Document:

May 5, 2000

Paul  Sandhu
GTC  Telecom  Corp.
3151  Airway  Ave.,  Suite  P-3
Costa  Mesa,  California  92626

     RE:  STOCK  ISSUANCES

Dear  Paul:

     This letter confirms our understanding that I am to be issued 25,500 shares
of  GTC  Telecom  Corp. common stock with S-8 registration rights.  These shares
are issued to me, in lieu of cash, as payment against $35,000 for legal services
provided.  As  agreed,  this firm will prepare and file the appropriate Form S-8
at  no  additional  cost.

     In  order  for  me  to  accept  securities  as  compensation, I must obtain
informed,  written  consent  from the Company.  The purpose of this letter is to
request  informed,  written  consent  to  the  receipt  of  such  compensation.

     Essentially,  certain  conflicts  of  interest  may arise from accepting an
equity  position  in  the  Company  for  legal services.  More specifically, the
interests  and  objectives of one party may become inconsistent and incompatible
with  the  interests  and  objectives  of  another  party.

     Attorneys  are  governed  by specific rules regarding the representation of
clients  when present or potential conflicts of interest exist.  Rules 3-310(A),
(B),  and  (C)  and (E) of the Rules of Professional Conduct of the State Bar of
California  provide  as  follows:

     "Rule  3-310  Avoiding  Interests  Adverse  to  a  Client

A.     For  purposes  of  this  rule:

1.     'Disclosure'  means  informing  the  client  or former client of the
relevant  circumstances  and  of  the  actual and reasonably foreseeable adverse
consequences  to  the  client  or  former  client;

2.     'Informed  written consent' means the client's or former client's written
agreement  to  the  representation  following  written  disclosure;

3.     'Written'  means  any  writing  as  defined in Evidence Code Section 250.

B.     A  member shall not accept or continue representation of a client without
providing  written  disclosure  to  the  client  where:

1.     The  member  has  a  legal,  business,  financial,  professional, or
personal  relationship  with  a  party  or  witness  in  the  same  matter;  or

2.     The  member  knows  or  reasonably  should  know  that:
(a)     the  member  previously  had  a  legal,  business,
financial, professional, or personal relationship with a party or witness in the
same  matter;  and

(b)     the  previous  relationship  would  substantially  affect  the  member's
representation;  or

3.     The member has or had a legal, business, financial, professional, or
personal  relationship  with  another  person  or  entity  the  member  knows or
reasonably  should  know  would  be  affected substantially by resolution of the
matter;  or

<PAGE>

4.     The  member has or had a legal, business, financial, or professional
interest  in  the  subject  matter  of  the  representation.

C.     A  member shall not, without the informed written consent of each client:

1.     Accept  representation  of more than one client in a matter in which
the  interests  of  the  clients  potentially  conflict;  or

2.     Accept  or continue representation of more than one client in a matter in
which  the  interests  of  the  clients  actually  conflict;  or

3.     Represent  a client in a matter and at the same time in a separate matter
accept  as  a  client  a  person or entity whose interest in the first matter is
adverse  to  the  client  in  the  first  matter.

D.     A member shall not, without the informed written consent of the client or
former client accept employment adverse to the client or former client where, by
reason  of  the  representation  of  the client or former client, the member has
obtained  confidential  information  material  to  the  employment."

     Because  of  possible  conflicts  of  interest,  I suggest that the Company
carefully  consider the implications of compensation in the form of common stock
of  the  Company.  Additionally, I recommend that the Company seek the advice of
independent counsel should any questions arise regarding the existence of actual
or potential conflicts of interest which may presently exist or which may arise.
Once the Company has fully considered such implications, if they so desire, they
may  consent  to our accepting common stock as compensation by signing a copy of
this  letter  acknowledging  that  (i)  the  Company  has  been advised of rules
3-310(A),  (B),  (C),  and (E) and of the conflicts associated with the proposed
arrangement,  and (ii) nevertheless, the Company wants us to represent it and be
compensated  partially  with  common  stock  warrants.

                                      Very  truly  yours,

                                      /s/  M.  Richard  Cutler

                                      M.  Richard  Cutler

<PAGE>
                                     CONSENT

     M. Richard Cutler and the Cutler Law Group has explained to the undersigned
that  there  may  exist present and conflicting interests in the above-described
action  and  has  informed  me  of the possible consequences of these conflicts.

     I  understand  that  I  have  the  right to seek independent counsel before
signing  this  Consent  or  at  any  future  time.  The undersigned nevertheless
desires  representation  by  and payment of common stock to M. Richard Cutler to
the  extent described above, and, therefore, consents and gives approval to such
representation  and  payment.

Dated:     May  5,  2000                   GTC  Telecom  Corp.

                                           By:  /s/  Paul  Sandhu
                                           Paul  Sandhu
                                           President and Chief Executive OfficerExhibit 4.A

                              AGREEMENT CONCERNING
                           TAX-EFFICIENT SAVINGS PLAN
                              FOR HOURLY EMPLOYEES
                                       AND
                               FORD MOTOR COMPANY
                           TAX-EFFICIENT SAVINGS PLAN
                              FOR HOURLY EMPLOYEES

On this 9th day of October, 1999, at Dearborn,  Michigan,  Ford Motor Company, a
Delaware   corporation,   hereinafter   designated  as  the  Company,   and  the
International  Union,  United Automobile,  Aerospace and Agricultural  Implement
Workers of America, UAW, an unincorporated  voluntary  association,  hereinafter
designated as the Union, agree as follows:

<PAGE>

                              AGREEMENT CONCERNING
                           TAX-EFFICIENT SAVINGS PLAN
                              FOR HOURLY EMPLOYEES

Section 1. Continuation of Plan

     Subject to the approval of the Company's  Board of Directors and receipt by
     the  Company of  approval by the  Internal  Revenue  Service as meeting the
     requirements  of Sections  401(a) and 401(k) of the Internal  Revenue Code,
     the  Company  will  continue  the  Tax-Efficient  Savings  Plan for  Hourly
     Employees  (hereinafter  referred to as the Plan) in the form that has been
     agreed to by the parties,  effective,  except as otherwise  provided in the
     Plan, January 1, 1997. In the event that an Internal Revenue Service ruling
     acceptable  to the Company is not  obtained,  the  Company,  within 30 days
     after such  disapproval,  will give written notice thereof to the Union and
     this Agreement shall thereupon have no force or effect.  In that event, the
     matters  covered  by  this  Agreement  shall  be  the  subject  of  further
     negotiation  between the  Company and the Union with  respect to adopting a
     program  adhering as closely as possible to the  language and intent of the
     provisions  outlined  in the  Plan  for  which a  favorable  ruling  may be
     obtained.

<PAGE>

                       AGREEMENT CONCERNING TAX-EFFICIENT
                        SAVINGS PLAN FOR HOURLY EMPLOYEES

Section 2. Administration

     The Plan will be maintained  under provisions of Sections 401(a) and 401(k)
     of the  Internal  Revenue  Code of l986,  as  amended.  In the event of any
     conflict  between  the  provisions  of the Plan and the  provisions  of the
     Agreement,  the  provisions of this Agreement will supersede the provisions
     of the Plan to the extent necessary to eliminate such conflict.

<PAGE>

                       AGREEMENT CONCERNING TAX-EFFICIENT
                        SAVINGS PLAN FOR HOURLY EMPLOYEES

Section 3. Obligations During Term of This Agreement

     During the term of this Agreement,  neither the Company nor the Union shall
     request  any  change,  deletion  from  or  addition  to the  Plan  or  this
     Agreement,  except as required to maintain  qualification of the Plan under
     Sections 401(a) and 401(k) of the Internal Revenue Code, and for compliance
     with ERISA and any other  legislation  governing such plans, or be required
     to bargain with respect to any provision or  interpretation  of the Plan or
     this  Agreement;  and during  such  period no change in,  deletion  from or
     addition  to  any  provision,  or  interpretation,  of  the  Plan  or  this
     Agreement,  nor any dispute or  difference  occurring  in any  negotiations
     pursuant  to Section 1 of this  Agreement  shall be an  objective  of, or a
     reason or cause  for,  any  action or  failure  to act,  including  without
     limitation,  any strike,  slowdown,  work stoppage,  lockout,  picketing or
     other exercise of economic force,  or threat  thereof,  by the Union or the
     Company.

Section 4. Nonapplicability of Collective Bargaining Agreement Grievance
Procedure

     No matter  respecting  the Plan as  supplemented  by this  Agreement or any
     difference arising  thereunder shall be subject to the Grievance  Procedure
     established in the Collective  Bargaining Agreement between the Company and
     the Union.

<PAGE>

                       AGREEMENT CONCERNING TAX-EFFICIENT
                        SAVINGS PLAN FOR HOURLY EMPLOYEES

Section 5. Term of Agreement; Notice to Modify or Terminate

     The Plan as amended  will,  except as  otherwise  provided in the Plan,  be
     effective January 1, 1997, and this Agreement and the Plan will continue in
     effect until the termination of the Collective  Bargaining  Agreement dated
     October  9, 1999  between  the  Company  and the  Union.  The Plan shall be
     renewed  automatically  for successive  one-year periods  thereafter unless
     either party shall give written  notice to the other at least 60 days prior
     to September 14, 2003, or any subsequent anniversary date) of its desire to
     amend or modify the Plan as of one of the dates  specified  in this Section
     (it being understood,  however,  that the foregoing provision for automatic
     one-year renewal periods shall not be construed as an endorsement by either
     party of the proposition that one year is a suitable term for such a Plan).
     If such  notice  is  given,  the  Plan  shall  be open to  modification  or
     amendment on September 14, 2003, or the subsequent anniversary date, as the
     case may be.

     If either party shall desire to terminate this  Agreement,  it may do so on
     September 14, 2003, or any subsequent  anniversary  date, by giving written
     notice  to the  other  party at least 60 days  prior to the date  involved.
     Anything  herein which might be construed to the contrary  notwithstanding,
     however, it is understood that termination of this Agreement shall not have
     the effect of automatically terminating the Plan.

     Notwithstanding  termination  of this  Agreement  and the Plan,  any profit
     sharing  distributions  pursuant to the Ford Motor Company  Profit  Sharing
     Plan for Hourly  Employees  in the United  States that  otherwise  would be
     contributed to the trust fund under this Plan with respect to calendar year
     2003  shall  be  contributed  and   administered  in  accordance  with  the
     provisions of this Agreement and the Plan.

     Any  notice  under  this  Agreement  shall  be  in  writing  and  shall  be
     sufficient,  if sent by mail addressed,  if to the Union, to  International
     Union, UAW, 8000 East Jefferson Avenue, Detroit, Michigan 48214, or to such
     other address as the Union shall furnish to the Company in writing,  and if
     to the Company, to Ford Motor Company, Dearborn, Michigan 48121, Attention:
     Vice  President-Human  Resources,  or to such other  address as the Company
     shall furnish to the Union, in writing.

<PAGE>

                              AGREEMENT CONCERNING
                           TAX-EFFICIENT SAVINGS PLAN
                              FOR HOURLY EMPLOYEES

     IN WITNESS  WHEREOF,  this Agreement is executed on behalf of each party by
     its duly authorized representatives as of the date first appearing above.

                               FORD MOTOR COMPANY

         Jacques A. Nasser                  Glen A. Anderson
         William C. Ford, Jr.               James D. Boydston
         Peter J. Pestillo                  Richard D. Freeman
         James J. Padilla                   James N. Gibson
         Robert H. Marcin                   Sylvester Glover
         David L. Murphy                    Timothy P. Hartmann
         Dennis J. Cirbes                   Roger J. Mitchell
         Robert W. Clark                    Rick E. Poynter
         James Tucker, Jr.                  Thomas M. Ryan
         Livio Mezza                        Cynthia A. Sloat
         Stephen M. Kulp                    Peter A. Stickler
         Daniel L. Greenbaum                Marilyn S. Bingamen
         Woodrow A. Myers, Jr.              Tamara L. McDaniel
         William E. Asselin                 Richard O. Bair
         William S. Flatt                   Thomas J. Gorman

                                       UAW
         International Union                National Ford Council

         Steven P. Yokich                   Johnny Martin, Subcouncil #6
         Ron Gettelfinger                   Jeff Washington, Subcouncils #2 & #3
         David Curson                       Jerry Sullivan, Subcouncil #1
         Bill Stevenson                     Rory Gamble, Subcouncil #1
         Joseph Reilly                      Carl Dowell, Subcouncil #2
         Paul Massaron                      Jerry Kline, Subcouncil #2
         Frank Musick                       Gordon Rushlau, Subcouncil #3
         Charles Hoskins                    Frank Walker, Subcouncil #3
         Frank Howe                         Bill Norfleet, Subcouncil #4
         Ron Hughes                         Tom Zmrazek, Subcouncil #4
         Joseph Peters                      Bob Hasty, Subcouncil #5
                                            John Talik, Subcouncil #5
                                            Joel Goddard, Subcouncil #6
                                            Tony White, Subcouncil #7

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

     This Plan has been  established by the Company to enable  employees to save
     and invest in a systematic  manner and to provide them with an  opportunity
     to become stockholders of the Company.

     I.   Definitions

          As hereinafter used:
          1.   "Account"  shall  mean,  as  appropriate,  any one of a  Member's
               Tax-Efficient Savings Account,  After-Tax Savings Account, or any
               combination of such accounts.

          2.   "After-Tax Savings  Contributions" shall mean amounts contributed
               by an Employee to the Plan from the Employee's Wages, as provided
               in Paragraph IV hereof.

          3.   "After-Tax  Savings  Account"  shall  mean an Account of a Member
               under the Plan to which are credited After-Tax Contributions made
               by such Employee and Earnings thereon.

          4.   "Bond Fund"  shall mean that  portion of the trust fund under the
               Plan consisting of investments  made by the Trustee in accordance
               with Subparagraph 3 of Paragraph XIII hereof.

          5.   "Bond Fund Units"  shall mean the measure of a member's  interest
               in the Bond Fund as described in Subparagraph 3 of Paragraph XIII
               hereof.

          6.   "Cash  value  of  assets"  shall  mean the  value of the  assets,
               expressed in dollars,  in a member's account under any investment
               election under the Plan or the total thereof, as the case may be,
               at the close of  business  on the date  such cash  value is to be
               determined.

          7.   "Collective  Bargaining  Agreement"  shall  mean  the  Collective
               Bargaining  Agreement  dated  October 9, 1999 between the Company
               and the International  Union,  United  Automobile,  Aerospace and
               Agricultural Implement Workers of America, UAW.

          8.   "Committee"  shall  mean the  Committee  created  by the  Company
               pursuant to the provisions of Paragraph XX hereof.

          9.   "Common  Stock  Fund"  shall mean that  portion of the trust fund
               under the Plan  consisting of investments  made by the Trustee in
               accordance with Subparagraph 2 of Paragraph XIII hereof.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

          10.  "Common  Stock Fund  Units"  shall mean the measure of a member's
               interest in the Common Stock Fund as described in  Subparagraph 2
               of Paragraph XIII hereof.

