Document:

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                                                                     EXHIBIT 4.2

          Manufactured Housing Contract Senior/Subordinate Pass-Through
                           Certificates, Series 2001-4

                               TRANSFER AGREEMENT

                                     between

                      CONSECO FINANCE SECURITIZATIONS CORP.
                                    Purchaser

                                       and

                              CONSECO FINANCE CORP.
                                     Seller

                                   dated as of

                                December 1, 2001
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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Article I DEFINITIONS.........................................................1
     Section 1.01 General.....................................................1
     Section 1.02 Specific Terms..............................................1
     Section 1.03 Usage of Terms..............................................3
     Section 1.04 No Recourse.................................................3

Article II CONVEYANCE OF THE INITIAL CONTRACTS AND THE INITIAL
           COLLATERAL SECURITY................................................3
     Section 2.01 Conveyance of the Initial Contracts and the
                  Initial Collateral Security.................................3
     Section 2.02 Purchase Price of Initial Contracts.........................4
     Section 2.03 Conveyance of Subsequent Contracts and
                  Subsequent Collateral Security..............................4

Article III REPRESENTATIONS AND WARRANTIES....................................5
     Section 3.01 Representations and Warranties of Conseco Finance...........5
     Section 3.02 Representations and Warranties of CFSC......................7

Article IV COVENANTS OF CONSECO FINANCE.......................................9
     Section 4.01 Transfer of Contracts.......................................9
     Section 4.02 Costs and Expenses.........................................10
     Section 4.03 Indemnification............................................10
     Section 4.04 Financial Statement Disclosure.............................10

Article V REPURCHASES........................................................10
     Section 5.01 Repurchase of Contracts Upon Breach of Warranty............10
     Section 5.02 Reassignment of Purchased Contracts........................11
     Section 5.03 Waivers....................................................11

Article VI MISCELLANEOUS.....................................................12
     Section 6.01 Liability of Conseco Finance...............................12
     Section 6.02 Merger or Consolidation of Conseco Finance or CFSC.........12
     Section 6.03 Limitation on Liability of Conseco Finance and Others......13
     Section 6.04 Amendment..................................................13
     Section 6.05 Notices....................................................14
     Section 6.06 Merger and Integration.....................................14
     Section 6.07 Severability of Provisions.................................15
     Section 6.08 Intention of the Parties...................................15
     Section 6.09 Governing Law..............................................15
     Section 6.10 Counterparts...............................................15
     Section 6.11 Conveyance of the Initial Contracts and the
                  Initial Collateral Security to the Trust...................15
     Section 6.12 Nonpetition Covenant.......................................16

                                       i
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                                    SCHEDULES

Schedule A  --  Schedule of Initial Contracts

                                    EXHIBITS

Exhibit A  --  Form of Subsequent Transfer Agreement

                                       ii
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                               TRANSFER AGREEMENT
                               ------------------

         THIS TRANSFER AGREEMENT, dated as of December 1, 2001, executed between
Conseco Finance Securitizations Corp., a Minnesota corporation, as purchaser
("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller ("Conseco
Finance").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, CFSC has agreed to purchase from Conseco Finance and Conseco
Finance, pursuant to this Agreement, is transferring to CFSC certain
manufactured housing contracts specified in the Schedule of Initial Contracts
attached hereto as Schedule A (the "Initial Contracts"); and

         WHEREAS, CFSC has agreed to purchase from Conseco Finance and Conseco
Finance has agreed to transfer to CFSC the Subsequent Contracts and Subsequent
Collateral Security in an amount set forth herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Conseco Finance, intending to be
legally bound, hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

         Section 1.01 General. The specific terms defined in this Article
include the plural as well as the singular. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Pooling and Servicing Agreement, dated as
of December 1, 2001, by and among Conseco Finance Securitizations Corp. (as
Seller), Conseco Finance Corp. (in its individual capacity and as Servicer), and
U.S. Bank National Association, as trustee (the "Trustee") relating to the
Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
Series 2001-4 (the "Trust").

         Section 1.02 Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:

         "Agreement" shall mean this Transfer Agreement and all amendments
hereof and supplements hereto.

         "Closing Date" means December 18, 2001.
<PAGE>

         "Collateral Security" means the Initial Collateral Security conveyed by
Conseco Finance to CFSC pursuant to this Agreement together with any and all
Subsequent Collateral Security conveyed by Conseco Finance to CFSC pursuant to
each Subsequent Transfer Agreement.

         "Initial Contracts" means the Contracts listed on the Schedule of
Initial Contracts attached hereto as Schedule A.

         "Initial Collateral Security" means, with respect to any Initial
Contract,

         (i)      the security interests, if any, granted by or on behalf of the
                  related Obligor with respect thereto, including a first
                  priority perfected security interest in the related
                  Manufactured Home,

         (ii)     all other security interests or liens and property subject
                  thereto from time to time purporting to secure payment of such
                  Contract, whether pursuant to the agreement giving rise to
                  such Contract or otherwise, together with all financing
                  statements signed by the Obligor describing any collateral
                  securing such Contract,

         (iii)    all security agreements granting a security interest in the
                  related Manufactured Home and all guarantees, insurance and
                  other agreements or arrangements of whatever character from
                  time to time supporting or securing payment of such Contract
                  whether pursuant to the agreement giving rise to such Contract
                  or otherwise, and

         (iv)     all records in respect of such Contract.

         "Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of December 1, 2001, executed and delivered by Conseco
Finance Corp., as Originator and Servicer, Conseco Finance Securitizations Corp.
as Seller; and the Trustee.

         "Related Documents" means the Certificates, the Pooling and Servicing
Agreement, each Subsequent Transfer Agreement and the Underwriting Agreement
among Conseco Finance, CFSC and the underwriters of the Certificates. The
Related Documents to be executed by any party are referred to herein as "such
party's Related Documents," "its Related Documents" or by a similar expression.

         "Repurchase Event" means the occurrence of a breach of any of Conseco
Finance's representations and warranties hereunder or under any Subsequent
Purchase Agreement or any other event which requires the repurchase of a
Contract by Conseco Finance under the Pooling and Servicing Agreement.

         "Schedule of Initial Contracts" means the schedule of all Contracts
sold and transferred pursuant to this Agreement which is attached hereto as
Schedule A.

         "Schedule of Contracts" means the Schedule of Initial Contracts
attached hereto as Schedule A as supplemented by each Schedule of Subsequent
Contracts attached to each Subsequent Purchase Agreement as Schedule A.

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         "Schedule of Subsequent Contracts" means the schedule of all Contracts
sold and transferred pursuant to a Subsequent Purchase Agreement which is
attached to such Subsequent Purchase Agreement as Schedule A, which Schedule of
Subsequent Contracts shall supplement the Schedule of Initial Contracts.

         "Subsequent Contracts" means the Contracts specified in the Schedule of
Subsequent Contracts attached as Schedule A to each Subsequent Purchase
Agreement.

         "Subsequent Collateral Security" means the Subsequent Collateral
Security conveyed by Conseco Finance to CFSC pursuant to each Subsequent
Transfer Agreement.

         "Subsequent Transfer Agreement" has the meaning assigned in Section
2.03(b)(iii).

         "Trust" means the trust created by the Trust Agreement, the estate of
which consists of the Trust Property.

         "Trustee" means U.S. Bank Trust National Association, a national
banking association organized and existing under the laws of the United States,
not in its individual capacity but solely as trustee of the Trust, and any
successor trustee appointed and acting pursuant to the Trust Agreement.

         "Trust Property" means the property and proceeds of every description
conveyed by CFSC to the Trust pursuant to the Pooling and Servicing Agreement
and pursuant to any Subsequent Transfer Agreement, together with the Certificate
Accounts (including all Eligible Investments therein and all proceeds
therefrom).

         Section 1.03 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Pooling and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."

         Section 1.04 No Recourse. Without limiting the obligations of Conseco
Finance hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Conseco
Finance, or of any predecessor or successor of Conseco Finance.

                                   ARTICLE II

                     CONVEYANCE OF THE INITIAL CONTRACTS AND
                         THE INITIAL COLLATERAL SECURITY

         Section 2.01 Conveyance of the Initial Contracts and the Initial
Collateral Security. Subject to the terms and conditions of this Agreement,
Conseco Finance hereby sells, transfers,

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assigns, and otherwise conveys to CFSC without recourse (but without limitation
of its obligations in this Agreement or in the Pooling and Servicing Agreement),
and CFSC hereby purchases, all right, title and interest of Conseco Finance in
and to the Initial Contracts and the Initial Collateral Security. It is the
intention of Conseco Finance and CFSC that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Initial Contracts
and the Initial Collateral Security from Conseco Finance to CFSC, conveying good
title thereto free and clear of any Liens, and the Initial Contracts and the
Initial Collateral Security shall not be part of Conseco Finance's estate in the
event of the filing of a bankruptcy petition by or against Conseco Finance under
any bankruptcy or similar law.

         Section 2.02 Purchase Price of Initial Contracts. Simultaneously with
the conveyance of the Initial Contracts and the Initial Collateral Security to
CFSC, CFSC has paid or caused to be paid to or upon the order of Conseco Finance
approximately $458,623,717 by wire transfer of immediately available funds
(representing the proceeds to CFSC from the sale of the Initial Contracts before

         (i)      deducting expenses incurred by CFSC in connection with such
                  sale and

         (ii)     depositing the Pre-Funded Amount in the Pre-Funding Account.)

         Section 2.03 Conveyance of Subsequent Contracts and Subsequent
Collateral Security.

         (a) Subject to the conditions set forth in paragraph (b) below and the
terms and conditions in the related Subsequent Transfer Agreement, in
consideration of CFSC's delivery on the related Subsequent Transfer Date to or
upon the order of Conseco Finance of an amount equal to the purchase price of
the Subsequent Contracts (as set forth in the related Subsequent Transfer
Agreement), Conseco Finance hereby agrees to sell, transfer, assign, and
otherwise convey to CFSC without recourse (but without limitation of its
obligations in this Agreement and the related Subsequent Purchase Agreement),
and CFSC hereby agrees to purchase all right, title and interest of Conseco
Finance in and to the Subsequent Contracts and the Subsequent Collateral
Security described in the related Subsequent Transfer Agreement.

         (b) Conseco Finance shall transfer to CFSC, and CFSC shall acquire, the
Subsequent Contracts and the Subsequent Collateral Security to be transferred on
any Subsequent Transfer Date only upon the satisfaction of each of the following
conditions on or prior to such Subsequent Transfer Date:

         (i)      Conseco Finance shall have provided the Trustee and the
                  relevant rating agencies with an Addition Notice at least five
                  Business Days prior to the Subsequent Transfer Date and shall
                  have provided any information reasonably requested by the
                  Trustee with respect to the Subsequent Contracts;

         (ii)     Conseco Finance shall have delivered the related Contract File
                  for each Subsequent Contract to the Trustee at least two
                  Business Days prior to the Subsequent Transfer Date;

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         (iii)    CFSC shall have delivered to Conseco Finance a duly executed
                  Subsequent Transfer Agreement substantially in the form of
                  Exhibit A hereto (the "Subsequent Transfer Agreement"), which
                  shall include a List of Contracts identifying the related
                  Subsequent Contracts;

         (iv)     as of each Subsequent Transfer Date, as evidenced by delivery
                  of the Subsequent Transfer Instrument, that neither Conseco
                  Finance nor CFSC shall be insolvent nor shall they have been
                  made insolvent by such transfer nor shall they be aware of any
                  pending insolvency;

         (v)      such transfer shall not result in a material adverse tax
                  consequence to the Trust (including the Master REMIC and the
                  Subsidiary REMIC) or the Certificateholders or Class C
                  Certificateholders;

         (vi)     the Pre-Funding Period shall not have ended;

         (vii)    Conseco Finance shall have delivered to CFSC an Officer's
                  Certificate substantially in the form attached to the Pooling
                  and Servicing Agreement as Exhibit E, confirming the
                  satisfaction of each condition precedent and the
                  representations specified in this Section and in Sections
                  3.01, 3.02 and 3.04 of the Pooling and Servicing Agreement;

         (viii)   the Seller and CFSC shall have delivered to the Trustee
                  Opinions of Counsel addressed to S&P, Moody's, Fitch and the
                  Trustee with respect to the transfer of the Subsequent
                  Contracts substantially in the form of the Opinions of Counsel
                  delivered on the Closing Date regarding certain bankruptcy,
                  corporate and tax matters;

         (ix)     each of the representations and warranties contained in
                  Section 3.04 of the Pooling and Servicing Agreement shall be
                  true and correct.

         (c) Conseco Finance covenants to transfer to CFSC pursuant to paragraph
(a) above Subsequent Contracts with an aggregate Cut-off Date Principal Balance
approximately equal to $229.11; provided, however, that the sole remedy of CFSC
with respect to a failure of such covenant shall be to enforce the provisions of
Section 8.07 of the Pooling and Servicing Agreement.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Section 3.01 Representations and Warranties of Conseco Finance. Conseco
Finance makes the following representations and warranties, on which CFSC relies
in purchasing the Initial Contracts and the Initial Collateral Security and in
transferring the Initial Contracts and the Initial Collateral Security to the
Trust under the Pooling and Servicing Agreement. Such representations are made
as of the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Initial Contracts and the Initial Collateral
Security hereunder and the sale, transfer and assignment thereof by CFSC to the
Trust under the Pooling and

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Servicing Agreement. Conseco Finance and CFSC agree that CFSC will assign to the
Trust all of CFSC's rights under this Agreement and that the Trust will
thereafter be entitled to enforce this Agreement against Conseco Finance in the
Trust's own name.

         (a) Representations Regarding Contracts. The representations and
warranties set forth in Sections 3.02, 3.03 and 3.04 of the Pooling and
Servicing Agreement are true and correct.

         (b) Organization and Good Standing. Conseco Finance has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Initial Contracts
and the Initial Collateral Security transferred to CFSC.

         (c) Due Qualification. Conseco Finance is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
its property or the conduct of its business requires such qualification.

         (d) Power and Authority. Conseco Finance has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its terms and their terms, respectively; Conseco Finance has full power and
authority to sell and assign the Initial Contracts and the Initial Collateral
Security to be sold and assigned to and deposited with CFSC hereunder and has
duly authorized such sale and assignment to CFSC by all necessary corporate
action; and the execution, delivery and performance of this Agreement and
Conseco Finance's Related Documents have been duly authorized by Conseco Finance
by all necessary corporate action.

         (e) Valid Sale; Binding Obligations. This Agreement and Conseco
Finance's Related Documents have been duly executed and delivered, shall effect
a valid sale, transfer and assignment of the Initial Contracts and the Initial
Collateral Security, enforceable against Conseco Finance and creditors of and
purchasers from Conseco Finance; and this Agreement and Conseco Finance's
Related Documents constitute legal, valid and binding obligations of Conseco
Finance enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

         (f) No Violation. The consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms of
this Agreement and the Related Documents shall not conflict with, result in any
breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under, the certificate of incorporation
or bylaws of Conseco Finance, or any indenture, agreement, mortgage, deed of
trust or other instrument to which Conseco Finance is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other

                                       6
<PAGE>

than this Agreement and the Pooling and Servicing Agreement, or violate any law,
order, rule or regulation applicable to Conseco Finance of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Conseco Finance or any of its
properties.

