) and upon 10 days prior written notice to the Owner
Trustee and the Indenture Trustee, the Company will be permitted to sell to the
Trust, and the Trust shall be obligated to purchase from the Company (subject to
the availability of funds), all or any portion of the Fixed Value Payments
and/or Fixed

                                       12
<PAGE>   17
Value Finance Charges due under the Receivables, subject to the terms and
conditions of the Sale and Servicing Agreement. Upon any such sale, (i) the
Depositor, the Company and the Owner Trustee will enter into an amendment to
this Agreement to provide for, at the election of the Company, the issuance of
certificates representing ownership interests in the Trust to the extent of the
Fixed Value Payments and/or Fixed Value Finance Charges due under the
Receivables or the issuance of indebtedness by the Trust secured by the Fixed
Value Payments and/or Fixed Value Finance Charges due under the Receivables and
to make any other provisions herein that are necessary or desirable in
connection therewith and (ii) the Owner Trustee and the Depositor will enter
into any other agreements or instruments related thereto as may be requested by
the Company; provided, however, that the Owner Trustee may, but shall not be
obligated to, enter into any such amendment, agreement or instrument that
affects the Owner Trustee's own rights, duties or immunities under this
Agreement; and provided, further, that the obligation of the Owner Trustee to
enter into any such amendment or other agreement or instrument is subject to the
following conditions precedent:

      (a) Such amendment and other agreements and instruments, in forms
satisfactory to the Owner Trustee and, in the case of amendments or agreements
to be executed and delivered by the Indenture Trustee, the Indenture Trustee,
shall have been executed by each other party thereto and delivered to the Owner
Trustee;

      (b) The Company shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an Opinion of Counsel to the
effect that each condition precedent (including the requirement with respect to
all required filings) provided by this Section has been complied with and such
amendment or other agreement or instrument is authorized or permitted by this
Agreement;

      (c) The Rating Agency Condition shall have been satisfied with respect to
such sale and issuance;

      (d) Such sale and issuance and such amendment or other agreement or
instrument shall not adversely affect in any material respect the interest of
any Noteholder or Certificateholder, and the Company shall have provided to the
Owner Trustee and the Indenture Trustee an Officer's Certificate to such effect;

      (e) The Owner Trustee and the Indenture Trustee shall have received an
Opinion of Counsel to the effect that such sale and issuance will not have any
material adverse tax consequence to the Trust or to any Noteholder or
Certificateholder; and

      (f) All filings and other actions required to continue the first perfected
interest of the Trust in the Owner Trust Estate and of the Indenture Trustee in
the Collateral shall have been duly made or taken by the Company.

                                       13
<PAGE>   18
                                   ARTICLE IV

                            Actions by Owner Trustee

      SECTION 4.01. Prior Notice to Owners with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action unless
at least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the Owners
shall not have notified the Owner Trustee in writing prior to the 30th day after
such notice is given that such Owners have withheld consent or provided
alternative direction:

      (a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Receivables) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Receivables);

      (b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);

      (c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;

      (d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the Owners;

      (e) the amendment, change or modification of the Administration Agreement,
except to cure any ambiguity or to amend or supplement any provision in a manner
or add any provision that would not materially adversely affect the interests of
the Owners; or

      (f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.

      SECTION 4.02. Action by Owners with Respect to Certain Matters. The Owner
Trustee shall not have the power, except upon the direction of the Owners, to
(a) remove the Administrator under the Administration Agreement pursuant to
Section 8 thereof, (b) appoint a successor Administrator pursuant to Section 8
of the Administration Agreement, (c) remove the Servicer under the Sale and
Servicing Agreement pursuant to Section 8.01 thereof or (d) except as expressly
provided in the Basic Documents, sell the Receivables after the termination of
the Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the Owners.

      SECTION 4.03. Action by Owners with Respect to Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to

                                       14
<PAGE>   19
the Trust without the unanimous prior approval of all Owners and the delivery to
the Owner Trustee by each such Owner of a certificate certifying that such Owner
reasonably believes that the Trust is insolvent.

      SECTION 4.04. Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
Section 2.03, nor shall the Owner Trustee be obligated to follow any such
direction, if given.

      SECTION 4.05. Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of the Certificates evidencing not less than a majority of the
Percentage Interests evidenced by the Certificates. Except as expressly provided
herein, any written notice of the Owners delivered pursuant to this Agreement
shall be effective if signed by the Holders of the Certificates evidencing not
less than a majority of the Percentage Interests evidenced by the Certificates
at the time of the delivery of such notice.

                                   ARTICLE V

                   Application of Trust Funds; Certain Duties

      SECTION 5.01. Establishment of Deposit Account. The Deposit Account shall
be established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement. The Deposit Account shall be under the sole dominion and control of
the Indenture Trustee for the benefit of Noteholders and the Certificateholders,
as applicable in accordance with the Sale and Servicing Agreement.

      SECTION 5.02. Application of Trust Funds. (a) On each Payment Date, the
Servicer is obligated to instruct the Indenture Trustee to make distributions
and allocations in accordance with Section 5.05(a) of the Sale and Servicing
Agreement. Distributions to Certificateholders will be made in accordance with
Section 5.05(a)(ii) (D) and (E) of the Sale and Servicing Agreement.

      (a) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Paying
Agent is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution (such
as a

                                       15
<PAGE>   20
distribution to a non-U.S. Owner), the Paying Agent may in its sole discretion
withhold such amounts in accordance with this paragraph.

      SECTION 5.03. Method of Payment. Subject to Section 9.01(c), distributions
required to be made to Certificateholders on any Payment Date shall be made by
the Paying Agent to each Certificateholder of record on the preceding Record
Date by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date, or,
if not, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.

      SECTION 5.04. Accounting and Reports to Owners, Internal Revenue Service
and Others. The Owner Trustee shall deliver to each Owner such information,
reports or statements as may be required by the Code and applicable Treasury
Regulations and as may be required to enable each Owner to prepare its federal
and state income tax returns. Consistent with the Trust's characterization for
tax purposes, as a security arrangement for the issuance of non-recourse debt,
no federal income tax return shall be filed on behalf of the Trust unless either
(i) the Owner Trustee shall receive an Opinion of Counsel that, based on a
change in applicable law occurring after the date hereof, or as a result of a
transfer by the Company permitted by Section 3.04, the Code requires such a
filing or (ii) the Internal Revenue Service shall determine that the Trust is
required to file such a return. Notwithstanding the preceding sentence, the
Owner Trustee shall file Internal Revenue Service Form 8832 and elect for the
Trust to be treated as a domestic eligible entity with a single owner that is
disregarded as a separate entity, which election shall remain in effect so long
as the Company or any other party is the sole Owner. In the event that the Trust
is required to file tax returns, the Owner Trustee shall prepare or shall cause
to be prepared any tax returns required to be filed by the Trust and shall remit
such returns to the Company (or if the Company no longer owns any Certificates,
the Owner designated for such purpose by the Company to the Owner Trustee in
writing) at least five (5) days before such returns are due to be filed. The
Company (or such designee Owner, as applicable) shall promptly sign such returns
and deliver such returns after signature to the Owner Trustee and such returns
shall be filed by the Owner Trustee with the appropriate tax authorities. In no
event shall the Owner Trustee or the Company (or such designee Owner, as
applicable) be liable for any liabilities, costs or expenses of the Trust or the
Noteholders arising out of the application of any tax law, including federal,
state, foreign or local income or excise taxes or any other tax imposed on or
measured by income (or any interest, penalty or addition with respect thereto or
arising from a failure to comply therewith) except for any such liability, cost
or expense attributable to any act or omission by the Owner Trustee or the
Company (or such designee Owner, as applicable), as the case may be, in breach
of its obligations under this Agreement.

                                       16
<PAGE>   21
                                   ARTICLE VI

                      Authority and Duties of Owner Trustee

      SECTION 6.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument described in Section 3.11, in each
case, in such form as the Company shall approve, as evidenced conclusively by
the Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust pursuant to the Basic Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator recommends
with respect to the Basic Documents.

      SECTION 6.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Owners, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.

      SECTION 6.03. Action upon Instruction. (a) Subject to Article IV and in
accordance with the terms of the Basic Documents, the Owners may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the Owners
pursuant to Article IV.

      (b) The Owner Trustee shall not be required to take any action hereunder
or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.

      (c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Agreement or the Basic Documents,
as

                                       17
<PAGE>   22
it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.

      (d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Owners requesting
instruction and, to the extent that the Owner Trustee acts or refrains from
acting in good faith in accordance with any such instruction received, the Owner
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.

      SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.

      SECTION 6.05. No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.

      SECTION 6.06. Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (b) that, to the actual

                                       18
<PAGE>   23
knowledge of the Owner Trustee, would result in the Trust's becoming taxable as
a corporation for federal income tax purposes. The Owners shall not direct the
Owner Trustee to take action that would violate the provisions of this Section.

                                  ARTICLE VII

                            Concerning Owner Trustee

      SECTION 7.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts, but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):

      (a) The Owner Trustee shall not be liable for any error of judgment made
in good faith by the Owner Trustee;

      (b) The Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Administrator or any Owner;

      (c) No provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;

      (d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes or any amounts payable on the
Certificates;

      (e) The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or the Company or for the form, character, genuineness, sufficiency,
value or validity of any of the Owner Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to any Noteholder or to any
Owner, other than as expressly provided for herein or expressly agreed to in the
Basic Documents;

      (f) The Owner Trustee shall not be liable for the default or misconduct of
the Administrator, CFC, as Seller or Depositor, the Company, the Indenture
Trustee or the Servicer under any of the Basic Documents or otherwise, and the
Owner Trustee shall have no obligation

                                       19
<PAGE>   24
or liability to perform the obligations of the Trust under this Agreement or the
Basic Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer or CFC, as Depositor or as Seller, under the Sale and Servicing
Agreement; and

      (g) The Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of any such act.

      SECTION 7.02. Furnishing of Documents. The Owner Trustee shall furnish to
the Owners, promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.

      SECTION 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Company, for the benefit of the Owners, that:

      (a) It is a national banking association duly organized and validly
existing in good standing under the laws of the United States. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.

      (b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.

      (c) Neither the execution or the delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated hereby, nor compliance by it
with any of the terms or provisions hereof will contravene any federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.

      SECTION 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of determination

                                       20
<PAGE>   25
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.

      (b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled Persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such Persons and not contrary to this Agreement or
any Basic Document.

      SECTION 7.05. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Chase Manhattan Bank
USA, National Association acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.

      SECTION 7.06. Owner Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certificates) shall be taken as
the statements of the Depositor and the Company, and the Owner Trustee assumes
no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes, or of
any Receivable or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable, or the perfection and priority of any security
interest created by any Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be distributed
to Certificateholders under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and ownership
of any Financed Vehicle; the existence and enforceability of any insurance
thereon; the existence and contents of any Receivable on any computer or other
record thereof; the validity of the assignment of any Receivable to the Trust or
of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Depositor,
the Company or the Servicer with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation, or any action of the Administrator, the Indenture Trustee or
the Servicer or any subservicer taken in the name of the Owner Trustee.

                                       21
<PAGE>   26
         SECTION 7.07. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Company, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee.

         SECTION 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
The Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Trust to use
its best efforts to maintain, the effectiveness of all licenses required under
the Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the Basic Documents and the transactions contemplated hereby and
thereby until such time as the Trust shall terminate in accordance with the
terms hereof.

                                  ARTICLE VIII

                          Compensation of Owner Trustee

         SECTION 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.

         SECTION 8.02. Indemnification. The Depositor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Depositor shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's choice of
legal counsel shall be subject to the approval of the Depositor, which approval
shall not be unreasonably withheld.

                                       22
<PAGE>   27
         SECTION 8.03. Payments to Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.

                                   ARTICLE IX

                         Termination of Trust Agreement

         SECTION 9.01. Termination of Trust Agreement. (a) The Trust shall
dissolve upon the final distribution by the Owner Trustee of all moneys or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture, the Sale and Servicing Agreement and Article V. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner shall not (x) operate
to dissolve or terminate this Agreement or the Trust or (y) entitle such Owner's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate or (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.

         (b) Except as provided in Section 9.01(a), none of the Depositor, the
Company or any Owner shall be entitled to revoke, dissolve or terminate the
Trust.

         (c) Notice of any dissolution of the Trust, specifying the Payment Date
upon which Certificateholders shall surrender their Certificates to the Paying
Agent for payment of the final distribution and cancellation, shall be given by
the Owner Trustee by letter to Certificateholders mailed within five Business
Days of receipt of a termination notice of such termination from the Servicer
given pursuant to Section 9.01(c) of the Sale and Servicing Agreement, stating
(i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Paying Agent at the time such notice
is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Section 5.02.

         In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain

                                       23
<PAGE>   28
subject to this Agreement. Subject to applicable escheat laws, any funds
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Paying Agent to the Company.

      (d) Upon the winding up of the Trust in accordance with Section 3808 of
the Business Trust Statute, the Owner Trustee shall cause the Certificate of
Trust to be cancelled by filing a certificate of cancellation with the Secretary
of State in accordance with the provisions of Section 3810 of the Business Trust
Statute and the Trust and this Agreement (other than Article VIII) shall
terminate and be of no further force or effect.

                                   ARTICLE X

             Successor Owner Trustees and Additional Owner Trustees

      SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) time deposits that are rated at least "A-1"
by Standard & Poor's and "P-1" by Moody's. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.02.

      SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator. Upon receiving such notice
of resignation, the Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.

      If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.01 and shall fail to resign after written
request therefor by the Administrator, or if at any time the Owner Trustee shall
be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator may remove the Owner Trustee. If the
Administrator shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Administrator shall

                                       24
<PAGE>   29
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing Owner Trustee so
removed and one copy to the successor Owner Trustee, and shall pay all fees owed
to the outgoing Owner Trustee.

      Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.

      SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.

      No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.

      Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.

      SECTION 10.04. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.

      SECTION 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal

                                       25
<PAGE>   30
requirements of any jurisdiction in which any part of the Owner Trust Estate or
any Financed Vehicle may at the time be located, the Administrator and the Owner
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Administrator and
Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or as
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust or
any part thereof and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Administrator and the
Owner Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor Owner Trustee pursuant
to Section 10.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.03.

      Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

      (a) All rights, powers, duties and obligations conferred or imposed upon
the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Owner Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;

      (b) No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and

      (c) The Administrator and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.

      Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Administrator.

                                       26
<PAGE>   31
      Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.

                                   ARTICLE XI

                                  Miscellaneous

      SECTION 11.01. Supplements and Amendments. This Agreement may be amended
by the Depositor, the Company and the Owner Trustee, with prior written notice
to the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement
(including for the issuance of Fixed Value Securities pursuant to Section 2.03
of the Sale and Servicing Agreement) or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder or Certificateholder.

      This Agreement may also be amended from time to time by the Depositor, the
Company and the Owner Trustee, with prior written notice to the Rating Agencies,
with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes, the
consent of the Holders of Certificates evidencing not less than a majority of
the Percentage Interests evidenced by the Certificates, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes or of the Percentage Interests evidenced by the Certificates
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Certificates.

      Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.

      It shall not be necessary for the consent of Certificateholders,
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance

                                       27
<PAGE>   32
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

      Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.

      Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment that affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.

      In connection with the execution of any amendment to this Agreement or any
amendment of any other agreement to which the Issuer is a party, the Owner
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel to the effect that such amendment is authorized or permitted by the
Basic Documents and that all conditions precedent in the Basic Documents for the
execution and delivery thereof by the Issuer or the Owner Trustee, as the case
may be, have been satisfied.

      SECTION 11.02. No Legal Title to Owner Trust Estate in Owners. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
ownership interest therein only in accordance with Articles V and IX. No
transfer, by operation of law or otherwise, of any right, title or interest of
the Owners to and in their ownership interest in the Trust shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.

      SECTION 11.03. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Depositor, the
Company, the Owners, the Administrator and, to the extent expressly provided
herein, the Indenture Trustee and the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.

      SECTION 11.04. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to Chrysler Financial Company L.L.C., 1000 Chrysler
Drive, CIMS 485-14-78, Auburn Hills, Michigan 48236, Attention of Assistant
Secretary; if to the Company, addressed to DaimlerChrysler Retail Receivables,
LLC, 27777 Franklin Road, Southfield,

                                       28
<PAGE>   33
Michigan 48034, Attention of Assistant Secretary; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party.

      (b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.

      SECTION 11.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

      SECTION 11.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

      SECTION 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Company and its permitted assignees, the Owner Trustee and its
successors and each Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.

      SECTION 11.08. Covenants of Company. In the event that any litigation with
claims in excess of $1,000,000 to which the Company is a party which shall be
reasonably likely to result in a material judgment against the Company that the
Company will not be able to satisfy shall be commenced by an Owner, during the
period beginning nine months following the commencement of such litigation and
continuing until such litigation is dismissed or otherwise terminated (and, if
such litigation has resulted in a final judgment against the Company, such
judgment has been satisfied), the Company shall not make any distribution on or
in respect of its membership interests to any of its members, or repay the
principal amount of any indebtedness of the Company held by CFC, unless (i)
after giving effect to such distribution or repayment, the Company's liquid
assets shall not be less than the amount of actual damages claimed in such
litigation or (ii) the Rating Agency Condition shall have been satisfied with
respect to any such distribution or repayment. The Company will not at any time
institute against the Trust any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Certificates, the Notes, this Agreement or any of the Basic
Documents.

      SECTION 11.09. No Petition. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Company
or the Trust, or join in any institution against the Company or the Trust of,
any bankruptcy proceedings under any United States federal or

                                       29
<PAGE>   34
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, this Agreement or any of the Basic Documents.

      SECTION 11.10. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, the Servicer, the Company, the Administrator, the
Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse
may be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates or the Basic
Documents.

      SECTION 11.11. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

      SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      SECTION 11.13. Certificate Transfer Restrictions. The Certificates may not
be acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding a Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.

      SECTION 11.14. Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and liabilities
of the Administrator incurred thereunder. In addition, the Depositor shall be
responsible for the payment of all fees and expenses of the Trust, the Owner
Trustee and the Indenture Trustee paid by any of them in connection with any of
their obligations under the Basic Documents to obtain or maintain any required
license under the Pennsylvania Motor Vehicle Sales Finance Act.

                                       30
<PAGE>   35
      IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.

                              CHRYSLER FINANCIAL COMPANY L.L.C.,
                                 as Depositor

                              By: /s/ Anthony Pisano
                                  ----------------------------------------------
                                   Name:   Anthony Pisano
                                   Title:  Assistant Controller

                              DAIMLERCHRYSLER RETAIL RECEIVABLES LLC

                              By: Chrysler Financial Receivables Corporation,
                                  as a Member

                              By: /s/ Anthony Pisano
                                  ----------------------------------------------
                                   Name:   Anthony Pisano
                                   Title:  Assistant Controller

                              CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                                not in its individual capacity but solely as
                                Owner Trustee

                              By: /s/ John J. Cashin
                                  ----------------------------------------------
                                   Name:   John J. Cashin
                                   Title:  Vice President

                                       31
<PAGE>   36
                                                                       EXHIBIT A

                             Form of Certificate

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN
SECTION 3.04 OF THE TRUST AGREEMENT UNDER WHICH THIS CERTIFICATE IS ISSUED (A
COPY OF WHICH TRUST AGREEMENT IS AVAILABLE FROM THE OWNER TRUSTEE OR UPON
REQUEST), INCLUDING RECEIPT BY THE OWNER TRUSTEE OF AN INVESTMENT LETTER IN
WHICH THE TRANSFEREE MAKES CERTAIN REPRESENTATIONS.

No. R-1                                              Percentage Interest: 100%

                      DAIMLERCHRYSLER AUTO TRUST 2001-C

                                 CERTIFICATE

evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts (as
defined herein) secured by new and used automobiles and light duty trucks.

(This Certificate does not represent an interest in or obligation of Chrysler
Financial Company L.L.C. or any of its affiliates, except to the extent
described below.)