          11.  "Company" shall mean Ford Motor Company.

          12.  "Company stock" shall mean Common Stock of the Company.

          13.  "Composite  Quotation  Listing" shall mean a composite listing of
               market  prices of  securities  supplied by a reputable  financial
               statistical  service  selected  by  the  Trustee,  which  listing
               includes  the prices at which  securities  are traded on national
               securities exchanges located in the United States.

          14.  "Current  Market  Value"  shall mean,  with  reference to Company
               stock, the closing market price on the New York Stock Exchange on
               the day in  question  or, if no sales were made on that date,  at
               the closing market price on the next preceding day on which sales
               were made.

          15.  "Earnings" with reference to Tax-Efficient  Savings Contributions
               and  After-Tax   Savings   Contributions,   shall  mean  earnings
               resulting  from  the  investment  and  any  reinvestment  of such
               contributions   and  any  increment  thereof  and  shall  include
               interest, dividends and other distributions on such investments.

          16.  "Employee"  shall mean each  person who is  employed at an hourly
               rate by a  Participating  Company  and is  enrolled on the active
               employment rolls of such Participating  Company maintained in the
               United States.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

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

          18.  "Ford Stock Fund" shall mean that portion of the trust fund under
               the  Plan  consisting  of  investments  made  by the  Trustee  in
               accordance with Subparagraph 1 of Paragraph XIII hereof.

          19.  "Ford  Stock Fund  Units"  shall  mean the  measure of a member's
               interest in the Ford Stock Fund as described in Subparagraph 1 of
               Paragraph XIII hereof.

          20.  "Interest  Income Fund" shall mean that portion of the trust fund
               under the Plan  consisting of investments  made by the Trustee in
               accordance with Subparagraph 4 of Paragraph XIII hereof.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

          21.  "Interest  Income Fund Advisor" shall mean one or more persons or
               companies,  corporations, or other organizations appointed by the
               Company to provide  investment  advice to the Trustee  concerning
               the  Interest  Income  Fund.  The  Trustee may be  designated  an
               Interest Income Fund Advisor by the Company.

          22.  "Member"  shall mean and include  (a) an employee  who shall have
               elected  to  participate  in the  Plan  and,  in the  case  of an
               employee  of  a  Participating   Company,   shall  have  filed  a
               Tax-Efficient  Savings agreement then outstanding under the Plan,
               and (b) a person who has assets under the Plan.

          23.  "Participating  Company" shall mean and include the Company,  AAI
               Employee  Services  Company,  L.L.C.,  and each Subsidiary of the
               Company that shall have elected to  participate  in the Plan with
               the consent of the Company.  "Subsidiary  of the  Company"  shall
               mean a  domestic  corporation  not less  than a  majority  of the
               voting  stock of which is owned  directly  or  indirectly  by the
               Company.

          24.  "Performance  Bonus  Payments"  shall  mean  payments  to members
               pursuant  to  Article  IX,  Section  2 (b)(1)  of the  Collective
               Bargaining Agreement.

          25.  "Plan  year"  shall  mean,  prior to the Plan Year  beginning  in
               December 1999, a twelve-month period starting on the first day of
               the first pay period  beginning in a calendar  year and ending on
               the last day of the last pay period  beginning  in such  calendar
               year. Notwithstanding the foregoing, the 1999 Plan Year shall end
               on  December  30,  1999.  Thereafter,  the Plan  Year  shall be a
               twelve-month   period  beginning   December  31  and  ending  the
               following December 30.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

          26.  "Profit sharing  distributions" shall mean amounts distributed to
               hourly  employees  under profit sharing plans of a  Participating
               Company.

          27.  "Subsidiary" or "Affiliate"  shall mean (a) all corporations that
               are  members of a  controlled  group of  corporations  within the
               meaning  of  Section   1563(a)  of  the  Internal   Revenue  Code
               (determined  without  regard to Section  1563(a)(4)  and  Section
               1563(e)(3)(c)  of the  Internal  Revenue  Code)  and of which the
               Company  is  then a  member  and (b) all  trades  or  businesses,
               whether  or  not   incorporated,   that,  under  the  regulations
               prescribed by the  Secretary of the Treasury  pursuant to Section
               414(c)  of the  Internal  Revenue  Code,  are then  under  common
               control with the Company.

          28.  "Tax-Efficient Savings account" shall mean an account of a member
               under  the  Plan to  which  are  credited  Tax-Efficient  Savings
               Contributions on behalf of such employee and earnings thereon.

          29.  "Tax-Efficient  Savings election" shall mean an agreement between
               an employee and the Participating  Company to have the employee's
               wages  or  profit  sharing  distributions  reduced  by an  amount
               specified  by the  employee  and to have an amount  equal to such
               reduction contributed by the Participating Company to the Plan on
               behalf  of  the  employee,  pursuant  to  Section  401(k)  of the
               Internal Revenue Code and Paragraph IV hereof.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

          30.  "Tax-Efficient   Savings   Contributions"   shall  mean   amounts
               contributed  by the Company to the Plan on behalf of an employee,
               pursuant to a  Tax-Efficient  Savings  agreement,  as provided in
               Paragraph IV hereof.

          31.  "Trustee"  shall mean the  trustee or trustees  appointed  by the
               Company pursuant to the provisions of Paragraph XVI hereof.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

I. Definitions (contd.)

          32.  "Wages"  shall mean the regular base pay for straight time hours,
               including  holiday pay and  vacation pay  (including  the related
               excused absence allowance),  and incentive pay,  bereavement pay,
               jury duty pay, and short-term military duty pay, and the straight
               time  portion of any  overtime  hours  paid,  up to a total of 40
               hours in a week for all such payments,  cost of living  allowance
               applicable to the foregoing,  and  Performance  Bonus Payments to
               which an employee of a Participating Company is entitled prior to
               giving effect to any Tax-Efficient Savings election.  Performance
               Bonus payments shall qualify as wages irrespective of the 40 hour
               maximum.   "Wages"  shall  not  include  any  other  category  of
               compensation  (e.g.,  overtime  premium pay,  Saturday and Sunday
               premium  pay,  cost-of-living  allowance  not  applicable  to the
               foregoing, call-in pay, shift premium pay, seven-day premium pay,
               holiday  premium  pay,   grievance  awards,   moving  allowances,
               supplemental  unemployment  benefit  payments under the Company's
               Supplemental   Unemployment  Benefit  Plan  (including  automatic
               short-week benefit payments), suggestion awards, tool allowances,
               apprentice  training  incentives,  the cost to the  Participating
               Company of providing  Group Life  Insurance  and Survivor  Income
               Benefit  coverages  in excess of  $50,000  (or any other  imputed
               income as may be designated by law),  pension or retirement  plan
               payments,   any   Christmas   bonus,   or   any   other   special
               remuneration).

               In  addition,  effective  January 1, 1995,  wages for purposes of
               determining the amount of  contributions  that may be made to the
               Plan by employees whose  regularly  scheduled hours are less than
               40  hours  as a  result  of the  establishment  of a  three-shift
               operation at the discretion of the Company shall be determined by

                    (i)  multiplying  the excess of 40 hours over the  regularly
                         scheduled  hours  by a rate  equal  to  the  sum of the
                         regular  straight-time rate and the applicable cost-of-
                         living allowance and

                    (ii) adding thereto  straight-time  pay and applicable cost-
                         of-living allowance for hours worked,

               up to a total of 40 hours in a week for all such payments.

               For  years   beginning   after  December  31,  1988,  the  annual
               compensation  of each employee taken into account for determining
               all benefits provided under the Plan for any determination period
               shall not exceed the amount  specified in Section  401(a)(17)  of
               the Internal Revenue Code.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

II.  Eligibility

     Except as hereinafter  provided,  each employee of a Participating  Company
     shall be  eligible for membership in the Plan and to make After-Tax Savings
     Contributions and to have  Tax-Efficient Savings  Contributions made to the
     Plan  three months after such  employee's initial date of hire (eligibility
     date).

     The  Company  may  in  its discretion  determine,   in  the  event  of  the
     acquisition by a Participating  Company (by purchase,  merger or otherwise)
     of all or part of the assets of another corporation,  that the service of a
     person as an  employee  of such  other  corporation  shall be  included  in
     ascertaining  whether he or she has had such service as required  above for
     eligibility,  provided  that he or she shall have  become an  employee of a
     Participating Company in connection with such acquisition.

     Leased  employees  are  not considered employees and are therefore excluded
     from eligibility for membership in the Plan.  The  term  "leased  employee"
     includes any person (other than an employee of the Company) who pursuant to
     an  agreement  between  the  Company  and  any  other  person  ("leasing
     organization")  has performed  services for the Company (or for the Company
     and related persons determined  in accordance with Section 414(n)(6) of the
     Internal Revenue Code)  on a  substantially full time basis for a period of
     at least one year,  and such services are performed under primary direction
     or  control  by  the Company.  For purposes of this subparagraph,  the term
     Company shall include the Company and its subsidiaries.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

III. Membership

     Membership of  any employee  in the Plan shall be entirely voluntary except
     as otherwise provided in Paragraph XXVI hereof.

     An  eligible employee may elect membership in the Plan as of any pay period
     commencing after such  employee's eligibility date or as of the date of any
     profit  sharing  distribution  by  delivering  a  notice  of  election  to
     participate  and  a Tax-Efficient  Savings  election  in  accordance  with
     Paragraph IV hereunder.

     A newly-hired  employee  of a Participating Company may elect membership in
     the Plan prior to the date on which such employee  would  otherwise  become
     eligible for membership  in  the  Plan  for the limited purpose of making a
     rollover contribution to the Plan as hereinafter provided.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions

     1.   Tax-Efficient Savings Contributions

          Each eligible employee,  by making a Tax-Efficient Savings election in
          such  form  and  in  such manner and at such time as the Committee may
          prescribe,  may elect to have contributed to the Plan on  his  or  her
          behalf

          (a)  for each pay period, a Tax-Efficient Savings Contribution in such
               amount as he or she may  authorize at a rate of not less than one
               percent  nor  more  than  twenty  (20)  percent  for  the  period
               following  the first pay period after January 1, 1997 through the
               first pay  period  after  January  1, 1998 and  twenty-five  (25)
               percent  thereafter,  in increments of one percent, of his or her
               wages for such pay period, such amounts to be rounded down to the
               nearest full dollar, and

          (b)  for each profit sharing  distribution,  a  Tax-Efficient  Savings
               Contribution  in such amount as he or she may authorize at a rate
               of not  less  than one  percent  nor more  than 100  percent,  in
               increments of one percent, of such profit sharing distribution.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     1. Tax-Efficient Savings Contributions (contd.)

     Subject  to  the  foregoing  provisions  of  this Paragraph IV, the rate of
     Tax-Efficient Savings Contributions with respect to wages authorized by the
     employee may be decreased, increased or stopped by him or her by delivering
     notice of such  change  in such form and in such manner and at such time as
     the Committee shall specify. If an employee shall become ineligible to have
     Tax-Efficient  Savings  Contributions  made  to  the  Plan,  his or her
     Tax-Efficient  Savings  election  shall  terminate  forthwith.  If  the
     Tax-Efficient Savings election  of  an  employee  shall  terminate for  any
     reason,  the employee thereafter may, subject to the eligibility provisions
     of the Plan,  resume the making of  Tax-Efficient  Savings Contributions to
     the Plan,  as of the first day of any pay period by giving notice  in  such
     form and in such manner and at such time as the  Committee  shall  specify.

     The Company shall contribute to the Plan each pay period, out of current or
     accumulated  earnings  and profits, an amount equal to the aggregate of the
     amounts of Tax-Efficient Savings Contributions to  be  contributed  by  the
     Company on behalf of employees  pursuant to such employees' elections under
     Tax-Efficient Savings agreements with respect to such pay period.

2.   After Tax Savings Contributions

     Beginning January 1, 2000, or as soon as practicable thereafter, in lieu of
     all  or  part  of the contributions an employee may authorize in accordance
     with Subparagraph 1 of Paragraph IV, an employee may elect  in  the  manner
     prescribed by the Committee  to contribute an equivalent amount to the Plan
     on an  after-tax  basis.  Such contributions  shall  be  allocated  to  the
     employee's After-Tax Savings Account.

     The Committee may require employees of a participating Company who elect to
     make  After-Tax  Savings Contributions to the Plan to contribute by payroll
     deductions or by such other  method as the Committee may designate.  If the
     Committee shall designate a  method  other  than  payroll  deductions,  the
     Committee  shall  adopt  rules applying,  as  nearly  as  practicable,  the
     provisions of this Paragraph IV relating  to  payroll  deductions  to  such
     method of making After-Tax Savings Contributions.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     3.   Limitation on Contributions

          (a)  Definitions. As hereinafter used in this Paragraph IV:

               "Average Tax-Efficient Savings Contribution percentage" means the
               average of the Tax-Efficient Savings Contribution  percentages of
               the eligible employees in a group.

               "Tax-Efficient  Savings Contribution  percentage" means the ratio
               (expressed   as   a   percentage)   of   Tax-Efficient    Savings
               Contributions  under the Plan on behalf of the eligible  employee
               for the  year to the  eligible  employee's  compensation  for the
               year.  "Compensation" for this purpose means compensation paid by
               the Company to the employee  during the year which is required to
               be  reported  as  wages  on  the   employee's   Form  W-2,   plus
               Tax-Efficient  Savings  Contributions.  The  determination of the
               Tax-Efficient  Savings Contribution  percentage and the treatment
               of Tax-Efficient  Savings  Contributions shall satisfy such other
               requirements  as  may  be  prescribed  by  the  Secretary  of the
               Treasury pursuant to the Internal Revenue Code.

               The  Tax-Efficient   Savings  Contribution   percentage  for  any
               eligible  employee who is a highly  compensated  employee for the
               year  and  who  is   eligible  to  have   Tax-Efficient   Savings
               Contributions  allocated  to his account  under two or more plans
               described  in  Section  40l(a) of the  Internal  Revenue  Code or
               arrangements  described in Section 40l(k) of the Internal Revenue
               Code that are maintained by the Company or an Affiliate  shall be
               determined as if all such  contributions were made under a single
               plan.

               "Average After-Tax Contribution  percentage" means the average of
               the After-Tax  Savings  Contribution  percentages of the eligible
               employee's in a group.

               "After-Tax Contribution percentage" means the ratio (expressed as
               a percentage) of After-Tax Savings  Contributions  under the Plan
               on behalf of the  eligible  employee for the year to the eligible
               employee's  compensation  for the year.  "Compensation"  for this
               purpose  means  compensation  paid by the Company to the employee
               during the year which is  required to be reported as wages on the
               employee's Form W-2, plus  Tax-Efficient  Savings  Contributions.
               The  determination of the After-Tax  Contribution  percentage and
               the treatment of After-Tax  Savings  Contributions  shall satisfy
               such other  requirements as may be prescribed by the Secretary of
               the Treasury pursuant to the Internal Revenue Code. The After-Tax
               Contribution Percentage for any eligible employee who is a Highly

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     3.   Limitation on Contributions (contd.)