         (g) No Proceedings. There are no proceedings or investigations pending
or, to Conseco Finance's knowledge, threatened against Conseco Finance, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Conseco Finance or its
properties

         (i)      asserting the invalidity of this Agreement or any of the
                  Related Documents,

         (ii)     seeking to prevent the issuance of the Certificates or the
                  consummation of any of the transactions contemplated by this
                  Agreement or any of the Related Documents,

         (iii)    seeking any determination or ruling that might materially and
                  adversely affect the performance by Conseco Finance of its
                  obligations under, or the validity or enforceability of, this
                  Agreement or any of the Related Documents or

         (iv)     seeking to affect adversely the federal income tax or other
                  federal, state or local tax attributes of, or seeking to
                  impose any excise, franchise, transfer or similar tax upon,
                  the transfer and acquisition of the Initial Contracts and the
                  Initial Collateral Security hereunder or under the Pooling and
                  Servicing Agreement.

         (h) Chief Executive Office. The chief executive office of Conseco
Finance is located at 1100 Landmark Towers, 345 St. Peter Street, Saint Paul, MN
55102-1639.

         Section 3.02 Representations and Warranties of CFSC. CFSC makes the
following representations and warranties, on which Conseco Finance relies in
selling, assigning, transferring and conveying the Initial Contracts and the
Initial Collateral Security to CFSC hereunder. Such representations are made as
of the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Initial Contracts and the Initial Collateral
Security hereunder and the sale, transfer and assignment thereof by CFSC to the
Trust under the Pooling and Servicing Agreement.

         (a) Organization and Good Standing. CFSC has been duly organized and is
validly existing and in good standing as a corporation under the laws of the
State of Minnesota, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and has, full power,
authority and legal right to acquire and own the Initial Contracts and the
Initial Collateral Security and to transfer the Initial Contracts and the
Initial Collateral Security to the Trust pursuant to the Pooling and Servicing
Agreement.

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         (b) Due Qualification. CFSC is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions where the failure to do so would materially
and adversely affect

         (i)      CFSC's ability to acquire the Initial Contracts or the Initial
                  Collateral Security,

         (ii)     the validity or enforceability of the Initial Contracts and
                  the Initial Collateral Security or

         (iii)    CFSC's ability to perform its obligations hereunder and under
                  the Related Documents.

         (c) Power and Authority. CFSC has the power, authority and legal right
to execute and deliver this Agreement and its Related Documents and to carry out
the terms hereof and thereof and to acquire the Initial Contracts and the
Initial Collateral Security hereunder; and the execution, delivery and
performance of this Agreement and its Related Documents and all of the documents
required pursuant hereto or thereto have been duly authorized by CFSC by all
necessary action.

         (d) No Consent Required. CFSC is not required to obtain the consent of
any other Person, or any consent, license, approval or authorization or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery or performance of this Agreement and
the Related Documents, except for such as have been obtained, effected or made.

         (e) Binding Obligation. This Agreement and each of its Related
Documents constitutes a legal, valid and binding obligation of CFSC, enforceable
against CFSC in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general equitable
principles.

         (f) No Violation. The execution, delivery and performance by CFSC of
this Agreement, the consummation of the transactions contemplated by this
Agreement and the Related Documents and the fulfillment of the terms of this
Agreement and the Related Documents do not and will not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or without
notice or lapse of time) a default under the articles of incorporation or bylaws
of CFSC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which CFSC
is a party or by which CFSC is bound or to which any of its properties are
subject, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument (other than the Pooling and Servicing
Agreement), or violate any law, order, rule or regulation, applicable to CFSC or
its properties, of any federal or state regulatory body or any court,
administrative agency, or other governmental instrumentality having jurisdiction
over CFSC or any of its properties.

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<PAGE>

         (g) No Proceedings. There are no proceedings or investigations pending,
or, to the knowledge of CFSC, threatened against CFSC, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over CFSC or its properties:

         (i)      asserting the invalidity of this Agreement or any of the
                  Related Documents,

         (ii)     seeking to prevent the consummation of any of the transactions
                  contemplated by this Agreement or any of the Related
                  Documents,

         (iii)    seeking any determination or ruling that might materially and
                  adversely affect the performance by CFSC of its obligations
                  under, or the validity or enforceability of, this Agreement or
                  any of the Related Documents or

         (iv)     that may adversely affect the federal or state income tax
                  attributes of, or seeking to impose any excise, franchise,
                  transfer or similar tax upon, the transfer and acquisition of
                  the Initial Contracts and the Initial Collateral Security
                  hereunder or the transfer of the Initial Contracts and the
                  Initial Collateral Security to the Trust pursuant to the
                  Pooling and Servicing Agreement.

         In the event of any breach of a representation and warranty made by
CFSC hereunder, Conseco Finance covenants and agrees that it will not take any
action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the later of

         (i)      the date on which all pass-through certificates or other
                  similar securities issued by the Trust, or a trust or similar
                  vehicle formed by CFSC, have been paid in full, or

         (ii)     all Certificates or other similar securities issued by the
                  Trust, or a trust or similar vehicle formed by CFSC, have been
                  paid in full. Conseco Finance and CFSC agree that damages will
                  not be an adequate remedy for such breach and that this
                  covenant may be specifically enforced by CFSC or by the
                  Trustee on behalf of the Trust.

                                   ARTICLE IV

                          COVENANTS OF CONSECO FINANCE

         Section 4.01 Transfer of Contracts. Conseco Finance has filed a form
UCC-1 financing statement regarding the sale of the Contracts to CFSC, and shall
file continuation statements in respect of such UCC-1 financing statement as if
such financing statement were necessary to perfect such sale. Conseco Finance
shall take any other actions necessary to maintain the perfection of the sale of
the Contracts to CFSC.

                                       9
<PAGE>

         Section 4.02 Costs and Expenses. Conseco Finance shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under each Subsequent Transfer Agreement and its
Related Documents.

         Section 4.03 Indemnification.

         (a) Conseco Finance will defend and indemnify CFSC against any and all
costs, expenses, losses, damages, claims, and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, arising out of or
resulting from any breach of any of Conseco Finance's representations and
warranties contained herein or in any Subsequent Purchase Agreement.
Notwithstanding any other provision of this Agreement, the obligation of Conseco
Finance under this Section shall not terminate upon a Service Transfer pursuant
to Article VII of the Pooling and Servicing Agreement, except that the
obligation of Conseco Finance under this Section shall not relate to the actions
of any subsequent Servicer after a Service Transfer.

         (b) No obligation or liability to any Obligor under any of the
Contracts is intended to be assumed by CFSC under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum extent
permitted and valid under mandatory provisions of law, CFSC expressly disclaims
such assumption.

         (c) Conseco Finance agrees to pay, and to indemnify, defend and hold
harmless CFSC from any taxes which may at any time be asserted with respect to,
and as of the date of, the transfer of the Contracts to CFSC including, without
limitation, any sales, gross receipts, general corporation, personal property
and costs, expenses and reasonable counsel fees in defending against the same,
whether arising by reason of the acts to be performed by Conseco Finance under
this Agreement or imposed against CFSC.

         (d) Indemnification under this Section 4.03 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Originator has made any indemnity payments to CFSC pursuant to this
Section and CFSC thereafter collects any of such amounts from others, CFSC will
repay such amounts collected to Conseco Finance, as the case may be, without
interest.

         Section 4.04 Financial Statement Disclosure. Conseco Finance's
financial statements will disclose that the Initial, Additional and Subsequent
Contracts have been transferred by Conseco Finance to CFSC, and by CFSC to the
Trust, and that these Contracts and any other assets of CFSC are not available
to satisfy claims of Conseco Finance's creditors.

                                   ARTICLE V

                                   REPURCHASES

         Section 5.01 Repurchase of Contracts Upon Breach of Warranty.

         (a) Upon the occurrence of a Repurchase Event, Conseco Finance shall,
unless such breach shall have been cured in all material respects, repurchase
such Contract from the Trust pursuant to Section 3.05 of the Pooling and
Servicing Agreement, subject to the limitation of Section 3.06 of the Pooling
and Servicing Agreement. It is understood and agreed that the

                                       10
<PAGE>

obligation of Conseco Finance to repurchase any Contract as to which a breach
has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against Conseco Finance for such breach available to
CFSC, the Certificateholders or the Trustee on behalf of Certificateholders. The
provisions of this Section 5.01 are intended to grant the Trustee a direct right
against Conseco Finance to demand performance hereunder, and in connection
therewith, Conseco Finance waives any requirement of prior demand against CFSC
with respect to such repurchase obligation. Any such purchase shall take place
in the manner specified in Section 3.06 of the Pooling and Servicing Agreement.
Notwithstanding any other provision of this Agreement, any Subsequent Purchase
Agreement or the Pooling and Servicing Agreement or any Subsequent Transfer
Agreement to the contrary, the obligation of Conseco Finance under this Section
shall not terminate upon a termination of Conseco Finance as Servicer under the
Pooling and Servicing Agreement and shall be performed in accordance with the
terms hereof notwithstanding the failure of the Servicer or CFSC to perform any
of their respective obligations with respect to such Contract under the Pooling
and Servicing Agreement.

         (b) In addition to the foregoing and notwithstanding whether the
related Contract shall have been purchased by Conseco Finance, Conseco Finance
shall indemnify the Trustee, the Trust and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third party claims arising out of the events or facts
giving rise to such Repurchase Events.

         Section 5.02 Reassignment of Purchased Contracts. Upon deposit of the
purchase amount of any Contract repurchased or replaced by Conseco Finance under
Section 5.01, CFSC shall cause the Trustee to take such steps as may be
reasonably requested by Conseco Finance in order to assign to Conseco Finance
all of CFSC's and the Trust's right, title and interest in and to such Contract
and all security and documents and all Collateral Security conveyed to CFSC and
the Trust directly relating thereto, without recourse, representation or
warranty, except as to the absence of liens, charges or encumbrances created by
or arising as a result of actions of CFSC or the Trustee. Such assignment shall
be a sale and assignment outright, and not for security. If, following the
reassignment of a Contract, in any enforcement suit or legal proceeding, it is
held that Conseco Finance may not enforce any such Contract on the ground that
it shall not be a real party in interest or a holder entitled to enforce the
Contract, CFSC and the Trustee shall, at the expense of Conseco Finance, take
such steps as Conseco Finance deems reasonably necessary to enforce the
Contract, including bringing suit in CFSC's or the Trustee's name.

         Section 5.03 Waivers. No failure or delay on the part of CFSC, or the
Trustee as assignee of CFSC, in exercising any power, right or remedy under this
Agreement or under any Subsequent Transfer Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy preclude any other or future exercise thereof or the exercise of any
other power, right or remedy.

                                       11
<PAGE>

                                   ARTICLE VI

                                  MISCELLANEOUS

         Section 6.01 Liability of Conseco Finance. Conseco Finance shall be
liable in accordance herewith only to the extent of the obligations in this
Agreement or in any Subsequent Transfer Agreement specifically undertaken by
Conseco Finance and the representations and warranties of Conseco Finance.

         Section 6.02 Merger or Consolidation of Conseco Finance or CFSC. Any
corporation or other entity

         (i)      into which Conseco Finance or CFSC may be merged or
                  consolidated,

         (ii)     resulting from any merger or consolidation to which Conseco
                  Finance or CFSC is a party or

         (iii)    succeeding to the business of Conseco Finance or CFSC, in the
                  case of CFSC, which corporation has articles of incorporation
                  containing provisions relating to limitations on business and
                  other matters substantively identical to those contained in
                  CFSC's articles of incorporation, provided that in any of the
                  foregoing cases such corporation shall execute an agreement of
                  assumption to perform every obligation of Conseco Finance or
                  CFSC, as the case may be, under this Agreement and each
                  Subsequent Transfer Agreement and, whether or not such
                  assumption agreement is executed, shall be the successor to
                  Conseco Finance or CFSC, as the case may be, hereunder and
                  under each such Subsequent Transfer Agreement (without
                  relieving Conseco Finance or CFSC of its responsibilities
                  hereunder, if it survives such merger or consolidation)
                  without the execution or filing of any document or any further
                  act by any of the parties to this Agreement or each Subsequent
                  Transfer Agreement. Conseco Finance or CFSC shall promptly
                  inform the other party, the Trustee of such merger,
                  consolidation or purchase and assumption. Notwithstanding the
                  foregoing, as a condition to the consummation of the
                  transactions referred to in clauses (i), (ii) and (iii) above,
                  (x) immediately after giving effect to such transaction, no
                  representation or warranty made pursuant to Sections 3.01 and
                  3.02 and this Agreement, or similar representation or warranty
                  made in any Subsequent Transfer Agreement, shall have been
                  breached (for purposes hereof, such representations and
                  warranties shall speak as of the date of the consummation of
                  such transaction),

                  (A)      Conseco Finance or CFSC, as applicable, shall have
                           delivered written notice of such consolidation,
                           merger or purchase and assumption to the relevant
                           rating agencies prior to the consummation of such
                           transaction and shall have delivered to the Trustee
                           an Officer's Certificate and an Opinion of Counsel
                           each

                                       12
<PAGE>

                           stating that such consolidation, merger or succession
                           and such agreement of assumption comply with this
                           Section 6.2 and that all conditions precedent, if
                           any, provided for in this Agreement, or in each
                           Subsequent Transfer Agreement, relating to such
                           transaction have been complied with, and

                  (B)      Conseco Finance or CFSC, as applicable, shall have
                           delivered to the Trustee an Opinion of Counsel,
                           stating that, in the opinion of such counsel, either

                           (1)      all financing statements and continuation
                                    statements and amendments thereto have been
                                    executed and filed that are necessary to
                                    preserve and protect the interest of the
                                    Trustee in the Trust and reciting the
                                    details of the filings or

                           (2)      no such action shall be necessary to
                                    preserve and protect such interest.

         Section 6.03 Limitation on Liability of Conseco Finance and Others.
Conseco Finance shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its obligations under this
Agreement, any Subsequent Transfer Agreement or its Related Documents and that
in its opinion may involve it in any expense or liability.

         Section 6.04 Amendment.

         (a) This Agreement and any Subsequent Transfer Agreement may be amended
by Conseco Finance and CFSC and without the consent of the Trustee or any of the
Certificateholders

         (i)      to cure any ambiguity or

         (ii)     to correct any provisions in this Agreement or any such
                  Subsequent Transfer Agreement; provided, however, that such
                  action shall not, as evidenced by an Opinion of Counsel
                  delivered to the Trustee, adversely affect in any material
                  respect the interests of any Certificateholder.