      THIS CERTIFIES THAT ______________________________________ is the
registered owner of a __________________________________ PERCENT nonassessable,
fully-paid, undivided percentage interest in DaimlerChrysler Auto Trust 2001-C
(the "Trust"), formed by Chrysler Financial Company L.L.C., a Michigan limited
liability company (the "Depositor"), and DaimlerChrysler Retail Receivables LLC,
a Michigan limited liability company (the "Company"). The initial Certificate
Balance is $_______________.

                                     A-1-1
<PAGE>   37
                   OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Trust
Agreement.

CHASE MANHATTAN BANK USA, NATIONAL        CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, as Owner Trustee          Or ASSOCIATION,
                                          as Owner Trustee
                                          by:  THE CHASE MANHATTAN BANK,
                                               as Authenticating Agent
by:                                       by:
-----------------------------------          -----------------------------------
         Authorized Signatory                       Authorized Signatory

                                     A-1-2
<PAGE>   38
      The Trust was created pursuant to a Trust Agreement dated as of August 8,
2001, as amended and restated by an Amended and Restated Trust Agreement dated
as of September 1, 2001 (as so amended and restated and further amended or
supplemented from time to time, the "Trust Agreement"), among the Depositor, the
Company and Chase Manhattan Bank USA, National Association, as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement or
the Sale and Servicing Agreement dated as of September 1, 2001 (as amended and
supplemented from time to time, the "Sale and Servicing Agreement"), between the
Trust and the Depositor, as seller and as servicer (in such capacity, the
"Servicer"), as applicable.

      This Certificate is one of the duly authorized class of certificates
(herein called the "Certificates"). Also issued under an Indenture dated as of
September 1, 2001 (the "Indenture"), between the Trust and Citibank, N.A., as
indenture trustee, are the four classes of Notes designated as "Class A-1 3.50%
Asset Backed Notes," "Class A-2 3.71% Asset Backed Notes," "Class A-3 4.21%
Asset Backed Notes" and "Class A-4 4.63% Asset Backed Notes" (collectively, the
"Notes"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of its acceptance hereof assents and by
which such Holder is bound. The property of the Trust consists of a pool of
retail installment sale contracts for new and used automobiles and light duty
trucks (collectively, the "Receivables"), all monies received on or after August
29, 2001, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement and all proceeds of the foregoing.

      It is the intent of the Depositor, the Company, the Servicer and the
Certificateholder that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a security arrangement for the issuance of debt by the sole Certificateholder.
The Company, by acceptance of the Certificates, agrees to treat, and to take no
action inconsistent with the above treatment for so long as the Company is the
sole Owner.

      Solely in the event the Certificates are held by more than a single Owner,
it is the intent of the Depositor, the Company, the Servicer and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be treated
as partners in the partnership. The Company and the other Certificateholders, by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the Treatment of, the Certificates for such tax purposes as partnership
interests in the Trust.

      Each Certificateholder, by its acceptance of a Certificate covenants and
agrees that such Certificateholder will not at any time institute against the
Company, or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar

                                     A-1-3
<PAGE>   39
law in connection with any obligations relating to the Certificates, the Notes,
the Trust Agreement or any of the Basic Documents.

      Distributions on this Certificate will be made as provided in the Trust
Agreement by the Paying Agent by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Owner Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency maintained for that
purpose by the Paying Agent in the Borough of Manhattan, The City of New York.

      Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

      Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.

      THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                                     A-1-4
<PAGE>   40
      IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.

                                    DAIMLERCHRYSLER AUTO TRUST 2001-C

                                    by: CHASE MANHATTAN BANK USA, NATIONAL
                                        ASSOCIATION, not in its individual
                                        capacity but solely as Owner Trustee

Dated:                              by:
                                       ---------------------------------------
                                                Authorized Signatory

                                     A-1-5
<PAGE>   41
                           [REVERSE OF CERTIFICATE]

      The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Servicer, the Company, the Owner Trustee or any affiliates of any
of them and no recourse may be had against such parties or their assets, except
as expressly set forth or contemplated herein or in the Trust Agreement or the
Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries with respect to the Receivables (and certain
other amounts), all as more specifically set forth herein and in the Sale and
Servicing Agreement. A copy of each of the Sale and Servicing Agreement and the
Trust Agreement may be examined by any Certificateholder upon written request
during normal business hours at the principal office of the Depositor and at
such other places, if any, designated by the Depositor.

      The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the Company and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor, the Company and the Owner Trustee
with the consent of the Holders of the Certificates and the Notes, each voting
as a class, evidencing not less than a majority of the Percentage Interests
evidenced by the outstanding Certificates or a majority of the Outstanding
Amount of the Notes of each such class. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

      As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Borough of Manhattan, The City of New York, accompanied
by a written instrument of transfer in form satisfactory to the Owner Trustee
and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is The Chase Manhattan
Bank, New York, New York.

      Except as provided in the Trust Agreement, the Certificates are issuable
only as registered Certificates. As provided in the Trust Agreement and subject
to certain limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.

                                     A-1-6
<PAGE>   42
      The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.

      The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Owner Trust Estate. The Servicer of the Receivables may at its
option purchase the Owner Trust Estate at a price specified in the Sale and
Servicing Agreement, and such purchase of the Receivables and other property of
the Trust will effect early retirement of the Certificates; provided, however,
such right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to 10% of the Original
Pool Balance.

      The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or which uses plan assets to acquire Certificates
(each, a "Benefit Plan"). By accepting and holding this Certificate, the Holder
hereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.

                                     A-1-7
<PAGE>   43
                                  ASSIGNMENT

      FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

the within Certificate, and all rights thereunder, and hereby irrevocably
constitutes and appoints         , attorney, to transfer said Certificate on the
books of the Certificate Registrar, with full power of substitution in the
premises.

Dated:                                                                     */
                                            --------------------------------
                                              Signature Guaranteed:

                                                                           */
                                            --------------------------------

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

  */  NOTICE: The signature to this assignment must correspond with the name of
      the registered owner as it appears on the face of the within Certificate
      in every particular, without alteration, enlargement or any change
      whatever. Such signature must be guaranteed by an "eligible guarantor
      institution" meeting the requirements of the Certificate Registrar, which
      requirements include membership or participation in STAMP or such other
      "signature guarantee program" as may be determined by the Certificate
      Registrar in addition to, or in substitution for, STAMP, all in accordance
      with the Securities Exchange Act of 1934, as amended.

                                     A-1-8
<PAGE>   44
                                                                       EXHIBIT B

      Form of Certificate of Trust of DaimlerChrysler Auto Trust 2001-C

            THIS Certificate of Trust of DaimlerChrysler Auto Trust 2001-C (the
"Trust"), dated ___________, 2001, is being duly executed and filed by Chase
Manhattan Bank USA, National Association, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, Section 3801 et seq.).

            1.    Name. The name of the business trust formed hereby is
DAIMLERCHRYSLER AUTO TRUST 2001-C.

            2.    Delaware Trustee.  The name and business address of the
trustee of the Trust in the State of Delaware is Chase Manhattan Bank USA,
National Association, 1201 Market Street, Wilmington, Delaware 19801,
Attention:  Corporate Trustee Administration Department.

            3.    Effective Date.  This Certificate of Trust shall be
effective upon its filing with the Secretary of State of the State of
Delaware.

            IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.

                                    CHASE MANHATTAN BANK USA, NATIONAL
                                    ASSOCIATION, not in its individual capacity
                                    but as owner trustee under the Trust
                                    Agreement dated as of ____________, 2001

                                    by:
                                       ---------------------------------------
                                       Name:
                                       Title:

                                      B-1
<PAGE>   45
                                                                       EXHIBIT C

                         FORM OF TRANSFEROR CERTIFICATE

                         [DATE]

[Seller]
[Seller Address]
[Owner Trustee]
[Owner Trustee Address]

            Re:   DaimlerChrysler Auto Trust 2001-C Certificates

Ladies and Gentlemen:

      In connection with our disposition of the above-referenced Certificates
(the "Certificates") we certify that (a) we understand that the Certificates
have not been registered under the Securities Act of 1933, as amended (the
"Act"), and are being transferred by us in a transaction that is exempt from the
registration requirements of the Act and (b) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, in a
manner that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act.

                        Very truly yours,

                        [NAME OF TRANSFEROR]

                        By:
                             -------------------------------
                             Authorized Officer

                                      C-1
<PAGE>   46
                                                                       EXHIBIT D

                            FORM OF INVESTMENT LETTER

                     [DATE]

[Seller]
[Seller Address]
[Owner Trustee]
[Owner Trustee Address]

            Re:   DaimlerChrysler Auto Trust 2001-C  Certificates

Ladies and Gentlemen:

      In connection with our acquisition of the above-referenced Certificates
(the "Certificates") we certify that (a) we understand that the Certificates are
not being registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such laws,
(b) we are an "accredited investor," as defined in Regulation D under the Act,
and have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the seller concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (f) below), (e)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action that would result in a
violation of Section 5 of the Act or any state securities laws and (f) we will
not sell, transfer or otherwise dispose of any Certificates unless (1) such
sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act and in compliance with any relevant state
securities laws or is exempt from such registration requirements and, if
requested, we will at our expense provide an Opinion of Counsel satisfactory to
the addresses of this certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Amended and Restated Trust dated as of September 1, 2001, between Chrysler
Financial Company L.L.C., as Depositor, DaimlerChrysler Retail Receivables LLC
and Chase Manhattan Bank USA, National Association, as Owner Trustee.

                        Very truly yours,

                        [NAME OF TRANSFEROR]

                        By:
                             -------------------------------
                             Authorized Officer

                                      D-1
<PAGE>   47
                                                                       EXHIBIT E

                           FORM OF RULE 144A LETTER

                  [DATE]

[Seller]
[Seller Address]
[Owner Trustee]
[Owner Trustee Address]

            Re:   DaimlerChrysler Auto Trust 2001-C Certificates

Ladies and Gentlemen:

      In connection with our acquisition of the above-referenced Certificates
(the "Certificates") we certify that (a) we understand that the Certificates are
not being registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such laws,
(b) we have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the seller concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) we have not, nor has anyone acting on
our behalf, offered, transferred, pledged, sold or otherwise disposed of the
Certificates or any interest in the Certificates, or solicited any offer to buy,
transfer, pledge or otherwise dispose of the Certificates or any interest in the
Certificates from any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action
that would constitute a distribution of the Certificates under the Act or that
would render the disposition of the Certificates a violation of Section 5 of the
Act or any state securities laws or require registration pursuant thereto, and
we will not act, or authorize any person to act, in such manner with respect to
the Certificates, (e) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Act. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Certificates for our own
account or for resale pursuant to Rule 144A and understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A or (ii) pursuant to another exemption from registration under the Act.

                        Very truly yours,

                        [NAME OF TRANSFEROR]

                        By:
                             -------------------------------
                             Authorized Officer

                                      E-1<PAGE>   1
                                                                   EXHIBIT 10.12

                                             LIMITED LIABILITY COMPANY AGREEMENT
                                             TEXACO OVONIC FUEL CELL COMPANY LLC

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                       TEXACO OVONIC FUEL CELL COMPANY LLC

                         DATED AS OF SEPTEMBER 21, 2000

                                 BY AND BETWEEN

                           TEXACO ENERGY SYSTEMS INC.

                                       AND

                         ENERGY CONVERSION DEVICES, INC.

<PAGE>   2

                                TABLE OF CONTENTS

                                    ARTICLE 1

              SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION

<TABLE>
<S>               <C>                                                                   <C>
Section 1.1       Subject Matter........................................................  1
Section 1.2       Definitions...........................................................  1
Section 1.3       Other Definitions.....................................................  9
Section 1.4       Rules of Construction................................................. 11

                                    ARTICLE 2

                           ORGANIZATION AND OPERATIONS

Section 2.1       Company............................................................... 12
Section 2.2       Certificate of Formation.............................................. 12
Section 2.3       Place of Business..................................................... 12
Section 2.4       Purpose............................................................... 12
Section 2.5       Associated Agreements................................................. 12
Section 2.6       Phases of Operations.................................................. 13
Section 2.7       Funding Deadlock...................................................... 16
Section 2.8       Funding Deadlock Buy-Out Procedures................................... 17
Section 2.9       Valuation Procedures.................................................. 18
Section 2.10      Commercial Deadlock................................................... 18

                                    ARTICLE 3

                                CAPITAL STRUCTURE

Section 3.1       Members' Capital Contributions and Percentage Interests............... 20
Section 3.2       Funding Alternatives During Commercial Phase.......................... 21
Section 3.3       Additional Capital Contributions...................................... 22
Section 3.4       Payment of Capital Contributions...................................... 22
Section 3.5       No Voluntary Contributions; Interest.................................. 22
Section 3.6       Member Loans.......................................................... 22
Section 3.7       Capital Accounts...................................................... 22
Section 3.8       Capital Account Adjustments........................................... 22
Section 3.9       Return of Capital..................................................... 24
</TABLE>

                                       ii

<PAGE>   3

                                    ARTICLE 4

                          ALLOCATIONS AND DISTRIBUTIONS

<TABLE>
<S>               <C>                                                                   <C>
Section 4.1       Distributions......................................................... 24
Section 4.2       Profits, Losses and Distributive Shares of Tax Items.................. 24
Section 4.3       Compliance with Code.................................................. 28
Section 4.4       Allocations upon Disposition of Interest.............................. 28
Section 4.5       Tax Matters........................................................... 28

                                    ARTICLE 5

                                   MANAGEMENT

Section 5.1       Management of the Business of the Company............................. 30
Section 5.2       The Management Committee.............................................. 30
Section 5.3       Power and Authority of the Management Committee....................... 31
Section 5.4       Authority of Each Member.............................................. 33
Section 5.5       Meetings of Management Committee/Conduct of Business.................. 34
Section 5.6       Remuneration of Management Committee.................................. 35
Section 5.7       Officers of the Company............................................... 35
Section 5.8       Authority and Duties of Officers...................................... 35

                                    ARTICLE 6

                                 INDEMNIFICATION

Section 6.1       Exculpation........................................................... 35
Section 6.2       Indemnification....................................................... 35
Section 6.3       Liability for the Debts of the Company; Limited Liability............. 36
Section 6.4       Company Expenses...................................................... 37

                                    ARTICLE 7

                              TRANSFER OF INTERESTS

Section 7.1       Restrictions on Transfer.............................................. 37
Section 7.2       Change of Control..................................................... 39
Section 7.3       Waiver of Partition................................................... 40
Section 7.4       Covenant Not to Withdraw or Dissolve.................................. 40
Section 7.5       Substituted Members................................................... 40
Section 7.6       Deliveries............................................................ 41
Section 7.7       Approvals............................................................. 41
</TABLE>

                                       iii

<PAGE>   4

                                    ARTICLE 8

                                     DEFAULT

<TABLE>
<S>               <C>                                                                   <C>
Section 8.1       Default............................................................... 41
Section 8.2       Options of Nondefaulting Member....................................... 42
Section 8.3       No Limitation or Right of Set-Off..................................... 43

                                    ARTICLE 9

                                   DISSOLUTION

Section 9.1       Dissolution........................................................... 44
Section 9.2       Winding Up............................................................ 44
Section 9.3       Distributions Upon Liquidation........................................ 44
Section 9.4       Claims of the Members................................................. 45
Section 9.5       Rights and Obligations of Members..................................... 46

                                   ARTICLE 10

                                FINANCIAL MATTERS

Section 10.1      Books and Records..................................................... 46
Section 10.2      Financial Reports..................................................... 46
Section 10.3      Company Funds......................................................... 46

                                   ARTICLE 11

                                  MISCELLANEOUS

Section 11.1      Notices............................................................... 47
Section 11.2      Modification.......................................................... 48
Section 11.3      Governing Law......................................................... 48
Section 11.4      Assignment, Binding Effect............................................ 48
Section 11.5      No Third Party Rights................................................. 48
Section 11.6      Counterparts.......................................................... 48
Section 11.7      Invalidity............................................................ 48
Section 11.8      Entire Agreement...................................................... 48
Section 11.9      Expenses.............................................................. 49
Section 11.10     Waiver................................................................ 49
Section 11.11     Dispute Resolution.................................................... 49
</TABLE>

                                       iv

<PAGE>   5

<TABLE>
<S>               <C>                                                                    <C>
Section 11.12     Disclosure............................................................ 49
Section 11.13     Non-Compete; First Opportunity........................................ 49
Section 11.14     Further Assurances.................................................... 50
Section 11.15     Press Releases........................................................ 51
Section 11.16     Non-Assertion......................................................... 51

                                    EXHIBITS

A.                Certificate of Formation
B-1               Initial Annual Budget-ECD Services
B-2               ECD Annual Budgets
B-3               Budget Estimate for TESI Services
C.                Development Program
D.                Budget Protocol
E.                Initial Management Committee Representatives
F.                Dispute Resolution Procedure

                                    SCHEDULES

Schedule 2.6      Milestones
Schedule 3.2      Loan and Preferred Equity Terms
Schedule 9.3      In-Kind Distribution Protocol
</TABLE>

                                       v

<PAGE>   6

                       LIMITED LIABILITY COMPANY AGREEMENT

         LIMITED LIABILITY COMPANY AGREEMENT ("Agreement"), dated as of
September 21, 2000, by and between TEXACO ENERGY SYSTEMS INC. ("TESI"), a
Delaware corporation, having an office at 1111 Bagby, Houston, Texas 77002, and
ENERGY CONVERSION DEVICES, INC. ("ECD"), a Delaware corporation, having an
office at 1675 West Maple Road, Troy, Michigan 48084.

                                    ARTICLE 1

              SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION

         Section 1.1 Subject Matter. This Agreement sets forth the terms and
conditions upon which the parties shall form and operate Texaco Ovonic Fuel Cell
Company LLC ("the Company").

         Section 1.2 Definitions. For purposes of this Agreement, including the
Exhibits hereto, except as otherwise expressly provided or unless the context
otherwise requires, the terms defined in this Section 1.2 shall have the
meanings herein assigned to them and the capitalized terms defined elsewhere in
this Agreement, by inclusion in quotation marks and parentheses, shall have the
meanings so ascribed to them.

                  "Acceptable Transferee" means a Person proposed by the Selling
         Member in accordance with Section 7.1(c) and either accepted or not
         objected to by the Offeree Member within the time period set forth in
         such Section.

                  "Adjusted Capital Account" means, with respect to any Member,
         such Member's Capital Account as of the end of any relevant date after
         giving effect to the following adjustments:

                           (i) Credit to such Capital Account any amounts which
                  such Member is deemed to be obligated to restore pursuant to
                  Treasury Regulations Sections 1.704-1(b)(2)(ii)(c),
                  1.704-2(g)(1) and 1.704-2(i)(5); and

                           (ii) Debit to such Capital Account the items
                  described in Treasury Regulations Sections
                  1.704-1(b)(2)(ii)(d)(4), (5) and (6).

                  "Adjusted Capital Account Deficit" means, with respect to any
         Member, the deficit balance, if any, in that Member's Adjusted Capital
         Account.

                  "Affiliate" means with respect to any specified Person, any
         other Person directly or indirectly controlling or controlled by or
         under direct or indirect common control with such specified Person. For
         the purposes of this definition, "control" means the ownership,
         directly or indirectly, of more than 50% of the Voting Securities, of
         such

                                       1

<PAGE>   7

         Person; and the terms "controlling" and "controlled" have meanings
         correlative to the foregoing.

                  "Annual Budget" means the budget for operating expenses and
         capital expenditures of the Company for any Fiscal Year prepared in
         accordance with the Budget Protocol.

                  "Annual Operating Plan" means the detailed written description
         of the Company's objectives for a Fiscal Year and the actions the
         Company intends to take in furtherance of these objectives.

                  "Approved Annual Budget" means an Annual Budget (including the
         Initial Annual Budget) approved by the Management Committee or the
         Members in accordance with this Agreement.

                  "Assignment Agreement" means the Assignment Agreement dated as
         of the date hereof between ECD and TESI.

                  "Associated Agreements" means the following contracts: the
         Technology Agreement, the Assignment Agreement, the ECD Service
         Agreement, the Texaco Service Agreement, the Trade Name Agreement and
         the Confidentiality Agreement.