          (a)  Definitions (contd.)

               compensated  employee  for the year and who is  eligible  to make
               After-Tax Savings  Contributions to his or her accounts under two
               or more plans described in Section 401(a) of the Internal Revenue
               Code or arrangements  described in Section 401(m) of the Internal
               Revenue Code that are  maintained  by the Company or an Affiliate
               shall be determined as if all such  contributions were made under
               a single plan.

               The  term   "highly   compensated   employee"   includes   highly
               compensated   active  employees  and  highly  compensated  former
               employees.

               A highly  compensated  active employee  includes any employee who
               performs  service for the  Company  and who,  (i) was a 5 percent
               owner at any time  during  the  look-back  year or  determination
               year,  which terms are defined  below,  or (ii) for the look-back
               year, received compensation from the Company in excess of $80,000
               (as adjusted  pursuant to the Internal  Revenue Code) and, if the
               Company so elects for the  look-back  year,  was in the  top-paid
               group of employees for such look-back year.

               For this purpose,  the determination year shall be the plan year.
               The look-back year shall be the twelve-month  period  immediately
               preceding the determination year.

               A highly  compensated  former employee  includes any employee who
               separated from service (or was deemed to have separated) prior to
               the  determination  year,  performs  no service  for the  Company
               during  the  determination  year,  and was a  highly  compensated
               active   employee   for  either  the   separation   year  or  any
               determination  year  ending  on  or  after  the  employee's  55th
               birthday.

               The  determination  of  who  is a  highly  compensated  employee,
               including  the  determinations  of the  number  and  identity  of
               employees in the top-paid  group,  and the  compensation  that is
               considered,  will be made in  accordance  with Section 414 (q) of
               the Internal  Revenue Code and the  regulations  thereunder.  For
               this purpose, for the Plan Year beginning in 1997, "compensation"
               shall mean  compensation  within the meaning of Section 415(c)(3)
               of the Internal Revenue Code determined without regard to Section
               402(e)(3) and  402(h)(1)(B) of the Internal Revenue Code, and for
               Plan  Years   beginning   after  January  1,  1998,   shall  mean
               compensation  as  defined in Section  415(c)(3)  of the  Internal
               revenue Code.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     3.   Limitation on Contributions (contd.)

          (b)  Limits on Tax-Efficient Savings Contributions

               The total amount of Tax-Efficient Savings Contributions allowable
               under  Tax-Efficient  Savings  elections for any employee for any
               year  beginning on or after  January l, l988 shall not exceed the
               lesser of 1) prior to January 1, 2000,  $7,000  multiplied by the
               cost-of-living  adjustment  factor prescribed by the Secretary of
               the Treasury  under Section  4l5(d) of the Internal  Revenue Code
               and after January 1, 2000, the maximum allowed by Sections 401(a)
               (30) and  402(g) of the code as from time to time in effect or as
               provided by any successor  provisions;  or 2) twenty (20) percent
               for the period  following  the first pay period after  January 1,
               1997  through  the first pay  period  after  January  1, 1998 and
               twenty-five  (25) percent  thereafter of the employee's wages for
               that year plus 100  percent of the profit  sharing  distributions
               payable to the employee during that year.

          (c)  Limitations on Tax-Efficient Savings Contributions  Applicable to
               Highly Compensated Employees

               For each  employee who is a highly  compensated  employee for the
               year the total  amount  of  Tax-Efficient  Savings  Contributions
               available  shall not exceed the percent of the  employee's  wages
               and  profit  sharing  distributions  for the year  determined  as
               follows.  There first shall be  determined,  under the  following
               table, an average allowable tax-efficient savings percentage, for
               the eligible employees who are not highly  compensated  employees
               for the year as a group.

               If the average of the              The allowable average Tax-
               actual Tax-Efficient               Efficient Savings
               Savings Contribution               Contribution percentage for
               percentages of eligible            eligible employees who are
               employees who are not              highly compensated
               highly compensated employees       shall not exceed:
               employees for the preceding
               Plan Year (or if the Company
               elects in accordance with
               Section 401(k)(3)(A) of the
               Internal Revenue Code, including
               such changes in election as many
               be permitted by the Secretary of
               Treasury, the current Plan Year)
               is:
               ________________________________   ___________________________
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     3.   Limitation on Contributions (contd.)
<TABLE>
<CAPTION>

<S>                                                <C>
          (a) 2% or less                           (a) 2.0 times the average of the
                                                        actual tax-efficient savings percentages for eligible employees
                                                        who are not highly compensated employees.

         (b) over 2% but not more                  (b) 2.0 percentage points added to
             than 8%                                   the average of the actual tax-efficient savings percentages for
                                                       eligible employees who are not highly compensated employees.

         (c) more than 8%                          (c) l.25 times the average of the tax-efficient savings percentages
                                                       for eligible employees who are not highly compensated employees
                                                       or, in any case, such lesser amount as the Secretary of the
                                                       Treasury shall prescribe to prevent
                                                       the multiple use of parts (a) and (b)
                                                       of this limitation with respect to any
                                                       highly compensated employee.
</TABLE>

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     3.   Limitation on Contributions (contd.)

          (d)  Limitations  on After-Tax  Savings  Contributions  Applicable  to
               Highly Compensated Employees.

               The After-Tax  Contribution  percentage for any eligible employee
               who is a  highly  compensated  employee  for the  year  shall  be
               limited to the extent required under the following tables:
<TABLE>
<CAPTION>

                  After-Tax Contribution Percentage Limitation

<S>                                                              <C>
       If the Average of the actual After-                       The allowable Average After-Tax
       Tax Contribution percentages of                           Contribution percentage for the current
       eligible employees who are not                            Plan Year for eligible employees who
       highly compensated employees for                          are highly compensated employees shall the
       Preceding Plan Year (or if the                            not exceed:
       Company elects in accordance with
       Section 401(m)(2)(A) of the
       Internal Revenue Code, including
       such changes in election as may be
       permitted by the Secretary of
       Treasury, the current Plan Year)
       is:
       __________________________________                        ______________________________________

       (a) 2% or less                                            (a) 2.0 times the average of the actual
                                                                 After-Tax Contribution percentages for
                                                                 eligible employees who are not highly
                                                                 compensated employees.

       (b) over 2% but not more than 8%                          (b) 2.0 percentage points added to the
                                                                 average of the actual After-Tax
                                                                 Contribution percentages for eligible
                                                                 employees who are not highly
                                                                 compensated employees.

       (c) more than 8%                                          (c) 1.25 multiplied by the Average
                                                                 After-Tax Contribution percentage for
                                                                 eligible employees who are not highly
                                                                 compensated employees

                                                                 or, in any case, such lesser amount as
                                                                 the Secretary of the Treasury shall
                                                                 prescribe to prevent the multiple use
                                                                 of parts (a) and (b) of this limitation
                                                                 with respect to any highly compensated
                                                                 employee.

</TABLE>

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions

     3.   Limitation on Contributions (contd.)

          (e)  Committee Actions to Limit Contributions

               The Committee  shall,  to the extent  necessary to conform to the
               foregoing limitations,  reduce the amounts of allowable After-Tax
               Savings  Contributions and Tax Efficient  Savings  Contributions,
               respectively,  for the year with  respect to any or all  eligible
               employees  who  are  highly  compensated   employees.   Any  such
               reductions by the  Committee  shall be made in such manner as the
               Committee from time to time may  prescribe.  For purposes of this
               section,  the Plan shall  satisfy  the  requirements  of Sections
               401(k)(3)  and  401(m)  of the  Code  and  Treas.  Reg.  Sections
               1.401(k)-1(b) and 1.401(m)-1.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     4.   Return of Contributions in Excess of Limitations

          Subject  to  such  regulations  as the Committee from time to time may
          prescribe,  a member whose Tax-Efficient Savings Contributions to this
          Plan and similar contributions to all other plans in which  the member
          is a  participant  exceed  the  limit  of  $7,000  multiplied  by  the
          cost-of-living  adjustment  factor  prescribed by the Secretary of the
          Treasury for any year may request and receive return  of  such  excess
          Tax-Efficient  Savings  Contributions  to  this Plan for such year and
          earnings thereon by submitting a request for return of such excess  in
          this Plan to the Committee in such form as shall be acceptable to  the
          Committee. Such amounts shall be returned to such member no later than
          April l5, l989,  and  each  April l5 thereafter, to members who submit
          such requests to the Committee no later than the immediately preceding
          March l.

          Tax-Efficient Savings Contributions and  earnings thereon in excess of
          the limitations in this Paragraph IV applicable to such  contributions
          by  employees  shall  be  returned  to  members  on  whose behalf such
          contributions were made for the preceding plan year at such  times and
          upon such terms as  the  Committee  shall prescribe.  Income on excess
          contributions  shall  be  allocated  in the same manner that income is
          allocated  to members' accounts during  the plan year, and such method
          will be used consistently for all  affected  members.  Notwithstanding
          the foregoing provisions of this paragraph,  for years beginning after
          December  31, 1996  excess  Tax-Efficient  Savings  Contributions  and
          earnings  thereon  shall  be  returned  on  the basis of the amount of
          contributions  by  or  on  behalf  of  members as provided in Sections
          401(k)(8)(C) of the Code.

5.   Rollover Contributions

          A  newly-hired   employee  of  a  Participating   Company  who  elects
          membership  in the Plan in  accordance  with  Paragraph III may make a
          rollover  contribution,  as permitted  under Section  402(a)(5) of the
          Internal  Revenue Code, to the Plan in cash in an amount not exceeding
          the total amount of taxable proceeds distributed to such employee by a
          similar qualified plan maintained by his or her immediately  preceding
          former  employer.  The  rollover  contribution  must  be  made  by the
          employee  within 60 days following the receipt by the employee of such
          distribution from such former employer's plan. Rollover  contributions
          shall be invested in accordance  with the  provisions of Paragraph VII
          as the employee shall elect.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

     5.   Contributions Following Service in a Uniformed Service

          A member of the Plan who is reinstated  following  qualified  military
          service,   as  defined  in  the  Uniformed  Services   Employment  and
          Reemployment  Rights Act, may elect to have  contributions made to the
          Plan from such member's wages paid  following such qualified  military
          service that shall be  attributable to the period  contributions  were
          not  otherwise  permitted  due to military  service.  Such  additional
          contributions shall be based on the amount of wages and profit sharing
          that the member would have received but for military service and shall
          be  subject  to the  provisions  of the  Plan  in  effect  during  the
          applicable period of military  service.  Such  contributions  shall be
          made during the period beginning upon reemployment  following military
          service  and  ending  at the  lesser  of (i)  five  years  or (ii) the
          member's  period  of  military  service   multiplied  by  three.  Such
          additional  contributions  shall not be taken into account in the year
          in which they are made for purposes of any  limitation or  requirement
          identified in Section 414(u)(1) of the Internal Revenue code provided,
          however,   that  such  contributions,   when  added  to  contributions
          previously  made,  shall not  exceed the  applicable  limits in effect
          during the period of military  service if the member had  continued to
          be employed by the Company  during such period.  Further,  payments on
          any loan or loans  outstanding  during the period of military  service
          shall  be  extended  for a  period  of time  equal  to the  period  of
          qualified military service.

     6.   Recovery of Contributions

          The  Company  may  recover,   without  interest,  the  amount  of  its
          contributions made on account of a mistake in fact, provided that such
          recovery is made within one year after the date of such  contribution.
          Any recovery by the Company of its contributions to the Plan shall not
          exceed the value at the time of recovery of assets  acquired  with the
          Company's contributions and earnings thereon.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IV.  Contributions (contd.)

          In the even the deduction of the  contribution  made by the Company is
          disallowed  under  Section  404 of the  Internal  Revenue  Code,  such
          contribution  (to  the  extent  disallowed)  must be  returned  to the
          Company within one year of the disallowance of the deduction.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

V.   Member's Account in Trust Fund

     As soon  as  practicable  after  each pay period but in any event not later
     than 15 days after the month of payment of wages for such  pay  period, the
     Company  shall  pay  to  the  Trustee  (a) the  Tax-Efficient  Savings  and
     After-Tax Savings  Contributions  for  such  period, and (b) the amounts of
     payments by members with respect to loans and interest  thereon pursuant to
     Paragraph XI hereof.  Upon receipt of  such  payments  by the  Trustee, the
     aggregate amount of such  payments  (and earnings thereon,  as from time to
     time received by the Trustee) shall be credited  to the respective accounts
     of the members,  and the Trustee shall hold, invest and dispose of the same
     as provided in the Plan.

     The corpus or income  of  the  trust may not be diverted to or used for any
     purpose  other  than  the  exclusive  benefit  of  the  members  or  their
     beneficiaries.

VI.  Vesting

     The assets  credited  to  a  member's  account shall be fully vested and no
     portion  of  such  account  shall  be  subject to forfeiture for any reason
     whatsoever.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

VII. Member's Election as to Investment of Funds

     Tax-Efficient Savings and After-Tax Savings Contributions made on behalf of
     a member shall be  invested as the member shall elect in one or more of the
     Ford Stock Fund,  the Common Stock Fund, the Bond Fund, the Interest Income
     Fund,  the Fidelity Magellan  Fund,  the Fidelity Contrafund,  the Fidelity
     Overseas Fund,  Fidelity Asset Manager:  Income,  Fidelity  Asset  Manager,
     Fidelity  Asset  Manager:  Growth  and  any  of the Additional Mutual Funds
     listed  in  Appendix  A,  provided  that  the  amount  contributed  to  any
     investment  election  shall  be  at  least  five  percent  of  the  amount
     contributed;  contributions  in  excess  of  five  percent shall be made in
     increments of one percent.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

VII.      Member's Election as to Investment of Funds (contd.)

          A prospectus for the Fidelity Magellan Fund,  the Fidelity Contrafund,
          the Fidelity Overseas Fund,  the Fidelity Asset Manager:  Income,  the
          Fidelity  Asset Manager,  the Fidelity Asset Manager:  Growth,  all of
          which  are  mutual  funds, or for any of the  Additional  Mutual Funds
          listed in Appendix  A shall be delivered promptly to any employee upon
          request of such employee.

          The Committee  may  in  its  discretion make additions to or deletions
          from the Additional Mutual Funds listed in Appendix A.