         (b) This Agreement may also be amended from time to time by Conseco
Finance and CFSC, with the prior written consent of the Trustee and the Holders
of Certificates representing, in the aggregate, 66 2/3% or more of the Aggregate
Cut-off Date Principal Balance, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall

         (i)      increase or reduce in any manner the amount of, or accelerate
                  or delay the timing of, collections of payments on the
                  Contracts or, distributions that are required to be made on
                  any Certificate or

                                       13
<PAGE>

         (ii)     reduce the aforesaid percentage required to consent to any
                  such amendment or any waiver hereunder, without the consent of
                  the Holders of all Certificates then outstanding.

         (c) This Agreement shall not be amended under this Section without the
consent of 100% of the Certificateholders and the Class C Certificateholders if
such amendment would result in the disqualification of the Trust as a REMIC
under the Code.

         (d) Concurrently with the solicitation of any consent pursuant to this
Section 6.04, CFSC shall furnish written notification to S&P, Moody's and Fitch.
Promptly after the execution of any amendment or consent pursuant to this
Section 6.04, CFSC shall furnish written notification of the substance of such
amendment to S&P, Moody's, Fitch, each Certificateholder and the Class C
Certificateholders.

         (e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee, as applicable, may
prescribe, including the establishment of record dates. The consent of any
Holder of a Certificate given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Certificate and of any Certificate issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate.

         Section 6.05 Notices. All demands, notices and communications to
Conseco Finance or CFSC hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt

         (i)      in the case of Conseco Finance, to Conseco Finance Corp., 300
                  Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota
                  55102-1639, Attention: Chief Financial Officer, or such other
                  address as shall be designated by Conseco Finance in a written
                  notice delivered to the other party or to the Trustee, as
                  applicable, or

         (ii)     in case of CFSC, to Conseco Finance Securitizations Corp.,
                  1100 Landmark Towers, 345 St. Peter Street, Saint Paul,
                  Minnesota 55102-1639, Attention: Chief Financial Officer.

         Section 6.06 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.

                                       14
<PAGE>

         Section 6.07 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.

         Section 6.08 Intention of the Parties. The execution and delivery of
this Agreement and of each Subsequent Transfer Agreement shall constitute an
acknowledgment by Conseco Finance and CFSC that they intend that each assignment
and transfer herein and therein contemplated constitute a sale and assignment
outright, and not for security, of the Initial Contracts and the Initial
Collateral Security, and the Subsequent Contracts and Subsequent Collateral
Security, as the case may be, conveying good title thereto free and clear of any
Liens, from Conseco Finance to CFSC, and that the Initial Contracts and the
Initial Collateral Security, and the Subsequent Contracts and Subsequent
Collateral Security shall not be a part of Conseco Finance's estate in the event
of the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to, Conseco
Finance. In the event that such conveyance is determined to be made as security
for a Contract made by CFSC, the Trust or the Certificateholders to Conseco
Finance, the parties intend that Conseco Finance shall have granted to CFSC a
security interest in all of Conseco Finance's right, title and interest in and
to the Initial Contracts and the Initial Collateral Security, and the Subsequent
Contracts and Subsequent Collateral Security, as the case may be, conveyed
pursuant to Section 2.01 hereof or pursuant to any Subsequent Transfer
Agreement, and that this Agreement and each Subsequent Transfer Agreement shall
constitute a security agreement under applicable law.

         Section 6.09 Governing Law. This Agreement shall be construed in
accordance with, the laws of the State of Minnesota without regard to the
principles of conflicts of laws thereof, and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.

         Section 6.10 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

         Section 6.11 Conveyance of the Initial Contracts and the Initial
Collateral Security to the Trust. Conseco Finance acknowledges that CFSC
intends, pursuant to the Pooling and Servicing Agreement, to convey the Initial
Contracts and the Initial Collateral Security, together with its rights under
this Agreement, to the Trust on the date hereof. Conseco Finance acknowledges
and consents to such conveyance and waives any further notice thereof and
covenants and agrees that the representations and warranties of Conseco Finance
contained in this Agreement and the rights of CFSC hereunder are intended to
benefit the Trustee, the Trust, and the Certificateholders. In furtherance of
the foregoing, Conseco Finance covenants and agrees to perform its duties and
obligations hereunder, in accordance with the terms hereof for the benefit of
the Trustee, the Trust, and the Certificateholders and that, notwithstanding
anything to the contrary in this Agreement, Conseco Finance shall be directly
liable to the Trustee and the Trust (notwithstanding any failure by the Servicer
or CFSC to perform its duties

                                       15
<PAGE>

and obligations hereunder or under the Pooling and Servicing Agreement) and that
the Trustee may enforce the duties and obligations of Conseco Finance under this
Agreement against Conseco Finance for the benefit of the Trust and the
Certificateholders.

         Section 6.12 Nonpetition Covenant. Neither CFSC nor Conseco Finance
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Trust
(or, in the case of Conseco Finance, against CFSC) under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust (or CFSC) or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Trust (or CFSC).

                                       16
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Transfer Agreement to
be duly executed by their respective officers as of the day and year first above
written.

                                       CONSECO FINANCE SECURITIZATIONS CORP.,
                                       as Purchaser

                                       By
                                          --------------------------------------
                                          Timothy R. Jacobson
                                          Vice President and Assistant Treasurer

                                       CONSECO FINANCE CORP.,
                                       as Seller

                                       By
                                          --------------------------------------
                                          Timothy R. Jacobson
                                          Vice President and Assistant Treasurer

                                       17
<PAGE>

                                                                      SCHEDULE A

                          SCHEDULE OF INITIAL CONTRACTS

                                  Schedule B-1
<PAGE>

                                                                       EXHIBIT A

                                                                       EXHIBIT A

                                     FORM OF

                          SUBSEQUENT TRANSFER AGREEMENT

                                     between

                      CONSECO FINANCE SECURITIZATIONS CORP.
                                    Purchaser

                                       and

                              CONSECO FINANCE CORP.
                                     Seller

                                   dated as of

                                 ________, 2001
<PAGE>

         SUBSEQUENT TRANSFER AGREEMENT, dated as of ____________, 2001, between
Conseco Finance Securitizations Corp., a Minnesota corporation, as purchaser
("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller ("Conseco
Finance"), pursuant to the Transfer Agreement, dated as of December 1, 2001
between CFSC and Conseco Finance.

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, Conseco Finance and CFSC are parties to a Transfer Agreement,
dated as of December 1, 2001 (as amended or supplemented, the "Transfer
Agreement");

         WHEREAS, pursuant to the Transfer Agreement and this Agreement, CFSC
has agreed to purchase from Conseco Finance and Conseco Finance is transferring
to CFSC the Subsequent Contracts and the Subsequent Collateral Security.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Conseco Finance, intending to be
legally bound, hereby agree as follows:

         1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Transfer
Agreement.

         "Schedule of Subsequent Contracts" means the schedule of all
manufactured housing contracts sold and transferred pursuant to this Agreement
attached hereto as Schedule A, which Schedule of Subsequent Contracts shall
supplement the Schedule of Initial Contracts attached to the Transfer Agreement.

         "Subsequent Cut-off Date" shall mean, with respect to the Subsequent
Contracts conveyed hereby, ____________, 2001.

         "Subsequent Collateral Security" means the Subsequent Collateral
Security conveyed by Conseco Finance to CFSC pursuant to each Subsequent
Transfer Agreement.

         "Subsequent Contracts" means, for purposes of this Agreement, the
Contracts listed in the Schedule of Subsequent Contracts.

         2. Conveyance of the Subsequent Contracts and the Collateral Security.
Subject to the terms and conditions of this Agreement and the Transfer
Agreement, Conseco Finance hereby sells, transfers, assigns, and otherwise
conveys to CFSC without recourse (but without limitation of its obligations in
this Agreement and the Transfer Agreement), and CFSC hereby purchases, all
right, title and interest of Conseco Finance in and to the Subsequent Contracts
and the Subsequent Transfer Agreement, including (i) all the right, title and
interest of Conseco Finance in and to the Subsequent Contracts identified on the
list attached hereto as Exhibit A (the "Subsequent Contracts"), including,
without limitation, all right, title and interest in and to the Collateral
Security and all rights to receive payments on or with respect to the Subsequent
Contracts (other than the principal and interest due on the Subsequent Contracts
before the applicable Cut-off Date), (ii) all rights under every Hazard
Insurance Policy relating to a

                                      A-1
<PAGE>

Manufactured Home securing a Subsequent Contract for the benefit of the creditor
of such Subsequent Contract, (iii) all rights under all FHA/VA Regulations
pertaining to any Subsequent Contract that is an FHA/VA Contract, (iv) the
proceeds from the Errors and Omissions Protection Policy and all rights under
any blanket hazard insurance policy to the extent they relate to the
Manufactured Homes, (v) all documents contained in the Contract Files and the
Land-and-Home Contract Files relating to the Subsequent Contracts, (vi) all
rights of Conseco Finance under the Subsequent Transfer Agreement between
Conseco Finance and CFSC, and (vii) all proceeds and products of the foregoing.
It is the intention of Conseco Finance and CFSC that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Subsequent
Contracts and the Collateral Security from Conseco Finance to CFSC, conveying
good title thereto free and clear of any Liens, and the Subsequent Contracts and
the Collateral Security shall not be part of Conseco Finance's estate in the
event of the filing of a bankruptcy petition by or against Conseco Finance under
any bankruptcy or similar law. Conseco Finance's financial statements will
disclose that the Subsequent Contracts have been transferred by Conseco Finance
to CFSC, and by CFSC to the Trust, and are not available to satisfy claims of
Conseco Finance's creditors.

         3. Purchase Price. Simultaneously with the conveyance of the Subsequent
Contracts and the Collateral Security to CFSC, CFSC has paid or caused to be
paid to or upon the order of Conseco Finance, by wire transfer of immediately
available funds (representing certain proceeds to CFSC from the sale of the
Certificates on deposit in the Pre-Funding Account), the amount of funds as
specified below:

         (i)      Principal Balance of Subsequent Contracts: $________

         (ii)     Proceeds to Conseco Finance:               $________

         4. Representations and Warranties of Conseco Finance. Conseco Finance
makes the following representations and warranties, on which CFSC relies in
purchasing the Subsequent Contracts and the Collateral Security and in
transferring the Subsequent Contracts and the Collateral Security to the Trust
under this Agreement. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Subsequent Contracts and the Collateral Security hereunder, and the sale,
transfer and assignment thereof by CFSC to the Trust hereunder. Conseco Finance
and CFSC agree that CFSC will assign to the Trust all of CFSC's rights under
this Agreement, and that the Trust will thereafter be entitled to enforce this
Agreement against Conseco Finance in the Trust's own name.

         (a) Schedule of Representations. The representations and warranties set
forth in Sections 3.02, 3.03 and 3.04 of the Pooling and Servicing Agreement are
true and correct.

         (b) Organization and Good Standing. Conseco Finance has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Subsequent
Contracts and the Collateral Security transferred to CFSC.

                                      A-2
<PAGE>

         (c) Due Qualification. Conseco Finance is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
its property or the conduct of its business requires such qualification.

         (d) Power and Authority. Conseco Finance has the power and authority to
execute and deliver this Agreement and to carry out its terms and their terms,
respectively; Conseco Finance has full power and authority to sell and assign
the Subsequent Contracts and the Collateral Security to be sold and assigned to
and deposited with CFSC hereunder and has duly authorized such sale and
assignment to CFSC by all necessary corporate action; and the execution,
delivery and performance of this Agreement have been duly authorized by Conseco
Finance by all necessary corporate action.

         (e) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment of
the Subsequent Contracts and the Collateral Security, enforceable against
Conseco Finance and creditors of and purchasers from Conseco Finance; and this
Agreement constitutes the legal, valid and binding obligations of Conseco
Finance enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

         (f) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under, the
certificate of incorporation or bylaws of Conseco Finance, or any indenture,
agreement, mortgage, deed of trust or other instrument to which Conseco Finance
is a party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement and the Transfer Agreement, or violate any law, order, rule or
regulation applicable to Conseco Finance of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Conseco Finance or any of its properties.

         (g) No Proceedings. There are no proceedings or investigations pending
or, to Conseco Finance's knowledge, threatened against Conseco Finance, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Conseco Finance or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent or the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by Conseco Finance of its obligations under, or
the validity or enforceability of, this Agreement, or (iv) seeking to affect
adversely the federal income tax or other federal, state or local tax attributes
of, or seeking to impose any excise, franchise, transfer or similar tax upon,
the transfer and acquisition of the Subsequent Contracts and the Collateral
Security hereunder.

         (h) Insolvency. As of the Subsequent Cut-off Date and the Subsequent
Transfer Date, neither Conseco Finance nor CFSC is insolvent nor will either of
them have been made

                                      A-3
<PAGE>

insolvent after giving effect to the conveyance set forth in Section 2 of this
Agreement, nor are any of them aware of any pending insolvency.

         (i) Chief Executive Office. The chief executive office of Conseco
Finance is located at 1100 Landmark Towers, 345 St. Peter Street, Saint Paul,
Minnesota 55102-1639.

         5. Representations and Warranties of CFSC. CFSC makes the following
representations and warranties, on which Conseco Finance relies in selling,
assigning, transferring and conveying the Subsequent Contracts and the
Collateral Security to CFSC hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Subsequent Contracts and the Collateral Security
hereunder.

         (j) Organization and Good Standing. CFSC has been duly organized and is
validly existing and in good standing as a corporation under the laws of the
State of Minnesota, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and has, full power,
authority and legal right to acquire and own the Subsequent Contracts and the
Collateral Security, and to transfer the Subsequent Contracts and the Collateral
Security to the Trust pursuant to this Agreement.

         (k) Due Qualification. CFSC is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions where the failure to do so would materially
and adversely affect CFSC's ability to acquire the Subsequent Contracts or the
Collateral Security or the validity or enforceability of the Subsequent
Contracts and the Collateral Security or to perform CFSC's obligations
hereunder.

         (l) Power and Authority. CFSC has the power, authority and legal right
to execute and deliver this Agreement and to carry out the terms hereof and to
acquire the Subsequent Contracts and the Collateral Security hereunder; and the
execution, delivery and performance of this Agreement and all of the documents
required pursuant hereto have been duly authorized by CFSC by all necessary
action.

         (m) No Consent Required. CFSC is not required to obtain the consent of
any other Person, or any consent, license, approval or authorization or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery or performance of this Agreement,
except for such as have been obtained, effected or made.

         (n) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of CFSC, enforceable against CFSC in accordance with its
terms, subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other similar
laws and to general equitable principles.