                  "Available Funds" means Company cash on hand, as of the date
         of computation, including (without limitation) cash derived from any
         one or more of the following sources: (i) the Capital Contributions of
         the Members made pursuant to the terms of this Agreement, (ii) the
         proceeds of any disposition of all or any portion of the assets of the
         Company, including, but not limited to, any insurance proceeds, (iii)
         any distributions (including liquidating distributions) received from
         any Person in which the Company holds an interest, and (iv) all Company
         operating income.

                  "Bankruptcy" means (i) the filing of any petition or the
         commencement of any suit or proceeding by an individual or entity
         pursuant to Bankruptcy Law seeking an order for relief, liquidation,
         reorganization or protection from creditors, (ii) the entry of an order
         for relief against an individual or entity pursuant to Bankruptcy Law
         or (iii) the appointment of a receiver, trustee or custodian for a
         substantial portion of the individual's or entity's assets or property,
         provided such order for relief, liquidation, reorganization or
         protection from creditors is not dismissed within sixty (60) days after
         such appointment of a receiver, trustee or custodian.

                  "Bankruptcy Law" means Title 11, U.S. Code or any similar
         Federal or state law for the relief of debtors.

                  "Beneficial Ownership" shall have the meaning set forth in
         Rule 13d under the Exchange Act, and derivative terms such as
         "beneficially own" shall be given corresponding meanings.

                                       2

<PAGE>   8

                  "Book Value" means, with respect to any asset, the asset's
         adjusted basis for federal income tax purposes, except (i) the initial
         Book Value of any asset contributed by a Member to the Company shall be
         the fair market value of such asset, as determined by the Management
         Committee; (ii) the Book Value of all Company assets shall be adjusted
         in the event of a revaluation as provided in Section 3.8(d) as
         determined by the Management Committee; (iii) the Book Value of any
         Company asset distributed to any Member shall be the fair market value
         of such asset on the date of distribution as determined by the
         Management Committee; and (iv) such Book Value shall be adjusted by the
         Depreciation taken into account with respect to such asset for purposes
         of computing Profits and Losses.

                  "Business Day" means any day other than a Saturday, Sunday or
         other day on which banks in the State of New York are permitted or
         required to close.

                  "Capital Contribution" means, with respect to any Member, the
         amount of capital contributed by such Member to the Company in
         accordance with Article 3 of this Agreement.

                  "Certificate of Formation" means the certificate of formation
         of the Company, as amended or restated from time to time, filed in the
         Office of the Secretary of State of the State of Delaware in accordance
         with the Delaware Act.

                  "Change of Control" means the occurrence of any of the
         following at any time after the date hereof:

                           (i) in the case of an ECD Member, (A) any Person or
                  "Group" (within the meaning of Rule 13d under the Exchange
                  Act) of Persons shall have become the Beneficial Owner of more
                  than Fifty Percent (50%) of the then outstanding Voting
                  Securities of ECD, or (B) the Board of Directors of ECD shall
                  approve the sale of all or substantially all the assets of ECD
                  to any third party or third parties in a transaction or a
                  series of related transactions; and

                           (ii) in the case of a Texaco Member, (A) any Person
                  or "Group" (within the meaning of Rule 13d under the Exchange
                  Act) of Persons shall have become the Beneficial Owner of more
                  than Fifty Percent (50%) of the then outstanding Voting
                  Securities of Texaco Inc., or (B) the Board of Directors of
                  Texaco Inc. shall approve the sale of all or substantially all
                  the assets of Texaco Inc. to any third party or third parties
                  in a transaction or a series of related transactions.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Commercialization Plan" means the comprehensive business plan
         covering all aspects of how the Company proposes to manufacture and
         market the Production Ready Prototype(s), all aspects of investment in
         necessary manufacturing facilities, including full financial and market
         projections, and full details of funding thereof by the Members.

                                       3

<PAGE>   9

                  "Company" means Texaco Ovonic Fuel Cell Company LLC, a limited
         liability company formed under the Delaware Act.

                  "Confidentiality Agreement" means the Confidentiality
         Agreement dated as of the date hereof among TESI, ECD and the Company.

                  "Default Purchase Price" means:

                           (i) if the Default that results in the Default
                  Purchase occurs on or before the first anniversary of this
                  Agreement, and TESI is the Defaulting Member: zero; and

                           (ii) if any other Default results in the Default
                  Purchase:

                                    (A) 80% of the Fair Market Value of the
                           Company,

                                    (B) minus the Fair Market Value of the
                           Released Technology, if any, to be transferred to
                           Defaulting Member pursuant to Section 3.2 of the
                           Technology Agreement,

                                    (C) multiplied by the Defaulting Member's
                           Percentage Interest, multiplied by the percentage of
                           the Defaulting Member's Interest that the Default
                           Purchaser wishes to purchase;

         provided that the Default Purchase Price shall in no case be less than
         zero.

                  "Delaware Act" means the Delaware Limited Liability Company
         Act, 6 Del. C.ss.ss.18-101, et seq., as amended from time to time.

                  "Depreciation" means, for each Fiscal Year or other period, an
         amount equal to the depreciation, amortization or other cost recovery
         deduction allowable with respect to an asset for such year or other
         period, except that if the Book Value of an asset differs from its
         adjusted basis for federal income tax purposes at the beginning of such
         year or other period (as a result of property contributions or
         adjustments to such values), Depreciation shall be adjusted as
         necessary so as to be an amount which bears the same ratio to such
         beginning Book Value as the federal income tax depreciation,
         amortization, or other cost recovery deduction for such year or other
         period bears to such beginning adjusted tax basis; provided, however,
         that if the federal income tax depreciation, amortization, or other
         cost recovery deduction for such year or other period is zero,
         Depreciation for such year or other period shall be determined with
         reference to such beginning Book Value using any reasonable method
         selected by the Management Committee.

                  "Development Program" means the program for the development of
         the Fuel Cell Business during the R&D Phase attached hereto as Exhibit
         C.

                                       4

<PAGE>   10

                  "Disposition", "Disposing", "Dispose" or "Disposed" means,
         with respect to any asset (including Members' Interests or any portion
         thereof), a sale, assignment, transfer, conveyance, gift, exchange or
         other disposition of such asset.

                  "Distributable Cash Flow" means any Available Funds after (i)
         paying the ordinary and necessary expenses of the Company, (ii) paying
         any debts or liabilities of the Company to the extent required under
         any agreement with any lender or creditor (including any Member) and
         (iii) establishing reserves to meet current or reasonably expected
         obligations of the Company as the Management Committee determines in
         its sole discretion.

                  "ECD Assigned Technology" has meaning assigned to such term in
         the Technology Agreement.

                  "ECD Group Entity" means, at any time, ECD and each Subsidiary
         of ECD of which ECD, directly or indirectly through Subsidiaries,
         Beneficially Owns at least 75% of the outstanding Voting Securities at
         such time.

                  "ECD Member" means any Member that is an ECD Group Entity.

                  "ECD Licensed Technology" has the meaning assigned to such
         term in the Technology Agreement.

                  "ECD Service Agreement" means the ECD Service Agreement
         effective as of July 1, 2000 between the Company and ECD.

                  "Exchange Act" means the Securities Exchange Act of 1934.

                  "Fair Market Value" means, as of any determination time, (i)
         with respect to the Company as a whole, the price at which a willing
         seller under no compulsion to sell would sell, and a willing buyer
         under no compulsion to purchase would purchase, 100% of the Ownership
         Interests in the Company, but before giving effect to any transfer of
         Released Technology pursuant to Section 3.2 of the Technology Agreement
         (subject to all indebtedness, liabilities and other obligations of the
         Company outstanding at such time), and (ii) with respect to any
         individual asset, the price at which a willing seller under no
         compulsion to sell would sell, and a willing buyer under no compulsion
         to purchase would purchase, such asset (or the relevant portions of
         such rights).

                  "Fiscal Year" means (i) the period of time commencing on the
         effective date of this Agreement and ending on June 30, 2001, in the
         case of the first Fiscal Year of the Company or (ii) in the case of
         subsequent Fiscal Years of the Company, any subsequent twelve (12)
         month period commencing on July 1 and ending on June 30.

                  "Foreground Technology" has the meaning assigned to such term
         in the Technology Agreement.

                                       5

<PAGE>   11

                  "Fuel Cell Business" means the application of the ECD Licensed
         Technology, the Texaco Technology, the Texaco Improvement Technology
         and the Foreground Technology by the Company to the research,
         development, manufacturing and marketing of Ovonic Fuel Cells in all
         sizes and in all markets, whether existing or identified in the future.

                  "GAAP" means generally accepted accounting principles in the
         United States, consistently applied.

                  "Governmental Body" means a government organization,
         subdivision, agency or authority thereof, whether foreign or domestic.

                  "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
         Act of 1976.

                  "Irreparable Effect" means an adverse effect of (i) at least
         20% of value on the Fair Market Value of the Company's assets or (ii)
         at least 30% on the Company's annual earnings before deductions on
         account of interest expense, income tax expense, depreciation expense
         and amortization expense on a recurring basis for a period of at least
         2 years.

                  "Interest" means the ownership interest of a Member in the
         Company (which shall be considered intangible personal property for all
         purposes) consisting of (i) such Member's Percentage Interest in
         profits, losses, allocations and distributions, (ii) such Member's
         right to vote or grant or withhold consents with respect to Company
         matters as provided herein or in the Delaware Act, and (iii) such
         Member's other rights and privileges as herein provided.

                  "Laws" means all applicable statutes, laws, rules,
         regulations, orders, ordinances, judgments and decrees of any
         Governmental Body, including the common or civil law of any
         Governmental Body.

                  "Lien" shall mean any lien, encumbrance, security interest,
         charge, mortgage, option, pledge or restriction on transfer of any
         nature whatsoever.

                  "Losses" shall mean any and all damages, losses, deficiencies,
         liabilities, taxes, obligations, penalties, judgments, settlements,
         claims, payments, fines, interest, costs and expenses (including,
         without limitation, the costs and expenses of any and all Proceedings
         and demands, assessments, judgments, settlements and compromises
         relating thereto and the costs and expenses of attorneys',
         accountants', consultants' and other professionals' fees and expenses
         incurred in the investigation or defense thereof or the enforcement of
         rights hereunder), but excluding consequential damages and punitive
         damages (other than such damages awarded to any third party against an
         Indemnitee).

                  "Management Committee" means the committee comprised of the
         individuals designated as representatives by the Members pursuant to
         Section 5.2 hereof and all other persons who may from time to time be
         duly elected or appointed to serve as

                                       6

<PAGE>   12

         representatives on the Management Committee in accordance with the
         provisions hereof, in each case so long as such person shall continue
         in office in accordance with the terms hereof.

                  "Members" means TESI, ECD and such other Persons who are
         admitted as Members pursuant to this Agreement.

                  "Member Nonrecourse Debt" means any nonrecourse debt of the
         Company for which any Member bears the economic risk of loss.

                  "Member Nonrecourse Debt Minimum Gain" means, for each Member,
         the amount of Minimum Gain for the Fiscal Year or other period
         attributable to such Member's "partner nonrecourse debt," determined in
         accordance with Treasury Regulations Section 1.704-2(i)(2).

                  "Minimum Gain" means, with respect to all nonrecourse
         liabilities of the Company, the minimum amount of gain that would be
         realized by the Company if the Company disposed of the Company property
         subject to such liability in full satisfaction thereof computed in
         accordance with Treasury Regulations Section 1.704-2(d).

                  "Minimum Gain Share" means, for each Member, such Member's
         share of Minimum Gain for the Fiscal Year (after taking into account
         any decrease in Minimum Gain for such year), such share to be
         determined under Treasury Regulations Section 1.704-2(g).

                  "Nonrecourse Deductions" means, for each Fiscal Year or other
         period, an amount of Company deductions that are characterized as
         "nonrecourse deductions" under Treasury Regulations Section 1.704-2(c).

                  "Ovonic Fuel Cell" means an electrochemical device that
         includes two electrodes, an anode and a cathode, which sandwich a solid
         or liquid electrolyte that is conductive to the passage of ions but
         insulative to the conduction of electrons. Hydrogen, which enters the
         cathode, and oxygen, which enters the anode, are converted into water
         (a by-product) and electrical energy. "Ovonic Fuel Cell" shall also
         include associated subcomponents and subsystems necessary to maintain
         the Ovonic Fuel Cell (such as the KOH loop) but excludes all hydrogen
         generation systems and electric power conditioning devices and controls
         therefor, regardless of whether used for stationary or portable,
         including propulsion, applications.

                  "Percentage Interest" means a Member's share of the Profits
         and Losses of the Company and the Member's right to receive
         distributions of the Company's assets. The Percentage Interest of each
         Member shall initially be the percentage set forth opposite such
         Member's name in Section 3.1(c).

                                       7

<PAGE>   13

                  "Person" means any individual, corporation, partnership, joint
         venture, association, joint stock company, limited liability company,
         trust, estate, unincorporated organization or Governmental Body.

                  "Prime Rate" means the corporate base rate per annum in effect
         as published by Citibank, N.A. from time to time for domestic unsecured
         commercial loans.

                  "Proceeding" shall mean any action, claim, suit, arbitration,
         subpoena, discovery request, proceeding or investigation by or before
         any court or grand jury, any Governmental Body or arbitration tribunal.

                  "Production Ready Prototype" means a prototype Ovonic Fuel
         Cell that incorporates design for manufacture and assembly, that can be
         manufactured in volume with production methodology available to the
         Company, that has been adequately life cycle tested by the Company and
         possesses all performance, cost and other attributes and capabilities
         required for commercial success in the market segments targeted in the
         Commercialization Plan.

                  "Profits" and "Losses" means, for purposes of Article 4, an
         amount equal to the Company's taxable income or loss for each Fiscal
         Year or other period, determined in accordance with Code Section 703(a)
         (for this purpose, all items of income, gain, loss, or deduction
         required to be stated separately pursuant to Code Section 703(a)(1)
         shall be included in taxable income or loss), with the following
         adjustments:

                           (i) Any income of the Company that is exempt from
                  federal income tax and not otherwise taken into account in
                  computing Profits or Losses pursuant to this definition shall
                  be added to such taxable income or loss;

                           (ii) Any expenditures of the Company described in
                  Code Section 705(a)(2)(B) or treated as Code Section
                  705(a)(2)(B) expenditures pursuant to Treasury Regulations
                  Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
                  account in computing Profits or Losses pursuant to this
                  definition, shall be subtracted from such taxable income or
                  loss;

                            (iii) Gain or loss resulting from any disposition of
                  Company property with respect to which gain or loss is
                  recognized for federal income tax purposes shall be computed
                  by reference to the Book Value of the property Disposed of,
                  notwithstanding that the adjusted tax basis of such property
                  differs from such Book Value;

                            (iv) In lieu of the depreciation, amortization, and
                  other cost recovery deductions taken into account in computing
                  such taxable income or loss, there shall be taken into account
                  Depreciation for such Fiscal Year or other period, computed in
                  accordance with the definition of "Depreciation" herein; and

                                       8

<PAGE>   14

                            (v) Notwithstanding any other provision of this
                  definition, any items which are specifically allocated
                  pursuant to Section 4.2(c) shall not be taken into account in
                  computing Profits or Losses.

                  "Released Technology" means intellectual property assigned or
         licensed in the circumstances set forth in Section 3.2 of the
         Technology Agreement.

                  "Subsidiary" means, with respect to any Person, any other
         Person of which a majority of the Voting Securities are at the time
         directly or indirectly owned by such Person.

                  "Technology Agreement" means the Technology License Agreement
         dated as of the date hereof among ECD, TESI and the Company.

                  "Texaco Group Entity" means, at any time, Texaco Inc. and each
         Subsidiary of Texaco Inc. of which Texaco Inc., directly or indirectly
         through Subsidiaries, Beneficially Owns at least 75% of the outstanding
         Voting Securities at such time.

                  "Texaco Member" means any Member that is a Texaco Group
         Entity.

                  "Texaco Improvement Technology" has the meaning assigned to
         such term in the Technology Agreement.

                  "Texaco Service Agreement" means the TESI Service Agreement
         dated as of the date hereof between the Company and TESI.

                  "Texaco Technology" has the meaning assigned to such term in
         the Technology Agreement.

                  "Trade Name Agreement" means the Trade Name License Agreement
         dated as of the date hereof among Texaco Inc. and the Company.

                  "Transfer" means any sale, transfer, exchange, assignment or
         other disposition, by operation of law or otherwise.

                  "Treasury Regulations" means the Treasury Regulations
         promulgated under the Code, as from time to time in effect.

                  "Voting Securities" means any Person's securities or other
         ownership interests which have ordinary voting power under ordinary
         circumstances for the election of directors (or the equivalent) of such
         Person.

         Section 1.3 Other Definitions. The following terms have the meanings
ascribed to them in the Sections noted:

              "Accepting Member"                        2.10

                                       9

<PAGE>   15

              "Appraisers"                              2.9
              "Authorized Person"                       6.1
              "Budget Protocol"                         2.6(a)(ii)
              "Buy-Out Closing"                         2.8
              "Buy-Out Loan"                            2.8
              "Buy-Out Notice"                          2.8
              "Buy-Out Price"                           2.8
              "Buy-Out Procedures"                      2.7
              "Capital Account"                         3.7
              "Change Price"                            7.2
              "Changed Member"                          7.2
              "Commercial Deadlock"                     2.10
              "Commercial Deadlock Event"               2.10
              "Commercial Deadlock Notice"              2.10
              "Commercial Phase"                        2.6(b)
              "Commercial Funding Disagreement"         2.7
              "Company"                                 1.1
              "Default "                                8.1
              "Default Purchase"                        8.2
              "Default Purchaser"                       8.2
              "Defaulting Member"                       8.1
              "Designated Price"                        2.10
              "Dissolution Event"                       9.1
              "ECD Cash Contribution"                   3.1
              "Electing Member"                         2.10
              "Event of Default "                       8.2
              "First Appraiser"                         2.9
              "Funding Deadlock"                        2.7
              "Funding Deadlock Notice"                 2.7
              "IB Firm"                                 2.9
              "Indemnitee"                              6.2
              "Interim Funding"                         2.6
              "Initial Annual Budget"                   2.6(a)(ii)
              "Loan Account"                            3.6
              "Milestones"                              2.6(a)(iii)
              "Nondefaulting Member"                    8.1
              "Offeree Member"                          7.1
              "Offeree Member's Acceptance Notice"      7.1
              "Offeree Member Response Date"            7.1
              "R&D Funding Disagreement"                2.7
              "R&D Phase"                               2.6(a)
              "Regulatory Allocations"                  4.2
              "Sale Materials"                          7.1
              "Second Appraiser"                        2.9
              "Secretary"                               5.5(b)

                                       10

<PAGE>   16

              "Selling Member"                          7.1
              "Selling Member's Price"                  7.1
              "Selling Member's Offer Notice"           7.1
              "Tax Matters Member"                      4.5(a)
              "Tax Return"                              4.5(b)
              "TESI Cash Contribution"                  3.1
              "Third Appraiser"                         2.9
              "Unanimous Approval"                      5.3"
              "Unchanged Member"                        7.2

         Section 1.4 Rules of Construction. For purposes of this Agreement,
including the Exhibits hereto:

                  (a) General. Unless the context otherwise requires, (i) "or"
         is not exclusive; (ii) an accounting term not otherwise defined has the
         meaning assigned to it in accordance with GAAP; (iii) words in the
         singular include the plural and words in the plural include the
         singular; (iv) words in the masculine include the feminine and words in
         the feminine include the masculine; (v) any date specified for any
         action that is not a Business Day shall be deemed to be the first
         Business Day after such date; (vi) the words "include", "includes" and
         "including" shall be deemed to be followed by the phrase "without
         limitation"; (vii) the words "hereof," "herein'" and "hereunder" and
         words of similar import shall refer to this Agreement as a whole and
         not to any particular provision of this Agreement; and (vii) a
         reference to a Party includes its successors and assigns.

                  (b) Articles, Parts and Sections. References in this Agreement
         to Articles, Parts, Sections or other subdivisions are, unless
         otherwise specified, to corresponding Articles, Parts, Sections or
         other subdivisions of this Agreement. Neither the captions to Articles,
         Parts, Sections or other subdivisions of this Agreement or the section
         headings of this Section 1.4, nor any Table of Contents shall be deemed
         to be a part of this Agreement or this Section 1.4.