          A member's investment election  hereunder shall be confirmed on his or
          her Confirmation Statement.  Each  investment  election hereunder with
          respect to wages  shall  remain in effect until changed by the member,
          and may be  changed  effective  for  any  pay  period  in  respect  of
          Tax-Efficient  Savings  and  After-Tax  Savings  Contributions  made
          thereafter by  delivering a notice in such form and in such manner and
          at  such  time  as the  Committee  shall  specify.   Profit  sharing
          distributions that members elect to have contributed to the Plan shall
          be  invested  in  accordance  with  a member's election in effect with
          respect to weekly wages at the time profit sharing  distributions  are
          contributed to the Plan or, if the member does not have in effect such
          an election  with  respect  to  weekly wages,  in  accordance with the
          member's latest election or,  in the absence of any such  election, in
          the Interest Income Fund.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

VIII.     Transfer of Assets to Other Investment Elections

          Any member may elect, at  such  times,  in such manner, to such extent
          and with respect to such assets as the Committee from time to time may
          determine, to have the value of all or part of the assets invested in
          any  investment  election  under  the  Plan  in  such member's account
          transferred  by  being  invested  in such account in such other of the
          ways  in  which  After-Tax  Savings  Contributions  and  Tax-Efficient
          Savings Contributions may  be invested pursuant to this Paragraph VIII
          as the member shall elect; provided, however, that:

          (a)  a member may make one (1) or more such  transfer  elections  each
               business day;

          (b)  a member  may make  such  transfer  elections  in either a dollar
               amount or a percentage of the amount  invested in such investment
               election  from which such  transfer is elected,  in increments of
               one percent, provided that the amount transferred is at least the
               greater  of  five  percent  of the  value  of the  assets  in the
               investment  election  from which  transfer is elected or $250.00,
               or, if the amount invested in the investment  election from which
               transfer is elected is less than $250.00, the entire value of the
               assets invested in the investment election from which transfer is
               elected; and

          (c)  all such  transfer  elections  shall  be  subject  to such  other
               regulations  as the Committee may  prescribe,  which may specify,
               among other things,  application procedures,  minimum and maximum
               amounts that may be  transferred,  procedures for determining the
               value of assets,  the  subject of a transfer  election  and other
               matters which may include  conditions or restrictions  applicable
               to transfer elections.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

IX.  Investment of Dividends, Interest, Etc.

     Cash dividends, interest, and  the  cash proceeds of any other distribution
     in respect  of  any  investment  funds  available under this Plan, shall be
     invested in the respective Funds giving rise  to  the  same;  except  that,
     commencing with respect to Company stock  with  the dividend payable in the
     third quarter of 1996, all  or  a portion of cash dividends paid on Company
     stock held in  the  Ford  Stock  Fund  that  have  not  been  in  the  Plan
     continuously since January 1, 1989  shall be distributed in accordance with
     the provisions of Paragraph X  to members who have elected to invest in the
     Ford  Stock  Fund  unless such members elect not to receive such dividends.
     Cash dividends on Company stock  in  the  Ford  Stock  Fund  that  are  not
     distributed to members shall be invested  on behalf of the members entitled
     thereto  in  the  Ford  Stock  Fund through the purchase of additional Ford
     Stock Fund Units.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets

     Distribution of all  assets in  a member's account shall be governed by the
     following provisions:

     1.   Termination of Employment

          In the case of a member's termination  of  employment  for  any reason
          (whether  voluntary or by discharge, with or without cause),  the cash
          value of assets in his or her account shall be delivered to the member
          as soon as practicable after the earliest of

          (i)  receipt of a request  for  distribution  made by the member at or
               after termination of employment in accordance with the provisions
               of Paragraph XII,

          (ii) in the case of a member who has terminated  employment,  attained
               age sixty-five  (65),  and requested a  distribution  of the cash
               value of the  assets  in his or her  account,  provided  that the
               request for  distribution is received by the end of the Plan Year
               in which the member attains age sixty-five (65), the distribution
               shall be made no later  than the 60th day  after the close of the
               Plan Year in which such member attains age sixty-five (65),

          (iii)attainment  of age  seventy  and one  half  (70  1/2) on or after
               January 1, 1988 in which event  distribution of the cash value of
               assets in his or her  account  shall begin not later than April 1
               of the calendar  year  following  the calendar  year in which the
               member  attains age seventy  and one half  (70-1/2)  and shall be
               made over a period of  fifteen  (15)  years or, if the  member so
               elects,  over the life of the  member or the lives of the  member
               and the  member's  beneficiary  under  the  Plan  (including  the
               member's  spouse) in  accordance  with  Section  401(a)(9) of the
               Internal  Revenue  Code and with  regulations  prescribed  by the
               Secretary  of  the  Treasury   thereunder  and  subject  to  such
               regulations as the Committee may prescribe, or

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets (contd.)

          (iv) for  accounts  established  on  or  after  October  1,  1995,  at
               termination  of  employment  if the value of the  account is less
               than $3,500 (determined within 90 days after termination) and was
               less than $3,500 on the effective date of any prior withdrawal or
               distribution from such member's account.

     2.   Dividends on Company stock in the Ford Stock Fund

          All or a portion of cash  dividends paid on shares of Company stock in
          the Ford  Stock Fund that have not been in the Plan continuously since
          January 1, 1989 shall be distributed  proportionately  to  members who
          have assets in the  Ford Stock Fund on the dividend record date and do
          not reject such distribution.  The amount of such dividends that shall
          be distributed to members who do not reject  distribution  shall equal
          the lesser  of (i) the  total  of  such  dividends,  or (ii) the total
          amount of  dividends  paid  on  all shares held in the Ford Stock Fund
          multiplied by the ratio of the number of  Ford Stock Fund units in the
          accounts of members who do not reject such  distribution to the number
          of Ford  Stock  Fund  units  in  the  accounts  of  all  members, such
          determination to be made as of the dividend record date. The amount of
          such  dividends  that  shall be distributed to each member who has not
          rejected  such  distribution  shall  be  equal  to the total amount of
          dividends to be distributed  multiplied  by the ratio of the number of
          Ford  Stock  Fund  units  in  the  account of such member to the total
          number of  Ford  Stock  Fund  units in the accounts of all members who
          have not rejected  such  distribution, all determined as of the end of
          each  business  day  that  is  a  trading  day  of  the New York Stock
          Exchange.

          The Committee  shall  from  time to time determine the manner in which
          members shall  be  provided  an  opportunity to reject distribution of
          Company stock dividends or to change a  prior election with respect to
          distribution.

          Distribution of such  dividends  shall  be made as soon as practicable
          after receipt of such dividends by the Trustee.

          A member to whom  such  dividends  would  otherwise be distributed may
          reject  such  distribution  in  such  manner  and  at such time as the
          Committee shall determine.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets (contd.)

     3.   Death of a Member

          In the event of death of a member, distribution  shall be made to such
          member's  beneficiaries  hereunder as soon as practicable after notice
          of such member's death is received by the Company.

          Notwithstanding  the provisions of the immediately preceding sentence,
          effective January 1, 2000, or as soon as is  administratively feasible
          thereafter, (a) if a member's beneficiary  is  the  member's surviving
          spouse, if  the  member  has elected a distribution schedule which had
          commenced  by  the  member's date of death, the member's account shall
          continue to be paid to the surviving  spouse pursuant to such schedule
          or, at the  spouse's  election  at any time, in a lump sum, and (b) if
          distribution of the  member's  account  has  not  commenced  as of the
          member's date of death, the  surviving  spouse  shall, for purposes of
          the distribution requirements and options under the Plan,  be deemed a
          member; except that the surviving spouse shall be deemed to attain age
          seventy  and  one  half (70-1/2) on  the  date  the  member would have
          attained such age.

          4.   Miscellaneous

          For purposes of any  distribution  of  assets  in  a  member's account
          pursuant to  this Paragraph  X, the cash value of assets in his or her
          account shall  be  reduced  by  the  balance  of any loan made to such
          member as provided in Paragraph XI hereof and interest thereon that is
          unpaid at the effective date of such distribution.

          Subject to  the  provisions  of  Paragraph XVII hereof, and subject to
          such regulations as the Committee from time to time  may  prescribe, a
          member receiving  a  distribution  pursuant  to  this  Paragraph X may
          direct the Trustee to make distribution of the cash value of assets in
          such member's Ford Stock Fund account in  the  form of whole shares of
          Company stock and  cash for any fraction of a share, such distribution
          to be at a  price  per  share  equal  to  the  current market value of
          Company stock on the effective date of the distribution. The member so
          directing the Trustee shall pay all applicable transfer taxes incident
          to the distribution of  such  shares  by  the Trustee, and  the amount
          thereof may be deducted from the payment made  by  the  Trustee to the
          member.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets (contd.)

     3.   Death of a Member (cont'd)

          Assets  held for the  benefit  of an  alternate  payee  pursuant  to a
          qualified domestic relations order as defined by section 414(p) of the
          Internal  Revenue  Code of 1986 and  section  206(d) of ERISA shall be
          distributed  prior to the date on which assets would be distributed to
          a member if such order so requires  provided that such order  requires
          distribution  of all assets  held for the  benefit  of such  alternate
          payee.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets (contd.)

     4.   Miscellaneous (contd.)

          In the event that  distribution  to a member or his or her beneficiary
          or  beneficiaries  cannot be made  because the identity or location of
          such member or such beneficiary or beneficiaries  cannot be determined
          after  reasonable  efforts and if the assets in such member's  account
          for that reason  remain  undistributed  for a period of one year,  the
          Committee may direct that the assets in such member's account shall be
          forfeited and all liability  for the payment  thereof shall  terminate
          provided,  however, that in the event that the identity or location of
          the member or beneficiary is subsequently determined, the value of the
          assets in such  member's  account at the date of  forfeiture  shall be
          paid by the Company to such  person in a single sum.  The value of the
          assets so  forfeited  shall be  applied,  as soon as  practicable,  to
          reimburse the Company for its expense in  administering  the Plan. For
          such purposes,  the value of the assets in such member's account shall
          be determined as of the date of the forfeiture.

     5.   Rollovers

          A member who would otherwise  receive a distribution may elect to have
          the Trustee  transfer  directly to an  Individual  Retirement  Account
          ("IRA")  of the  member  or to  another  employer's  plan in which the
          member is a  participant  all or part of the  assets  included  in the
          distribution,  including  Company  stock,  except  (i) a  distribution
          required to be made to a member who has  attained  age seventy and one
          half (70 1/2) to satisfy  the  minimum  distribution  requirements  of
          section  401(a)(9) of the Internal  Revenue Code, and (ii) the portion
          of  the  distribution  that  constitutes  a  return  of  the  member's
          after-tax  contributions  that were transferred from the Tax Reduction
          Act  Stock  Ownership  Plan for  Hourly  Employees  when that Plan was
          terminated in 1989. Any transfer shall be subject to such  regulations
          as the  Committee  from time to time may  prescribe.  The member shall
          designate the IRA or other  employer's  plan to which assets are to be
          transferred  and transfer  shall be made subject to  acceptance by the
          transferee plan or IRA.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

X.   Distribution of Assets (contd.)

     6.   Active Employees who attained age seventy and one half (70 1/2) prior
          to January 1, 1997

          Distributions  to active  employees  who  attained age seventy and one
          half  (70  1/2)  prior to  January  1,  1997  shall  be  continued  in
          accordance  with the  provisions of the Plan and the Internal  Revenue
          Code as in  effect  prior  to  January  1,  1997  unless  such  active
          employees  elect to have  such  distributions  discontinued  effective
          beginning with  distributions  that would  otherwise be required to be
          made for the 1997 plan year.

     7.   If  the  Committee  shall find  that any person to whom any payment is
          payable  from the  Plan is  unable  to care  for  this or her  affairs
          because  of  illness,  accident,  or  disability,  or is a minor,  any
          payment due may be paid to the spouse,  child, a parent,  or a brother
          or sister,  or to any person  deemed by the Committee to have incurred
          expense for such person otherwise  entitled to payment (unless a prior
          claim  therefor  shall  have been made by a duly  appointed  guardian,
          committee or other legal  representative).  In addition, the Committee
          may make  distributions  on  behalf  of  minors  to  parties  it deems
          appropriate under any Uniform Transfer to Minors Act. Any such payment
          shall be a complete discharge of the liabilities of the Plan therefor.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XI.  Borrowings with Respect to Assets Attributable to Tax-Efficient Savings
     Contributions

     Subject  to  such  regulations  as  the  Committee  from  time  to time may
     prescribe, a member prior to termination of  employment  may  apply for and
     receive a  loan from the Plan provided that the aggregate of all such loans
     does not exceed the lesser of

          (i)  fifty  percent  (50%) of the cash  value of assets at the time of
               any such loan in his or her account but not more than $50,000; or

          (ii) $50,000 reduced by the difference  between such member's  highest
               loan balance under all plans of the Company and its  subsidiaries
               during  the  previous  12 months  (ending  on the day  before the
               effective date of such loan from the Plan) and such member's loan
               balance on the effective date of such loan.

     The member may designate the assets to be used to provide the amount of the
     loan or, if  the  member so elects, such loan shall be made proportionately
     from each  investment  in  such member's account under the Plan. No loan of
     less than $1,000 shall be made. All loans from all plans of the Company and
     other members of a group of employers described in Sections 414(b), 414(c),
     414(m) and 414(o) of the  Internal Revenue Code are aggregated for purposes
     of the above limitation in Subparagraph (ii).

     All  such  loans  shall  (i)  be  available  to all members on a reasonably
     equivalent basis, (ii) be adequately secured and (iii)  bear  a  reasonable
     rate of interest  and  be  subject  to  such  other requirements, including
     repayment  terms,  as  the  Committee  from  time  to  time  may prescribe,
     provided, however, that (a) the entire amount  of  any  such  loan  and all
     amounts of related interest must be repaid  not later than 60 months or, in
     the case of a loan made for the member to  buy  or  construct the principal
     residence of the member, 120 months (or, when  permitted by law, such later
     date as the Committee  may  determine) after the month in which the loan is
     effective and (b) repayments  shall  be  made  by  a member from his or her
     wages by payroll  deductions  or  in such other manner as the Committee may
     prescribe. In no event shall the  repayment  be  made  less frequently than
     once per calendar quarter. The Committee shall determine a rate of interest
     such that the Plan is provided with a return commensurate with the interest
     rates charged
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XI.  Borrowings with Respect to Assets Attributable to Tax-Efficient Savings
     Contributions (cont.)

     by persons  in  the business of lending money for loans which would be made
     under similar circumstances.  Any loan to a member shall be secured by such
     member's interest in the Plan. All such requirements shall be applicable on
     a uniform  and  non-discriminatory  basis  to all members who may apply for
     such loans.

     Amounts paid by a member, including  interest payments, with respect to any
     such loan  shall be credited to a loan subaccount in such member's account.
     Loan  repayments, including  interest, on loans made before October 1, 1995
     shall be  invested  in  the Interest Income Fund until the member elects to
     have such assets transferred. Loan repayments, including interest, on loans
     made on or after October 1, 1995 shall be invested in the latest investment
     elections  made on or after October 1, 1995 by the  member  with respect to
     weekly contributions or, in the  absence  of such election, in the Interest
     Income Fund until the member elects to have such assets transferred.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XII. Withdrawal of Assets

     Prior to  termination  of  employment  a  member  shall not be permitted to
     withdraw all or any portion of the cash value of the assets in the member's
     account; provided, however, that such withdrawal shall  be permitted (i) at
     any time after the member shall have attained age  fifty-nine  and one half
     (59-1/2) or (ii) prior to attaining age fifty-nine and  one  half (59-1/2),
     if withdrawal (i) is  made  on account of an  immediate and heavy financial
     need of the member and (ii) is necessary to satisfy such financial need.