         (o) No Violation. The execution, delivery and performance by CFSC of
this Agreement, the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not and will not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a

                                      A-4
<PAGE>

default under, the articles of incorporation or bylaws of CFSC, or conflict with
or breach any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement, mortgage,
deed of trust or other instrument to which CFSC is a party or by which CFSC is
bound or to which any of its properties are subject, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than the Pooling and Servicing Agreement and the Transfer Agreement), or
violate any law, order, rule or regulation, applicable to CFSC or its
properties, of any federal or state regulatory body, any court, administrative
agency, or other governmental instrumentality having jurisdiction over CFSC or
any of its properties.

         (p) No Proceedings. There are no proceedings or investigations pending,
or, to the knowledge of CFSC, threatened against CFSC, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over CFSC or its properties: (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by CFSC of its obligations under, or the validity or enforceability
of, this Agreement, or (iv) that may adversely affect the federal or state
income tax attributes of, or seeking to impose any excise, franchise, transfer
or similar tax upon, the transfer and acquisition of the Subsequent Contracts
and the Collateral Security to the Trust.

         In the event of any breach of a representation and warranty made by
CFSC hereunder, Conseco Finance covenants and agrees that it will not take any
action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all
pass-through certificates or other similar securities issued by the Trust, or a
trust or similar vehicle formed by CFSC, have been paid in full. Conseco Finance
and CFSC agree that damages will not be an adequate remedy for such breach and
that this covenant may be specifically enforced by CFSC or by the Trustee on
behalf of the Trust.

         6. Conditions Precedent. The obligation of CFSC to acquire the
Subsequent Contracts and the Collateral Security hereunder is subject to the
satisfaction, on or prior to the Subsequent Transfer Date, of the following
conditions precedent:

         (q) Representations and Warranties. Each of the representations and
warranties made by the Conseco Finance in Section 4 of this Agreement and in
Section 3.01 of the Transfer Agreement shall be true and correct as of the date
of this Agreement and as of the Subsequent Transfer Date.

         (r) Transfer Agreement Conditions. Each of the conditions set forth in
Section 2.03(b) of the Transfer Agreement applicable to the conveyance of
Subsequent Contracts and the Collateral Security shall have been satisfied.

         (s) Pooling and Servicing Agreement Representations and Warranties.
Each of the representations and warranties contained in Section 3.04 of the
Pooling and Servicing Agreement shall be true and correct.

                                      A-5
<PAGE>

         (t) Additional Information. Conseco Finance shall have delivered to
CFSC such information as was reasonably requested by CFSC to satisfy itself as
to (i) the accuracy of the representations and warranties set forth in Section 4
of this Agreement and in Section 3.01 of the Transfer Agreement and (ii) the
satisfaction of the conditions set forth in this Section 6.

         7. Ratification of Transfer Agreement. As supplemented by this
Agreement, the Transfer Agreement is in all respects ratified and confirmed and
the Transfer Agreement as so supplemented by this Agreement shall be read, taken
and construed as one and the same instrument.

         8. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Minnesota without regard to the principles of conflicts
of laws thereof, and the obligations, rights and remedies of the parties under
this Agreement shall be determined in accordance with such laws.

         9. Counterparts. For the purposes of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.

         10. Conveyance of the Subsequent Contracts and the Collateral Security
to the Trust. Conseco Finance acknowledges that CFSC intends, pursuant to a
Subsequent Transfer Instrument, to convey the Subsequent Contracts and the
Collateral Security, together with its rights under this Agreement and under the
Transfer Agreement, to the Trust on the date hereof. Conseco Finance
acknowledges and consents to such conveyance and waives any further notice
thereof and covenants and agrees that the representations and warranties of
Conseco Finance contained in this Agreement and the rights of CFSC hereunder and
thereunder are intended to benefit Trustee, the Trust and the
Certificateholders. In furtherance of the foregoing, Conseco Finance covenants
and agrees to perform its duties and obligations hereunder and under this
Agreement and the Transfer Agreement, in accordance with the terms hereof and
thereof for the benefit of the Trustee, the Trust and the Certificateholders and
that, notwithstanding anything to the contrary in this Agreement or in the
Transfer Agreement, Conseco Finance shall be directly liable to the Trustee and
the Trust (notwithstanding any failure by CFSC to perform its duties and
obligations hereunder or under the Pooling and Servicing Agreement or the
Transfer Agreement) and that the Trustee may enforce the duties and obligations
of Conseco Finance under this Agreement and the Transfer Agreement against
Conseco Finance for the benefit of the Trust and the Certificateholders.

                                      A-6
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.

                                       CONSECO FINANCE SECURITIZATIONS CORP.,
                                       as Purchaser

                                       By
                                           =------------------------------------
                                           Name:
                                           Title:

                                       CONSECO FINANCE CORP.,
                                       as Seller

                                       By
                                           -------------------------------------
                                           Name:
                                           Title:

                                      A-7<PAGE>

                                                                   EXHIBIT 10.18

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS.

                    McLAREN STOCK OPTION PURCHASE AGREEMENT

     THIS STOCK OPTION PURCHASE AGREEMENT (the "Agreement") is made as of August
1, 2001, by and between EMM McLAREN INVESTMENT COMPANY, L.L.C., a Michigan
limited liability company located at 1845 Maxwell, Suite 101, Troy, Michigan
48084 ("Investor"), and MCLAREN PERFORMANCE TECHNOLOGIES, INC., a Delaware
corporation with offices at 32233 West Eight Mile Road, Livonia, Michigan 48152
("McLaren").

                                   RECITALS:

     A.   McLaren has offered to Investor, and Investor desires to acquire, the
option to acquire up to One Million Seven Hundred Fifty Thousand (1,750,000)
shares of the common stock of McLaren, par value $0.00001 per share ("Common
Stock"), in accordance with the terms of this Agreement (the "Option Shares").

     B.   McLaren has offered to Investor, and Investor desires to acquire,
warrants to purchase additional shares of Common Stock equal to twenty percent
(20%) of the sum of the Option Shares acquired by Investor on or before October
1, 2001, in accordance with the terms of this Agreement (the "Warrant Shares").

     C.   McLaren and Investor desire to enter into this Agreement to facilitate
the acquisition of the Option Shares and the Warrant Shares (collectively, the
"Shares").

     NOW, THEREFORE, in consideration of the mutual undertakings contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

     1.   Recitals.  The recitals set forth above are hereby incorporated into
          --------
and made part of this Agreement.

     2.   Grant of Option.  McLaren hereby grants to Investor an option to
          ---------------
purchase the Option Shares (the "Option"), on the following terms:

          (a)  Minimum Initial Exercise.   Investor shall have the option to
               ------------------------
purchase not less than Six Hundred Fifty Thousand (650,000) Option Shares (the
"Initial Option Shares") at the Exercise Price (as defined below) on or before
August 21, 2001. In the event that Investor, or Investor's permitted assignee,
has not exercised its option to purchase the Initial Option Shares on or before
August 21, 2001, this Agreement, and Investor's right to purchase any Shares
hereunder, shall immediately terminate.

          (b)  Additional Exercises.  In the event that Investor, and/or
               --------------------
Investor's permitted assignee, has exercised its option to purchase the Initial
Option Shares on or before August ___, 2001, Investor shall have the option to
purchase additional Option Shares at the Exercise Price on or before October 1,
2001; provided, however, that the aggregate number of the Initial Option Shares
and Additional Option Shares purchased by Investor shall not exceed One Million
Seven Hundred Fifty Thousand (1,750,000) Option Shares.

          (c)  Exercise Price.  The exercise price (the "Exercise Price") for
               --------------
each of the Option Shares shall be $0.98 per share.

                                       1
<PAGE>

          (d)  Exercise of the Option.  Investor shall have the right to
               ----------------------
exercise the Option at any time, in whole or in part, in one or more
transactions, during the period commencing on the date hereof and ending at 5:00
p.m., Detroit, Michigan time, on October 1, 2001 (the "Exercise Period"). The
Option may only be exercised during the Exercise Period. The Option shall
terminate with respect to all unexercised Option Shares upon the expiration of
the Exercise Period.

          (e)  Method of Exercising the Option.   The Option may be exercised
               -------------------------------
only by written notice received by the Chief Financial Officer of McLaren. The
notice shall state the irrevocable election to exercise the Option as to any or
all of the Option Shares. Such notice shall be accompanied by payment of the
full Exercise Price for such Option Shares in immediately available funds. Upon
receipt of the appropriate notice and the Exercise Price in immediately
available funds, McLaren will instruct its stock transfer agent to issue that
number of shares equal to the Option Shares to Investor at Investor's address
set forth above.

     3.   Warrants.  On or before October 5, 2001, McLaren shall deliver to
          --------
Investor: (a) a warrant, in the form attached hereto as Exhibit A, to purchase
one-half of the Warrant Shares on or before December 31, 2002, at an exercise
price of $1.00 per share; and (b) a warrant, in the form attached hereto as
Exhibit B, to purchase one-half of the Warrant Shares on or before December 31,
2003, at an exercise price of $2.00 per share (the "Warrants").

     4.   Adjustments to Number of Option Shares.  The number of Option Shares
          --------------------------------------
shall be subject to adjustment from time to time in accordance with this Section
4, including the limitations set forth in Subsection 4(i).

          (a)  Definitions.  Certain capitalized terms used in this Section 4
               -----------
shall have the following meanings:

                    (i)    "Additional Shares of Common Stock" means all shares
of Common Stock issued by McLaren after the date hereof, except (i) the Shares,
and (ii) any shares of Common Stock issued pursuant to the exercise of stock
options issued by McLaren to its employees pursuant to any Company stock option
plans.

                    (ii)   "Convertible Securities" means evidences of
indebtedness, shares of stock or other securities that are convertible into or
exchangeable for shares of Common Stock.

                    (iii)  "Per Share Market Price" means on any particular date
(a) the closing bid price per share of the Common Stock on such date on NASDAQ
or other registered national stock exchange on which the Common Stock is then
listed or if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such date, or
(b) if the Common Stock is not listed then on NASDAQ or any registered national
stock exchange, the closing bid price for a share of Common Stock in the over-
the-counter market, as reported by the OTC Bulletin Board or in the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
McLaren's Board of Directors, or (d) if the Common Stock is not then publicly
traded, the fair market value of a share of Common Stock as determined in good
faith by McLaren's Board of Directors.

          (b)  Stock Dividends, Subdivision and Combination.  In the event that,
               --------------------------------------------
on or before October 1, 2001, McLaren shall: (i) pay a dividend or other
distribution of Common Stock to the holders of its outstanding Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock, or (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock; then the number of Option
Shares shall be adjusted so as to consist of the number of shares of Common
Stock that a record holder of the number of shares of Common Stock comprising
the Option Shares immediately prior to the happening of such event would own or
be entitled to receive after the happening of such event.  The adjustments
required by this subsection shall be made whenever and as often as any specified
event requiring an adjustment shall occur.

          (c)  Certain Other Dividends and Distributions.  In the event that,
               -----------------------------------------
on or before October 1, 2001, McLaren intends to pay a dividend or other
distribution of: (i) cash, or (ii) any evidences of its indebtedness, any other
securities or property of any nature whatsoever (other than cash or Common
Stock); then at least ten (10) business days prior to the record date to
determine shareholders entitled to receive such dividend or distribution,
McLaren

                                       2
<PAGE>

shall give notice of such proposed dividend or distribution to the Investor for
the purpose of enabling the Investor to exercise the Option, and thereby
participate in such dividend or distribution.

          (d)  Issuance of Additional Shares.  In the event that, on or before
               -----------------------------
October 1, 2001, McLaren shall issue or sell any Additional Shares of Common
Stock for a consideration per share less than the Per Share Market Price, then
the number of Option Shares shall be adjusted to that number determined by
multiplying the number of Option Shares immediately prior to such adjustment by
a fraction:  (i) the numerator of which shall be the sum of the number of shares
of Common Stock issued and outstanding, plus the number of Additional Shares of
Common Stock deemed to be outstanding pursuant to Subsection 4(d) immediately
prior to the issuance of such Additional Shares of Common Stock, plus the number
of such Additional Shares of Common Stock so issued; and (ii) the denominator of
which shall be the sum of the number of shares of Common Stock issued and
outstanding, plus the number of Additional Shares of Common Stock deemed to be
outstanding pursuant to Subsection 4(d) immediately prior to the issuance of
such Additional Shares of Common Stock, plus the number of shares of Common
Stock that the aggregate consideration for the total number of such Additional
Shares of Common Stock so issued would purchase at the Per Share Market Price.
The provisions of this Subsection 4(d) shall not apply to any issuance of
Additional Shares of Common Stock for which an adjustment is provided under
Subsection 4(b).  No adjustment of the number of Option Shares shall be made
under this subsection upon the issuance of any Additional Shares of Common Stock
that are issued pursuant to the exercise of any warrants or other subscription
or purchase rights or pursuant to the exercise of any conversion or exchange
rights in any Convertible Securities, if any such adjustment shall previously
have been made upon the issuance of such warrants or other rights or upon the
issuance of such Convertible Securities (or upon the issuance of any warrant or
other rights therefor) pursuant to Subsection 4(d).

          (e)  Issuance of Warrants, Convertible Securities or Other Rights.
               ------------------------------------------------------------
In the event that, on or before October 1, 2001, McLaren shall issue or sell any
warrants or other rights to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Securities (whether or not the rights to
exchange or convert thereunder are immediately exercisable) and the
consideration per share for which Additional Shares of Common Stock may at any
time thereafter be issuable pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities shall be lower than the
Exercise Price, then the number of Option Shares shall be adjusted as provided
in Subsection 4(c) and the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by McLaren for the issuance of such
Additional Shares of Common Stock pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities.  No adjustment of the
number of Option Shares of shall be made under this Subsection 4(e) upon the
issuance of any Convertible Securities that are issued pursuant to the exercise
of any warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to this Subsection 4(e).

          (f)  Superseding Adjustment to Option Shares.  If, at any time after
               ---------------------------------------
any adjustment of the number of Option Shares shall have been made pursuant to
the foregoing Subsection 4(e) on the basis of the issuance of warrants or other
rights or the issuance of other Convertible Securities, or after any new
adjustments of the number of shares comprising the Option Shares shall have been
made pursuant to this Subsection 4(f), (i) such warrants or rights or the right
of conversion or exchange in such other Convertible Securities shall expire, and
a portion of such warrants or rights, or the right of conversion or exchange in
respect of a portion of such other Convertible Securities, as the case may be,
shall not have been exercised, and/or (ii) the consideration per share, for
which shares of Common Stock are issuable pursuant to such warrants or rights or
the terms of such other Convertible Securities, shall be increased for any
reason, then such previous adjustment shall be rescinded and annulled and the
Additional Shares of Common Stock that were deemed to have been issued by virtue
of the computation made in connection with the adjustment so rescinded and
annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
rights or options or other Convertible Securities on the basis of (x) treating
the number of Additional Shares of Common Stock, if any, theretofore actually
issued or issuable pursuant to the previous exercise of such warrants or rights
or such right of conversion or exchange, as having been issued on the date or
dates of such exercise and for the consideration actually received and
receivable therefor, and (y) treating any such warrants or rights or any such
other Convertible Securities that then remain outstanding as having been granted
or issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock are issuable under such warrants or
rights or other Convertible Securities; and, if and to the extent called for by
the foregoing provisions of this Section 4 on the basis aforesaid, a new

                                       3
<PAGE>

adjustment of the number of Option Shares shall be made, which new adjustment
shall supersede the previous adjustment so rescinded and annulled.