                  (c) Exhibits and Schedules. The Exhibits and Schedules to this
         Agreement form part of this Agreement and shall have the same force and
         effect as if set out in the body of this Agreement. References to this
         Agreement include the attachments thereto and all Exhibits and
         Schedules incorporated therein. All references in this Agreement to
         Exhibits and Schedules refer to Exhibits and Schedules to this
         Agreement, unless expressly provided otherwise.

                  (d) Other Agreements. References herein to any agreement or
         other instrument shall, unless the context otherwise requires (or the
         definition thereof otherwise specifies), be deemed references to such
         agreement or other instrument as it may from time to time be changed,
         amended or extended.

                  (e) Certain Terms. The words "best efforts" shall mean the use
         of reasonable best efforts conducted in good faith in a commercially
         reasonable manner. Whenever any Person is permitted or required to make
         a decision or act in its "sole discretion" or

                                       11

<PAGE>   17

         "discretion" or under a grant of similar authority or latitude, such
         Person shall be entitled to consider only such interest and factors as
         it desires, including its own interest, and shall not be subject to any
         other or different standard imposed by the relevant agreement or by
         relevant provisions of law or in equity or otherwise. Whenever any
         Person is permitted or required to make a decision or act in its "good
         faith," such Person shall act under such standard and shall not be
         subject to any other or different standard imposed by the relevant
         agreement or by relevant provisions of law or in equity or otherwise.

                                    ARTICLE 2

                           ORGANIZATION AND OPERATIONS

         Section 2.1 Company. Subject to the terms and conditions of this
Agreement, the Members hereby form and agree to jointly operate the Company, a
limited liability company organized pursuant to the Delaware Act, which shall
engage in the business described herein.

         Section 2.2 Certificate of Formation. Concurrently with or as soon as
possible after the execution of this Agreement, the Members shall cause the
Certificate of Formation, in the form attached hereto as Exhibit A, to be filed
in the Office of the Secretary of State of the State of Delaware in accordance
with the requirements of the Delaware Act. From time to time, the Members shall
cause to be filed such further certificates of formation, qualifications to do
business, fictitious name certificates or like filings in such jurisdictions as
may be necessary or appropriate in connection with the conduct of the Company's
business or to provide notification of the limitation of liability of Members
and Management Committee representatives under applicable Law. Corporation
Service Company is hereby designated within the meaning of the Delaware Act to
execute, deliver and file, or cause the execution, delivery and filing of, all
certificates required or permitted by the Delaware Act to be filed in the office
of the Secretary of State of the State of Delaware.

         Section 2.3 Place of Business. The principal place of business of the
Company shall be in Troy, Michigan or such other place as the Management
Committee may from time to time determine. The registered office of the Company
in the State of Delaware shall be 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808 and the registered agent for service of process on the Company
shall be Corporation Service Company, whose business address is the same as the
Company's registered office (or such other registered office and registered
agent as the Management Committee may from time to time select).

         Section 2.4 Purpose. The business and purposes of the Company shall be
(i) to carry on the Fuel Cell Business and (ii) to engage in such other business
activities that may be undertaken by a limited liability company under the
Delaware Act as the Members may from time to time determine by Unanimous
Approval.

         Section 2.5 Associated Agreements. Concurrently with the execution of
this Agreement, the Company and each Member, as applicable, shall execute, and
deliver the Associated Agreements. The execution and delivery of, and
performance by the Company of its

                                       12

<PAGE>   18

obligations under, the Associated Agreements to which the Company is a party,
and any agreements, instruments or other documents contemplated thereby to be
entered into by the Company in connection therewith, are hereby authorized
(without requirement for further approval under Article 5 hereof).

         Section 2.6 Phases of Operations.

                  (a) Research and Development Phase. During the initial phase
         of its operations (the "R&D Phase"), the Company shall conduct
         research, development, and market research, assessment and development
         activities and shall identify, develop and validate appropriate
         manufacturing methodologies in order to produce Production Ready
         Prototype(s) and validate the technical and commercial viability
         thereof. The Company's activities during the R&D Phase as contemplated
         by TESI and ECD as of the date of this Agreement are more particularly
         described in the Development Program.

                           (i) During the R&D Phase, ECD shall use its best
                  efforts (consistent with the applicable Approved Annual
                  Budgets) and shall have the primary responsibility to perform
                  and manage the research and development activities, identify,
                  develop and validate appropriate manufacturing methodologies
                  and provide the necessary technical and managerial staff for
                  these activities. ECD and TESI shall each use their best
                  efforts (consistent with the applicable Approved Annual
                  Budgets) and shall jointly have responsibility to perform and
                  manage the market research, assessment and development
                  activities and shall jointly provide the necessary staff for
                  these activities. ECD and TESI shall perform the activities
                  described in this Section 2.6(a)(i) pursuant to the ECD
                  Service Agreement and the TESI Service Agreement,
                  respectively.

                           (ii) The Annual Budget for the first Fiscal Year
                  ("Initial Annual Budget") set forth in Exhibit B-1 and the
                  Annual Operating Plan for the first Fiscal Year contained in
                  Exhibit C are hereby approved by TESI and ECD without need for
                  the approval of the Management Committee otherwise required
                  pursuant to Article 5. The President shall prepare and submit
                  for Management Committee approval Annual Budgets and Annual
                  Operating Plans for all subsequent Fiscal Years during the R&D
                  Phase in accordance with the Budget Protocol attached hereto
                  as Exhibit D ("Budget Protocol"). So long as the Company is
                  substantially achieving the Milestones (as they may be
                  modified from time to time in accordance with Section
                  2.6(a)(iii)), the Members shall approve Annual Budgets during
                  the R&D Phase. Subject to Section 2.6(a)(iv), TESI shall fund
                  all costs and expenses set forth in Approved Annual Budgets
                  and incurred during the R&D Phase to the extent such costs and
                  expenses exceed cash available from the Company's operations.
                  The Members acknowledge that during the R&D Phase, the Company
                  will incur costs and expenses (including amounts payable under
                  the ECD Service Agreement and the Texaco Service Agreement) in
                  an amount estimated as of the date of this Agreement to be
                  $39.3 million for (x) technical research and development
                  services (in the amount of $32.8 million per Exhibit B-2,
                  payable under the ECD Service Agreement) and (y) market

                                       13

<PAGE>   19

                  assessment and development activities (in the amount of $6.5
                  million per Exhibit B-3, payable under the Texaco Service
                  Agreement). The Members further acknowledge that during the
                  R&D Phase, the Company will also incur costs and expenses
                  (including amounts payable under the ECD Service Agreement and
                  the Texaco Service Agreement) in an amount estimated as of the
                  date of this Agreement to be $20 million for development and
                  validation of manufacturing methodologies and pilot production
                  of beta models for testing and evaluation by potential
                  customers. The Members acknowledge the necessity of providing
                  "beta" models for evaluation by potential customers for market
                  development purposes at potentially less than the Company's
                  cost to manufacture. The Company will use reasonable and
                  customary industry pricing methodologies to determine
                  appropriate terms and conditions when providing "beta" models
                  to potential customers.

                           (iii) TESI and ECD will use their best efforts
                  (consistent with the applicable Approved Annual Budgets) to
                  conduct their respective activities during the R&D Phase in
                  all material respects in accordance with the timetable and
                  specifications set forth on Schedule 2.6 (the "Milestones"),
                  as modified from time to time by the Management Committee. The
                  President shall inform the Management Committee as to the
                  progress of the development activities relative to the
                  Milestones at appropriate intervals (but at least once during
                  each calendar quarter), and the Management Committee shall
                  determine whether the Milestones have been satisfied. If the
                  Management Committee determines that the Company has failed to
                  meet a Milestone in any material respect, the President shall
                  promptly submit a recovery plan in writing to the Management
                  Committee for approval that includes proposed revisions to
                  such Milestone and any such revisions necessary for future
                  Milestones, as well as any proposed revisions to the current
                  Annual Budget that may be requested as a result of the
                  proposed Milestone revisions. If the Management Committee
                  approves such recovery plan, any revisions to the Milestones
                  and the current Annual Budget included therein shall also be
                  deemed approved by the Management Committee. If the Management
                  Committee does not approve the recovery plan as initially
                  proposed, the Company shall use diligent efforts to minimize
                  the costs and expenditures for continued R&D Phase activities
                  until a recovery plan is approved and, subject to Section
                  2.6(a)(iv), TESI shall continue to provide funding at such
                  reduced levels until the end of the Fiscal Year in which such
                  failure to meet a Milestone occurred or the occurrence of a
                  Buy- Out Closing, whichever is earlier ("Interim Funding"). In
                  no event shall TESI be obligated to fund in excess of the
                  amounts set forth in the applicable Approved Annual Budget
                  until such time as a recovery plan providing for increases in
                  such amounts is approved by the Management Committee.

                           (iv) In no event shall TESI be required to fund costs
                  and expenses during the R&D Phase in excess of the TESI Cash
                  Contribution and TESI shall not be obligated to fund any such
                  costs and expenses during the R&D Phase until such time as the
                  ECD Cash Contribution has been made in full.

                                       14

<PAGE>   20

                           (v) As soon as practicable after the formation of the
                  Company, the President shall submit a draft Commercialization
                  Plan to the Management Committee for its review. The
                  Management Committee and the President shall make such
                  revisions to the Commercialization Plan as they may deem
                  appropriate from time to time. The Members shall review the
                  final Commercialization Plan, together with any other
                  appropriate information they may request, to determine whether
                  or not a Production Ready Prototype is capable of commercial
                  production on an economically viable basis.

                           (vi) The Members contemplate that multiple Production
                  Ready Prototypes may be developed and that Commercialization
                  Plans with respect to Production Ready Prototypes may be
                  approved by the Members at different times. The R&D Phase
                  shall conclude with respect to a Production Ready Prototype
                  upon the completion of such Production Ready Prototype in
                  accordance with the Milestones, as they may be amended from
                  time to time in accordance with Section 2.6(a)(iii), and
                  approval by the Members of a Commercialization Plan with
                  respect to such Production Ready Prototype.

                  (b) Commercial Phase. Upon the Members' determination that the
         Company should proceed with commercial production of a Production Ready
         Prototype, the Company shall commence its second phase of operations
         (the "Commercial Phase") with respect to such Production Ready
         Prototype, and shall conduct all activities necessary or appropriate to
         manufacture and market fuel cell assemblies similar to such Production
         Ready Prototype, including the development, construction, ownership and
         operation of production facilities.

                           (i) The President shall prepare and submit for
                  Management Committee approval Annual Budgets for all
                  subsequent Fiscal Years during the Commercial Phase in
                  accordance with the Budget Protocol. Should the Company enter
                  the Commercial Phase with respect to a Production Ready
                  Prototype prior to completion of the R&D Phase with respect to
                  other prototypes contemplated by the Development Program, the
                  applicable Annual Budgets and Operating Plans shall separately
                  identify Commercial Phase and R&D Phase costs and expenses. As
                  more fully provided in Section 3.2, TESI and ECD shall be
                  responsible for funding all costs and expenses incurred by the
                  Company in the Commercial Phase and included in the applicable
                  Approved Annual Budgets, to the extent such costs and expenses
                  exceed cash available from the Company's operations or from
                  third party funding obtained pursuant to Section 3.1(b). TESI
                  shall fund the first $6 million in the aggregate necessary for
                  Commercial Phase costs and expenses, and thereafter, TESI and
                  ECD shall fund such costs and expenses in proportion to their
                  respective Percentage Interests.

                           (ii) The Members recognize that the market for the
                  Company's products may outgrow the Company's ability to
                  satisfy market demand with its existing manufacturing
                  facilities. In this event, the Members may elect to cause the

                                       15
<PAGE>   21

                  Company to increase its own manufacturing capacity, enter into
                  joint ventures with third parties, admit as a Member another
                  Person who will provide the necessary capital for increased
                  manufacturing capacity, contract with third parties to
                  manufacture additional products, grant limited licenses to
                  other Persons to manufacture its products or take such other
                  actions as they determine to be appropriate to increase the
                  supply of the Company's products to satisfy market demand. Any
                  licenses granted by the Company shall contain restrictive
                  terms such as limitations on the duration of the license, the
                  quantity of products that can be manufactured thereunder, the
                  territory in which such products can be marketed or other
                  similar limitations in order to prevent the use of such
                  licenses from having a material adverse effect on the
                  Company's business.

                  (c) During both the R&D Phase and the Commercial Phase, the
         Company shall comply with any applicable bidding procedures when
         expending funds pursuant to an Approved Annual Budget.

         Section 2.7 Funding Deadlock.

                  (a) If (i) the Management Committee fails to approve a
         recovery plan with respect to the Company's failure to substantially
         meet a Milestone (as it may be modified from time to time in accordance
         with Section 2.6(a)(iii)) within 90 days after the occurrence of such
         failure ("R&D Funding Disagreement"), or (ii) the Members have not
         agreed on a mutually acceptable Commercialization Plan for a Production
         Ready Prototype within 90 days after completion of the fifty (50)
         kilowatt Production Ready Prototype in accordance with the applicable
         Milestone (as it may be modified from time to time in accordance with
         Section 2.6(a)(iii)) ("Commercial Funding Disagreement"), then in each
         instance either Member may request that such matter be immediately
         submitted to the Chairman of ECD and the Senior Vice President for
         Corporate Development of Texaco Inc. for resolution. Such request shall
         be in writing and shall be accompanied by the requesting Member's
         statement of the matter and its position with respect thereto. The
         other Member shall have the right to submit to such officers its own
         statement of the matter and its position with respect thereto. If such
         matter is not resolved within 180 days of the submission of such matter
         to such officers, ECD may declare a funding deadlock (a "Funding
         Deadlock") by delivering a written notice (a "Funding Deadlock Notice")
         to the Company and TESI at the end of such 180 day period stating that
         a Funding Deadlock has occurred and requesting the initiation of the
         buy out procedures pursuant to Section 2.8 ("Buy-Out Procedures"). If
         ECD does not deliver a timely Funding Deadlock Notice, (i) TESI's
         proposal with respect to the recovery plan in question (in the case of
         a R&D Funding Disagreement), or (ii) TESI's proposal with respect to
         the Commercialization Plan in question (in the case of a Commercial
         Funding Disagreement) shall be deemed adopted by the Members.

                  (b) Upon the submission to officers of ECD and Texaco of a
         Commercial Funding Disagreement pursuant to Section 2.7(a), the Company
         shall prepare, and shall operate in accordance with, a modified budget
         until such time as the disagreement is resolved pursuant to this
         Section 2.7 or 2.8, as the case may be. Such modified budget

                                       16

<PAGE>   22

         shall provide for the minimum expenses necessary to maintain the status
         quo until such resolution is achieved.

         Section 2.8 Funding Deadlock Buy-Out Procedures.

                  (a) Promptly following delivery of a Funding Deadlock Notice,
         the Members shall cause the Fair Market Value of the Company to be
         determined in accordance with Section 2.9.

                  (b) At any time during the 30 day period following the
         determination of Fair Market Value of the Company, ECD may provide a
         notice to TESI (a "Buy-Out Notice"), setting forth the irrevocable
         commitment by ECD to purchase or cause to be purchased TESI's Interest
         for the Buy-Out Price, and setting forth the date on which ECD intends
         to acquire or cause to be acquired such Interest, which date shall be
         as soon as practicable after delivery of the Buy-Out Notice. If ECD
         does not provide TESI with a Buy-Out Notice by the end of such 30 day
         period, (i) TESI's proposal with respect to the recovery plan in
         question (in the case of a R&D Funding Disagreement), or (ii) TESI's
         proposal with respect to the Commercialization Plan in question (in the
         case of a Commercial Funding Disagreement) shall be deemed adopted by
         the Members. As used in this Agreement, the term "Buy-Out Price" means,
         with respect to TESI's Interest, the Fair Market Value of the Company
         determined in accordance with the procedures set forth in Section 2.9,
         multiplied by TESI's Percentage Interest, plus in the case of a buy-out
         following an R&D Funding Disagreement, an amount equal to the sum of
         any Interim Funding by TESI after the thirtieth (30th) day following
         the date of the Buy-Out Notice.

                  (c) Upon the consummation of any purchase and sale pursuant to
         this Section 2.8 ("Buy-Out Closing"), TESI shall deliver its Interest,
         free and clear of all Liens (other than any Lien created under any
         financing to which the Company is a party), together with duly executed
         written instruments of transfer with respect thereto, in form and
         substance reasonably satisfactory to ECD or its designee, against
         payment of the Buy-Out Price as set forth in subsection (d).

                  (d) The Buy-Out Price shall be paid by wire transfer, in
         immediately available funds, to the bank account of TESI designated for
         such purpose, unless TESI's Interest is being purchased by ECD in
         connection with an R&D Funding Disagreement and ECD certifies at a time
         reasonably in advance of the Buy-Out Closing that despite diligent
         efforts it is unable to fund all or part of the Buy-Out Price in cash
         from its own corporate resources or third party equity or debt
         financing. In such event, TESI shall make a loan ("Buy-Out Loan") to
         ECD in an amount equal to the portion of Buy-Out Price that ECD is
         unable to fund. The Buy-Out Loan shall be on commercial terms
         reasonable and customary under the circumstances and shall in all
         events be repaid within ten years of the Buy-Out Closing or earlier to
         the extent of the proceeds received by ECD upon any subsequent sale or
         other transfer for value of all or part of its Interest.

                  (e) Notwithstanding any other provision of this Agreement, no
         transfer of TESI's Interest shall occur pursuant to this Section 2.8
         unless and until any and all

                                       17

<PAGE>   23

         necessary consents and approvals have been obtained from any
         Governmental Body with authority with respect thereto, including any
         required approvals under the HSR Act. The Members agree to cooperate
         and to cause their Affiliates to cooperate in the preparation and
         filing of any and all reports or other submissions required in
         connection with obtaining such consents and approvals.

                  Section 2.9 Valuation Procedures. Any determination of Fair
         Market Value under this Agreement shall be made as follows:

                  (a) The Members will first seek to agree on such Fair Market
         Value.

                  (b) If the Members cannot agree on the Fair Market Value
         within 30 days of delivery of such notice, ECD will promptly select an
         independent investment banking firm of recognized international
         standing (an "IB Firm") (the "First Appraiser") and TESI will select an
         IB Firm (the "Second Appraiser" and, together with the First Appraiser,
         the "Appraisers") to determine the Fair Market Value. The fees and
         expenses of each Appraiser will be borne by each of the Members that
         have retained such Appraiser.

                  (c) Within 45 days of the date of selection of the Appraisers,
         each of the First Appraiser and the Second Appraiser will determine the
         Fair Market Value and will notify the Members in writing of such
         determination (specifying the Fair Market Value as determined by such
         Appraiser and setting forth, in reasonable detail, the basis for such
         determination). If the Fair Market Value as determined by one Appraiser
         is not more than 110% of the Fair Market Value as determined by the
         other Appraiser, the Fair Market Value will be the average of the two
         amounts. In all other cases, the Appraisers will jointly select a third
         IB Firm (the "Third Appraiser"). The fees and expenses of the Third
         Appraiser will be borne by the Members equally.

                  (d) The Third Appraiser will, within 45 days of its retention,
         determine its view of the Fair Market Value, and the Fair Market Value
         will thereupon be the average of (i) the Fair Market Value as
         determined by the Third Appraiser and (ii) whichever of the Fair Market
         Values as determined by the First Appraiser and the Second Appraiser is
         closer to the Fair Market Value as determined by the Third Appraiser;
         provided that if Fair Market Values as determined by the First
         Appraiser and the Second Appraiser differ by the same amount from the
         Third Appraiser's determination of Fair Market Value, the Fair Market
         Value will be as determined by the Third Appraiser. The determination
         of Fair Market Value in accordance with this Section 2.9 will be final,
         binding and conclusive upon the Members.

                  (e) Each Member will share with the other Member any written
         communication it has with the Third Appraiser and will not communicate
         other than in writing with the Third Appraiser without giving the other
         Member an opportunity to be present at any such communication.