     At any time or  from  time  to  time  prior to termination of employment, a
     member may  withdraw  all or part of the cash value of assets in his or her
     After-Tax Savings Account that  are  attributable  to  his or her After-Tax
     Savings Contributions and earnings thereon.

     At any  time after  the member shall have terminated employment or attained
     age fifty-nine and one half (59 1/2), a member may elect to withdraw all or
     part of the cash value of assets in such member's account as the member may
     specify. In addition, a member may elect to make a systematic withdrawal of
     the cash  value  of assets  in such member's account in monthly, quarterly,
     semi-annual or annual  installments  over such period of time as the member
     shall specify. Each such installment  shall  be  paid in an amount equal to
     the cash value of assets in such member's account at  the effective date of
     each  such  installment  multiplied by a fraction the numerator of which is
     one and  the  denominator  of which is the number of installments remaining
     in the period  specified  by  the  member.  The  cash  value  of  each such
     installment in a systematic withdrawal shall be  withdrawn  proportionately
     from each of the investments which the member has elected under the Plan at
     the effective date of each such installment.  The effective  date  of  each
     such installment shall be selected by  the  Committee  and  communicated to
     members of the Plan. Such  systematic  withdrawals shall be subject to such
     further requirements as the  Committee shall specify. In the event that the
     systematic  withdrawals  specified  by  the member  do not meet the minimum
     distribution  requirements  beginning  at age seventy and one half (70 1/2)
     under  section  401(a)(9) of the Internal  Revenue  Code  as  specified  in
     Paragraph  X,  then  such  additional  amounts  shall  be  distributed  in
     accordance with the  provisions of Paragraph X as necessary to satisfy such
     minimum distribution requirements.

     An immediate and  heavy  financial  need  shall  be  deemed to exist if the
     requirements  of  Treasury  Regulation  section 1.401(k)-1(d)(2)(ii)(B) are
     met or if an expense of $500 or  more  is  approved  by  the  Committee  as

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XII. Withdrawal of Assets (contd.)

     constituting  an  immediate  and heavy financial need. A withdrawal will be
     deemed necessary to  satisfy  such  financial need if (i) the withdrawal is
     not in excess of the immediate  and  heavy  financial need; (ii) the member
     has no other  distribution or nontaxable loan privileges available from any
     plan  maintained  by  the  Company  or its subsidiaries; (iii) the member's
     contributions to the Company's  savings  plans  are  suspended  for  twelve
     months  after  the  withdrawal;  and (iv) the annual limit on Tax-Efficient
     Savings Contributions  in  the  taxable  year  of  enrollment following the
     hardship  withdrawal  is  reduced  by  the  amount of Tax-Efficient Savings
     Contributions  made  in  the withdrawal year.  Any withdrawal on account of
     financial hardship cannot exceed the dollar amount of Tax-Efficient Savings
     Contributions  made  to  the  account  of the member, exclusive of earnings
     thereon after December 31, 1988.  Any  such  withdrawal  of assets shall be
     made as of the date specified by the  Committee in its determination of the
     existence of a financial  hardship.   The  assets  so  withdrawn  shall  be
     delivered to the member as soon as practicable after the  effective date of
     the withdrawal.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XII.      Withdrawal of Assets (contd.)

          Subject  to  the  provisions  of Paragraph XVII hereof, and subject to
          such regulations as the  Committee  from time to time may prescribe, a
          member requesting any such withdrawal  other than an installment under
          a systematic withdrawal, may direct the Trustee  to  make distribution
          of assets  in  such  member's Ford Stock Fund account  in  the form of
          whole shares of Company stock, and in cash for  any  fractional share,
          such distribution to be at a  price  per  share  equal  to the current
          market value of Company stock on the  effective date of the withdrawal
          The member so directing the Trustee  shall pay all applicable transfer
          taxes incident to the  distribution of such shares by the Trustee, and
          the amount  thereof  may  be  deducted  from  the  payment made by the
          Trustee to the member.

          A member  who  would  otherwise request a withdrawal may elect to have
          the Trustee transfer directly  to  an  Individual  Retirement  Account
          ("IRA") of  the  member or to another  employer's  plan  in  which the
          member is a participant all or part of  the  assets  included  in  the
          withdrawal,  including  Company  stock,  except  (i) a withdrawal made
          after  attainment  of age seventy and one half (70 1/2) to satisfy the
          minimum  distribution  requirements  under  section  401(a)(9)  of the
          Internal  Revenue  Code  and  (ii)  the portion of the withdrawal that
          constitutes a return of the member's after-tax contributions that were
          transferred from the Tax Reduction Act Stock Ownership Plan for Hourly
          Employees when that Plan was terminated in 1989. Any transfer shall be
          subject to such regulations as the Committee  from  time  to  time may
          prescribe. The member shall designate the IRA or other employer's plan
          to which assets are to  be  transferred  and  transfe  shall  be  made
          subject to acceptance by the transferee plan or IRA.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds

          1.   Ford Stock Fund

               The Trustee shall establish and administer the Ford Stock Fund in
               accordance with the following:

               (a)  Investments

                    For each member who elects pursuant to Paragraph VII to have
                    Tax-Efficient Savings Contributions and/or After-Tax Savings
                    Contributions  invested in the Ford Stock Fund or for whom a
                    transfer  is made to the  Ford  Stock  Fund as  provided  in
                    Paragraph VIII hereof,  the Trustee shall invest the sums so
                    to  be   invested  or   transferred   in   accordance   with
                    instructions  of a  person,  company,  corporation  or other
                    organization  appointed by the  Company.  The Trustee may be
                    appointed for such purpose.

                    Investments  shall be made  primarily  in shares of  Company
                    stock;  a small  portion  shall be  invested  in  short-term
                    investments to provide  liquidity for daily activity.  It is
                    expected  that about one to two  percent of the Fund will be
                    held in short-term  investments,  but the  percentage may be
                    higher  or  lower,  depending  upon the  expected  liquidity
                    requirements of the Fund.

                    Investments  of all or a portion of Ford  Stock Fund  assets
                    may be made in any common,  collective  or  commingled  fund
                    when, in the opinion of the Trustee,  such  investments  are
                    consistent with the objective of the Ford Stock Fund.

               (b)  Ford Stock Fund Units Members shall have no ownership in any
                    particular  asset of the Ford Stock Fund.  The Trustee shall
                    be  the  sole  owner  of  all  Ford   Stock   Fund   assets.
                    Proportionate  interests  in the Ford  Stock  Fund  shall be
                    expressed  in Ford  Stock  Fund  Units.  All Ford Stock Fund
                    Units  shall be of equal  value and no Ford  Stock Fund Unit
                    shall have priority or preference over any other. Ford Stock
                    Fund Units  shall be  credited by the Trustee to accounts of
                    members as of each valuation date.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          (c)  Ford Stock Fund Unit Prices

               The term "Ford Stock Fund Unit Price," as used herein, shall mean
               the  value  in  money  of an  individual  Ford  Stock  Fund  Unit
               expressed to the nearest cent.  The Ford Stock Fund Unit Price as
               of October 1, 1995 was $10.00 as determined by the Committee. The
               number  of Ford  Stock  Fund  Units  as of  October  1,  1995 was
               determined  by  dividing  the  market  value of shares of Company
               stock and cash received by the Trustee for investment in the Ford
               Stock Fund by such Ford Stock Fund Unit  Price.  Thereafter,  the
               Ford Stock Fund Unit Price  shall be  redetermined  at the end of
               each  business  day that is a trading  day of the New York  Stock
               Exchange.  The Ford Stock Fund Unit Price for each such  business
               day shall be  determined  by dividing  the net asset value of the
               Ford Stock Fund on such  business day by the number of Ford Stock
               Fund Units outstanding on such business day. Ford Stock Fund Unit
               Prices  shall  be   determined   before   giving  effect  to  any
               distribution or withdrawal and before crediting  contributions to
               members'  accounts  effective  as of any such  business  day. Net
               asset value of the Ford Stock Fund shall be computed as follows:

               (i)  Company  stock shall be valued at the  closing  price on the
                    New York Stock  Exchange  on such  business  day,  or, if no
                    sales were made on that date,  at the  closing  price on the
                    next preceding day on which sales were made.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          (c)  Ford Stock Fund Unit Prices (cont.)

               (ii) All  other  assets of the Ford  Stock  Fund,  including  any
                    interest in a common,  collective or commingled  fund, shall
                    be  valued  at the  fair  market  value  as of the  close of
                    business on the valuation  date.  Fair market value shall be
                    determined by the Trustee in the reasonable  exercise of its
                    discretion,   taking  into  account  values  supplied  by  a
                    generally   accepted   pricing  or   quotation   service  or
                    quotations furnished by one or more reputable sources,  such
                    as  securities  dealers,  brokers,  or  investment  bankers,
                    values of comparable property,  appraisals or other relevant
                    information  and,  in the case of a  common,  collective  or
                    commingled  fund,  fair market value shall be the unit value
                    of such fund for a date the same as the  valuation  date, or
                    as close thereto as practicable.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          (c)  Ford Stock Fund Unit Prices (cont.)

               (iii)Ford Stock Fund Units  credited  to members'  accounts  with
                    respect to After-Tax Savings Contributions and Tax-Efficient
                    Savings   Contributions  made  during  any  month  shall  be
                    credited at the Ford Stock Fund Unit Price  determined as of
                    the close of business on the day that such contributions are
                    received by the Trustee.  Ford Stock Fund Units withdrawn or
                    distributed  shall be  valued  at the Ford  Stock  Fund Unit
                    Price at the close of  business on the day  coinciding  with
                    the effective date of such withdrawal or distribution.

               (iv) Investment transactions,  income and any expenses chargeable
                    to the Ford Stock Fund will be  accounted  for on an accrual
                    basis.

          (d)  Distribution and Withdrawal From Ford Stock Fund

               The  cash  value  of  assets  in the  Ford  Stock  Fund  shall be
               distributed  to members or may be  withdrawn  by members  only in
               accordance  with Paragraphs X and XII hereof.  All  distributions
               and withdrawals  shall be in cash,  except that a member making a
               withdrawal or receiving a distribution  may direct the Trustee to
               make such  withdrawal or distribution in the form of whole shares
               of  Company  stock,  based on the  closing  price on the New York
               Stock  Exchange  on the  effective  date  of such  withdrawal  or
               distribution.

          (e)  Registered Name

               Securities  held in the Ford Stock Fund may be  registered in the
               name of the Trustee or its nominee.

         (f)   Commissions Charged to the Plan

               No commission shall be charged to the Plan or any trust under the
               Plan in connection  with any  acquisition  by the Plan of Company
               Stock  from the  Company,  whether  by cash  purchase,  exchange,
               conversion or otherwise.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

         2.   Common Stock Fund (cont.)

               (b)  Common Stock Fund Units

                    Members shall have no ownership in any  particular  asset of
                    the Common Stock Fund.  The Trustee  shall be the sole owner
                    of all Common Stock Fund assets.  Proportionate interests in
                    the Common  Stock Fund shall be  expressed  in Common  Stock
                    Fund  Units.  All Common  Stock Fund Units shall be of equal
                    value and no Common  Stock Fund Unit shall have  priority or
                    preference over any other.  Common Stock Fund Units shall be
                    credited  by the  Trustee to  accounts of members as of such
                    valuation date.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          2.   Common Stock Fund (contd.)

               (c)  Common Stock Fund Unit Prices

               The term "Common  Stock Fund Unit  Price," as used herein,  shall
               mean the value in money of an  individual  Common Stock Fund Unit
               expressed to the nearest  cent.  The Common Stock Fund Unit Price
               as of November  30, 1988 was  determined  by the  Committee.  The
               number of Common  Stock Fund Units as of  November  30,  1988 was
               determined by dividing the total amounts  received by the Trustee
               for investment in the Common Stock Fund by such Common Stock Fund
               Unit  Price.  Thereafter,  the Common  Stock Unit Price  shall be
               redetermined  at the end of each  business  day that is a trading
               day on the New York Stock  Exchange.  The Common  Stock Fund Unit
               Price for each such  business day shall be determined by dividing
               the net asset value of the Common Stock Fund on such business day
               by the  number of Common  Stock Fund  Units  outstanding  on such
               business  day.  Common Stock Fund Unit Prices shall be determined
               before giving effect to any distribution or withdrawal and before
               crediting  contributions to members' accounts effective as of any
               such business day. Net asset value of the Common Stock Fund shall
               be computed as follows:

               (i)  Securities  listed on a  national  stock  exchange  shall be
                    valued at the closing price on the valuation date, or, if no
                    sales were made on that date,  at the  closing  price on the
                    next  preceding day on which sales were made, in either case
                    as reported on the primary exchange.

               (ii) Securities traded only in over-the-counter  markets shall be
                    valued at the mean of the  closing  bid and asked  prices as
                    listed in a  publication  or  publications  selected  by the
                    Trustee for the valuation  date,  or the next  preceding day
                    for which such prices are  available,  if not  available for
                    the valuation date.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          2.   Common Stock Fund (contd.)

               (c)  Common Stock Fund Unit Prices (contd.)

                    (iii)All other  assets of the Common  Stock Fund,  including
                         any  interest  in a common,  collective  or  commingled
                         fund,  shall be valued at the fair  market  value as of
                         the  close of  business  on the  valuation  date.  Fair
                         market value shall be  determined by the Trustee in the
                         reasonable  exercise  of its  discretion,  taking  into
                         account values supplied by a generally accepted pricing
                         or quotation service or quotations  furnished by one or
                         more  reputable  sources,  such as securities  dealers,
                         brokers,  or investment  bankers,  values of comparable
                         property, appraisals or other relevant information and,
                         in the case of a common, collective or commingled fund,
                         fair market  value shall be the unit value of such fund
                         for a date the same as the valuation  date, or as close
                         thereto as practicable.

                    (iv) Common Stock Fund Units  credited to members'  accounts
                         with  respect to  Tax-Efficient  Savings  Contributions
                         made  during any month  shall be credited at the Common
                         Stock  Fund Unit  Price  determined  as of the close of
                         business  on  the  day  that  such   contributions  are
                         received  by  the  Trustee.  Common  Stock  Fund  Units
                         withdrawn or distributed  shall be valued at the Common
                         Stock Fund Unit Price at the close of  business  on the
                         day   coinciding   with  the  effective  date  of  such
                         withdrawal or distribution.

                    (v)  Investment   transactions,   income  and  any  expenses
                         chargeable  to the Common  Stock Fund will be accounted
                         for on an accrual basis.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          2.   Common Stock Fund (contd.)

                    (d)  Distribution  and Withdrawal From Common Stock Fund

                         The cash value of assets in the Common Stock Fund shall
                         be distributed to members or may be withdrawn by
                         members only in accordance with Paragraphs X and XII
                         hereof. All distributions and withdrawals shall be only
                         in cash.

                    (e)  Voting Stock

                         The Trustee  shall  be entitled, itself or by proxy, to
                         vote in its discretion all  shares  of  voting stock in
                         the Common Stock Fund.