          (g)  Other Provisions Applicable to Adjustment Under This Section.
               ------------------------------------------------------------
The following provisions shall be applicable to the making of adjustments of the
number of Option Shares hereinbefore provided for in this Section 4:

                    (i)    Treasury Stock.  The sale or other disposition of any
                           --------------
issued shares of Common Stock owned or held by or for the account of McLaren
shall be deemed an issuance thereof for the purposes of this Section 4.

                    (ii)   Computation of Consideration.  To the extent that any
                           ----------------------------
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for a cash consideration,
the consideration received by McLaren therefor shall be deemed to be the amount
of the cash received by McLaren therefor, or, if such Additional Shares of
Common Stock or Convertible Securities are offered by McLaren for subscription,
the subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price, in any such
case excluding any amounts paid or receivable for accrued interest or accrued
dividends (but without deduction of any compensation, discounts or expenses paid
or incurred by McLaren for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to be the
fair value of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of McLaren (but without deduction of any
compensation, discounts or expenses paid or incurred by McLaren for and in the
underwriting of, or otherwise in connection with, the issuance thereof). In case
any Additional Shares of Common Stock or Convertible Securities or any warrants
or other rights to subscribe for or purchase such Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any merger in
which McLaren issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of McLaren, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. In the event of any consolidation
or merger of McLaren in which McLaren is not the surviving corporation or in the
event of any sale of all or substantially all of the assets of McLaren for stock
or other securities of any corporation, McLaren shall be deemed to have issued a
number of Additional Shares of Common Stock or Convertible Securities of the
other corporation computed on the basis of the actual exchange ratio on which
the transaction was predicated, and the consideration received for such issuance
shall be equal to the fair market value, as determined in good faith by the
Board of Directors of McLaren, on the date of such transaction, of such stock or
securities of the other corporation, and if any such calculation results in
adjustment of the number of Option Shares immediately prior to such merger,
conversion or sale for purposes of this Subsection 4(g), such merger, conversion
or sale shall be deemed to have been made after giving effect to such
adjustment. The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase the same
shall be the consideration received by McLaren for issuing such warrants or
other rights, plus the additional consideration payable to McLaren upon the
exercise of such warrants or other rights. The consideration for any Additional
Shares of Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the consideration received by McLaren for issuing any
warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to McLaren in respect of the
subscription for or purchase of such Convertible Securities, plus the additional
consideration, if any, payable to McLaren upon the exercise of the right of
conversion or exchange in such Convertible Securities.

                    (iii)  Fractional Interests.  In computing adjustments under
                           --------------------
this section, fractional interests in Common Stock shall not be taken into
account.

                    (iv)   When Adjustment Not Required; Abandonment of Plan for
                           -----------------------------------------------------
Dividend and the Like.  If McLaren shall declare a dividend or distribution of,
---------------------
or grant subscription or purchase rights with respect to, Common Stock as
described in this Section 4 and shall, thereafter, legally abandon its plan to
pay or deliver such dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required and any such adjustment
previously made in respect thereof shall be rescinded and annulled.

                                       4
<PAGE>

     (h)  Reorganization, Reclassification, Merger, Consolidation or Disposition
          ----------------------------------------------------------------------
of Assets.  In case McLaren shall reorganize its capital, reclassify its capital
---------
stock, merge or consolidate into another corporation, then the number of shares
of stock purchasable upon exercise of the Option shall be adjusted to consist of
the number of shares of stock or other securities that a record holder of the
number of shares of Common Stock purchasable upon exercise of the Option
immediately prior to such event would own or be entitled to receive immediately
after such event.

     (i)  No Adjustment.  Notwithstanding the foregoing, an adjustment as
          -------------
provided in this Section 4 shall not be made if:  (a) McLaren offers securities
to the public pursuant to a registration statement under the Act, (b) McLaren
issues securities pursuant to the acquisition by McLaren of any product,
technology, know-how or another corporation by merger, purchase of all or
substantially all of the assets, or any other reorganization whereby McLaren
owns over fifty percent (50%) of the voting power of such corporation, (c)
Company issues shares of its capital stock in connection with any stock split,
stock dividend or McLaren issues any shares of common stock of McLaren pursuant
to options, warrants or rights granted before the date hereof, or granted before
or after the date hereof if granted to purchase shares of such common stock in
favor of employees, directors, officers, strategic partners or consultants of
McLaren or any subsidiary thereof pursuant to a stock option plan or agreement
approved by McLaren's Board of Directors; provided that such stock options
thereunder, if granted after the date hereof, are granted at a conversion or
exercise price that McLaren's Board of Directors determines in good faith is not
less than the fair market value of the securities into which they are
exercisable as of the date of grant, or (d) McLaren converts any securities into
Common Stock pursuant to McLaren's Certificate of Incorporation, as amended.

     (j)  Notice of Adjustment.  Whenever McLaren takes any action that causes
          --------------------
the composition of the Option to change under Subsections 4(b) through 4(h),
McLaren shall provide the Investor with written notice of such change and the
number of Option Shares for which the Option is or will become exercisable.  In
addition to any other notice required hereunder, McLaren shall provide the
Investor with a copy of any notice that McLaren is required to provide those
persons holding shares of Common Stock on the same date such persons receive
such notice.

  5. Representations and Warranties of Investor.  Investor hereby acknowledges,
     ------------------------------------------
represents and warrants as follows:

     (a) INVESTOR ACKNOWLEDGES THAT THE SHARES HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.

     (b)  Investor has the financial ability to bear the economic risk of
Investor's investment in the Shares (including a complete loss of Investor's
investment) and has no need for liquidity with respect to Investor's investment
in the Shares.

     (c)  Each of Investor's members has: (i) acknowledged that the Shares
represent substantially all of Investor's assets; (ii) the financial ability to
bear the economic risk of such member's investment in Investor (including a
complete loss of such member's investment in Investor), (iii) and no need for
liquidity with respect to Member's investment in the Investor.

     (d)  Investor, and each of Investor's members, has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of an investment in the Shares and has obtained, in
Investor's reasonable judgment, sufficient information from McLaren to evaluate
the merits and risks of an investment in the Shares.

     (e)  Investor, and each of Investor's members, is an "accredited investor"
as that term is defined in Rule 501(a) promulgated under Regulation D of the
Securities Act (an "Accredited Investor").

     (f)  Investor is acquiring the Shares for its own account and not with a
view to the distribution thereof within the meaning of the Securities Act.

                                       5
<PAGE>

     (g)  The Shares are not being subscribed for by Investor as a result of any
material information about McLaren's business that has not been publicly
disclosed.

     (h)  Investor has been given the opportunity to ask questions of, and
receive answers from, the management of McLaren concerning the terms and
conditions of the Offering and other matters pertaining to Investor's
investment, and has been given the opportunity to obtain such additional
information necessary to verify the accuracy of the information which was
otherwise provided in order for Investor to evaluate the merits and risks of an
investment in the Shares to the extent McLaren possesses such information or can
acquire it without unreasonable effort or expense.

     (i)  Investor, and each of Investor's members, has obtained and reviewed
McLaren's Annual Report on Form 10-KSB for the year ended September 30, 2000,
Quarterly Reports on Form 10-QSB for the quarters ended December 31, 2000, and
March 31, 2001, Current Report on Form 8-K filed December 8, 2000,  Current
Report on Form 8-K filed April 26, 2001, 2000 Annual Report to Shareholders, and
Definitive Proxy Statement for the Annual Meeting of Shareholders held on
February 11, 2001.

     (j)  Investor acknowledges that the representations, warranties,
agreements, undertaking and acknowledgments made by Investor in this Agreement
are made with the intent that they be relied upon by McLaren and its management
in determining Investor's suitability as a purchaser of the Shares.

     (k)  Investor has obtained written representations and warranties similar
to those set forth in this Section 6 from each of Investor's members and has
informed each of its members in writing that such representations and warranties
shall be relied upon by McLaren and its management in determining Investor's
suitability as a purchaser of the Shares.

  6. Warranties and Representations of McLaren.  McLaren represents and warrants
     -----------------------------------------
to Investor that:

     (a) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
McLaren's Board of Directors, and no other corporate proceedings on the part of
McLaren are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.  This Agreement has been duly and validly
executed and delivered by McLaren and constitutes a valid and binding agreement
of McLaren, enforceable against McLaren in accordance with its terms.

     (b) The Shares, upon issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and nonassessable and shall be delivered free and
clear of all claims, liens, encumbrances, security interests and charges of any
nature whatsoever.

  7. Rights as a Shareholder.  Investor shall have no rights of a shareholder
     -----------------------
of McLaren with respect to the Shares until such shares are actually issued to
Investor.  Except as provided in Section 4 or the Warrants, no adjustment shall
be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.

  8. Registration Rights.  On or before October 5, 2001, Investor and McLaren
     -------------------
shall enter into a Registration Rights Agreement in form attached hereto as
Exhibit C providing Investor with certain registration rights with respect to
the Shares.

  9. Miscellaneous.
     -------------

     (a)  Modification.  Neither this Agreement nor any provision hereof shall
          ------------
be modified, discharged or terminated except by an instrument in writing signed
by the party against whom any waiver, change, discharge or termination is
sought.

     (b)  Notices.  Any notice, demand or other communication which any party
          -------
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (i) delivered by a recognized national courier
service to such address as may be given herein, or (ii) delivered personally at
such address.

                                       6
<PAGE>

     (c)  Binding Effect.  Except as otherwise provided herein, this Agreement
          --------------
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.

     (d)  Entire Agreement.  This Agreement contains the entire agreement of the
          ----------------
parties with respect to the subject matter hereof, and there are no
representations, covenants or other agreements except as stated or referred to
herein.

     (e)  Assignability.  None of this Agreement, the Options nor the Warrants
          -------------
are transferable or assignable by either party without the prior written consent
of the other party; provided, however, that Investor may assign all or a portion
of Investor's rights hereunder to any of Investor's members or any entity
controlled by Investor or Investor's members, and further provided that such
assignee is an "Accredited Investor" and, prior to such assignment, Investor
delivers to McLaren a written opinion of counsel reasonably acceptable to
McLaren that such assignment is exempt from registration under the Securities
Act and applicable state law.

     (f)  Applicable Law.  This Agreement shall be governed by and construed in
          --------------
accordance with the laws of the State of Michigan applicable to contracts made
and to be performed entirely within such state without giving effect to the
choice of law provisions of such state.

     (g)  Counterparts; Facsimile Execution.  This Agreement may be executed
          ---------------------------------
through the use of separate signature pages or in any number of counterparts,
and each of such counterparts shall, for all purposes, constitute one agreement
binding on all the parties, notwithstanding that all parties are not signatories
to the same counterpart.  This Agreement may be signed by fax delivery of a
signed signature page to the other party and such fax execution shall be valid
in all respects.

  IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                         McLAREN PERFORMANCE TECHNOLOGIES, INC.

                         By: /s/ Steven Rossi
                            ----------------------------------------------
                              Steven Rossi, President

                         INVESTOR:

                         EMM McLAREN INVESTMENT COMPANY, L.L.C.

                         By:  /s/ Michael L. Garavaglia Member of
                            ----------------------------------------------
                         Its: EMM Management Group LLC
                             ---------------------------------------------
                              its Manager

                                       7
<PAGE>

                                   EXHIBIT A

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SAID ACTS AND ALL OTHER APPLICABLE SECURITIES LAWS
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                              WARRANT TO PURCHASE

                            SHARES OF COMMON STOCK

                                      OF

                    MCLAREN PERFORMANCE TECHNOLOGIES, INC.

Number of Shares:    [10% of Option Shares acquired on or before October 1,
                     2001]
Date of Issuance:    October 5, 2001
Date of Expiration:  December 31, 2002

     FOR VALUE RECEIVED, the undersigned, McLaren Performance Technologies,
Inc., a Delaware corporation (the "Company"), hereby certifies that EMM McLaren
Investment Company, L.L.C., a Michigan limited liability company located at 1845
Maxwell, Suite 101, Troy, Michigan 48084 ("EMM"), is entitled to subscribe for
and purchase, during the period specified in this Warrant, [10% of Option Shares
acquired on or before October 1, 2001] shares of common stock of the Company, at
an exercise price per share equal to the Per Share Exercise Price then in
effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth.

1.  Definitions.  Certain capitalized terms used in this Warrant shall have the
    -----------
following meanings:

     (a)  "Act" means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.

     (b)  "Additional Shares of Common Stock" means all shares of Common Stock
issued by the Company after the date hereof, except (i) the Warrant Stock, and
(ii) any shares of Common Stock issued pursuant to the exercise of stock options
issued by the Company to its employees pursuant to any Company stock option
plans.

     (c)  "Common Stock" means the Company's common stock, $0.00001 par value.

     (d)  "Commission" means the United States Securities and Exchange
Commission or any successor agency.

     (e)  "Convertible Securities" means evidences of indebtedness, shares of
stock or other securities that are convertible into or exchangeable for shares
of Common Stock.

     (f)  "Expiration Date" means December 31, 2002.

     (g)  "Holder" means EMM, or any permitted assignee who may have acquired
this Warrant in accordance with the terms of Section 7.

     (h)  "Issuance Date" means October 5, 2001.
<PAGE>

     (i)  "Per Share Exercise Price" shall mean $1.00 per share.

     (j)  "Per Share Market Price" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on NASDAQ or other
registered national stock exchange on which the Common Stock is then listed or
if there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on NASDAQ or any registered national stock
exchange, the closing bid price for a share of Common Stock in the over-the-
counter market, as reported by the OTC Bulletin Board or in the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
McLaren's Board of Directors, or (d) if the Common Stock is not then publicly
traded, the fair market value of a share of Common Stock as determined in good
faith by the Company's Board of Directors.

     (k)  "Person" means any individual, corporation, partnership, trust,
unincorporated organization and any government, and any political subdivision,
instrumentality or agency thereof.

     (l)  "Registration Rights Agreement" means that certain Registration Rights
Agreement made as of October 5, 2001, by and between the Company and EMM.

     (m)  "Term" shall have the meaning set forth in Section 2.

     (n)  "Warrant Stock" means the [10% of Option Shares acquired on or before
October 1, 2001] shares of Common Stock issuable upon the exercise of this
Warrant, subject to adjustment in accordance with Section 8.

     (o)  "Warrant Office" means 32233 West Eight Mile Road, Livonia, Michigan
48152, or such other office of the Company or of any transfer agent of the
Common Stock in the continental United States as to which written notice has
previously been given to the then current Holder of this Warrant.