         Section 2.10 Commercial Deadlock.

                                       18

<PAGE>   24

                  (a) If, at any time after commencement of operation of the
         Company's first commercial plant, there is a persistent inability of
         the Members to agree on a course of action in respect of any material
         matter despite good faith efforts to reach agreement, which inability
         shall in any event persist for at least 30 days after such inability
         first arises and if any Member believes that such inability to agree
         has or will have an Irreparable Effect, then in each instance such
         Member may request that such matter be immediately submitted to the
         Chairman of ECD and the Senior Vice President for Corporate Development
         of Texaco Inc. for resolution. Such request shall be in writing and
         shall be accompanied by the requesting Member's statement of the matter
         and its position with respect thereto. The other Member shall have the
         right to submit to such officers its own statement of the matter and
         its position with respect thereto.

                  (b) If such matter is not resolved within 180 days of the
         submission of such matter to such officers (a "Commercial Deadlock"),
         then:

                  (i) no action will be taken with respect to such matter and
                  the status quo shall be maintained in respect of the operation
                  of the Company in respect thereof and Section 2.7(b); and

                           (ii) if any Member believes that such a Commercial
                  Deadlock has or will have an Irreparable Effect, and such
                  Member is not a Defaulting Member, such Member (the "Electing
                  Member") may declare a deadlock event (a "Commercial Deadlock
                  Event") by delivering a written notice (a "Commercial Deadlock
                  Notice") to the Company and the other Member, which shall
                  state that the Commercial Deadlock Event has occurred and has
                  or will have an Irreparable Effect. If the Members are unable
                  to agree on whether there has been an Irreparable Effect, the
                  matter shall be subject to resolution under Section 11.11. In
                  addition, the Commercial Deadlock Notice shall specify the
                  price and other terms (the "Designated Price") for which the
                  Electing Member (or any Affiliate of the Electing Member
                  designated by it) agrees that it will either purchase all of
                  the other Member's (the "Accepting Member") Interest or sell
                  all of the Electing Member's Interest to the Accepting Member
                  (or any Affiliate of the Accepting Member designated by it).

                  (c) The Accepting Member shall have sixty (60) days from the
         receipt of the Commercial Deadlock Notice to notify the Electing Member
         of the Accepting Member's decision to either purchase the Electing
         Member's Interest or sell the Accepting Member's Interest, in each case
         for the Designated Price. If the Accepting Member does not provide such
         notice within such sixty (60) days, it shall be obligated to sell its
         Interest to the Electing Member for the Designated Price.

                  (d) Within sixty (60) days after identification of the
         purchasing Member pursuant to subsection (c) above, the selling Member
         shall deliver its Interest, free and clear of all Liens (other than any
         Lien created under any financing to which the Company is a party),
         together with duly executed written instruments of transfer with
         respect thereto, in form and substance reasonably satisfactory to the
         purchasing Member or its designee, against

                                       19

<PAGE>   25

         payment of the Designated Price.

                  (e) Notwithstanding any other provision of this Agreement, no
         transfer of the selling Member's Interest shall occur pursuant to this
         Section 2.10 unless and until any and all necessary consents and
         approvals have been obtained from any Governmental Body with authority
         with respect thereto, including any required approvals under the HSR
         Act. The Members agree to cooperate and to cause their Affiliates to
         cooperate in the preparation and filing of any and all reports or other
         submissions required in connection with obtaining such consents and
         approvals.

                                    ARTICLE 3

                                CAPITAL STRUCTURE

         Section 3.1 Members' Capital Contributions and Percentage Interests.

                  (a) R&D Phase Capital Contributions. Concurrently with the
         execution of this Agreement, ECD and TESI shall make Capital
         Contributions to the Company of certain intellectual property and know
         how in accordance with the terms of the Technology Agreement. In order
         to fund the Company's operations during the R&D Phase, (i) ECD shall
         contribute cash in an aggregate amount of $18,000,000 (the "ECD Cash
         Contribution"), and (ii) after the ECD Cash Contribution has been made
         in full, TESI shall contribute cash in an aggregate amount not
         exceeding $52,000,000 (the "TESI Cash Contribution"). Both the ECD Cash
         Contribution and the TESI Cash Contribution shall be paid pursuant to
         Approved Annual Budgets during the R&D Phase and in accordance with the
         Budget Protocol. The Members agree that the Book Value of the
         intellectual property and know how contributed pursuant to the
         Technology Agreement shall be, in the case of ECD, equal to the actual
         amount of the TESI Cash Contribution and in the case of TESI, equal to
         $18,000,000. TESI may, with the prior approval of the Management
         Committee, contribute to the Company property, use of facilities or
         other noncash contributions during the R&D Phase. All such
         contributions by TESI to the Company that are not included as expense
         items in an Approved Annual Budget shall be treated as Capital
         Contributions and credited to its Capital Account in accordance with
         Section 3.8.

                  (b) Commercial Phase Capital Contributions. TESI and ECD shall
         use reasonable efforts to assist the Company in securing funding for
         its operations during the Commercial Phase from sources other than TESI
         and ECD. If despite such efforts the Company is unable to obtain such
         funding on terms acceptable to the Members, TESI and ECD shall be
         responsible for making Capital Contributions, as are required to fund
         the Company's operations during the Commercial Phase in accordance with
         the applicable Approved Annual Budgets, but only to the extent such
         funding requirements exceed cash available from the Company's
         operations. TESI shall fund the first $6 million dollars necessary for
         the Commercial Phase, and thereafter, TESI and ECD shall fund such
         costs and expenses in proportion to their respective Percentage
         Interests. The Members'

                                       20

<PAGE>   26

         obligations to make Capital Contributions are subject to Section 3.2.

                  (c) Percentage Interests. The Percentage Interests assigned to
         the Members in consideration of their Capital Contributions pursuant to
         this Section 3.1 are as follows:

                           Member                  Percentage Interest

                           TESI                    50%

                           ECD                     50%

         The Management Committee shall amend the foregoing table of Members and
         Percentage Interests from time to time as necessary to reflect any
         admission of additional or substituted Members, in each case as
         permitted herein. No adjustment to the Capital Account of a Member in
         accordance with Section 3.8 shall affect the Percentage Interest of
         such Member.

         Section 3.2 Funding Alternatives During Commercial Phase. While the
Company is developing the Commercialization Plan for a Production Ready
Prototype, it shall consult with the Members with respect to the amount of
funding that will be required in connection with such plan and the methods by
which such funding may be arranged. Each Member shall use diligent efforts to
meet its funding requirements in cash from its own corporate resources. If ECD
determines that, despite such efforts, it will not be able to fund in cash its
50% share of the funding required for the Commercial Phase for such Production
Ready Prototype, ECD shall diligently explore other reasonable funding
alternatives, including in-kind Capital Contributions of technology (other than
the ECD Licensed Technology) and equity or debt financing from independent third
parties. ECD's use of any such alternatives shall be subject to TESI's prior
consent (which consent shall not be unreasonably withheld); except that TESI's
consent shall be in its full and absolute discretion with respect to any funding
alternatives proposed by ECD that would involve bringing in an additional Member
or would result in the imposition of a Lien on its Interest in the Company or on
any assets of the Company. If ECD is unable to secure such approved alternative
funding after using its diligent efforts to do so, then TESI shall at its option
(i) make a loan to the Company or (ii) purchase preferred equity in the Company,
in either case in an amount equal to the Capital Contribution that ECD is unable
to fund. The terms of any such loan or preferred equity shall be as set forth in
Schedule 3.2. Any loan or purchase of preferred equity made by TESI may, at its
option, also include TESI's share of the required funding. In no event shall
TESI be obligated to make any loans or preferred equity purchases pursuant to
this Section 3.2 after the fifth anniversary of the first such loan or preferred
equity purchase, as the case may be. All of the foregoing consultations and
efforts with respect to funding arrangements shall be concluded prior to
presentation of the final Commercialization Plan to the Members for approval and
such final plan shall include a detailed statement of the amount and method of
funding agreed to by the Members and the Company. Neither ECD nor TESI shall be
responsible for making any Capital Contributions otherwise required pursuant to
Section 3.1(b) that are funded with the loans or equity purchases made by TESI
under this Section 3.2.

                                       21

<PAGE>   27

         Section 3.3 Additional Capital Contributions. In the event that the
Members shall determine that Capital Contributions in addition to the Capital
Contributions provided for in Section 3.1 shall be made, each Member shall
contribute to the capital of the Company an amount calculated by multiplying
such Member's Percentage Interest by the aggregate amount of additional Capital
Contributions so determined by the Members.

         Section 3.4 Payment of Capital Contributions. TESI and ECD shall make
Capital Contributions pursuant to Section 3.1 in accordance with the procedures
set forth in the Budget Protocol. The Management Committee shall issue or cause
to be issued a written request to each Member for payment of any Capital
Contributions to be made in accordance with Section 3.3 at such times and in
such amounts as the Members shall determine, provided that the due date for any
such Contributions shall be not less than 10 Business Days following the date of
such request. All Capital Contributions received by the Company after the date
specified in such written request shall be accompanied by interest on such
overdue amounts, which interest shall be payable to the Company and shall accrue
from and after such specified date until paid at an annual rate equal to 2% over
the Prime Rate.

         Section 3.5 No Voluntary Contributions; Interest. No Member shall make
any Capital Contributions to the Company except pursuant to this Article 3. No
Member shall be entitled to interest on its Capital Contributions.

         Section 3.6 Member Loans. With the prior approval of the other Member,
a Member may lend to the Company funds needed by the Company for working capital
purposes (which shall not include amounts due under Sections 3.1, 3.2 and 3.3).
An account shall be established and maintained for such lending Member separate
from such Member's capital account, such account being herein referred to as
such Member's "Loan Account." Any Loan made by a Member to the Company shall be
credited to such Member's Loan Account. Interest on any Loan made by a Member to
the Company shall accrue on the unpaid balance thereof at the Prime Rate and
shall be repaid by the Company prior to any distributions to the Members
pursuant to Section 4.1 hereof. A credit balance in the Loan Account of a Member
shall constitute a liability of the Company and shall not constitute a part of
such Member's capital account.

         Section 3.7 Capital Accounts. The Company shall maintain a separate
capital account for each Member which shall be maintained and adjusted as
described in Section 3.8 below ("Capital Account").

         Section 3.8 Capital Account Adjustments.

                  (a) Notwithstanding any provision in this Agreement to the
         contrary, each Member's Capital Account shall be maintained and
         adjusted in accordance with the Code and the Treasury Regulations
         thereunder, including without limitation (i) the adjustments permitted
         or required by Code Section 704(b) and (ii) the adjustments required to
         maintain Capital Accounts in accordance with the "substantial economic
         effect test" set forth in the Treasury Regulations under Code Section
         704(b).

                                       22

<PAGE>   28

                  (b) A Member's Capital Account shall be increased by (1) the
         amount of cash and the initial Book Value of any property contributed
         by such Member to the Company, (2) such Member's allocable share of
         Profits, income and gain and (3) the amount of any Company liabilities
         that are expressly assumed by such Member or that are secured by any
         Company property distributed to such Member.

                  (c) A Member's Capital Account shall be decreased by (1) the
         amount of cash and the Book Value of any Company property distributed
         to such Member pursuant to any provision of this Agreement, (2) such
         Member's allocable share of Losses, deductions and other losses and (3)
         the amount of any liabilities of such Member that are expressly assumed
         by the Company or that are secured by any property contributed by such
         Member to the Company.

                  (d) Upon the occurrence of certain events described in
         Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4) and
         1.704-2, the Management Committee shall increase or decrease the
         Capital Accounts of the Members to reflect a revaluation of Company
         property on the Company's books and any unrealized gain or loss shall
         be allocated in accordance with Article 4.

                  (e) The Capital Account of each Member shall be determined
         after giving effect to all transactions which have been effected prior
         to the time when such determination is made giving rise to the
         allocation of Profits and Losses and to all contributions and
         distributions theretofore made. Any Person who acquires an Interest
         directly from a Member, or whose Percentage Interest shall be increased
         by means of a Disposition to it of all or part of the interest of
         another Member, shall have a Capital Account which includes all or part
         of the Capital Account balance of the Interest so acquired or Disposed
         of.

                  (f) Any fees, salary or similar compensation payable to a
         Member pursuant to this Agreement shall be deemed a guaranteed payment
         for federal income tax purposes and not a distribution to such Member
         for such purposes. Such payments to a Member shall not reduce the
         Capital Account of such Member, except to the extent of its
         distributive share of any Losses or other downward capital adjustment
         resulting from such payment.

                  (g) From time to time the Management Committee may make such
         modifications to the manner in which the Capital Accounts are computed
         to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2
         provided that such modification is not likely to have a material effect
         on the amounts distributable to any Member pursuant to this Agreement.

                  (h) The foregoing provisions and the other provisions of this
         Agreement relating to the maintenance of Capital Accounts are intended
         to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2,
         and shall be interpreted and applied in a manner consistent with such
         Treasury Regulations.

                                       23

<PAGE>   29

                  (i) No Member with a deficit balance in its Capital Account
         shall have any obligation to the Company or any other Member to restore
         such deficit balance. In addition, no venturer or partner in any Member
         shall have any liability to the Company or any other Member for any
         deficit balance in such venturer's or partner's Capital Account in the
         Member in which it is a partner or venturer. Furthermore, a deficit
         Capital Account balance of a Member (or a deficit Capital Account of a
         venturer or partner in a Member) shall not be deemed to be a Company
         asset or Company property.

         Section 3.9 Return of Capital. Except to the extent permitted in
Article 9 upon a dissolution of the Company, no Member shall have the right to
demand a return of such Member's Capital Contribution (or the balance of such
Member's Capital Account). Further, except as provided in Article 4, no Member
shall have the right (i) to demand and receive any distribution from the Company
in any form other than cash or (ii) to bring an action of partition against the
Company or its property. The Management Committee shall have no personal
liability for the repayment of the capital contributed by Members.

                                    ARTICLE 4

                          ALLOCATIONS AND DISTRIBUTIONS

         Section 4.1 Distributions. Except as provided in Article 9 upon a
dissolution of the Company, Distributable Cash Flow shall be distributed at such
time and in such amounts as the Management Committee may determine as follows:

                  (a) first, if the Company shall have outstanding any debt
         owing to its Members, then to such Members in repayment of such debt;

                  (b) second, if the Company shall have outstanding any
         preferred equity, then in redemption of such preferred equity; and

                  (c) then, to the Members, pro rata, in accordance with their
         respective Percentage Interests, determined as of the date of such
         distribution.

         Section 4.2 Profits, Losses and Distributive Shares of Tax Items.

                  (a) Profits. Except as provided in Section 4.2(c), Profits for
         any Fiscal Year will be allocated to the Members in proportion to their
         respective Percentage Interests.

                  (b) Losses. Except as provided in Section 4.2(c), Losses for
         any Fiscal Year will be allocated to the Members in proportion to their
         respective Percentage Interests.

                  (c) Special Allocations. Except as otherwise provided in this
         Agreement, the following special allocations will be made in the
         following order and priority:

                                       24

<PAGE>   30

                           (i) Company Minimum Gain Chargeback. Notwithstanding
                  any other provision of this Section, if there is a net
                  decrease in Minimum Gain during any taxable year or other
                  period for which allocations are made, the Members will be
                  specially allocated items of Company income and gain for that
                  period (and, if necessary, subsequent periods). The amount
                  allocated to each Member under this Section shall be an amount
                  equal to the total net decrease in the Member's Minimum Gain
                  Share at the end of the immediately preceding taxable year.
                  The items to be allocated will be determined in accordance
                  with Treasury Regulations Section 1.704-2(g)(2). This Section
                  4.2(c)(i) is intended to comply with the "partnership minimum
                  gain chargeback" requirements of the Treasury Regulations and
                  the exceptions thereto and will be interpreted consistently
                  therewith.

                           (ii) Member Nonrecourse Debt Minimum Gain Chargeback.
                  Notwithstanding any other provision of this Section (other
                  than Section 4.2(c)(i) which shall be applied first), if there
                  is a net decrease in Member Nonrecourse Debt Minimum Gain
                  during any taxable year or other period for which allocations
                  are made, any Member with a share of such Member Nonrecourse
                  Debt Minimum Gain attributable to any Member Nonrecourse Debt
                  (determined under Treasury Regulations Section 1.704-2(i)(5))
                  as of the beginning of the year shall be specially allocated
                  items of Company income and gain for that period (and, if
                  necessary, subsequent periods) in proportion to the portion of
                  such Member's share of the net decrease in the Member
                  Nonrecourse Debt Minimum Gain with respect to such Member
                  Nonrecourse Debt that is allocable to the disposition of
                  Company property subject to such Member Nonrecourse Debt. The
                  items to be so allocated shall be determined in accordance
                  with Treasury Regulations Section 1.704-2(g). This Section is
                  intended to comply with the "partner minimum gain chargeback"
                  requirements of the Treasury Regulations and the exceptions
                  thereto and shall be interpreted consistently therewith.

                           (iii) Qualified Income Offset. A Member who
                  unexpectedly receives any adjustment, allocation or
                  distribution described in Treasury Regulations Sections
                  1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially
                  allocated items of Company income and gain in an amount and
                  manner sufficient to eliminate, to the extent required by the
                  Treasury Regulations, the Adjusted Capital Account Deficit of
                  the Member as quickly as possible.

                           (iv) Nonrecourse Deductions. Nonrecourse Deductions
                  for any taxable year or other period for which allocations are
                  made will be allocated among the Members in proportion to
                  their respective Percentage Interests in the Company. -

                           (v) Member Nonrecourse Deductions. Notwithstanding
                  anything to the contrary in this Agreement, any Member
                  Nonrecourse Deductions for any taxable year or other period
                  for which allocations are made will be allocated to the Member
                  who bears the economic risk of loss with respect to the Member

                                       25

<PAGE>   31

                  Nonrecourse Debt to which the Member Nonrecourse Deductions
                  are attributable in accordance with Treasury Regulations
                  Section 1.704-2(i).

                           (vi) Code Section 754 Adjustments. To the extent an
                  adjustment to the adjusted tax basis of any Company asset
                  under Code Sections 734(b) is required to be taken into
                  account in determining capital accounts under Treasury
                  Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the
                  adjustment to the capital accounts will be treated as an item
                  of gain (if the adjustment increases the basis of the asset)
                  or loss (if the adjustment decreases the basis), and the gain
                  or loss will be specially allocated to the Members in a manner
                  consistent with the manner in which their capital accounts are
                  required to be adjusted under Treasury Regulations Section
                  1.704-1(b)(2)(iv)(m).

                           (vii) Depreciation Recapture. In the event there is
                  any recapture of Depreciation, the allocation of gain or
                  income attributable to such recapture shall be shared by the
                  Members in the same proportion as the deduction for such
                  Depreciation was shared.

                           (viii) Reallocation. To the extent Losses allocated
                  to a Member would cause the Member to have an Adjusted Capital
                  Account Deficit at the end of any Fiscal Year, the Losses will
                  be allocated to the other Member. If any Member receives an
                  allocation of Losses otherwise allocable to the other Member
                  in accordance with this Section, such Member shall be
                  allocated Profits in subsequent Fiscal Years necessary to
                  reverse the effect of such allocation of Losses. Such
                  allocation of Profits (if any) shall be made before any
                  allocations under Section 4.2(a) but after any other
                  allocations under Section 4.2(c).

                           (ix) Interest in Company. Notwithstanding any other
                  provision of this Agreement, no allocation of Profit or Loss
                  or item of Profit or Loss will be made to a Member if the
                  allocation would not have "economic effect" under Treasury
                  Regulations Section 1.704-1(b)(2)(ii) or otherwise would not
                  be in accordance with the Member's interest in the Company
                  within the meaning of Treasury Regulations Section
                  1.704-1(b)(3) or 1.704-1(b)(4)(iv). The Management Committee
                  will have the authority to reallocate any item in accordance
                  with this Section 4.2(c)(ix).