                    (f)  Registered Name

                         Securities held in the Common Stock Fund may be
                         registered in the name of the Trustee or its nominee.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          3.   Bond Fund

               The  Trustee  shall  establish  and  administer  the Bond Fund in
               accordance with the following:

               (a)  Investments

                    For each member who elects pursuant to Paragraph VII to have
                    Tax-Efficient Savings Contributions and/or After-Tax Savings
                    Contributions  invested  in the  Bond  Fund  or  for  whom a
                    transfer is made to the Bond Fund as  provided in  Paragraph
                    VIII  hereof,  the  Trustee  shall  invest the sums so to be
                    invested or transferred in accordance with instructions of a
                    person, company, corporation or other organization appointed
                    by the  Company.  The  Trustee  may be  appointed  for  such
                    purpose.

                    Investments  shall be made with the  objective  of providing
                    investment  results that closely correspond to the price and
                    yield  performance of the Lehman  Brothers  Aggregate  Index
                    (the "Lehman Aggregate Index").  Assets shall be invested in
                    a portfolio of the Treasury notes and bonds, corporate notes
                    and  bonds   and   mortgage-backed   securities   and  other
                    securities  that, in the  aggregate,  typify the  securities
                    that are included in the Lehman Aggregate Index.

                    Investments  of all or a portion of Bond Fund  assets may be
                    made in any common, collective or commingled fund maintained
                    by the Trustee or the person, company,  corporation or other
                    organization  appointed  by the  Company  to manage all or a
                    portion of the Bond Fund when, in the opinion of the Trustee
                    or the person,  company,  corporation or other  organization
                    appointed  by the  Company to manage all or a portion of the
                    Bond  Fund,   such   investments  are  consistent  with  the
                    objective of the Bond Fund. To the extent that assets are so
                    invested,  they shall be subject to the terms and conditions
                    of the  Declaration  of Trust of such common,  collective or
                    commingled  fund, as amended from time to time. A portion of
                    the funds of the Bond  Fund may be held in cash or  invested
                    in short-term obligations when deemed advisable by the

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          3.   Bond Fund (contd.)

               a)   Investments (contd.)

                    Trustee  or  the  person,  company,   corporation  or  other
                    organization  appointed  by the  Company  to manage all or a
                    portion of the Bond  Fund.  Securities  may be sold  without
                    regard  to the  length  of  time  they  have  been  held.  A
                    different  market  index of  publicly  traded  fixed  income
                    securities may be selected by the Company for investments of
                    Bond Fund assets in the event the Lehman  Aggregate Index is
                    discontinued or for other reasons.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          3.   Bond Fund (contd.)

               (b)  Bond Fund Units

                    Members shall have no ownership in any  particular  asset of
                    the Bond Fund.  The  Trustee  shall be the sole owner of all
                    Bond Fund assets.  Proportionate  interests in the Bond Fund
                    shall be expressed  in Bond Fund Units.  All Bond Fund Units
                    shall be of equal  value and no Bond Fund  Unit  shall  have
                    priority or preference over any other. Bond Fund Units shall
                    be credited by the Trustee to accounts of members as of each
                    valuation date.

               (c)  Bond Fund Unit Prices

                    The term "Bond Fund Unit Price," as used herein,  shall mean
                    the value in money of an individual Bond Fund Unit expressed
                    to the nearest cent.  The Bond Fund Unit Price as of January
                    31, 1994 was determined by the Committee. The number of Bond
                    Fund Units as of January 31, 1994 was determined by dividing
                    the  total  amounts  received  by the  Trustee  pursuant  to
                    Paragraphs  VII and VIII hereof for  investment  in the Bond
                    Fund for the month of  January,  1994 by such Bond Fund Unit
                    Price.  Thereafter,  the  Bond  Fund  Unit  Price  shall  be
                    redetermined  each business day that is a trading day on the
                    New York Stock  Exchange.  The Bond Fund Unit Price for each
                    such  business day shall be  determined  by dividing the net
                    asset  value of the Bond  Fund on such  business  day by the
                    number of Bond Fund Units  outstanding on such business day.
                    Bond Fund Unit  Prices  shall be  determined  before  giving
                    effect  to  any   distribution   or  withdrawal  and  before
                    crediting contributions to members' accounts effective as of
                    any such  business  day.  Net  asset  value of the Bond Fund
                    shall be computed as follows:
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          3.   Bond Fund (contd.)

                    (i)  All assets of the Bond Fund,  including any interest in
                         a  common,  collective  or  commingled  fund,  shall be
                         valued  at the fair  market  value  as of the  close of
                         business on the valuation date. Fair market value shall
                         be determined by the Trustee in the reasonable exercise
                         of its discretion,  taking into account values supplied
                         by a generally accepted pricing or quotation service or
                         quotations  furnished by one or more reputable sources,
                         such as  securities  dealers,  brokers,  or  investment
                         bankers,  values of comparable property,  appraisals or
                         other  relevant  information  and,  in  the  case  of a
                         common,  collective  or  commingled  fund,  fair market
                         value  shall be the unit  value of such fund for a date
                         the same as the valuation  date, or as close thereto as
                         practicable.

                    (ii) Bond Fund Units  credited  to  members'  accounts  with
                         respect to  Tax-Efficient  Savings  Contributions  made
                         during  any month  shall be  credited  at the Bond Fund
                         Unit Price  determined  as of the close of  business on
                         the day that such  contributions  are  received  by the
                         Trustee. Bond Fund Units withdrawn or distributed shall
                         be valued  at the Bond Fund Unit  Price at the close of
                         business on the day coinciding  with the effective date
                         of such withdrawal or distribution.

                    (iii)Investment   transactions,   income  and  any  expenses
                         chargeable to the Bond Fund will be accounted for on an
                         accrual basis.

               (d)  Distribution and Withdrawal From Bond Fund

                    The  cash  value  of  assets  in  the  Bond  Fund  shall  be
                    distributed  to members or may be  withdrawn by members only
                    in  accordance  with  Paragraphs  X  and  XII  hereof.   All
                    distributions and withdrawals shall be only in cash.

               (e)  Registered Name

                    Securities  held in the Bond Fund may be  registered  in the
                    name of the Trustee or its nominee.
<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          4.   Interest Income Fund

               The  Trustee  shall establish and manage the Interest Income Fund
               in accordance with the following:

               (a)  Investments

                    For each member who elects pursuant to Paragraph VII to have
                    Tax-Efficient Savings Contributions and/or After-Tax Savings
                    Contributions  invested in the  Interest  Income Fund or for
                    whom a transfer is made as provided in Paragraph  VIII,  the
                    Trustee   shall  invest  the  sums  so  to  be  invested  or
                    transferred in accordance  with  instructions of one or more
                    persons,  companies,  corporations  or  other  organizations
                    appointed by the Company.  The Trustee may be appointed  for
                    such purpose.

                    Investments  shall be made with the objective of providing a
                    broadly  diversified,  stable value  investment in which the
                    value of the member's  investment does not fluctuate  except
                    for  the  addition  of  interest  credited  to the  member's
                    account. The interest rate payable on assets in the Interest
                    Income fund will be declared  annually in advance and may be
                    changed each calendar year.

                    The  Trustee   shall  invest  the   After-Tax   Savings  and
                    Tax-Efficient Savings  Contributions,  and earnings thereon,
                    received  for the accounts of members who elect to invest in
                    the  Interest  Income  Fund  according  to the advice of the
                    Interest  Income Fund Advisor.  Assets in such Fund shall be
                    invested in a well  diversified  portfolio  of fixed  income
                    securities,  including  investment  contracts with insurance
                    companies and other  organizations,  individual fixed income
                    securities,  and  units in fixed  income  collective  funds.
                    Securities  may be sold without regard to the length of time
                    they have been  held.  Investments  shall be subject to such
                    additional  restrictions  as  from  time to  time  shall  be
                    provided in the  agreement  designating  or  appointing  the
                    Interest Income Fund Advisor.  To the extent that the actual
                    return  on  assets  in the  Fund is more  or less  than  the
                    declared rate of interest for the current year,  the rate of
                    interest  declared  and paid for  succeeding  years  will be
                    adjusted upward or downward.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          4.   Interest Income Fund (contd.)

               (a)  Investments (contd.)

                    Investments  of all or a portion  of  Interest  Income  Fund
                    assets may be made in any common,  collective  or commingled
                    fund  maintained  by the  Trustee  or any  person,  company,
                    corporation or other  organization  appointed by the Company
                    to manage all or a portion of the Interest Income Fund when,
                    in the  opinion  of the  Trustee  or  the  person,  company,
                    corporation or other  organization  appointed by the Company
                    to manage all or a portion of the Interest Income Fund, such
                    investments   are  consistent  with  the  objective  of  the
                    Interest  Income  Fund.  To the  extent  that  assets are so
                    invested,  they shall be subject to the terms and conditions
                    of the  Declaration  of Trust of such common,  collective or
                    commingled  fund, as amended from time to time. A portion of
                    the funds of the Interest Income Fund may be held in cash or
                    invested in short-term  obligations when deemed advisable by
                    the Trustee or the  person,  company,  corporation  or other
                    organization  appointed  by the  Company  to manage all or a
                    portion of the Interest Income Fund.

               (b)  The  Trustee  periodically  shall  credit to the appropriate
                    Interest Income  Fund  accounts  of  members interest at the
                    rate  declared  prior  to  the commencement of each calendar
                    year.

               (c)  In the  event  that  the  total value of the Interest Income
                    Fund is reduced for any  reason  (other  than  by  reason of
                    distributions  to  or  withdrawals  or  transfers by members
                    pursuant to the Plan),  the  Trustee  shall reduce the total
                    amount credited to the Interest Income Fund account of each
                    member by a proportionate amount.

               (d)  Cash credited to members' accounts in the Interest Income
                    Fund shall be distributed to members or may be withdrawn by
                    members only in accordance with Paragraphs X and XII hereof.
                    All distributions and withdrawals shall be only in cash.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          4.   Interest Income Fund (contd.)

               (e)  Interest Income Fund Value

                    The term  "Value"  as used  herein  shall  mean the value in
                    money of the net assets in the  Interest  Income  Fund.  The
                    Interest Income Fund Value shall be determined each business
                    day that is a trading  day on the New York  Stock  Exchange.
                    Interest  Income  Fund  Values  shall be  determined  before
                    giving effect to any  distribution  or withdrawal and before
                    crediting  contributions  or transfers to members'  accounts
                    effective  as of any such  business  day.  The  Value of the
                    Interest Income Fund shall be computed as follows:

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          4.   Interest Income Fund (contd.)

               (e)  Interest Income Fund Value (contd.)

                    (i)  All assets of the Interest  Income Fund shall be valued
                         at the fair market value as of the close of business on
                         the  valuation   date.   Fair  market  value  shall  be
                         determined by the Trustee in the reasonable exercise of
                         its discretion,  taking into account values supplied by
                         a generally  accepted  pricing or quotation  service or
                         quotations  furnished by one or more reputable sources,
                         such as  securities  dealers,  brokers,  or  investment
                         bankers,  values of comparable property,  appraisals or
                         other relevant information.

                    (ii) Investment   transactions,   income  and  any  expenses
                         chargeable   to  the  Interest   Income  Fund  will  be
                         accounted for on an accrual basis.

               (f)  Registered Name

                    Securities   held  in  the  Interest   Income  Fund  may  be
                    registered in the name of the Trustee or its nominee.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIII.     Ford Stock Fund, Common Stock Fund, Bond Fund, Interest Income Fund,
          and Mutual Funds (contd.)

          5.   Mutual Funds

               Each of the Mutual Funds offered as an  investment election under
               the Plan shall be described in a prospectus for each  such Mutual
               Fund and  each  such  prospectus shall be provided to each member
               of the Plan who requests such prospectus.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIV.      Member's Quarterly Statement

          As soon as  practicable after the end of each calendar quarter of each
          year, there shall  be  furnished  to each member a statement as of the
          end of each such quarter of such year of the cash value of each of the
          investments in his or her account, the contributions made on behalf of
          such member  during  the  preceding  calendar  quarter, the investment
          elections  with  respect  to  such  contributions, and such additional
          information as the Committee shall determine. Such statements shall be
          deemed  to  have  been  accepted  by  the  member  and  his  or her
          beneficiaries designated hereunder as correct unless written notice to
          the contrary  shall  be  received as the Company shall specify on such
          statement within 30 days after  the  mailing  of such statement to the
          member.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XV.  Notices, etc.

     All notices, statements and  other  communications  from  the  Trustee or a
     Participating Company to an  employee,  member  or  designated  beneficiary
     required or permitted hereunder shall be deemed  to  have  been duly given,
     furnished, delivered or transmitted, as the case may be,  when delivered to
     (or when mailed  by first-class mail, postage prepaid and addressed to) the
     employee, member or beneficiary at his or her address last appearing on the
     books  of  such  Participating  Company  or,  in  the  case of an employee,
     delivered to the employee at his or her normal work station.

     All notices, instructions  and  other  communications  from  an employee or
     member  to  the  Company  or  Trustee  required  or  permitted  hereunder
     (including,  without  limitation,  authorizations,  Tax-Efficient  Savings
     agreements  and  terminations  thereof,  investment  and  other  elections,
     requests  for  withdrawal  or  loans  and designations of beneficiaries and
     revocations and changes thereof) shall be made in such form and such manner
     from time to time prescribed therefor by the Committee.

     From time to time as necessary to facilitate the administration of the Plan
     and the  trust  created  thereunder,  the  Company,  the  Trustee  and  the
     Committee  shall  deliver  to  each  other copies or consolidations of such
     notices, instructions or other communications in respect  of  the  Plan  or
     such trust as it may receive from employees, members or beneficiaries.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XVI. Trustee

     The Company shall appoint one or more individuals or corporations to act as
     Trustee under the Plan, and at  any time may remove the Trustee and appoint
     a successor Trustee. The Company may, without reference to or action by any
     employee, member or beneficiary or any other  Participating  Company, enter
     into such Trust Agreement with the Trustee and from time to time enter into
     such  further  agreements  with  the  Trustee  or  other parties, make such
     amendments to such Trust Agreement  or  further  agreements  and  take such
     other  steps  and execute such other instruments as the Company in its sole
     discretion may deem necessary or desirable to carry the Plan into effect or
     to facilitate its administration.

     The Trustee and the Company  may by mutual agreement in writing arrange for
     the delegation  by the  Trustee to the Committee of any of the functions of
     the Trustee, except the custody of assets, the voting of Company stock held
     by the Trustee and the purchase and sale or redemption of securities.

     The  Trustee  shall  agree  that  all  information  concerning  a  member's
     investment in the Plan,  exchanges  in or out of the investement elections,
     or the  voting  of  shares of stock represented by a member's proportionate
     interest in the Ford Stock Fund or  any  other  investment  under  the Plan
     shall not be disclosed to any  party  except  to  the  extent  necessary to
     administer  the  Plan  or  as  required  by  law.  The  Committee  shall be
     responsible  for  ensuring  that  the  provisions  of this subparagraph are
     complied with and shall have the  authority  to  determine,  in good faith,
     when and to what extent disclosure shall be necessary in administering the
     Plan.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XVII.     Purchases of Securities by the Trustee

          Tax-Efficient Savings and After-Tax Savings Contributions and earnings
          thereon in the accounts of members shall be invested by the Trustee as
          soon as practicable after receipt thereof by the Trustee.