2.  Exercisability; Expiration.  The right to subscribe for and purchase not
    --------------------------
less than all of the shares of Warrant Stock represented hereby shall commence
on the Issuance Date and shall expire at 5:00 p.m., Detroit time, on the
Expiration Date (such period being the "Term").  The purchase rights represented
by this Warrant may be exercised in whole at any time and from time to time
during the Term.  Rights to purchase shares under this Warrant shall expire and
may not be exercised after at 5:00 p.m., eastern daylight savings time, on
Expiration Date.

3.  Method of Exercise.  To the extent this Warrant is exercisable, to exercise
    ------------------
this Warrant, the Holder shall deliver to the Company at the Warrant Office in
accordance with Section 13: (a) a Notice of Exercise substantially in the form
attached hereto as Exhibit A duly executed by the Holder, (b) payment of an
amount equal to the product of the Per Share Exercise Price multiplied by the
number of shares of Warrant Stock, which shall be made in cash or by certified
or bank cashier's check payable to the order of the Company, and (c) this
Warrant.  An exercise of this Warrant shall be deemed to be effective upon
receipt by the Company of all of the items described in the preceding sentence.
The Company shall thereafter, as promptly as practicable, cause to be issued and
delivered to the Holder a certificate or certificates representing the Warrant
Stock specified in the Notice of Exercise.  The stock certificate or
certificates so delivered shall be in denominations of shares as may be
specified in said notice and shall be issued in the name of the Holder.  The
Company shall pay all expenses, taxes (excluding capital gains and income taxes)
and other charges payable in connection with the preparation, issuance and
delivery of stock certificates.

4.  Shares to be Fully Paid and Non-Assessable.  The Warrant Stock shall be
    ------------------------------------------
validly issued, fully paid, non- assessable and free from preemptive rights.

5.  No Fractional Shares to be Issued.  The Company shall not be required upon
    ---------------------------------
any exercise of this Warrant to issue a certificate representing any fraction of
a share of Common Stock.
<PAGE>

6.  Legend on Warrant Stock.  Each certificate representing the Warrant Stock,
    -----------------------
unless at the time of exercise such shares are registered under the Act, shall
bear substantially the following legend (and any additional legend required by
any national securities exchanges upon which such shares may, at the time of
such exercise, be listed or under applicable securities laws):  THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  THEY
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED, OR
OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE ISSUER, SUCH TRANSFER WOULD BE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACTS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.

7.  Ownership of Warrant; Restrictions on Transfer.  The Company may deem and
    ----------------------------------------------
treat the Person in whose name this Warrant is registered as the Holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary.  Neither this Warrant, nor any rights hereunder, are
transferable, in whole or in part, without the prior written consent of the
Company.

8.  Adjustments to Number of Shares of Warrant Stock.  The number of shares of
    -------------------------------------------------
Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 8, including the limitations set forth in Subsection 8(h).

     (a)  Stock Dividends, Subdivision and Combination.  In the event that,
          --------------------------------------------
during the Term, the Company shall:  (i) pay a dividend or other distribution of
Common Stock to the holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of shares of Common
Stock, or (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock; then the number of shares of Warrant Stock
shall be adjusted so as to consist of the number of shares of Common Stock that
a record holder of the number of shares of Common Stock comprising the Warrant
Stock immediately prior to the happening of such event would own or be entitled
to receive after the happening of such event.  The adjustments required by this
subsection shall be made whenever and as often as any specified event requiring
an adjustment shall occur.

     (b)  Certain Other Dividends and Distributions.  In the event that, during
          -----------------------------------------
the Term, the Company intends to pay a dividend or other distribution of:  (i)
cash, or (ii) any evidences of its indebtedness, any other securities or
property of any nature whatsoever (other than cash or Common Stock); then at
least ten (10) business days prior to the record date to determine shareholders
entitled to receive such dividend or distribution, the Company shall give notice
of such proposed dividend or distribution to the Holder for the purpose of
enabling the Holder to exercise this Warrant, and thereby participate in such
dividend or distribution.

     (c)  Issuance of Additional Shares. In the event that, during the Term, the
          -----------------------------
Company shall issue or sell any Additional Shares of Common Stock for a
consideration per share less than the Per Share Market Price, then the number of
shares of Warrant Stock shall be adjusted to that number determined by
multiplying the number of shares of Warrant Stock immediately prior to such
adjustment by a fraction:  (i) the numerator of which shall be the sum of the
number of shares of Common Stock issued and outstanding, plus the number of
Additional Shares of Common Stock deemed to be outstanding pursuant to
Subsection 8(d) immediately prior to the issuance of such Additional Shares of
Common Stock, plus the number of such Additional Shares of Common Stock so
issued; and (ii) the denominator of which shall be the sum of the number of
shares of Common Stock issued and outstanding, plus the number of Additional
Shares of Common Stock deemed to be outstanding pursuant to Subsection 8(d)
immediately prior to the issuance of such Additional Shares of Common Stock,
plus the number of shares of Common Stock that the aggregate consideration for
the total number of such Additional Shares of Common Stock so issued would
purchase at the Per Share Market Price.  The provisions of this Subsection 8(c)
shall not apply to any issuance of Additional Shares of Common Stock for which
an adjustment is provided under Subsection 8(a).  No adjustment of the number of
shares of Warrant Stock shall be made under this subsection upon the issuance of
any Additional Shares of Common Stock that are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities, if
any such adjustment shall previously have been made upon the issuance
<PAGE>

of such warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Subsection 8(d).

     (d)  Issuance of Warrants, Convertible Securities or Other Rights.  In the
          ------------------------------------------------------------
event that, during the Term, the Company shall issue or sell any warrants or
other rights to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Securities (whether or not the rights to exchange or convert
thereunder are immediately exercisable) and the consideration per share for
which Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to such warrants or other rights or pursuant to the terms of such
Convertible Securities shall be lower than the Per Share Exercise Price, then
the number of shares of Warrant Stock shall be adjusted as provided in
Subsection 8(c) and the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
Additional Shares of Common Stock pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities.  No adjustment of the
number of shares of Warrant Stock shall be made under this Subsection 8(d) upon
the issuance of any Convertible Securities that are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to this Subsection 8(d).

     (e)  Superseding Adjustment to Warrant Stock.  If, at any time after any
          ----------------------------------------
adjustment of the number of shares of Warrant Stock shall have been made
pursuant to the foregoing Subsection 8(d) on the basis of the issuance of
warrants or other rights or the issuance of other Convertible Securities, or
after any new adjustments of the number of shares comprising the Warrant Stock
shall have been made pursuant to this Subsection 8(e), (i) such warrants or
rights or the right of conversion or exchange in such other Convertible
Securities shall expire, and a portion of such warrants or rights, or the right
of conversion or exchange in respect of a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, and/or (ii) the
consideration per share, for which shares of Common Stock are issuable pursuant
to such warrants or rights or the terms of such other Convertible Securities,
shall be increased for any reason, then such previous adjustment shall be
rescinded and annulled and the Additional Shares of Common Stock that were
deemed to have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation.  Thereupon, a recomputation shall be made
of the effect of such rights or options or other Convertible Securities on the
basis of (x) treating the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise of
such warrants or rights or such right of conversion or exchange, as having been
issued on the date or dates of such exercise and for the consideration actually
received and receivable therefor, and (y) treating any such warrants or rights
or any such other Convertible Securities that then remain outstanding as having
been granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock are issuable under such
warrants or rights or other Convertible Securities; and, if and to the extent
called for by the foregoing provisions of this Section 8 on the basis aforesaid,
a new adjustment of the number of shares of Warrant Stock shall be made, which
new adjustment shall supersede the previous adjustment so rescinded and
annulled.

     (f)  Other Provisions Applicable to Adjustment Under This Section.  The
          ------------------------------------------------------------
following provisions shall be applicable to the making of adjustments of the
number of shares of Warrant Stock hereinbefore provided for in this Section 8:

          (i)  Treasury Stock.  The sale or other disposition of any issued
               --------------
     shares of Common Stock owned or held by or for the account of the Company
     shall be deemed an issuance thereof for the purposes of this Section 8.

          (ii) Computation of Consideration.  To the extent that any Additional
               ----------------------------
     Shares of Common Stock or any Convertible Securities or any warrants or
     other rights to subscribe for or purchase any Additional Shares of Common
     Stock or any Convertible Securities shall be issued for a cash
     consideration, the consideration received by the Company therefor shall be
     deemed to be the amount of the cash received by the Company therefor, or,
     if such Additional Shares of Common Stock or Convertible Securities are
     offered by the Company for subscription, the subscription price, or, if
     such Additional Shares of Common Stock or Convertible Securities are sold
     to underwriters or dealers for public offering without a subscription
     offering, the initial public offering price, in any such case excluding any
     amounts paid or receivable for accrued interest or accrued dividends (but
     without deduction of any compensation, discounts or expenses
<PAGE>

     paid or incurred by the Company for and in the underwriting of, or
     otherwise in connection with, the issuance thereof). To the extent that
     such issuance shall be for a consideration other than cash, then, except as
     herein otherwise expressly provided, the amount of such consideration shall
     be deemed to be the fair value of such consideration at the time of such
     issuance as determined in good faith by the Board of Directors of the
     Company (but without deduction of any compensation, discounts or expenses
     paid or incurred by the Company for and in the underwriting of, or
     otherwise in connection with, the issuance thereof). In case any Additional
     Shares of Common Stock or Convertible Securities or any warrants or other
     rights to subscribe for or purchase such Additional Shares of Common Stock
     or Convertible Securities shall be issued in connection with any merger in
     which the Company issues any securities, the amount of consideration
     therefor shall be deemed to be the fair value, as determined in good faith
     by the Board of Directors of the Company, of such portion of the assets and
     business of the nonsurviving corporation as such Board in good faith shall
     determine to be attributable to such Additional Shares of Common Stock,
     Convertible Securities, warrants or other rights, as the case may be. In
     the event of any consolidation or merger of the Company in which the
     Company is not the surviving corporation or in the event of any sale of all
     or substantially all of the assets of the Company for stock or other
     securities of any corporation, the Company shall be deemed to have issued a
     number of Additional Shares of Common Stock or Convertible Securities of
     the other corporation computed on the basis of the actual exchange ratio on
     which the transaction was predicated, and the consideration received for
     such issuance shall be equal to the fair market value, as determined in
     good faith by the Board of Directors of the Company, on the date of such
     transaction, of such stock or securities of the other corporation, and if
     any such calculation results in adjustment of the number of shares of
     Warrant Stock immediately prior to such merger, conversion or sale for
     purposes of this Subsection 8(f), such merger, conversion or sale shall be
     deemed to have been made after giving effect to such adjustment. The
     consideration for any Additional Shares of Common Stock issuable pursuant
     to any warrants or other rights to subscribe for or purchase the same shall
     be the consideration received by the Company for issuing such warrants or
     other rights, plus the additional consideration payable to the Company upon
     the exercise of such warrants or other rights. The consideration for any
     Additional Shares of Common Stock issuable pursuant to the terms of any
     Convertible Securities shall be the consideration received by the Company
     for issuing any warrants or other rights to subscribe for or purchase such
     Convertible Securities, plus the consideration paid or payable to the
     Company in respect of the subscription for or purchase of such Convertible
     Securities, plus the additional consideration, if any, payable to the
     Company upon the exercise of the right of conversion or exchange in such
     Convertible Securities.

          (iii) Fractional Interests.  In computing adjustments under this
                --------------------
     section, fractional interests in Common Stock shall not be taken into
     account.

          (iv)  When Adjustment Not Required; Abandonment of Plan for Dividend
                --------------------------------------------------------------
     and the Like.  If the Company shall declare a dividend or distribution of,
     ------------
     or grant subscription or purchase rights with respect to, Common Stock as
     described in this Section 8 and shall, thereafter, legally abandon its plan
     to pay or deliver such dividend, distribution, subscription or purchase
     rights, then thereafter no adjustment shall be required and any such
     adjustment previously made in respect thereof shall be rescinded and
     annulled.

     (g)  Reorganization, Reclassification, Merger, Consolidation or Disposition
          ----------------------------------------------------------------------
of Assets.  In case the Company shall reorganize its capital, reclassify its
---------
capital stock, merge or consolidate into another corporation, then the number of
shares of stock purchasable upon exercise of this Warrant shall be adjusted to
consist of the number of shares of stock or other securities that a record
holder of the number of shares of Common Stock purchasable upon exercise of this
Warrant immediately prior to such event would own or be entitled to receive
immediately after such event.

     (h)  No Adjustment.  Notwithstanding the foregoing, an adjustment as
          -------------
provided in this Section 8 shall not be made if:  (a) the Company offers
securities to the public pursuant to a registration statement under the Act, (b)
the Company issues securities pursuant to the acquisition by the Company of any
product, technology, know-how or another corporation by merger, purchase of all
or substantially all of the assets, or any other reorganization whereby the
Company owns over fifty percent (50%) of the voting power of such corporation,
(c) Company issues shares of its capital stock in connection with any stock
split, stock dividend or the Company issues any shares of common stock of the
Company pursuant to options, warrants or rights granted before August 1, 2001,
or granted before or
<PAGE>

after the date hereof if granted to purchase shares of such common stock in
favor of employees, directors, officers, strategic partners or consultants of
the Company or any subsidiary thereof pursuant to a stock option plan or
agreement approved by the Company's Board of Directors; provided that such stock
options thereunder, if granted after the date hereof, are granted at a
conversion or exercise price that the Company's Board of Directors determines in
good faith is not less than the fair market value of the securities into which
they are exercisable as of the date of grant, or (d) the Company converts any
securities into Common Stock pursuant to the Company's Certificate of
Incorporation, as amended.

     (i)  Notice of Adjustment.  Whenever the Company takes any action that
          --------------------
causes the composition of the Warrant Stock to change under Subsections 8(a)
through 8(g), the Company shall provide the Holder with written notice, in
accordance with Section 13, of such change and the number of shares of Warrant
Stock for which this Warrant is or will become exercisable.  In addition to any
other notice required hereunder, the Company shall provide the Holder with a
copy of any notice that the Company is required to provide those Persons holding
shares of Common Stock on the same date such persons receive such notice.

9.  Certain Covenants of the Company.  The Company has taken all action
    --------------------------------
necessary to authorize the issuance of this Warrant and the issuance of shares
of Common Stock upon exercise hereof.  The Company covenants and agrees that it
will reserve and set apart and have at all times, free from preemptive rights, a
number of shares of authorized but unissued Common Stock or other securities
deliverable upon the exercise of this Warrant from time to time sufficient to
enable it at any time to fulfill all its obligations hereunder.

10.  Entire Agreement.  This Warrant contains the entire agreement between the
     ----------------
Holder and the Company with respect to the Warrant Stock and supersedes all
prior arrangements or understandings with respect thereto.