                           (x) Curative Allocations. The allocations set forth
                  in Sections 4.2(c)(i) through (ix) (the "Regulatory
                  Allocations") are intended to comply with certain requirements
                  of Treasury Regulations Section 1.704-1(b) and 1.704-2. The
                  Regulatory Allocations may not be consistent with the manner
                  in which the Members intend to divide Company distributions.
                  Accordingly, the Management Committee is authorized to further
                  allocate Profits, Losses, and other items among the Members so
                  as to prevent the Regulatory Allocations from distorting the
                  manner in which Company distributions would be divided among
                  the Members under Sections 4.1 and 9.3 but for application of
                  the Regulatory Allocations. In general, the reallocation will
                  be accomplished by specially allocating other

                                       26

<PAGE>   32

                  Profits, Losses and items of income, gain, loss and deduction,
                  to the extent they exist, among the Members so that the net
                  amount of the Regulatory Allocations and the special
                  allocations to each Member is zero. The Management Committee
                  will have discretion to accomplish this result in any
                  reasonable manner that is consistent with Code Section 704 and
                  the related Treasury Regulations.

                           (xi) Extraordinary Gain Allocation. Profit or loss
                  from the sale of the Company's assets (other than in the
                  ordinary course of business) shall be allocated among the
                  Members in amounts sufficient to place the Members' relative
                  Capital Account balances, as nearly as possible, in the same
                  proportion as their respective Percentage Interests.

                  (d) Federal Income Tax Allocations.

                           (i) Except as provided in the following clauses (ii)
                  or (iii) or as required by the Code or Treasury Regulations,
                  all items of income, gain, loss, deduction, credit, and any
                  other items of the Company shall be allocated among the
                  Members for federal and state income tax purposes in the same
                  manner as such items are allocated for purposes of allocating
                  Profits and Losses.

                           (ii) Notwithstanding (i) above, if during the R&D
                  Phase the taxable income of the Company determined in
                  accordance with Code Section 703(a) (for this purpose, all
                  items of income, gain, loss, or deduction required to be
                  stated separately pursuant to Code Section 703(a)(1) shall be
                  included in taxable income or loss) is less than zero, such
                  loss shall be allocated 100% to TESI; provided, however, that
                  during such period (and for all subsequent periods), all
                  amortization associated with the intellectual property
                  contributed by each Member, shall be specially allocated to
                  TESI.

                           (iii) In accordance with Code Section 704(c) and the
                  related Treasury Regulations, income, gain, loss and deduction
                  with respect to any property contributed to the capital of the
                  Company, solely for tax purposes, will be allocated among the
                  Members using the "Traditional Method" as set forth in Treas.
                  Reg. Section 1.704-3(b). If the Book Value of any Company
                  asset is adjusted, subsequent allocations of income, gain,
                  loss and deduction with respect to that asset will take
                  account of any variation between the adjusted basis of the
                  asset for federal income tax purposes and its Book Value in
                  the same manner as under Code Section 704(c) and the related
                  Treasury Regulations. Allocations under this Section are
                  solely for purposes of federal, state and local taxes and will
                  not affect, or in any way be taken into account in computing,
                  any Member's Capital Account or share of Profits, Losses or
                  other items or distributions under any provision of this
                  Agreement.

                  (e) Member Acknowledgment. The Members agree to be bound by
         the provisions of this Section in reporting their shares of Company
         income and loss for federal and state income tax purposes.

                                       27

<PAGE>   33

         Section 4.3 Compliance with Code. The foregoing provisions of this
Article relating to the allocation of Profits, Losses and other items for
federal income tax purposes are intended to comply with Treasury Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Treasury Regulations. The Management Committee will
have the discretion to allocate items of income, gain, loss and deduction among
the Members to ensure that this Article complies with such Treasury Regulations.

         Section 4.4 Allocations upon Disposition of Interest. Profits or Losses
attributable to any Interest which has been disposed of shall be allocated (i)
to the transferor for the days prior to and including the date of the
disposition; and (ii) to the transferee for the days subsequent to the date of
the disposition.

         Section 4.5 Tax Matters.

                  (a) Tax Matters Member. The tax matters partner for purposes
         of Section 6231 of the Code (the "Tax Matters Member") shall be TESI.
         The Tax Matters Member is specifically directed and authorized to take
         whatever steps such Member, in its discretion, deems necessary or
         desirable to perfect such designation, including filing any forms or
         documents with the Internal Revenue Service and taking such other
         action as may from time to time be required. The Tax Matters Member
         shall not be liable to the Company or the other Members for any act or
         omission taken or suffered by it in its capacity as Tax Matters Member
         in good faith and in the belief that such act or omission is in
         accordance with the directions of the Members; provided that such act
         or omission is not in willful violation of this Agreement and does not
         constitute fraud or a willful violation of applicable Laws.

                  (b) Tax Returns. After consultation and the consent of the
         other Member and subject to Section 5.3 hereof, at the expense of the
         Company, the Tax Matters Member shall cause to be prepared and timely
         filed all tax returns (including amended returns) required to be filed
         by the Company. The Tax Matters Member shall maintain or cause to be
         maintained the Capital Accounts of the Members as described in Section
         3.7. On or prior to the August 15 following the end of each Fiscal Year
         of the Company, the Tax Matters Member shall provide to the other
         Member for its review a draft Form 1065 of the Company and related
         Schedules K-1 of the Members for such Fiscal Year. At least twenty (20)
         days prior to filing any Company tax return, including any information
         returns, estimated returns and any other statement, report or form,
         with respect to United States federal income taxes, or any state or
         local income tax returns for jurisdictions in which the Company is
         treated as a partnership (each, a "Tax Return"), the Tax Matters Member
         shall provide a copy of such Tax Return to the other Member for its
         review. The Members agree not to take any position in their respective
         tax returns that is inconsistent with the Tax Returns filed by the
         Company. The Members intend that the Company shall be classified as a
         partnership for federal income tax purposes under Treasury Regulations
         Section 301.7701-3.

                                       28

<PAGE>   34

                  (c) Tax Elections. After consultation and consent of the other
         Member (which consent shall not be unreasonably withheld) and subject
         to Section 5.3, the Tax Matters Member shall make any tax elections the
         Members agree to be appropriate to utilize the alternate test for
         economic effect contained in Treasury Regulation Section
         1.704-1(b)(2)(ii)(d) provided that the Company shall make the following
         elections (and any comparable state or local elections) effective from
         the Company's first taxable year:

                           (i) to amortize start-up expenditures, if any, over a
                  60-month period in accordance with Section 195 of the Code;

                           (ii) to amortize Company organizational expenses, if
                  any, over a 60-month period in accordance with Section 709(b)
                  of the Code;

                           (iii) To elect the most accelerated method of
                  depreciation and amortization for any Company asset acquired
                  by the Company;

                           (iv) To elect under Section 6231(a)(1)(B)(ii) of the
                  Code not to have clause (i) of Section 6231(a)(1)(B) of the
                  Code apply, it being agreed that the Company will be audited
                  at the Company level; and

                           (v) to elect to expense environmental remediation
                  costs as provided under Section 168 of the Code.

         In addition, notwithstanding Section 5.3, upon written request by any
         Member to the Tax Matters Member for a Section 754 election under the
         Code, the Members agree that the Tax Matters Member shall make such
         election.

                  (d) Audits. Subject to Section 5.3, all matters relating to
         all Tax Returns filed by the Company, including tax audits and related
         matters and controversies, shall be conducted, at the expense of the
         Company, by the Tax Matters Member after consultation and consent of
         the other Member (which consent shall not be unreasonably withheld).
         The Tax Matters Member will keep the other Member and the Management
         Committee fully advised of all actions taken and proposed to be taken
         by it in its capacity as Tax Matters Member. The Tax Matters Member
         shall give prompt written notice to the other Member of any audit or
         examination of the Company's books and records to be conducted by any
         taxing authority or other governmental Person. In the event any such
         examination results in a proposed adjustment, the Tax Matters Member
         may after consultation with and the consent of the other Member (which
         consent shall not be unreasonably withheld), settle or compromise any
         issue arising from such examination or audit. In the event of any audit
         or administrative or judicial proceeding that involves an issue that
         may have a material adverse impact on a Member, such Member may, at its
         option and at the expense of the Company, assume control of all or such
         portion of such audit or proceeding.

                  (e) Survival. The provisions of this Section 4.5 shall survive
         the dissolution of the Company or the termination of any Member's
         Interest and shall remain binding on

                                       29

<PAGE>   35

         all Members for a period of time necessary to resolve with the
         applicable federal, state, local or foreign taxing authorities all
         matters (including any litigation) regarding federal, state or local
         taxation, as the case may be, of the Company or any Member with respect
         to the Company.

                                    ARTICLE 5

                                   MANAGEMENT

         Section 5.1 Management of the Business of the Company. The Members
shall manage the business of the Company, and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the purposes and
business of the Company. The Members may appoint, employ or otherwise contract
with any persons or entities for the transaction of the business of the Company
or the performance of services for or on behalf of the Company, and the Members
may delegate to any such person (who may be designated an officer of the
Company) or entity such authority to act on behalf of the Company as the Members
may from time to time deem appropriate.

         Section 5.2 The Management Committee.

                  (a) Purpose. Pursuant to Section 5.1, and subject to the
         delegation of rights and powers as provided for herein, the Members
         shall manage the business of the Company by and through their
         respective representatives on the Management Committee, which
         representatives shall constitute agents of the appointing Member and
         shall not constitute managers of the Company within the meaning of the
         Delaware Act.

                  (b) Composition. Each Member shall be represented at
         Management Committee meetings by individuals designated by them to
         serve as representatives on the Management Committee. The Management
         Committee shall be comprised of four (4) representatives, with two
         representatives to be designated by each Member. The initial Management
         Committee representatives and the Member appointing each of them are
         set forth on Exhibit E. Each representative shall be an employee of the
         appointing Member or one of its Affiliates and shall serve for an
         indefinite term at the pleasure of the appointing Member. Any
         appointment or replacement (with or without cause) of a representative
         by a Member shall be effective upon written notice of such appointment
         or replacement given to the Company and the other Member. Upon the
         death, resignation or removal of any representative, the appointing
         Member shall promptly appoint a successor.

                  (c) Voting. Any approval, vote, or consent of the Members
         under this Agreement shall be taken at a meeting of the Management
         Committee or by written consent, in each case pursuant to this Section
         5.2(c) and Section 5.5. Each Member shall be entitled to one vote,
         which may be exercised by either Management Committee representative
         appointed by such Member. If both such representatives are present at a
         meeting, such Member shall appoint one such representative to exercise
         such Member's

                                       30

<PAGE>   36

         vote. Except to the extent expressly otherwise provided herein, each
         Member, when exercising any voting right hereunder or under the
         Delaware Act or determining to grant or withhold its consent to any
         matter involving the Company, may exercise such rights or make such
         determinations as it in its sole discretion deems appropriate, and each
         of the representatives on the Management Committee shall have the right
         to act in the interests and at the discretion of the Member that
         appointed such representative. Any reference in this Agreement to the
         approval, vote, or consent of the Management Committee shall mean the
         approval, vote, or consent of the Members in accordance with this
         Agreement.

         Section 5.3 Power and Authority of the Management Committee. Except as
otherwise provided herein, or as may otherwise be required by the Delaware Act,
all approvals and other actions by the Members shall be taken by unanimous vote
of the Members taken at a meeting of the Management Committee or by written
consent, in each case pursuant to Section 5.2(c) and Section 5.5 ("Unanimous
Approval"). Matters requiring Unanimous Approval shall include but not be
limited to the following:

                  (a) Determination as to whether the Company has satisfied the
         Milestones, approval of a recovery plan with respect to any Milestones
         that are not satisfied and any modifications of Milestones;

                  (b) Acquisition by purchase, lease, or otherwise of any real
         or personal property which may be necessary, convenient, or incidental
         to the Fuel Cell Business;

                  (c) Operation, maintenance, improvement, construction,
         ownership, grant of options with respect to, sale, conveyance,
         assignment, and lease of any real or personal property necessary,
         convenient, or incidental to the Fuel Cell Business;

                  (d) Execution of any and all agreements, contracts, documents,
         certifications, and instruments necessary or convenient in connection
         with the management, maintenance, and operation of the Company's assets
         and business, or in connection with management of the Company's
         affairs;

                  (e) Contracting on behalf of the Company for the services of
         independent contractors, and delegation to such Persons the duty to
         manage or supervise any of the assets or operations of the Company;

                  (f) Entering into any contract with a Member or an Affiliate
         of a Member;

                  (g) Assessment, collection, and receipt of any rents, issues
         and profits or income from any assets, or any part or parts thereof,
         and the disbursement of Company funds for Company purposes to those
         Persons entitled to receive same;

                  (h) Payment of all taxes, license fees, or assessments of
         whatever kind or nature, imposed upon or against the Company or its
         assets, and for such purposes to file such returns and do all other
         such acts or things as may be deemed necessary and advisable by the
         Company;

                                       31

<PAGE>   37

                  (i) Establishment, maintenance, and supervision of deposits of
         any monies or securities of the Company in accounts with federally
         insured banking institutions, or other institutions, as may be selected
         by the Management Committee, provided that such accounts are in the
         name of the Company;

                  (j) Defense of lawsuits or other judicial or administrative
         proceedings brought against the Company or the Members in connection
         with activities arising out of, connected with, or incidental to this
         Agreement and/or the business of the Company;

                  (k) Execution for and on behalf of the Company of all such
         applications for permits and licenses as the Management Committee deems
         necessary and advisable with respect to the Company's assets and
         business, and execution, filing and recordation of all such
         subdivisions, parcels, or similar maps covering or relating to the
         Company's assets or business;

                  (l) Performance of all ministerial acts and duties relating to
         the payment of all indebtedness, taxes, and assessments due or to
         become due with regard to the Company's assets or business, and the
         delivery and receipt of notices, reports, and other communications
         arising out of or in connection with the ownership, indebtedness, or
         maintenance of the Company's assets or business;

                  (m) Negotiation of and entry into leases for space necessary
         for the Company's assets or business on terms consistent with the then
         applicable Annual Operating Plan;

                  (n) Approval of the Annual Budgets and Annual Operating Plans;

                  (o) Approval of operating expenditures in excess of those in
         an Approved Annual Budget;

                  (p) Establishment, appointment and removal of the Company
         officers pursuant to Section 5.7;

                  (q) Establishment of bidding procedures for procurement of
         goods and services; and

                  (r) Determining the fair market value of in-kind Capital
         Contributions by the Members.

                  (s) Any amendment of any Associated Agreement to which the
         Company is a party;

                  (t) Any merger, conversion or consolidation of or involving
         the Company;

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

                                       32

<PAGE>   38

                  (v) A change of the name of the Company;

                  (w) Engaging in a business other than the Fuel Cell Business;

                  (x) Payment of distributions to the Members except in
         connection with the dissolution and winding up of the Company;

                  (y) Any borrowing, leasing or other financings by the Company,
         or the creation of security interests, liens or mortgages in or on any
         property or assets of the Company;

                  (z) Making any loan, advance or other extensions of credit;

                  (aa) Decisions as to the giving of any guarantee or indemnity
         to secure the liabilities or obligations of any other Person;

                  (bb) The assignment of any Company property in trust for the
         benefit of creditors, or the making or filing, or acquiescence in the
         making or filing by any other person, of a petition or other action
         requesting the reorganization or liquidation of the Company under the
         Bankruptcy Law;

                  (cc) The issuance of any additional Interests or, except as
         otherwise provided in Article 7 in connection with the transfer of an
         Interest, the admission of additional or substituted Members;

                  (dd) The settlement and compromise of lawsuits or other
         judicial or administrative proceedings brought against the Company or
         the Members in connection with activities arising out of, connected
         with, or incidental to this Agreement and/or the business of the
         Company, and the engagement of counsel and others in connection with
         the defense, settlement and compromise of said judicial or
         administrative matters;

                  (ee) Decisions with respect to any derivatives activities to
         which the Company may be a party;

                  (ff) Approval of Commercialization Plans;

                  (gg) Licensing, sale or other disposition of any material item
         of intellectual property; and

                  (hh) Requiring Capital Contributions from the Members (other
         than those made concurrently with the execution of this Agreement).

         Section 5.4 Authority of Each Member. No single Member, solely by
reason of its status as such, shall (i) transact any business on behalf of the
Company or (ii) possess any authority or power to sign for or bind the Company.
Notwithstanding the foregoing, Members

                                       33

<PAGE>   39

shall have the right to approve or disapprove, or otherwise consent or withhold
consent, with respect to such matters as are specified in this Agreement or the
Delaware Act. In addition, a Member may take such actions on behalf of the
Company and execute documents or otherwise bind the Company to the extent, if
any, that such powers are delegated to such Member by Unanimous Approval from
time to time.

         Section 5.5 Meetings of Management Committee/Conduct of Business.

                  (a) The Management Committee shall meet at least once during
         each calendar quarter subject to more frequent meetings upon approval
         of the Management Committee. Notice of and an agenda for all Management
         Committee meetings shall be provided to all Management Committee
         representatives by the Secretary at least ten (10) Business Days prior
         to the date of such meetings. Special meetings of the Management
         Committee may be called at the direction of any Member upon no less
         than five (5) Business Days notice to the other Member.

                  (b) Except as otherwise provided herein, the Management
         Committee shall conduct its meetings in accordance with such rules as
         it may from time to time establish and shall keep minutes of its
         meetings and issue resolutions evidencing the actions taken by it. A
         secretary elected by the Management Committee (the "Secretary") shall
         keep the minutes of all such meetings. The Secretary shall be an
         employee of a Member or one of its Affiliates.

                  (c) Unless otherwise agreed, all meetings of the Management
         Committee shall be held at the principal offices of the Company or by
         conference telephone or similar means of communication by which all
         representatives can participate in the meeting.

                  (d) Any action required or permitted to be taken by the
         Members, either at a meeting or otherwise, may be taken without a
         meeting if each of the Members' representatives on the Management
         Committee consents thereto in writing and the writing or writings are
         filed with the minutes of proceedings of the Management Committee.

                  (e) The Members may, by Unanimous Approval, delegate such of
         their powers and authority to one or more representatives serving on,
         or a subcommittee or subcommittees of, the Management Committee, the
         officers of the Company, or such other Person or Persons as the Members
         may deem advisable.

                  (f) At all meetings of the Management Committee, one (1)
         representative of each Member, present in person or by proxy and
         entitled to vote thereat, shall constitute a quorum for the transaction
         of business. In the absence of a quorum, a majority of the Management
         Committee so present or represented and entitled to vote may adjourn
         the meeting from time to time and from place to place, without further
         notice, other than by oral announcement at the meeting, until a quorum
         is obtained. At any such adjourned meeting at which a quorum is
         present, any business may be transacted which might have been
         transacted at the meeting as originally called.

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<PAGE>   40

         Section 5.6 Remuneration of Management Committee. The Management
Committee representatives shall receive no compensation from the Company for
performing services in their capacity as such representatives. Each of the
Members shall be responsible for the payment of the salaries, benefits,
retirement allowances and travel and lodging expenses for its Management
Committee representatives.

          Section 5.7 Officers of the Company. The officers of the Company shall
be a President and such other officers as may be determined by the Unanimous
Approval. The President shall be responsible for scheduling Management Committee
meetings and setting an agenda for such meetings. ECD shall designate a Person
(who may be one of its representatives on the Management Committee) to serve as
President during the R&D Phase. At the end of the R&D Phase and thereafter, the
Members shall by Unanimous Approval designate a President to serve for a term of
years. With respect to any renewal of a President's appointment, no Member shall
oppose such renewal for reasons unrelated to the performance of the Company or
the performance, fitness or suitability of such President for such position.

         Section 5.8 Authority and Duties of Officers. The officers of the
Company shall have such authority and shall perform such duties as may be
determined by the Members. At its initial meeting, the Management Committee
shall adopt a resolution providing for a delegation of authority to the
President of the Company setting forth in reasonable detail those actions which
may be undertaken by the President and the subordinate officers of the Company
without the prior approval of the Management Committee.