          The shares of Company stock from time to time required for purposes of
          the Plan  shall  be purchased by the Trustee from the Company, or from
          such other  person  or  corporation, on such stock exchange or in such
          other manner, as the  Company  by  action of its Board of Directors or
          any committee or person designated by  the  Board  of  Directors, from
          time to  time  in  its  sole  discretion  may  designate or prescribe;
          provided, however, that except as required  by any such designation by
          the Board of Directors, such shares shall be purchased  by the Trustee
          from such source and in such manner as the  Trustee  from time to time
          in its sole discretion may determine. Any shares so purchased from the
          Company may be either  treasury stock or newly-issued stock, and shall
          be purchased at a price per share equal to  the  closing  price on the
          New York Stock Exchange on the date of purchase.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XVII.     Purchases of Securities by the Trustee (contd.)

          Anything herein to the contrary notwithstanding, the Trustee shall not
          invest any of the funds in the Ford Stock Fund in any shares of
          Company stock, unless at the time of purchase thereof by the Trustee
          such shares shall be listed on the New York Stock Exchange.

          The shares of Company stock held by the Trustee under the Plan shall
          be registered in the name of the Trustee or its nominee, but shall not
          be voted by the Trustee or such nominee except as provided in
          Paragraph XVIII hereof.

          In the event that any option, right or warrant shall be received by
          the Trustee on Company stock, the Trustee shall sell the same, at
          public or private sale and at such price and upon such other terms as
          it may determine, unless the Committee shall determine that such
          option, right or warrant should be exercised, in which case the
          Trustee shall exercise the same upon such terms and conditions as the
          Committee may prescribe.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XVIII.    Voting of Company Stock

          The Trustee,  itself or by its nominee, shall be entitled to vote, and
          shall vote, shares of Company  stock  represented by the proportionate
          interests  in  the  accounts  of  members in  the  Ford  Stock Fund or
          otherwise held by the Trustee under the Plan as follows:

          1.   The Company shall  adopt reasonable measures to notify the member
               of the date and purposes of each meeting  of  stockholders of the
               Company at  which  holders  of  shares  of Company stock shall be
               entitled to vote, and to request instructions from the  member to
               the Trustee as to the  voting  at  such meeting of full shares of
               Company  stock  and  fractions  thereof  represented  by  the
               proportionate  interest  in  the  Ford Stock Fund  account of the
               member.

          2.   In each case,  the Trustee,  itself or by proxy,  shall vote full
               shares of Company stock and fractions thereof  represented by the
               proportionate  interest  in  the  Ford  Stock Fund account of the
               member  in  accordance  with  the  instructions  of  the  member.

          3.   If prior to the time of such  meeting of stockholders the Trustee
               shall not  have  received instructions from the member in respect
               of any shares of Company stock  represented  by the proportionate
               interest in  the  Ford  Stock  Fund  account of  the  member, the
               Trustee  shall  vote  thereat  such shares proportionately in the
               same manner as the Trustee  votes  thereat  the  aggregate of all
               shares of  Company  stock  with  respect to which the Trustee has
               received instructions from members.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XIX.      Cash Adjustments on Account of Fractional Interests in Securities

          Any fractional  interest  in  a  share  of  Company stock shall not be
          subject to distribution or withdrawal.  Settlement  for any fractional
          interest in  such  security,  upon distribution or withdrawal thereof,
          shall be  made  in  cash  based  on  the  current  market value or any
          applicable current  redemption value of such security,  as of the date
          of distribution or withdrawal, as the case may be.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XX.  Operation and Administration

     Pursuant  to  ERISA,  the  Company  shall  be the sole named fiduciary with
     respect to the Plan and shall  have  authority  to  control  and manage the
     operation and administration of the Plan.

     The Vice President-Human  Resources,  the Vice President and Treasurer and
     the  Vice  President-General  Counsel  and  Secretary  shall  have  the
     authority,  on behalf of the Company,  to appoint and remove trustees under
     the Plan, to approve  policies  relating to the allocation of contributions
     and  the  distribution  of  assets  among  trustees,  and to  approve  Plan
     amendments  other than Plan amendments  relating to the offering of Company
     stock as an investment election which amendments shall be made by the Board
     of Directors.

     The  Vice  President  and  Treasurer  shall  be authorized on behalf of the
     Company to contract  with the trustees  under the Plan and to determine the
     form and terms of the  trust  agreements,  to  allocate  contributions  and
     distribute assets among trustees, and to appoint an auditor under the Plan,
     and shall have  authority to designate  other persons to carry out specific
     responsibilities  in connection  therewith;  provided,  however,  that such
     actions  shall  be  consistent  with  ERISA,  the  policy  of the  Board of
     Directors and officers  designated in the  preceding  subparagraph  and the
     Plan.

     Except as otherwise  provided  in  this  Paragraph  XX  or elsewhere in the
     Plan,  the  Vice  President-Human  Resources  and the  Vice  President  and
     Treasurer are designated to carry out the Company's  responsibilities  with
     respect to the Plan, including, without limitation, appointment and removal
     of  members  of the  Committee  and  determination  of  prior  service  for
     eligibility  purposes  under  the  Plan in the  event of  acquisition  by a
     Participating Company (by purchase, merger, or otherwise) of all or part of
     the assets of another corporation.  The Vice President-Human  Resources and
     the Vice  President  and Treasurer  may allocate  responsibilities  between
     themselves   and  may  designate   other  persons  to  carry  out  specific
     responsibilities on behalf of the Company.

     Any Company director, officer or  employee  who  shall  have been expressly
     designated  pursuant  to  the  Plan  to  carry  out  specific  Company
     responsibilities  shall be acting on behalf of the  Company.  Any person or
     group of persons may serve in more than one  capacity  with  respect to the
     Plan and may employ one or more persons to render advice with regard to any
     responsibilities such person has under the Plan.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XX.  Operation and Administration (contd.)

     The  Company  shall  create  a  Committee  consisting  of  at least three
     members.  The Company shall from time to time  designate the members of the
     Committee and an alternate  for each of such  members,  who shall have full
     power  to act in the  absence  or  inability  to act of  such  member.  The
     Committee shall appoint its own Chairman and Secretary,  and shall act by a
     majority of its  members,  with or without a meeting.  The  Secretary or an
     Assistant  Secretary  of the  Company  shall  from time to time  notify the
     Trustee of the  appointment  of members of the Committee and alternates and
     of the  appointment  of the Chairman and Secretary of the  Committee,  upon
     which notices the Trustee shall be entitled to rely.

     The Committee  shall have full power and  authority to administer  the Plan
     and to  interpret its provisions.  Any  interpretation of the provisions of
     the Plan by the Committee shall be final and conclusive, and shall bind and
     may be relied upon  by  the  several Participating Companies, each of their
     employees, the Trustee and all other parties in interest.

     No  member  of  the  Committee  or  alternate  for  a  member or  director,
     officer or employee of any  Participating  Company  shall be liable for any
     action or failure to act under or in connection  with the Plan,  except for
     his or her own lack of good faith;  provided,  however, that nothing herein
     shall be deemed to relieve any such person from responsibility or liability
     for any obligation or duty under ERISA. Each director, officer, or employee
     of the Company who is or shall have been designated to act on behalf of the
     Company and each person who is or shall have been a member of the Committee
     or an  alternate  for a member or a  director,  officer or  employee of any
     Participating  Company,  as such, shall be indemnified and held harmless by
     the Company against and from any and all loss,  cost,  liability or expense
     that may be imposed upon or reasonably incurred by him or her in connection
     with or resulting from any claim, action, suit or proceeding to which he or
     she may be a party or in which he or she may be  involved  by reason of any
     action  taken or failure to act under the Plan and against and from any and
     all amounts paid by him or her in  settlement  thereof  (with the Company's
     written  approval) or paid by him or her in  satisfaction  of a judgment in
     any such  action,  suit or  proceeding,  except a judgment  in favor of the
     Company  based  upon a finding of his or her lack of good  faith;  subject,
     however,  to the condition  that,  upon the assertion or institution of any
     such claim,  action, suit or proceeding against him or her, he or she shall
     in writing give the Company an opportunity,  at its own expense,  to handle
     and defend the same before he or she undertakes to handle and

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XX.  Operation and Administration (contd.)

     defend it on his or her own behalf. The foregoing right of indemnification
     shall not be exclusive of any other right to which such person may be
     entitled as a matter of law or otherwise, or any power that a Participating
     Company may have to indemnify him or her or hold him or her harmless.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XX.  Operation and Administration. (contd.)

     Brokerage  commissions,  fees  and  transfer  taxes  incurred in connection
     with the  purchase or sale of Company  stock shall be paid by the  Company.
     Brokerage commissions and transfer taxes on the purchase and sale of Common
     Stock Fund  securities  shall be paid from Common  Stock Fund assets by the
     Trustee, and the expenses of any collective,  common, or commingled fund in
     which Common Stock Fund assets may be invested  pursuant to  Subparagraph 2
     of Paragraph XIII hereof shall be paid from the assets in such  collective,
     common or commingled fund. Brokerage  commissions and transfer taxes on the
     purchase and sale of Bond Fund securities and the expenses of the Bond Fund
     including,  without  limitation,  investment  management fees shall be paid
     from Bond Fund  assets,  and the  expenses of any  collective,  common,  or
     commingled  fund in which Bond Fund  assets  may be  invested  pursuant  to
     Subparagraph  3 of  Paragraph  XIII hereof shall be paid from the assets in
     such  collective,  common or  commingled  fund.  Earnings  credited  to the
     account of the Trustee  under the Bond Fund shall be net of such charges by
     the Bond  Fund  Manager  as may be  provided  in such  contract.  Brokerage
     commissions  and transfer taxes on the purchase and sale of Interest Income
     Fund  securities  shall be paid from  Interest  Income  Fund  assets by the
     Trustee and the expenses of any collective,  common,  or commingled fund in
     which Interest Income Fund assets may be invested  pursuant to Subparagraph
     4 of  Paragraph  XIII  hereof  shall  be  paid  from  the  assets  in  such
     collective, common or commingled fund. All management fees, redemption fees
     and all  other  expenses  of any  mutual  funds  offered  as an  investment
     election  under the Plan shall be paid from assets in such mutual  funds or
     charged  to the  accounts  of  members  who elect to invest in such  mutual
     funds. All other expenses of administration of the Plan, including expenses
     charged or incurred by the  Trustee or the  Company,  shall be borne by the
     Company.  Taxes,  if any, on any Ford Stock Fund Units,  Common  Stock Fund
     Units or Bond Fund Units held by the Trustee or income  therefrom which are
     payable by the Trustee  shall be charged  against the members'  accounts as
     the Trustee and the Committee shall determine.

     The records of the Trustee, the Committee and the several Participating
     Companies shall be conclusive in respect of all matters involved in the
     administration of the Plan.

     The Plan shall be governed by and construed in accordance with the laws of
     the State of Michigan.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXI.      Termination, Suspension and Modification

          The  Company,  by  action  of  its  Board  of  Directors, or  officers
          designated under Paragraph XX hereof, may terminate or modify the Plan
          or suspend the operation of any provision of the Plan, as follows:

          1.   The Company may terminate the Plan at any time or may at any time
               or from time to time  modify  the  Plan,  in its  entirety  or in
               respect  of the  employees  of one or more  of the  Participating
               Companies.  The  Company  may at any  time or  from  time to time
               terminate  or  modify  the Plan or  suspend  for any  period  the
               operation of any provision  thereof,  in respect of any employees
               located in one or more states or countries, if in the judgment of
               the Committee  compliance  with the laws of such state or country
               would involve  disproportionate  expense and  inconvenience  to a
               Participating  Company.  Any such  modification  that affects the
               rights or duties of the Trustee may be made only with the consent
               of the Trustee. Any such termination,  modification or suspension
               of the Plan may affect  members in the Plan at the time  thereof,
               as well as future  members,  but may not  affect  the rights of a
               member  as to the  continuance  of  investment,  distribution  or
               withdrawal  of the cash  value of  assets in the  account  of the
               member as of the effective date of such termination, modification
               or suspension and earnings thereon;  provided,  however, that the
               Company may, in the event of a  termination  of the Plan,  direct
               the Trustee to  distribute  the assets in the accounts of members
               in the Plan to such members.  Any  termination or modification of
               the  Plan  or  suspension  of  any  provision  thereof  shall  be
               effective as of such date as the Company may  determine,  but not
               earlier  than the date on which the Company  shall give notice of
               such  termination,  modification or suspension to the Trustee and
               to the Participating  Companies any of the employees of which are
               affected thereby.

          2.   The provisions  of  the foregoing Subparagraph 1 notwithstanding,
               the Company, by action  of  its  Vice  President-Human Resources,
               Vice President and Treasurer  and  Vice President-General Counsel
               and Secretary, at any time or from time to time may modify any of
               the provisions of the  Plan in  any respect retroactively, if and
               to the extent  necessary or appropriate  in the  judgment of such
               officers of the  Company to qualify or maintain  the Plan and the
               trust fund established thereunder as a plan and trust meeting the
               requirements of Section 401(a) and 501(a) of the Internal Revenue
               Code of 1986, as now in effect or hereafter amended, or any other
               applicable  provisions of Federal tax laws or other  legislation,
               as now in  effect  or  hereafter  amended  or  adopted,  and  the
               regulations thereunder at the time in effect.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXI.      Termination, Suspension and Modification (contd.)

          3.   Anything  herein  to  the  contrary  notwithstanding,  no  such
               termination  or  modification  of  the  Plan or suspension of any
               provision  thereof  may  diminish the cash value of assets in the
               account of a member as of the effective date of such termination,
               modification or suspension.

          4.   In the event of any merger or consolidation with,  or transfer of
               assets or liabilities to,  any other plan,  each employee member,
               former employee,  former member,  beneficiary  or estate eligible
               under the Plan shall,  if the Plan is then terminated, receive a
               benefit immediately after the merger,  consolidation or transfer,
               which is equal to the benefit he or she would have been entitled
               to  receive  immediately  before  the  merger,  consolidation  or
               transfer if the Plan had then terminated.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXII.     Conditions on Participation of Subsidiaries of the Company

          The consent  of  the  Company  to the participation in the Plan of any
          Subsidiary of the Company may be  conditioned  upon such provisions as
          the Company may prescribe,  including,  without limitation, conditions
          as to  (a) the  instruments  to  be  executed  and  delivered  by such
          Participating Company to  the  Trustee,  (b) the  extent  to which the
          Company  shall  act  as  representative  of such Participating Company
          under the Plan, and (c) the rights of  such  Participating  Company to
          withdraw  from  participation  in  the  Plan  and  the  effect of such
          withdrawal upon the  memberships and accounts in the Plan of employees
          of such Participating Company.