11.  Waiver and Amendment.  Any term or provision of this Warrant may be waived
     --------------------
at any time by the party that is entitled to the benefits thereof, and any term
or provision of this Warrant may be amended or supplemented at any time by
agreement of the Holder and the Company, except that any waiver of any term or
condition, or any amendment or supplementation, of this Warrant must be in
writing.  A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition of this Warrant.

12.  Illegality.  In the event that any one or more of the provisions contained
     ----------
in this Warrant shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in any other respect and the remaining provisions of this Warrant
shall not, at the election of the party for whom the benefit of the provision
exists, be in any way impaired.

13.  Notices.  Any notice or other document required or permitted to be given or
     -------
delivered to the Holder shall be delivered personally, or sent by certified or
registered mail, to the Holder at the last address shown on the books of the
Company maintained at the Warrant Office for the registration of the Warrant or
at any more recent address of which any Holder shall have notified the Company
in writing in accordance with this Section 13.  Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
personally, or sent by certified or registered mail, to the Warrant Office,
attention: Chief Financial Officer.  Any notice given by either party hereunder
shall be deemed to be effective upon receipt.

14.  Limitation of Liability; Not A Shareholder.  No provision of this Warrant
     ------------------------------------------
shall be construed as conferring upon the Holder the right to vote, consent,
receive dividends or receive notice other than as herein expressly provided in
respect of meetings of shareholders for the election of directors of the Company
or any other matter whatsoever as a shareholder of the Company.  No provision
hereof, in the absence of affirmative action by the Holder to purchase Warrant
Stock, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of such Holder for the purchase price of any
Warrant Stock or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

15.  Loss, Destruction, Etc. of Warrant.  Upon receipt of evidence satisfactory
     ----------------------------------
to the Company of the loss, theft, mutilation or destruction of the Warrant, and
in the case of any such loss, theft or destruction, upon delivery of a bond of
indemnity in such form and amount as shall be reasonably satisfactory to the
Company, or in the event of such mutilation, upon surrender and cancellation of
the Warrant, the Company shall make and deliver a new
<PAGE>

warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section 15 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.

     IN WITNESS WHEREOF, the Company has executed this Warrant as of the day and
year first above written.

                             MCLAREN PERFORMANCE TECHNOLOGIES, INC.

                             By:_________________________________
                                     Steven Rossi, President
<PAGE>

                                   EXHIBIT A

                              NOTICE OF EXERCISE

Dated: _______________

     The undersigned hereby irrevocably elects to exercise its right to purchase
[10% of Option Shares acquired on or before October 1, 2001] shares of the
common stock, $0.00001 par value per share, of McLaren Performance Technologies,
Inc., such right being pursuant to a Warrant dated October 5, 2001, as issued to
EMM McLaren Investment Company, L.L.C. (the "Warrant"), and remits herewith the
sum of [$1.00 x 10% of Option Shares acquired on or before October 1, 2001]
dollars in payment for same in accordance with the terms of the Warrant.

INSTRUCTIONS FOR REGISTRATION OF STOCK (Please typewrite or print in block
letters)

Name:      __________________________________________________

Address:   __________________________________________________
           __________________________________________________
           __________________________________________________

Signature: __________________________________________________
<PAGE>

                                   EXHIBIT B

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SAID ACTS AND ALL OTHER APPLICABLE SECURITIES LAWS
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                              WARRANT TO PURCHASE

                            SHARES OF COMMON STOCK

                                      OF

                    MCLAREN PERFORMANCE TECHNOLOGIES, INC.

Number of Shares:   [10% of Option Shares acquired on or before October 1, 2001]
Date of Issuance:   October 5, 2001
Date of Expiration: December 31, 2003

     FOR VALUE RECEIVED, the undersigned, McLaren Performance Technologies,
Inc., a Delaware corporation (the "Company"), hereby certifies that EMM McLaren
Investment Company, L.L.C., a Michigan limited liability company located at 1845
Maxwell, Suite 101, Troy, Michigan  48084 ("EMM"), is entitled to subscribe for
and purchase, during the period specified in this Warrant, [10% of Option Shares
acquired on or before October 1, 2001] shares of common stock of the Company, at
an exercise price per share equal to the Per Share Exercise Price then in
effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth.

1.  Definitions.  Certain capitalized terms used in this Warrant shall have the
    -----------
following meanings:

     (a) "Act" means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.

     (b) "Additional Shares of Common Stock" means all shares of Common Stock
issued by the Company after the date hereof, except (i) the Warrant Stock, and
(ii) any shares of Common Stock issued pursuant to the exercise of stock options
issued by the Company to its employees pursuant to any Company stock option
plans.

     (c) "Common Stock" means the Company's common stock, $0.00001 par value.

     (d) "Commission" means the United States Securities and Exchange Commission
or any successor agency.

     (e) "Convertible Securities" means evidences of indebtedness, shares of
stock or other securities that are convertible into or exchangeable for shares
of Common Stock.

     (f) "Expiration Date" means December 31, 2003.

     (g) "Holder" means EMM, or any permitted assignee who may have acquired
this Warrant in accordance with the terms of Section 7.

     (h) "Issuance Date" means October 5, 2001.
<PAGE>

     (i) "Per Share Exercise Price" shall mean $2.00 per share.

     (j) "Per Share Market Price" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on NASDAQ or other
registered national stock exchange on which the Common Stock is then listed or
if there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on NASDAQ or any registered national stock
exchange, the closing bid price for a share of Common Stock in the over-the-
counter market, as reported by the OTC Bulletin Board or in the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
McLaren's Board of Directors, or (d) if the Common Stock is not then publicly
traded, the fair market value of a share of Common Stock as determined in good
faith by the Company's Board of Directors.

     (k) "Person" means any individual, corporation, partnership, trust,
unincorporated organization and any government, and any political subdivision,
instrumentality or agency thereof.

     (l) "Registration Rights Agreement" means that certain Registration Rights
Agreement made as of October 5, 2001, by and between the Company and EMM.

     (m) "Term" shall have the meaning set forth in Section 2.

     (n) "Warrant Stock" means the [10% of Option Shares acquired on or before
October 1, 2001] shares of Common Stock issuable upon the exercise of this
Warrant, subject to adjustment in accordance with Section 8.

     (o) "Warrant Office" means 32233 West Eight Mile Road, Livonia, Michigan
48152, or such other office of the Company or of any transfer agent of the
Common Stock in the continental United States as to which written notice has
previously been given to the then current Holder of this Warrant.

2.  Exercisability; Expiration.  The right to subscribe for and purchase not
    --------------------------
less than all of the shares of Warrant Stock represented hereby shall commence
on the Issuance Date and shall expire at 5:00 p.m., Detroit time, on the
Expiration Date (such period being the "Term").  The purchase rights represented
by this Warrant may be exercised in whole at any time and from time to time
during the Term.  Rights to purchase shares under this Warrant shall expire and
may not be exercised after at 5:00 p.m., eastern daylight savings time, on
Expiration Date.

3.  Method of Exercise.  To the extent this Warrant is exercisable, to exercise
    ------------------
this Warrant, the Holder shall deliver to the Company at the Warrant Office in
accordance with Section 13: (a) a Notice of Exercise substantially in the form
attached hereto as Exhibit A duly executed by the Holder, (b) payment of an
amount equal to the product of the Per Share Exercise Price multiplied by the
number of shares of Warrant Stock, which shall be made in cash or by certified
or bank cashier's check payable to the order of the Company, and (c) this
Warrant.  An exercise of this Warrant shall be deemed to be effective upon
receipt by the Company of all of the items described in the preceding sentence.
The Company shall thereafter, as promptly as practicable, cause to be issued and
delivered to the Holder a certificate or certificates representing the Warrant
Stock specified in the Notice of Exercise.  The stock certificate or
certificates so delivered shall be in denominations of shares as may be
specified in said notice and shall be issued in the name of the Holder.  The
Company shall pay all expenses, taxes (excluding capital gains and income taxes)
and other charges payable in connection with the preparation, issuance and
delivery of stock certificates.

4.  Shares to be Fully Paid and Non-Assessable.  The Warrant Stock shall be
    ------------------------------------------
validly issued, fully paid, non- assessable and free from preemptive rights.

5.  No Fractional Shares to be Issued.  The Company shall not be required upon
    ---------------------------------
any exercise of this Warrant to issue a certificate representing any fraction of
a share of Common Stock.
<PAGE>

6.  Legend on Warrant Stock.  Each certificate representing the Warrant Stock,
    -----------------------
unless at the time of exercise such shares are registered under the Act, shall
bear substantially the following legend (and any additional legend required by
any national securities exchanges upon which such shares may, at the time of
such exercise, be listed or under applicable securities laws):  THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  THEY
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED, OR
OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE ISSUER, SUCH TRANSFER WOULD BE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACTS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.

7.  Ownership of Warrant; Restrictions on Transfer.  The Company may deem and
    ----------------------------------------------
treat the Person in whose name this Warrant is registered as the Holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary.  Neither this Warrant, nor any rights hereunder, are
transferable, in whole or in part, without the prior written consent of the
Company.

8.  Adjustments to Number of Shares of Warrant Stock.  The number of shares of
    ------------------------------------------------
Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 8, including the limitations set forth in Subsection 8(h).

     (a) Stock Dividends, Subdivision and Combination.  In the event that,
         --------------------------------------------
during the Term, the Company shall:  (i) pay a dividend or other distribution of
Common Stock to the holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of shares of Common
Stock, or (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock; then the number of shares of Warrant Stock
shall be adjusted so as to consist of the number of shares of Common Stock that
a record holder of the number of shares of Common Stock comprising the Warrant
Stock immediately prior to the happening of such event would own or be entitled
to receive after the happening of such event.  The adjustments required by this
subsection shall be made whenever and as often as any specified event requiring
an adjustment shall occur.

     (b) Certain Other Dividends and Distributions.  In the event that, during
         -----------------------------------------
the Term, the Company intends to pay a dividend or other distribution of:  (i)
cash, or (ii) any evidences of its indebtedness, any other securities or
property of any nature whatsoever (other than cash or Common Stock); then at
least ten (10) business days prior to the record date to determine shareholders
entitled to receive such dividend or distribution, the Company shall give notice
of such proposed dividend or distribution to the Holder for the purpose of
enabling the Holder to exercise this Warrant, and thereby participate in such
dividend or distribution.

     (c) Issuance of Additional Shares.  In the event that, during the Term, the
         -----------------------------
Company shall issue or sell any Additional Shares of Common Stock for a
consideration per share less than the Per Share Market Price, then the number of
shares of Warrant Stock shall be adjusted to that number determined by
multiplying the number of shares of Warrant Stock immediately prior to such
adjustment by a fraction:  (i) the numerator of which shall be the sum of the
number of shares of Common Stock issued and outstanding, plus the number of
Additional Shares of Common Stock deemed to be outstanding pursuant to
Subsection 8(d) immediately prior to the issuance of such Additional Shares of
Common Stock, plus the number of such Additional Shares of Common Stock so
issued; and (ii) the denominator of which shall be the sum of the number of
shares of Common Stock issued and outstanding, plus the number of Additional
Shares of Common Stock deemed to be outstanding pursuant to Subsection 8(d)
immediately prior to the issuance of such Additional Shares of Common Stock,
plus the number of shares of Common Stock that the aggregate consideration for
the total number of such Additional Shares of Common Stock so issued would
purchase at the Per Share Market Price.  The provisions of this Subsection 8(c)
shall not apply to any issuance of Additional Shares of Common Stock for which
an adjustment is provided under Subsection 8(a).  No adjustment of the number of
shares of Warrant Stock shall be made under this subsection upon the issuance of
any Additional Shares of Common Stock that are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance
<PAGE>

of such Convertible Securities (or upon the issuance of any warrant or other
rights therefor) pursuant to Subsection 8(d).

     (d) Issuance of Warrants, Convertible Securities or Other Rights.  In the
         ------------------------------------------------------------
event that, during the Term, the Company shall issue or sell any warrants or
other rights to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Securities (whether or not the rights to exchange or convert
thereunder are immediately exercisable) and the consideration per share for
which Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to such warrants or other rights or pursuant to the terms of such
Convertible Securities shall be lower than the Per Share Exercise Price, then
the number of shares of Warrant Stock shall be adjusted as provided in
Subsection 8(c) and the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
Additional Shares of Common Stock pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities.  No adjustment of the
number of shares of Warrant Stock shall be made under this Subsection 8(d) upon
the issuance of any Convertible Securities that are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to this Subsection 8(d).

     (e) Superseding Adjustment to Warrant Stock.  If, at any time after any
         ---------------------------------------
adjustment of the number of shares of Warrant Stock shall have been made
pursuant to the foregoing Subsection 8(d) on the basis of the issuance of
warrants or other rights or the issuance of other Convertible Securities, or
after any new adjustments of the number of shares comprising the Warrant Stock
shall have been made pursuant to this Subsection 8(e), (i) such warrants or
rights or the right of conversion or exchange in such other Convertible
Securities shall expire, and a portion of such warrants or rights, or the right
of conversion or exchange in respect of a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, and/or (ii) the
consideration per share, for which shares of Common Stock are issuable pursuant
to such warrants or rights or the terms of such other Convertible Securities,
shall be increased for any reason, then such previous adjustment shall be
rescinded and annulled and the Additional Shares of Common Stock that were
deemed to have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation.  Thereupon, a recomputation shall be made
of the effect of such rights or options or other Convertible Securities on the
basis of (x) treating the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise of
such warrants or rights or such right of conversion or exchange, as having been
issued on the date or dates of such exercise and for the consideration actually
received and receivable therefor, and (y) treating any such warrants or rights
or any such other Convertible Securities that then remain outstanding as having
been granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock are issuable under such
warrants or rights or other Convertible Securities; and, if and to the extent
called for by the foregoing provisions of this Section 8 on the basis aforesaid,
a new adjustment of the number of shares of Warrant Stock shall be made, which
new adjustment shall supersede the previous adjustment so rescinded and
annulled.

     (f) Other Provisions Applicable to Adjustment Under This Section.  The
         ------------------------------------------------------------
following provisions shall be applicable to the making of adjustments of the
number of shares of Warrant Stock hereinbefore provided for in this Section 8:

         (i)   Treasury Stock.  The sale or other disposition of any issued
               --------------
     shares of Common Stock owned or held by or for the account of the Company
     shall be deemed an issuance thereof for the purposes of this Section 8.