                                    ARTICLE 6

                                 INDEMNIFICATION

         Section 6.1 Exculpation. No Member, representative of either Member on
the Management Committee, officer of the Company or other Person to whom the
Management Committee has delegated its authority to act on behalf of the Company
("Authorized Person") shall have any liability to the Company or the Members for
any Losses incurred as a result of any act or omission of such Member,
representative, officer or Authorized Person if (i) such Member, representative,
officer or Authorized Person acted in good faith and in a manner such Member,
representative, officer or Authorized Person reasonably believed to be in, or
not opposed to, the interests of the Company and (ii) the conduct of such
Member, representative, officer or Authorized Person did not constitute actual
fraud, gross negligence or willful misconduct; provided that nothing contained
herein shall protect any Member against any liability to the Company or the
other Members for failure to perform the obligations of such Member expressly
set forth in this Agreement or the Associated Agreements.

         Section 6.2 Indemnification.

                  (a) Indemnification. The Company shall defend, protect,
         indemnify and hold harmless each Member, Management Committee
         representative, officer of the Company

                                       35

<PAGE>   41

         and Authorized Person (each individually, an "Indemnitee") from and
         against any and all Losses arising from any and all Proceedings in
         which an Indemnitee may be involved, or threatened to be involved, as a
         party or otherwise, arising out of or incidental to the business of the
         Company (excluding in the case of a Member, Losses for loss of profit
         or return on any Indemnified Person's direct or indirect investment in
         the Company), if (i) the Indemnitee acted in good faith and in a manner
         such Indemnitee reasonably believed to be in, or not opposed to, the
         interests of the Company, and, with respect to any criminal proceeding,
         had no reason to believe the conduct in question was unlawful and (ii)
         the Indemnitee's conduct did not constitute actual fraud, gross
         negligence or willful misconduct.

                  (b) Rights of Indemnitee. The Company will periodically
         reimburse each Indemnitee for all Losses (including fees and expenses
         of counsel) indemnified pursuant to Section 6.2(a) as such Losses are
         incurred in connection with investigating, preparing, pursuing or
         defending any Proceeding; provided that such Indemnitee shall promptly
         repay to the Company the amount of any such reimbursed expenses paid to
         it if it shall be judicially determined by judgment or order not
         subject to further appeal or discretionary review that such Indemnitee
         is not entitled to be indemnified by the Company in connection with
         such matter. The indemnification and advancement of expenses provided
         by, or granted pursuant to, this Section 6.2 shall not be deemed
         exclusive of, and shall not limit, any other rights or remedies to
         which any Indemnitee may be entitled or which may otherwise be
         available to any Indemnitee at law or in equity, (ii) shall continue as
         to a Person notwithstanding that such Person has ceased to be an
         Indemnitee, and (iii) shall inure to the benefit of the heirs,
         successors, assigns and administrators of the Indemnitee. Subject to
         the foregoing sentence, the provisions of this Section 6.2 are solely
         for the benefit of the Indemnitees and shall not be deemed to create
         any rights for the benefit of any other persons. Each Indemnitee shall
         have a claim against the property and assets of the Company for payment
         of any indemnity amounts from time to time due hereunder, which amounts
         shall be paid or properly reserved for prior to the making of
         distributions by the Company to Members.

                  (c) Further Indemnification. The Company may, to the extent
         authorized from time to time by Unanimous Approval, grant rights to
         indemnification and to advancement of expenses to any employee or agent
         of the Company to the fullest extent of the provisions of this Section
         6.2 with respect to the indemnification and advancement of expenses of
         Members and officers of the Company.

         Section 6.3 Liability for Debts of the Company; Limited Liability.

                  (a) Except as otherwise provided in the Delaware Act, 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 no Member shall be obligated personally
         for any such debt, obligation or liability of the Company solely by
         reason of being a Member.

                  (b) Except as provided by applicable Laws, a Member, in its
         capacity as such,

                                       36

<PAGE>   42

         shall have no liability to the Company or to any other Member in excess
         of payments required to be made by such Member under this Agreement.

                  (c) The provisions of this Agreement are intended solely to
         benefit the Members and, to the fullest extent permitted by applicable
         Laws, shall not be construed as conferring any benefit upon any
         creditor of the Company (and no such creditor shall be a third-party
         beneficiary of this Agreement), and no Member shall have any duty or
         obligation to any creditor of the Company to make any contributions or
         payments to the Company.

         Section 6.4 Company Expenses. The Company shall indemnify, hold
harmless, and pay all expenses, costs, or liabilities of any Member who for the
benefit of the Company and with the prior approval of the Management Committee
makes any deposit, acquires any option, or makes any other similar payment or
assumes any obligation in connection with any property proposed to be acquired
by the Company and who suffers any financial loss as the result of such action.

                                    ARTICLE 7

                              TRANSFER OF INTERESTS

         Section 7.1 Restrictions on Transfer.

                           (a) (i) Except as expressly permitted by this Article
                  7, no Member may at any time Transfer all or any part of any
                  of such Member's Interest, without the express written consent
                  of the other Member, which consent may be granted or withheld
                  by any such Member in its full and absolute discretion.
                  Nothing in this Article 7 shall be construed to permit any
                  Member at any time to, and no Member shall, create or suffer
                  to exist any Lien upon, in, or in respect of all or any part
                  of any of such Member's Interest without the express written
                  consent of the other Member, which consent may be granted or
                  withheld by any such Member in its full and absolute
                  discretion. Any offer or purported Transfer of a Member's
                  Interest in violation of the terms of this Agreement shall be
                  void.

                           (ii) Each Member hereby agrees that if such Member
                  ceases to be an ECD Group Entity or a Texaco Group Entity, as
                  the case may be, but no Change of Control shall have otherwise
                  occurred with respect to such Member, the Interest held by
                  such Member shall be first be transferred to another ECD Group
                  Entity or Texaco Group Entity, as the case may be, and such
                  Interest shall continue to be subject to (i) this Section
                  7.1(a)(ii), and (ii) Section 7.1(c) (when, as and if it is
                  applicable).

                  (b) Upon giving 30 days written notice to the other Member,
         any ECD Member may Transfer all or any part of its Interest to an ECD
         Group Entity, and any Texaco Member may Transfer all or any part of its
         Interest to a Texaco Group Entity,

                                       37

<PAGE>   43

         provided that the transferee of such Interest shall be bound by the
         terms of Section 7.1(a)(ii) above, when, as and if it becomes
         applicable to such transferee. After giving effect to any such
         permitted transfer of an Interest, any obligation of the transferring
         Member hereunder shall be a joint and several obligation of the
         transferring Member and such transferee, notwithstanding the fact that
         the transferring Member may no longer continue to have any Interest.

                  (c) On and after the completion of the R&D Phase with respect
         to all Production Ready Prototypes included in the Development Program
         as it may be modified from time to time, a Texaco Member may Transfer
         all or any part of its Interest to a Person that is not a Texaco Group
         Entity, and an ECD Member may Transfer all or any part of its Interest
         to a Person that is not an ECD Group Entity, provided that such
         Transfer is made in compliance with the procedure set forth in this
         Section 7.1(c).

                           (i) A Member intending to Transfer its Interest (the
                  "Selling Member") shall deliver a written notice to the Other
                  Member (the "Offeree Member") which shall (x) state such
                  intent, and (y) set forth a list of proposed Acceptable
                  Transferees, together with such information regarding each
                  Person on such list as may be reasonably required to determine
                  whether such Person is an Acceptable Transferee.

                           (ii) The Offeree Member shall, within 30 days after
                  receipt of such notice, deliver to the Selling Member a
                  written response to such list, setting forth its position with
                  respect to the acceptability of the Persons named therein,
                  which shall be determined by such Offeree Member in its sole
                  discretion exercised in good faith, for any reason other than
                  for the purpose of frustrating all Transfers. The procedure
                  set forth in this subsection (ii) may be repeated by the
                  Selling Member as often as may be reasonably required for the
                  Selling Member's marketing of the Selling Member's Interest.

                           (iii) The Selling Member shall have a period of no
                  less than 270 days after the Acceptable Transferees have
                  either been accepted or not objected to, to execute and
                  deliver a definitive agreement with any Acceptable Transferee
                  committing the Selling Member to sell and such Acceptable
                  Transferee to purchase the Selling Member's Interest, and to
                  complete such sale (subject to reasonable extension if
                  required to satisfy the condition set forth in Section 7.7).
                  If the Selling Member fails to complete such sale within such
                  period, the Selling Member must again invoke the offer
                  procedure set forth in this Section 7.1(c) in order to
                  Transfer its Interest pursuant to this Section 7.1(c). From
                  time to time, the Selling Member will furnish to the Offeree
                  Member such information respecting Selling Member's marketing
                  of the Selling Member's Interest as the Offeree Member
                  reasonably requests for any purpose reasonably related to
                  Offeree Member's exercise of its rights under Section
                  7.1(c)(iv).

                           (iv) Prior to consummating a proposed sale of the
                  Interest of the Selling Member to any Acceptable Transferee
                  pursuant to Section 7.1(c)(v), the Selling

                                       38

<PAGE>   44

                  Member shall deliver a second written notice (the "Selling
                  Member's Offer Notice") to the Offeree Member which shall (x)
                  state the intention of the Selling Member to sell the Interest
                  of such Member, and (y) describe the material terms and
                  conditions of the proposed sale (including the proposed
                  purchase price and structure), together with any letter of
                  intent or definitive agreement relating to such proposed sale
                  if executed as of such date ("Sale Materials"). If the Offeree
                  Member desires to purchase the Interest so offered, it shall,
                  within 10 days of the receipt by the Offeree Member of the
                  Selling Member's Offer Notice ("Offeree Member Response
                  Date"), deliver a written notice (the "Offeree Member's
                  Acceptance Notice") to the Selling Member. The Offeree
                  Member's Acceptance Notice shall set forth an irrevocable
                  commitment by the Offeree Member to purchase the Interest so
                  offered on the terms and conditions set forth in the Sale
                  Materials and in Section 7.7.

                           (v) If the Offeree Member's Acceptance Notice sets
                  forth a commitment to purchase the Interest of the Selling
                  Member on the terms and conditions set forth in the Selling
                  Member's Offer Notice, the closing of such purchase shall take
                  place within 30 days after delivery of the Offeree Member's
                  Acceptance Notice, subject to reasonable extension if required
                  to satisfy the conditions set forth in Section 7.7. If the
                  Offeree Member either notifies the Selling Member in writing
                  that it has elected not to purchase the Interest of the
                  Selling Member or fails to provide the Offeree Member's
                  Acceptance Notice on or prior to the Offeree Member Response
                  Date, the Selling Member shall be free to consummate its
                  proposed sale to the Acceptable Transferee on the terms and
                  conditions set forth in the Sale Materials and in Section 7.7.

                  (d) Notwithstanding anything to the contrary contained herein,
         unless all of the Members shall consent, no Member may Transfer all or
         any portion of its Interest if such Transfer: when added to the total
         of all other dispositions of Interests within the preceding twelve (12)
         months, would result in the Company being considered to have terminated
         within the meaning of Code Section 708.

         Section 7.2 Change of Control.

                  (a) In the event of a Change of Control of any Member (the
         "Changed Member"), the Changed Member shall, following such Change of
         Control, promptly notify the other Member (the "Unchanged Member") in
         writing of such event, setting forth the date and circumstances of the
         Change of Control and the identity of the Person that has acquired
         control of the Changed Member. If the Changed Member fails to give such
         notice, the Unchanged Member may give such notice. Promptly after
         delivery of any such notice, or after otherwise ascertaining that such
         Change of Control has occurred, the Members shall cause Fair Market
         Value of the Company to be determined in accordance with the procedures
         set forth in Section 2.9.

                  (b) Within 30 days following the determination of Fair Market
         Value of the Company, the Unchanged Member may provide a notice to the
         Changed Member

                                       39

<PAGE>   45

         indicating its desire to acquire the Interest of the Changed Member for
         the Change Price, and setting forth the date on which such Unchanged
         Member intends to acquire such Interest pursuant to this Section
         7.2(b), which date shall be as soon as practicable after delivery of
         the notice pursuant to this Section 7.2(b). If the Unchanged Member
         provides such notice, it shall have the right to acquire all but not
         less than all of the Interest of the Changed Member, subject to the
         provisions of Section 7.7, for the Change Price. As used in this
         Agreement, the term "Change Price" means, with respect to any Member's
         Interest, (x) the Fair Market Value of the Company multiplied by (y)
         such Member's Percentage Interest.

         Section 7.3 Waiver of Partition.

                  (a) All Company assets, whether real, personal or mixed,
         tangible or intangible, shall be owned by the Company as an entity. All
         the Company assets shall be recorded as the property of the Company on
         its books and records, irrespective of the name in which legal title to
         such Company assets is held.

                  (b) The assets, property and cash contributed to the Company,
         as well as all other property and assets acquired by the Company, shall
         be owned by the Company. No Member shall, either directly or
         indirectly, take any action to require partition, and notwithstanding
         any provisions of applicable Laws to the contrary, each Member (and
         each of its legal representatives, successors, or assigns) hereby
         irrevocably waives any and all rights it may have to maintain any
         action for partition or to compel any sale with respect to its
         Interest, or with respect to any assets or properties of the Company,
         except as expressly provided in this Agreement, until the termination
         of this Agreement.

         Section 7.4 Covenant Not to Withdraw or Dissolve. Notwithstanding any
provision of the Delaware Act, except as expressly provided above, each Member
hereby covenants and agrees that the Members have entered into this Agreement
based on their mutual expectation that both Members will continue as Members and
carry out the duties and obligations undertaken by them hereunder and that,
except as otherwise expressly required or permitted hereby, each Member hereby
covenants and agrees not to (i) take any action to file a certificate of
dissolution or its equivalent with respect to itself; (ii) take any action that
would cause a Bankruptcy of such Member; (iii) withdraw or attempt to withdraw
funds or assets from the Company, except as otherwise expressly permitted by the
Delaware Act; (iv) exercise any power under the Delaware Act to dissolve the
Company; (v) Transfer all or any portion of its Interest, except as expressly
provided herein; or (vi) demand a return of such Member's contributions or
profits (or a bond or other security for the return of such contributions of
profits), in each case without Unanimous Approval.

         Section 7.5 Substituted Members. Any transferee acquiring the Interest
of a Member as permitted under this Agreement shall be deemed admitted as a
substituted Member with respect to the Interest transferred concurrently with
the effectiveness of the Transfer without any further vote or approval of any
Member, provided such transferee shall have executed and delivered to the other
Member a counterpart of this Agreement and such other documents or agreements as
shall be reasonably requested by such other Member to confirm such transferee's

                                       40

<PAGE>   46

admission as a Member and its agreement to be bound by and assume the
obligations of the transferor in accordance with the terms of this Agreement and
any Associated Agreement under which such transferor has any rights or
obligations. The transferor shall not be relieved of any obligation or liability
hereunder arising prior to the consummation of such Transfer but shall be
relieved of all future obligations with respect to the Interest so Transferred.
No purported Transfer of any Interest, or any portion thereof or interest
therein, in violation of the terms of this Agreement (including any Transfer
occurring by operation of law) shall vest the purported transferee with any
rights, powers or privileges hereunder, and no such purported transferee shall
be deemed for any purposes as a Member hereunder or have any right to vote or
consent with respect to Company matters, to maintain any action for an
accounting or to exercise any other rights of a Member hereunder or under the
Delaware Act.

         Section 7.6. Deliveries. Upon the consummation of any purchase and sale
pursuant to this Article 7, the transferring Member shall deliver the Interest
of the transferring Member, free and clear of all Liens (other than any Lien
created under any financing to which the Company is a party), together with duly
executed written instruments of transfer with respect thereto, in form and
substance reasonably satisfactory to the purchaser of such Interests, against
(x) delivery of the cash portion of the applicable price for such Interest by
wire transfer, in immediately available funds, to the account of the
transferring Member designated for such purpose, and (y) delivery of any other
consideration as may be provided for such purchase and sale.

         Section 7.7 Approvals. Notwithstanding any other provision of this
Agreement, no Transfer of an Interest pursuant to this Article 7 shall occur
unless and until any and all necessary consents and approvals have been obtained
from any Governmental Body with authority with respect thereto, including any
required approvals under the HSR Act. The Members agree to cooperate and to
cause their Affiliates to cooperate in the preparation and filing of any and all
reports or other submissions required in connection with obtaining such consents
and approvals.

                                    ARTICLE 8

                                     DEFAULT

         Section 8.1 Default.

         (a) Default. If any of the following events occur:

                           (i)  the Bankruptcy of a Member; or

                           (ii) any part of the Interest of a Member is seized
                  by a creditor of such Member, and the same is not released
                  from seizure or bonded out within thirty (30) days from the
                  date of notice of seizure; or

                           (iii) a Member fails to (x) provide any Capital
                  Contribution required under Article 3 within ten (10) days
                  after the due date thereof, (y) comply with

                                       41

<PAGE>   47

                  any other funding request as required by this Agreement within
                  ten (10) days after the due date thereof, or (z) perform any
                  material obligation imposed upon such Member under any
                  agreement relating to borrowed money to which the Company is a
                  party which results in a default by, or acceleration of
                  indebtedness of, the Company thereunder, and such failure
                  continues unremedied for ten (10) days after the occurrence of
                  such failure; or

                           (iv) a Member (y) fails to perform any material
                  provision or obligation imposed on such Member in this
                  Agreement other than those described in Section 8.1(a)(iii);
                  or (z) attempts to transfer any of its Interest in the Company
                  except as permitted under Article 7, and in each such case
                  such failure continues unremedied for thirty (30) days after
                  receipt of notice from the other Member; or

                           (v) a Member fails to perform any material provision
                  or obligation imposed on such Member in the Technology
                  Agreement, the Assignment Agreement, the TESI Service
                  Agreement or the ECD Service Agreement, and such failure
                  continues unremedied for ten (10) days after receipt of notice
                  from the other Member;

         then a "Default" shall be deemed to have occurred with respect to such
         Member, who shall be referred to as the "Defaulting Member," and the
         other Member shall be referred to as a "Nondefaulting Member".
         Subsequent to the occurrence of a Default, the Defaulting Member shall
         continue to be a Member and shall continue to be obligated to make all
         Capital Contributions as provided in Article 3.

                  (b) Continuation of the Company. If an event described in
         Section 8.1(a) occurs, it is the intent of the Members that the Company
         shall continue to exist and operate without interruption, dissolution
         or termination, and without impairing or reducing in any manner the
         Company's rights and obligations to third parties unless the
         Nondefaulting Member elects to dissolve the Company pursuant to Section
         8.2(a)(i).

                  (c) Suspension and Assignment of Distributions.
         Notwithstanding anything in this Agreement to the contrary, effective
         upon the occurrence of an event which, but for the expiration of any
         applicable grace period, would constitute a Default with respect to a
         Member ("Event of Default"), no distribution shall be made by the
         Company to such Member until such Event of Default has been cured and
         the Nondefaulting Member has been reimbursed for all direct costs and
         expenses incurred as a result of the Event of Default. Effective upon
         the expiration of such grace period, the Defaulting Member assigns to
         the Nondefaulting Member its right to receive any and all distributions
         from the Company to which it would otherwise be entitled under this
         Agreement or the Delaware Act (including any distributions suspended
         during the grace period in accordance with the preceding sentence)
         until such time as the Nondefaulting Member has been reimbursed in full
         for all such costs and expenses.