XXIII.    Member's Rights Not Transferable

          No right  or  interest  of any member  under the Plan or in his or her
          account shall  be  assignable  or  transferable,  in whole or in part,
          either  directly  or by  operation  of  law or  otherwise,  including,
          without  limitation,  by  execution,  levy,  garnishment,  attachment,
          pledge or in any other manner,  except in accord with  provisions of a
          qualified domestic relations order as defined by section 414(p) of the
          Internal  Revenue Code of 1986 and section 206(d) of ERISA and further
          excluding  devolution  by death or mental  incompetency;  no attempted
          assignment or transfer  thereof  shall be  effective;  and no right or
          interest of any member  under the Plan or in his or her account  shall
          be liable for,  or subject to, any  obligation  or  liability  of such
          member.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXIV.     Designation of Beneficiaries

          (1)  A member  may  file  with  the Company a written designation of a
               beneficiary or beneficiaries with respect  to  all or part of the
               assets in the member's account. In the case of a  married  member
               who dies, the cash value of assets in such member's account shall
               be delivered to such member's surviving spouse unless the written
               designation of beneficiary  designating a person or persons other
               than the spouse with  respect to all or part of the assets in the
               member's account  includes  the  written  consent  of the spouse,
               witnessed by a  notary public.  A member,  if married,  with such
               written  consent  of  the spouse, may from time to time revoke or
               change any such designation of beneficiary.

          (2)  In the case of  an  unmarried  member who does not file a written
               designation of beneficiary, such member  shall  be deemed to have
               designated as  beneficiary  or  beneficiaries  under the Plan the
               person or persons who are  entitled in the  event of the member's
               death to  receive the proceeds under the Company's Group Life and
               Disability Insurance Program  if the member is covered under such
               Program at the date of his or her death.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXIV.     Designation of Beneficiaries (contd.)

          (3)  In the  event  of the death of a member, the cash value of assets
               in his or her account under  the  Plan  shall be delivered to, as
               applicable, such spouse or  beneficiaries  who  shall survive the
               member,  in  accordance  with  the applicable designation (to the
               extent  effective  and  enforceable at  the  time of the member's
               death)  and  the  provisions  of  the  Plan,  subject  to  such
               regulations  as  the Committee from time to time may prescribe in
               respect of distributions  to  minors;  provided, however, that if
               the Trustee or the Committee shall be in doubt as to the right of
               any such person to receive any of the  cash value of such assets,
               the Trustee may deliver the same to the estate  of the member, in
               which case the Trustee,  the  several Participating Companies and
               the Committee and the several  members thereof and alternates for
               members  shall  not  be  under  any  further liability to anyone.
               Except as hereinabove provided, in the  event  of  the death of a
               member, cash value of assets in his or her account under the Plan
               shall be delivered to his or her estate.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXV.      Limitation on Contributions under Section 415 of the Internal Revenue
          Code

          Notwithstanding  any  other  provision  of the  Plan,  the  sum of any
          Tax-Efficient  Savings and  After-Tax  Savings  Contributions  for any
          limitation year shall not exceed the applicable  limits set by section
          415 of the  Internal  Revenue  Code  and the  regulations  thereunder.
          Additionally,  prior to January 1, 2000,  the combined  limitation  of
          section 415(e) of the Internal  Revenue Code will be  administered  so
          that a member's defined benefit plan fraction and defined contribution
          plan fraction will not exceed 1.0 in any  limitation  year and will be
          accomplished  by  reducing  the rate of  benefit  accruals  under  the
          defined  benefit  plan so that the sum of the  fractions  equals  1.0.
          Thereafter,  such combined limitation shall not apply. For purposes of
          this Paragraph XXV,  "limitation  year" shall mean the 12-month period
          beginning April 1.

XXVI.     Transfer of Assets to or from the Plan

          Notwithstanding  any other provisions of the Plan, and subject to such
          regulations and procedures as the Committee may prescribe,  assets may
          be transferred to the Plan from the Tax Reduction Act Stock  Ownership
          Plan for Hourly  Employees in the United  States or the Tax  Reduction
          Act Stock  Ownership Plan for Salaried  Employees or any other similar
          plan  maintained  by the Company or its  subsidiaries.  If any cash or
          securities  shall be delivered to the Trustee by the trustee under any
          of such plans, effective on or after April 30, 1989, the Trustee shall
          receive and hold such  assets in the Plan trust and shall  credit them
          to accounts in the Plan for employees on whose behalf such assets have
          been  transferred.  Assets  received  in cash shall be invested in the
          Current  Interest Fund, or its  successor.  Thereafter all such assets
          shall be subject to all provisions of the Plan applicable to any other
          assets credited to the accounts of members.

          A member may elect to have the Plan  accept a transfer  from a savings
          plan of a subsidiary  where the member was previously  employed of any
          fully  vested  amounts,  either in the form of cash or Company  stock,
          provided  that such  acceptance  would not require the Plan to provide
          benefits in an amount or form not otherwise provided under the Plan in
          order to  preserve  an  accrued  benefit  under the  transferor  plan.
          Amounts  transferred would be invested in accordance with the member's
          election among investment  elections  available under the Plan made at
          the time of election to have assets transferred.  Thereafter, all such
          assets shall be subject to all  provisions  of the Plan  applicable to
          any other assets credited to the accounts of members.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXVI.     Transfer of Assets to or from the Plan (contd.)

          A member who is no longer eligible to contribute to the Plan may elect
          to have  transferred  from the Plan all, but not less than all, assets
          in such member's account under the Plan, either in the form of cash or
          Company stock,  to a savings plan of a subsidiary  where the member is
          currently employed, subject to acceptance by the transferee plan.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXVII.    Employee Stock Ownership Plan

          1.   There  was  established  in  the Plan an Employee Stock Ownership
               Plan ("ESOP") effective January 1, 1989. The ESOP consists of all
               the shares of Company stock in the Plan at any time and from time
               to time  including  all the shares in the Ford Stock Fund, shares
               formerly  allocated  to  members' accounts and shares held in the
               suspense  account  as  hereinafter  described  and  all  assets
               attributable to contributions made after December 31, 1988.

          2.   The trustee of the ESOP shall be  the Trustee of the Plan or such
               other  qualified  organization  as  the Company shall select (the
               "Trustee of the ESOP").  The  Trustee of the Plan and the Trustee
               of the ESOP shall  hold,  invest,  transfer  and  distribute  the
               shares of  Company  stock  and  all  other  assets in the ESOP in
               accordance  with  the  provision  of this Paragraph XXVII and the
               Plan. In the event the Company selects an organization other than
               the Trustee of the Plan to be  Trustee  of the ESOP, their duties
               under the ESOP shall be allocated  between  them  as  hereinafter
               provided or  in  accordance  with  the  provisions  of  the trust
               agreements appointing such Trustee of the Plan and Trustee of the
               ESOP.

          3.   (i)  The Trustee of the  ESOP  shall borrow on behalf of the ESOP
                    an amount not exceeding the amount of dividends estimated by
                    the Trustee of the ESOP, after consultation with the Trustee
                    of the Plan and the  Treasurer of the Company, to be paid on
                    Company stock held continuously since January 1, 1989 in the
                    ESOP  for  such  period  as  the  Trustee  of the ESOP shall
                    select, subject to a guarantee by the  Company of payment of
                    any such loan.

               (ii) The Trustee of the ESOP is  authorized to borrow such amount
                    from such persons,  including the Company, as the Trustee of
                    the  ESOP  shall  determine.  The  loan  shall  provide  for
                    repayment,  within  such  period as the  Trustee of the ESOP
                    shall  have  selected,  and shall be  payable  on such other
                    terms as the  Trustee  of the  ESOP in its  sole  discretion
                    shall determine.  The interest rate of a loan must not be in
                    excess of a reasonable rate of interest.

               (iii)The  proceeds  of any such loan shall be used by the Trustee
                    of the ESOP to  purchase  as soon as  practicable  shares of
                    Company stock in accordance with the provisions of Paragraph
                    XVII hereof. The Trustee of the ESOP is authorized to pledge
                    such stock as security  for  payment of such loan.  The loan
                    shall be without recourse against the ESOP.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXVII.    Employee Stock Ownership Plan (contd.)

          4.   The Trustee of the ESOP shall hold the shares of Company stock so
               purchased in the Plan in a suspense account unallocated until
               such time as all or part of the related loan and interest thereon
               is paid as hereinafter provided. The Trustee of the ESOP shall
               vote shares of Company stock in the suspense account in its
               discretion, notwithstanding the provisions of Paragraph XVIII
               hereof.

          5.   The Trustee of the Plan and the Trustee of the ESOP shall apply
               dividends paid on Company stock held in the ESOP with respect to
               which a loan was taken, including shares held in the Ford Stock
               Fund, to payment of such loan made in accordance with
               Subparagraph 3 hereof and interest thereon.

               In the event that such  dividends  paid on Company  stock are not
               sufficient  to enable the Trustee of the ESOP to make any payment
               on such loan the Trustee of the ESOP shall sell shares of Company
               stock  held in the  suspense  account in an amount  necessary  to
               permit such payment provided, however, that the Company may elect
               to make an additional  contribution to the Plan by making payment
               to the Trustee of the ESOP in an amount  sufficient to enable the
               Trustee of the ESOP to make all or part of such  payment  without
               selling shares of Company stock held in the suspense account.

               In the event that such  dividends  paid on Company  stock and the
               amount  realized  from  the  sale of  Company  stock  held in the
               suspense  account are not sufficient to enable the Trustee of the
               ESOP to make any payment on such loan,  the Company shall make an
               additional  contribution  to the Plan by  making  payment  to the
               Trustee of the ESOP in an amount sufficient to enable the Trustee
               of the ESOP to make such  payment or shall pay such amount to the
               lender.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXVII.    Employee Stock Ownership Plan (contd.)

     6.   The shares held in the  suspense  account  shall be released  from the
          suspense  account to the  Trustee of the Plan in an amount  that bears
          the same ratio to the total number of shares in the  suspense  account
          as the amount of principal  and interest paid on the loan bears to the
          total amount of principal and interest outstanding. The Trustee of the
          Plan shall allocate such shares so released to the Ford Stock Fund and
          the  accounts of members who have  elected to invest in the Ford Stock
          Fund shall be adjusted as if the dividends  paid on Company stock with
          respect to shares held in the Ford Stock Fund had been used to acquire
          shares  of  Company  stock in the open  market  on the last day of the
          month  preceding  the date such shares are released  from the suspense
          account.

          To the extent  that the number of shares  released  from the  suspense
          account at any time is less than the number that would be required for
          allocation  to the Ford  Stock Fund if the  dividends  paid on Company
          stock had been used to  acquire  shares of  Company  stock in the open
          market at the  closing  price on the New York  Stock  Exchange  on the
          dividend   payment   date,   the  Company  shall  make  an  additional
          contribution to the Plan in an amount sufficient to permit the Trustee
          of the ESOP to  acquire  additional  shares  so that the  value at the
          closing price on the dividend  payment date of the shares  released to
          the Trustee of the Plan plus cash,  if any,  shall equal the dividends
          paid by the Trustee of the Plan with  respect to Company  stock to the
          Trustee of the ESOP.

          To the extent  that the number of shares  released  from the  suspense
          account at any time  exceeds  the number that would be required if the
          dividend  paid on  Company  stock had been used to  acquire  shares of
          Company  stock in the open  market,  the  excess  shall be held by the
          Trustee of the ESOP and  released at the end of the  calendar  year to
          the  Trustee  of the Plan for an  addition  to the Ford Stock Fund and
          allocation of additional  units in the Ford Stock Fund to the accounts
          of members in an amount  proportional to the number of Ford Stock Fund
          units in their accounts.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

XXVII.    Employee Stock Ownership Plan (contd.)

     7.   Contributions to the ESOP for any eligible employee who is a highly
          compensated employee shall be limited to the extent required under the
          principles  described in  Paragraph  IV with respect to  Tax-Efficient
          Savings Contributions.

     8.   The  Committee  is  authorized  to  make  such   adjustments   in  the
          administration  of the  Plan  and  the  ESOP  as it  deems  necessary,
          appropriate or desirable to carry out the purposes and intents of this
          Paragraph XXVII.

     9.   In the event that any or all of the tax benefits  available  under the
          tax laws on the effective date hereof are restricted or eliminated, as
          determined by the Company,  the Trustee of the ESOP is authorized upon
          direction by the Company to sell upon such terms, at such times and to
          such persons,  as the Trustee of the ESOP in its sole discretion shall
          determine,  any or all of the shares of Company  stock in the suspense
          account and to use the proceeds of such sale to pay all or part of the
          loan balance  outstanding,  together with interest thereon. Any excess
          shares in the  suspense  account  at such time shall be  allocated  as
          provided in Subparagraph 6 hereof.

<PAGE>

                  FORD MOTOR COMPANY TAX-EFFICIENT SAVINGS PLAN
                                       FOR
                                HOURLY EMPLOYEES

                                   APPENDIX A
                             ADDITIONAL MUTUAL FUNDS

INCOME FUNDS:                                        INTERNATIONAL FUNDS:
Fidelity International Bond Fund            Fidelity Canada Fund
Fidelity Government Income Fund             Fidelity Europe Fund
Fidelity Investment-Grade Bond Fund         Fidelity International Growth &
Fidelity New Markets Income Fund                  Income Fund
Scudder Income Fund                         Fidelity Pacific Basin Fund
Scudder International Bond Fund             Fidelity Worldwide Fund
T. Rowe Price High Yield Fund               Scudder Greater Europe Growth Fund
T. Rowe Price Spectrum Income Fund          Scudder International Fund
                                            Scudder Japan Fund
GROWTH AND INCOME FUNDS:                    T. Rowe Price International
Fidelity Balanced Fund                            Discovery Fund
Fidelity Equity-Income Fund                 T. Rowe Price International Stock
Fidelity Fund                                     Fund
Fidelity Global Balanced Fund               T. Rowe Price Latin America Fund
Fidelity Growth & Income Portfolio          T. Rowe Price New Asia Fund
Fidelity Puritan Fund                       Vanguard International Value Fund
Fidelity Real Estate Investment
     Portfolio                                    ASSET ALLOCATION FUNDS:
Fidelity Utilities Fund                     Vanguard LifeStrategy-
Scudder Growth & Income Fund                      Conservative Growth Fund
T. Rowe Price Spectrum Growth Fund          Vanguard LifeStrategy - Moderate
Vanguard 500 Index Fund                           Growth Fund
Vanguard Value Index Fund                   Vanguard LifeStrategy - Growth Fund

GROWTH FUNDS:
Fidelity Capital Appreciation Fund
Fidelity Dividend Growth Fund
Fidelity Growth Company Fund
Fidelity Retirement Growth Fund
Fidelity Small Cap Selector
Fidelity Stock Selector
Fidelity Trend Fund
Fidelity Value Fund
Scudder Global Fund
Scudder Global Discovery Fund
T. Rowe Price New Era Fund
T. Rowe Price New Horizons Fund
Vanguard Explorer Fund
Vanguard Growth Index Fund

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