         Section 8.2 Options of Nondefaulting Member. If a Default occurs and is
continuing then the Nondefaulting Member shall have the right, in its sole and
absolute discretion, to:

                                       42

<PAGE>   48

                           (i) dissolve the Company in accordance with Article
                  9;

                           (ii) expel the Defaulting Member from the Company by
                  giving written notice specifying the expulsion date and
                  purchasing, designating another Person to purchase or causing
                  the Company to purchase the Interest of the Defaulting Member
                  as of the expulsion date in such percentage as the
                  Nondefaulting Member shall determine (the Nondefaulting
                  Member, such other Person or the Company, as the case may be,
                  the "Default Purchaser"), at the Default Purchase Price, less
                  all costs and expenses incurred or reasonably anticipated to
                  be incurred by the Default Purchaser as a result of the
                  Default (a "Default Purchase"). At the Default Purchaser's
                  election, payment to the Defaulting Member may take the form
                  of a ten (10) year note from the Default Purchaser secured by
                  the Interest purchased and payable in equal annual
                  installments of principal plus interest at the Prime Rate. In
                  the event the Default Purchaser incurs costs or expenses in
                  respect of the Defaulting Member's default in addition to
                  those which were previously deducted from the Default Purchase
                  Price, any such note shall be reduced by an amount equal to
                  such additional costs or expenses, or the Default Purchaser
                  may offset such amount against any other sums owed by the
                  Default Purchaser to the Defaulting Member;

                           (iii) Cure the default and cause the cost thereof to
                  be charged against a special loan account established for the
                  Nondefaulting Member until the entire cost thereof plus
                  interest on the unpaid balance at an annual rate equal to 2%
                  over the Prime Rate shall have been paid or reimbursed to the
                  Nondefaulting Member from any subsequent distributions made
                  pursuant to this Agreement to which the Defaulting Member
                  would otherwise have been entitled, which amounts shall be
                  paid first as interest and then principal, until the loan is
                  paid in full.

                           (iv) Cure the Default and credit the Nondefaulting
                  Member's Capital Account with an amount equal to the sum of
                  the costs of such cure and all other costs and expenses
                  incurred by the Nondefaulting Member as a result of the
                  Default and cause the Percentage Interests of the Members to
                  be adjusted to reflect the additional Interest in the Company
                  of the Nondefaulting Member as a result of such credit based
                  on the Fair Market Value of the Company as of the date of such
                  cure; provided, however, that any such cure by the
                  Nondefaulting Member shall not affect the liability of the
                  Defaulting Member for any other obligations to the Company or
                  the Nondefaulting Member, whether attributable to periods
                  prior to or following such cure. The Nondefaulting Member's
                  additional Interest shall be equal to the percentage
                  calculated by dividing the amount of the cure by the Fair
                  Market Value of the Company. Correspondingly, the Defaulting
                  Member's Interest shall be reduced by such percentage.

         Section 8.3 No Limitation or Right of Set-Off. Each Member agrees that
the obligation to make payment to the Company as provided in this Agreement is a
covenant of each Member to the other Member and any Default entitles the
Nondefaulting Member to take the

                                       43

<PAGE>   49

actions set forth in Section 8.2 which shall be in addition to, and not in
substitution for, any other rights or remedies which the Nondefaulting Member
may have at law or equity or pursuant to the other provisions of this Agreement
or any Associated Agreement. Any Member which becomes a Defaulting Member
undertakes that, in respect of any exercise by the Nondefaulting Member of any
rights under or the application of any of the provisions of Section 8.2, such
Defaulting Member shall not raise by way of set off, or invoke as a defense or
assert as a claim, whether in law or equity, any failure by any other Member to
pay amounts due and owing under this Agreement or any alleged or unliquidated
claim that such Defaulting Member may have against the Company or any Member,
whether such claim arises under this Agreement or otherwise. Such Defaulting
Member further undertakes not to raise by way of defense, whether in law or in
equity, that the nature or the amount of the remedies granted to the
Nondefaulting Member is unreasonable or excessive.

                                    ARTICLE 9

                                   DISSOLUTION

         Section 9.1 Dissolution. The Company shall dissolve and commence
winding up upon the first to occur of any of the following events (each, a
"Dissolution Event"):

                  (i) a decision by Unanimous Approval to dissolve, wind up and
         terminate the Company;

                  (ii) upon a Default, the Nondefaulting Member elects to
         dissolve the Company pursuant to Section 8.2(a)(i); or

                  (iii) the entry of a decree of judicial dissolution pursuant
         to Section 18-802 of the Delaware Act.

         Section 9.2 Winding Up. The Members shall be responsible for overseeing
the winding up and dissolution of the Company. A reasonable amount of time shall
be allowed for the period of winding up in light of prevailing market conditions
and so as to avoid undue loss in connection with any sale of the Company's
assets. Upon the occurrence of a Dissolution Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying or making reasonable provision for the
satisfaction of the claims of its creditors and Members, and no Member shall
take any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Company's business and affairs; provided that all
covenants contained in this Agreement and obligations provided for in this
Agreement shall continue to be fully binding upon the Members until such time as
the assets or property or the proceeds from the sale thereof have been
distributed pursuant to this Article 9 and the existence of the Company has been
terminated by the filing by the Members of a Certificate of Cancellation of the
Certificate of Formation of the Company with the Secretary of State of the State
of Delaware.

         Section 9.3       Distributions upon Liquidation.

                                       44

<PAGE>   50

         (a) In connection with the winding up of the Company, first the Fair
Market Value of the Company's assets shall be determined as provided in Section
2.9. To the extent the Fair Market Value of the Company's assets (net of
liabilities) differ from the aggregate balances in the Member's Capital
Accounts, such difference (positive or negative as the case may be) shall be
reflected in the Member's respective Capital Accounts in a manner as if the
Company's assets were sold and the resulting gains or losses allocated to the
Members in amounts sufficient to place the Member's relative Capital Accounts
balances, as nearly as possible, in the same proportion as their respective
Percentage Interests. The balance of any gains and losses will be allocated to
the Members in accordance with Sections 4.2 and 4.3.

         (b) In connection with the winding up of the Company, the Company's
assets or the proceeds from the sale thereof shall first be applied and
distributed to the maximum extent permitted by applicable Laws in accordance
with the In-Kind Distribution Protocol attached hereto as Schedule 9.3.

         (c) Thereafter, in connection with the winding up of the Company, the
Company's assets or the proceeds from the sale thereof shall be applied and
distributed to the maximum extent permitted by applicable Laws as follows:

                  (i) To creditors, including Members who are creditors (other
         than by reason of the operation and effect of Sections 18-601 and
         18-604 of the Delaware Act), to the extent otherwise permitted by law,
         in satisfaction of liabilities of the Company (whether by payment or
         the making of reasonable provision for payment thereof);

                  (ii) the assets not distributed pursuant to (b) above, in
         accordance with the In-Kind Distribution Protocol attached hereto as
         Schedule 9.3;

                  (iii) To the preferred equity owners, to the full extent of
         the preferred equity balances then outstanding plus an amount equal to
         any distributions owing to the preferred equity owners then in arrears;

                  (iv) To Members in satisfaction of liabilities for
         distributions under the Delaware Act; and

                  (v) Thereafter to Members in proportion to their respective
         Capital Account balances, to the extent the same are positive, up to
         the full amount thereof (after giving effect to adjustments to Capital
         Account balances under Section 3.8 and, as applicable, Article 4,
         through the date of distribution); with any remaining assets to be
         distributed to Members in accordance with their respective Percentage
         Interests.

         Section 9.4 Claims of the Members. The Members will look solely to the
Company's assets for the return of their contributions to their Capital
Accounts, and if the assets of the Company remaining after payment of or due
provision for all debts, liabilities and obligations of the Company are
insufficient to return such contributions, the Members will have no recourse
therefor against the Company or any other Member or any other Person. No Member
shall have

                                       45

<PAGE>   51

any obligation to restore, or otherwise pay to the Company, the other Member or
any third party, the amount of any deficit balance in such Member's Capital
Account upon dissolution and liquidation.

         Section 9.5 Rights and Obligations of Members. Dissolution of the
Company for any cause shall not release a Member from any liability which such
Member had already incurred at the time of dissolution and termination or affect
in any way the survival of the rights, duties and obligations of a Member
provided for in Section 4.5, Article 8, Section 11.11 or Section 11.13 of this
Agreement.

                                   ARTICLE 10

                                FINANCIAL MATTERS

         Section 10.1 Books and Records. The Company shall maintain, at the
Company's principal place of business and at the Company's expense, accurate and
complete books and records, on the accrual basis, in accordance with GAAP (the
application of which, having been adopted, shall not be changed without the
prior written consent of the Management Committee), showing all costs,
expenditures, sales, receipts, assets and liabilities, and profits and losses
and all other records necessary, convenient or incidental to recording the
Company's business and affairs. Such books and records shall be audited at least
annually, at the Company's expense, by independent certified public accountants
selected by the Management Committee. The initial certified public accountants
for the Company shall be Deloitte and Touche. The books and records of the
Company shall be open to inspection by each Member or its designated
representatives at the inspecting Member's expense at any reasonable time during
business hours for any proper purpose.

         Section 10.2 Financial Reports. The Management Committee shall cause to
be prepared (a) as of the end of each calendar month or quarter as appropriate,
(b) as of the end of each Fiscal Year, (c) as of the date of dissolution of the
Company, and (d) as of such additional dates as the Management Committee may
direct, in accordance with GAAP, appropriate financial statements showing the
assets, liabilities, capital, profits, expenses, losses and recovered and
unrecovered capital expenditures of the Company and a statement showing all
amounts credited and debited to each Member's capital account (for both GAAP and
Capital Accounts) and of each Member's distributive share, for federal income
tax purposes, of income, gains, deductions, losses and credits (or items
thereof) arising out of the Company's operations, as required by law, and a
further statement reconciling any difference between the Member's respective
capital accounts as shown in such financial statements and their capital
accounts as determined in accordance with the provisions of this Agreement. A
copy of each such report shall be delivered to each Member within ninety (90)
days after each such applicable date.

         Section 10.3 Company Funds. Pending application or distribution, the
funds of the Company shall be deposited in such bank accounts, or invested in
such interest-bearing or non-interest-bearing investments, including without
limitation, federally insured checking and savings accounts, certificates of
deposit, government issued or backed securities, or mutual funds

                                       46

<PAGE>   52

investing primarily in such types of securities, as shall be designated by the
Management Committee. Such funds shall not be commingled with the funds of any
other person. Withdrawals therefrom shall be made upon such signatures as the
Management Committee may designate.

                                   ARTICLE 11

                                  MISCELLANEOUS

         Section 11.1 Notices. All notices, consents, requests, demands and
other communications to be provided to any Person pursuant to the terms hereof
shall be in writing and shall be deemed to have been duly given or delivered
upon the date of receipt if: (a) delivered personally; (b) telecopied or telexed
with transmission confirmed; (c) mailed by registered or certified mail return
receipt requested; or (d) delivered by a recognized commercial courier to the
Person as follows (or to such other address as any Person shall have last
designated by fifteen (15) days written notice to the other Persons):

         If to TESI:

         Texaco Energy Systems Inc.
         1111 Bagby
         Houston, Texas  77002
         Fax: (713) 752-4681
         Phone: (713) 752-3965
         Attention: Greg Romney

         With copies of all notices for TESI to:

         Texaco Inc.
         2000 Westchester Avenue
         White Plains, New York 10650
         Fax: (914) 253-6342
         Phone: (914) 253-7611
         Attention: William M. Wicker

         If to ECD:

         Energy Conversion Devices, Inc.
         1675 West Maple Road
         Troy, Michigan  48084
         Fax: (248) 280-1456
         Phone: (248) 280-1900
         Attention: Stanford R. Ovshinsky

         With copies of notices for ECD to:

                                       47

<PAGE>   53

         General Counsel
         Energy Conversion Devices, Inc.
         1675 West Maple Road
         Troy, Michigan  48084
         Fax: (248) 288-5158
         Phone: (248) 280-1900

         Section 11.2 Modification. This Agreement, including this Section 11.2
and the Exhibits to this Agreement, shall not be modified except by a written
instrument signed by or on behalf of the Members.

         Section 11.3 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware as
applied to contracts made and performed within the State of Delaware, without
regard to principles of conflict of laws.

         Section 11.4 Assignment, Binding Effect. This Agreement shall not be
assigned by any Member directly or indirectly to any other Person (whether by
the sale of stock or other transfer of ownership interest in a Person, or the
sale or transfer by a Person that has an indirect stock or ownership interest in
a Person or otherwise). This Agreement shall be binding upon and inure to the
benefit of the Members and their respective successors and permitted assigns.

         Section 11.5 No Third Party Rights. Nothing in this Agreement shall
create or be deemed to create any third party beneficiary rights in any Person
or entity (including any employee of any Person) not party to this Agreement,
except that the Indemnitees may be third party beneficiaries pursuant to Article
6 of this Agreement in which instance their rights are subject to the terms of
such Article 6.

         Section 11.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

         Section 11.7 Invalidity. If any of the provisions of this Agreement
including the Exhibits hereto is held invalid or unenforceable, such invalidity
or unenforceability shall not affect in any way the validity or enforceability
of any other provision of this Agreement. In the event any provision is held
invalid or unenforceable, the Members shall attempt to agree on a valid or
enforceable provision which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the tenor of this Agreement and, on so
agreeing, shall incorporate such substitute provision in this Agreement.

         Section 11.8 Entire Agreement. This Agreement and the Associated
Agreements contain the entire agreement between the parties hereto with respect
to the matters contemplated herein and therein and all prior or contemporaneous
understandings and agreements shall merge herein. There are no additional terms,
whether consistent or inconsistent, oral or written, which are intended to be
part of the parties' understandings which have not been incorporated into this
Agreement or the Associated Agreements.

                                       48

<PAGE>   54

         Section 11.9 Expenses. Except as the parties may otherwise agree or as
otherwise provided herein, each party shall bear their respective fees, costs
and expenses in connection with this Agreement and the transactions contemplated
hereby.

         Section 11.10 Waiver. No waiver by any party, whether express or
implied, of any right under any provision of this Agreement shall constitute a
waiver of such party's right at any other time or a waiver of such party's
rights under any other provision of this Agreement unless it is made in writing
and signed by the President or a Vice President of the party waiving the
condition. No failure by any party hereto to take any action with respect to any
breach of this Agreement or default by another party shall constitute a waiver
of the former party's right to enforce any provision of this Agreement or to
take action with respect to such breach or default or any subsequent breach or
default by such other party.

         Section 11.11 Dispute Resolution. Any claim, controversy or dispute
arising out of, relating to, or in connection with this Agreement, or the
agreements and transactions contemplated hereby, including the interpretation,
validity, termination or breach thereof, shall be resolved solely in accordance
with the dispute resolution procedures set forth in Exhibit F.

         Section 11.12 Disclosure. Each Member is acquiring its Interest in the
Company based upon its own independent investigation, and the exercise by such
Member of its rights and the performance of its obligations under this Agreement
are based upon its own investigation, analysis and expertise. Each Member's
acquisition of its Interest in the Company is being made for its own account for
investment, and not with a view to the sale or distribution thereof.

         Section 11.13 Non-Compete; First Opportunity.

                  (a) ECD shall not and shall not permit any of its Affiliates
         to commercially exploit, directly or indirectly, Ovonic Fuel Cells
         other than through its ownership in the Company; provided that

                           (i) if ECD (or a subsequent ECD Member) and TESI (or
                  a subsequent Texaco Member) decide by Unanimous Approval to
                  dissolve, wind up and terminate the Company, ECD's obligations
                  under this Section 11.13(a) shall terminate, effective upon
                  the termination of the Company;

                           (ii) if there is a Default by ECD (or a subsequent
                  ECD Member) that results in a Default Purchase or in an
                  election by TESI (or a subsequent Texaco Member) to dissolve
                  the Company pursuant to Section 8.2(a)(i), ECD's obligations
                  under this Section 11.13(a) shall terminate, effective upon
                  the later of (x) three years after the Default Purchase or the
                  termination of the Company, as applicable, and (y) six years
                  after the date of this Agreement;

                           (iii) if an ECD Member Transfers all of its Interest
                  to a Person that is not an ECD Group Entity, ECD's obligations
                  under this Section 11.13(a) shall terminate, effective three
                  years after Transfer.

                                       49

<PAGE>   55

         During the period prior to the termination of ECD's obligations under
         this Section 11.13(a) as provided in subsections (ii) and (iii) above,
         ECD shall use its best efforts to enable the Company to utilize all
         technology which the Company owns or has the right to use pursuant to
         the Technology Agreement. In this regard, ECD shall make available to
         the Company and its Affiliates all personnel, services and facilities
         necessary for this purpose. Any personnel so provided by ECD shall be
         subject to appropriate confidentiality obligations in favor of the
         Company. During this period, the Company and its Affiliates may offer
         employment to any ECD employees who are associated with the Company's
         Fuel Cell Business.

                  (b) ECD shall give TESI or its Affiliates the first
         opportunity to participate in new or existing development and
         commercialization initiatives to use the ECD Licensed Technology, the
         Foreground Technology or any combination thereof in applications other
         than the Fuel Cell Business before commencing negotiations with third
         parties relating to such initiatives which terms shall reflect in
         TESI's favor the value of any of the Company's Foreground Technology
         that may be utilized in such other initiative. If ECD or any of its
         Affiliates proposes to engage in any such initiatives, it will promptly
         provide TESI with a reasonably detailed description thereof in writing
         and such additional information as TESI may reasonably request
         thereafter regarding the proposed initiative. If TESI fails to deliver
         written notice to ECD of its good faith intention to participate in the
         initiative within 30 days after receipt of ECD's written description of
         the initiative, ECD will be free to pursue the initiative with one or
         more third parties, and TESI and its Affiliates shall have no further
         rights with respect thereto. If TESI provides written notice to ECD
         prior to expiration of such 30 day period of its good faith desire to
         participate in the initiative, TESI and ECD shall use their
         commercially reasonable efforts to reach a definitive written agreement
         with respect to the terms of TESI's participation. If TESI and ECD are
         unable to agree in principle (subject to execution of a definitive
         written agreement) on the material terms for TESI's participation
         within 60 days after the date of TESI's notice, ECD will be free to
         pursue the initiative with one or more third parties and TESI and its
         Affiliates will have no further rights with respect thereto. If ECD
         materially modifies an initiative subject to this Section 11.13(b) at
         any time after presenting such initiative to TESI for its
         consideration, ECD shall provide TESI with the first opportunity to
         participate in such modified initiative in accordance with the
         foregoing procedures. ECD's obligations under this Section 11.13(b)
         shall continue for so long as TESI and its Affiliates and ECD and its
         Affiliates continue to collaborate in areas of advanced energy
         technology.

                  (c) Except as provided herein, each Member shall otherwise
         have the unqualified right to conduct its business as it may choose,
         whether or not in competition with the Company, without incurring any
         liability to the Company or to the other Member and wholly free from
         any right or privilege of the Company or the other Member.

         Section 11.14 Further Assurances. The Members shall provide to each
other such information with respect to the transactions contemplated hereby
(including sales or transfers of Interests in the Company) as may be reasonably
requested, and shall execute and deliver to each

                                       50

<PAGE>   56

other such further documents and take such further action as may be reasonably
requested by any party to this Agreement in order to document, complete or give
full effect to the terms and provisions of this Agreement and the transactions
contemplated herein.

         Section 11.15 Press Releases. The Members agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby. Neither
Member shall make any press release or other announcement respecting this
Agreement without the consent of the other unless a Member refuses to consent
and the Member desiring to make the release or other announcement is advised by
its counsel that the release or other announcement is required to comply with
any statute, law or regulation.

         Section 11.16 Non-Assertion. TESI and its affiliates hereby agrees that
with respect to any intellectual property right, including any United States
patent which, on the date of this Agreement, it owns or under which it has the
right to grant licenses of the scope of the licenses granted in the Technology
Agreement, or any intellectual property right, including any United States
patent which may later issue on an application for patent, which was filed
during the term of the Technology Agreement, it owns or under which it has the
right to grant licenses of the scope of the license granted in the Technology
Agreement, it will not assert against the Company, or its vendees, mediate or
immediate, any claims for infringement based on the manufacture, use, or sale of
any apparatus made or sold by the Company within the field of Ovonic Fuel Cells.

                         [Signatures on following page]

                                       51

<PAGE>   57

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

                               TEXACO ENERGY SYSTEMS INC.

                               By: /s/ Graham H. Batcheler
                                   --------------------------------
                                    Name: Graham H. Batcheler
                                    Title: President

                               ENERGY CONVERSION DEVICES, INC.

                               By: /s/ Stanford R. Ovshinsky
                                   --------------------------------
                                    Name: Stanford R. Ovshinsky
                                    Title: President and Chief Executive Officer

                               By: /s/ Robert C. Stempel
                                   --------------------------------
                                    Name: Robert C. Stempel
                                    Title: Chairman

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