         (ii)  Computation of Consideration.  To the extent that any Additional
               ----------------------------
     Shares of Common Stock or any Convertible Securities or any warrants or
     other rights to subscribe for or purchase any Additional Shares of Common
     Stock or any Convertible Securities shall be issued for a cash
     consideration, the consideration received by the Company therefor shall be
     deemed to be the amount of the cash received by the Company therefor, or,
     if such Additional Shares of Common Stock or Convertible Securities are
     offered by the Company for subscription, the subscription price, or, if
     such Additional Shares of Common Stock or Convertible Securities are sold
     to underwriters or dealers for public offering without a subscription
     offering, the initial public offering price, in any such case excluding any
     amounts paid or receivable for accrued interest or accrued dividends (but
     without deduction of any compensation, discounts or expenses
<PAGE>

     paid or incurred by the Company for and in the underwriting of, or
     otherwise in connection with, the issuance thereof). To the extent that
     such issuance shall be for a consideration other than cash, then, except as
     herein otherwise expressly provided, the amount of such consideration shall
     be deemed to be the fair value of such consideration at the time of such
     issuance as determined in good faith by the Board of Directors of the
     Company (but without deduction of any compensation, discounts or expenses
     paid or incurred by the Company for and in the underwriting of, or
     otherwise in connection with, the issuance thereof). In case any Additional
     Shares of Common Stock or Convertible Securities or any warrants or other
     rights to subscribe for or purchase such Additional Shares of Common Stock
     or Convertible Securities shall be issued in connection with any merger in
     which the Company issues any securities, the amount of consideration
     therefor shall be deemed to be the fair value, as determined in good faith
     by the Board of Directors of the Company, of such portion of the assets and
     business of the nonsurviving corporation as such Board in good faith shall
     determine to be attributable to such Additional Shares of Common Stock,
     Convertible Securities, warrants or other rights, as the case may be. In
     the event of any consolidation or merger of the Company in which the
     Company is not the surviving corporation or in the event of any sale of all
     or substantially all of the assets of the Company for stock or other
     securities of any corporation, the Company shall be deemed to have issued a
     number of Additional Shares of Common Stock or Convertible Securities of
     the other corporation computed on the basis of the actual exchange ratio on
     which the transaction was predicated, and the consideration received for
     such issuance shall be equal to the fair market value, as determined in
     good faith by the Board of Directors of the Company, on the date of such
     transaction, of such stock or securities of the other corporation, and if
     any such calculation results in adjustment of the number of shares of
     Warrant Stock immediately prior to such merger, conversion or sale for
     purposes of this Subsection 8(f), such merger, conversion or sale shall be
     deemed to have been made after giving effect to such adjustment. The
     consideration for any Additional Shares of Common Stock issuable pursuant
     to any warrants or other rights to subscribe for or purchase the same shall
     be the consideration received by the Company for issuing such warrants or
     other rights, plus the additional consideration payable to the Company upon
     the exercise of such warrants or other rights. The consideration for any
     Additional Shares of Common Stock issuable pursuant to the terms of any
     Convertible Securities shall be the consideration received by the Company
     for issuing any warrants or other rights to subscribe for or purchase such
     Convertible Securities, plus the consideration paid or payable to the
     Company in respect of the subscription for or purchase of such Convertible
     Securities, plus the additional consideration, if any, payable to the
     Company upon the exercise of the right of conversion or exchange in such
     Convertible Securities.

          (iii)  Fractional Interests.  In computing adjustments under this
                 --------------------
     section, fractional interests in Common Stock shall not be taken into
     account.

          (iv)   When Adjustment Not Required; Abandonment of Plan for Dividend
                 --------------------------------------------------------------
     and the Like.  If the Company shall declare a dividend or distribution of,
     ------------
     or grant subscription or purchase rights with respect to, Common Stock as
     described in this Section 8 and shall, thereafter, legally abandon its plan
     to pay or deliver such dividend, distribution, subscription or purchase
     rights, then thereafter no adjustment shall be required and any such
     adjustment previously made in respect thereof shall be rescinded and
     annulled.

     (g)  Reorganization, Reclassification, Merger, Consolidation or Disposition
          ----------------------------------------------------------------------
of Assets.  In case the Company shall reorganize its capital, reclassify its
---------
capital stock, merge or consolidate into another corporation, then the number of
shares of stock purchasable upon exercise of this Warrant shall be adjusted to
consist of the number of shares of stock or other securities that a record
holder of the number of shares of Common Stock purchasable upon exercise of this
Warrant immediately prior to such event would own or be entitled to receive
immediately after such event.

     (h)  No Adjustment.  Notwithstanding the foregoing, an adjustment as
          -------------
provided in this Section 8 shall not be made if:  (a) the Company offers
securities to the public pursuant to a registration statement under the Act, (b)
the Company issues securities pursuant to the acquisition by the Company of any
product, technology, know-how or another corporation by merger, purchase of all
or substantially all of the assets, or any other reorganization whereby the
Company owns over fifty percent (50%) of the voting power of such corporation,
(c) Company issues shares of its capital stock in connection with any stock
split, stock dividend or the Company issues any shares of common stock of the
Company pursuant to options, warrants or rights granted before August 1, 2001,
or granted before or
<PAGE>

after the date hereof if granted to purchase shares of such common stock in
favor of employees, directors, officers, strategic partners or consultants of
the Company or any subsidiary thereof pursuant to a stock option plan or
agreement approved by the Company's Board of Directors; provided that such stock
options thereunder, if granted after the date hereof, are granted at a
conversion or exercise price that the Company's Board of Directors determines in
good faith is not less than the fair market value of the securities into which
they are exercisable as of the date of grant, or (d) the Company converts any
securities into Common Stock pursuant to the Company's Certificate of
Incorporation, as amended.

     (i) Notice of Adjustment.  Whenever the Company takes any action that
         --------------------
causes the composition of the Warrant Stock to change under Subsections 8(a)
through 8(g), the Company shall provide the Holder with written notice, in
accordance with Section 13, of such change and the number of shares of Warrant
Stock for which this Warrant is or will become exercisable.  In addition to any
other notice required hereunder, the Company shall provide the Holder with a
copy of any notice that the Company is required to provide those Persons holding
shares of Common Stock on the same date such persons receive such notice.

9.  Certain Covenants of the Company.  The Company has taken all action
    --------------------------------
necessary to authorize the issuance of this Warrant and the issuance of shares
of Common Stock upon exercise hereof.  The Company covenants and agrees that it
will reserve and set apart and have at all times, free from preemptive rights, a
number of shares of authorized but unissued Common Stock or other securities
deliverable upon the exercise of this Warrant from time to time sufficient to
enable it at any time to fulfill all its obligations hereunder.

10.  Entire Agreement.  This Warrant contains the entire agreement between the
     ----------------
Holder and the Company with respect to the Warrant Stock and supersedes all
prior arrangements or understandings with respect thereto.

11.  Waiver and Amendment.  Any term or provision of this Warrant may be waived
     --------------------
at any time by the party that is entitled to the benefits thereof, and any term
or provision of this Warrant may be amended or supplemented at any time by
agreement of the Holder and the Company, except that any waiver of any term or
condition, or any amendment or supplementation, of this Warrant must be in
writing.  A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition of this Warrant.

12.  Illegality.  In the event that any one or more of the provisions contained
     ----------
in this Warrant shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in any other respect and the remaining provisions of this Warrant
shall not, at the election of the party for whom the benefit of the provision
exists, be in any way impaired.

13.  Notices.  Any notice or other document required or permitted to be given or
     -------
delivered to the Holder shall be delivered personally, or sent by certified or
registered mail, to the Holder at the last address shown on the books of the
Company maintained at the Warrant Office for the registration of the Warrant or
at any more recent address of which any Holder shall have notified the Company
in writing in accordance with this Section 13.  Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
personally, or sent by certified or registered mail, to the Warrant Office,
attention: Chief Financial Officer.  Any notice given by either party hereunder
shall be deemed to be effective upon receipt.

14.  Limitation of Liability; Not A Shareholder.  No provision of this Warrant
     ------------------------------------------
shall be construed as conferring upon the Holder the right to vote, consent,
receive dividends or receive notice other than as herein expressly provided in
respect of meetings of shareholders for the election of directors of the Company
or any other matter whatsoever as a shareholder of the Company.  No provision
hereof, in the absence of affirmative action by the Holder to purchase Warrant
Stock, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of such Holder for the purchase price of any
Warrant Stock or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

15.  Loss, Destruction, Etc. of Warrant.  Upon receipt of evidence satisfactory
     ----------------------------------
to the Company of the loss, theft, mutilation or destruction of the Warrant, and
in the case of any such loss, theft or destruction, upon delivery of a bond of
indemnity in such form and amount as shall be reasonably satisfactory to the
Company, or in the event of such mutilation, upon surrender and cancellation of
the Warrant, the Company shall make and deliver a new warrant, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Warrant.  Any Warrant issued
under the
<PAGE>

provisions of this Section 15 in lieu of any Warrant alleged to be lost,
destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an
original contractual obligation on the part of the Company.

     IN WITNESS WHEREOF, the Company has executed this Warrant as of the day and
year first above written.

                         MCLAREN PERFORMANCE TECHNOLOGIES, INC.

                         By:_________________________________
                                Steven Rossi, President
<PAGE>

                                   EXHIBIT A

                              NOTICE OF EXERCISE

Dated: _______________

     The undersigned hereby irrevocably elects to exercise its right to purchase
[10% of Option Shares acquired on or before October 1, 2001] shares of the
common stock, $0.00001 par value per share, of McLaren Performance Technologies,
Inc., such right being pursuant to a Warrant dated October 5, 2001, as issued to
EMM McLaren Investment Company, L.L.C. (the "Warrant"), and remits herewith the
sum of [$2.00 x 10% of Option Shares acquired on or before October 1, 2001]
dollars in payment for same in accordance with the terms of the Warrant.

INSTRUCTIONS FOR REGISTRATION OF STOCK (Please typewrite or print in block
letters)

Name:       _______________________________________________________

Address:    _______________________________________________________
            _______________________________________________________
            _______________________________________________________

Signature:  _______________________________________________________
<PAGE>

                                   EXHIBIT C

                         REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of the 5th
day of October, 2001, by and between McLAREN PERFORMANCE TECHNOLOGIES, INC., a
Delaware corporation located at 32233 West Eight Mile Road, Livonia, Michigan
48152 (the "Company"), and EMM McLAREN INVESTMENT COMPANY, L.L.C., a Michigan
limited liability company located at 1845 Maxwell, Suite 101, Troy, Michigan
48084 (the "Purchaser").

                                   RECITALS:

  A.  The Purchaser is the purchaser of [Option Shares acquired on or before
October 1, 2001] shares of Common Stock (as defined below) pursuant to a certain
McLaren Stock Option Purchase Agreement dated as of August 1, 2001, by and
between the Purchaser and the Company (the "Purchase Agreement").

  B.  The Purchaser has the right to purchase an additional [20% of Option
Shares acquired on or before October 1, 2001] shares of Common Stock pursuant to
two Warrants each dated as of October 5, 2001, issued to the Purchaser by the
Company (the "Warrants").

  C.  The Company and the Purchaser desire to set forth the registration rights
to be granted to the Purchaser.

  NOW, THEREFORE, in consideration of the mutual promises set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

  1.  Definitions.  As used in this Agreement, the following terms shall have
      -----------
the following respective meanings:

"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

"Common Stock" shall mean the common stock of the Company, $0.00001 par value.

The terms "register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

"Registrable Securities" means the shares of Common Stock purchased by the
Purchaser pursuant to the terms of the Subscription Agreement, and the shares of
Common Stock issuable to Purchaser upon exercise of the Warrants.

"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.

"Securities" shall mean the Registrable Securities and any securities issued in
respect thereto or upon conversion thereof.

  2.  Demand Registration.
      -------------------

        (a)  Demand Rights.  Subject to the limitations set forth in Section 5
             -------------
hereof, at any time beginning 180 days after the date hereof, one time only,
upon written demand by the Purchaser to the Company demanding registration of
not less than 200,000 shares of Common Stock that constitute Registrable
Securities, the Company shall, as soon as practicable, use its reasonable best
efforts to effect a registration with respect to such Registrable Securities (as
adjusted for stock splits, stock dividends, recapitalizations and similar
events), including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act, as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities as
are
<PAGE>

specified in such request; provided that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 2:

          (i)    which would require the Company to prepare and file a form of
     registration statement other than Form S-3 or any successor form;

          (ii)   in any particular jurisdiction in which the Company would be
     required to execute a general consent to service of process in effecting
     such registration, qualification or compliance unless the Company is
     already subject to service in such jurisdiction and except as may be
     required by the Securities Act;

          (iii)  within the one hundred twenty (120) day period immediately
     following the effective date of a registration statement pertaining to a
     public offering of Common Stock for its own account or for the account of
     another shareholder of the Company, other than a registration relating
     solely to employee benefit plans or securities issued or issuable to
     employees or consultants (including a registration on Form S-8), a
     registration relating solely to a Commission Rule 145 transaction, a
     registration on Form S-4 in connection with a merger, acquisition,
     divestiture, reorganization or similar event or a registration on any
     registration form which does not include substantially the same information
     as would be required to be included in a registration statement covering
     the sale of Registrable Securities;

          (iv)   after the Company has effected one (1) registration pursuant to
     this Section 2 and such registration has been declared or ordered
     effective; or

          (v)    if the Company furnishes to the Purchaser a letter signed by
     the Chief Executive Officer or the President of the Company stating that
     the Company intends to file a registration statement in connection with a
     bona fide firm commitment underwritten registration for securities to be
     offered for its own account (the "Intended Registration"); provided,
     however, that if the Company does not file with the Commission its Intended
     Registration within ninety (90) days of the request of the Purchaser, the
     Company shall file the requested registration statement within thirty (30)
     days of the termination of such ninety (90) day period.

          (b)    Underwriting.  The sale of Registrable Securities pursuant to
                 ------------
     this Section 2 must be made by means of a firm commitment underwriting
     through underwriters who are reasonably acceptable to the Company and the
     Purchaser that are proposed to be distributed through such underwriting.
     The right of the Purchaser to registration pursuant to this Section 2 shall
     be conditioned upon the Purchaser's participation in such underwriting and
     the inclusion of the Purchaser's Registrable Securities in the underwriting
     to the extent requested by the Purchaser as may be permitted herein. The
     Company and the Purchaser shall enter into an underwriting agreement in
     customary form with the underwriter or underwriters selected for such
     underwriting. Notwithstanding any other provision of this Section 2(b), if
     the underwriter determines that marketing factors require a limitation of
     the number of shares to be underwritten and so advises the Purchaser in
     writing, then the Purchaser shall so advise the Company and the number of
     Registrable Securities that may be included in the registration and
     underwriting shall be allocated first to the Purchaser; second to the
     Company; and third to other shareholders of the Company who have requested
     to sell in the registration. No Registrable Securities excluded from the
     underwriting by reason of the underwriter's marketing limitation shall be
     included in such registration; provided, however, that, notwithstanding
     Section 2(a)(iv) above, Purchaser's demand registration rights under this
     Section 2 shall survive an effective registration under this Section 2 with
     respect to any Registrable Securities which are so excluded subject to the
     limitations of Sections 2(a)(i), (ii), (iii), and (v). If the Purchaser
     disapproves of the terms of the underwriting, the Purchaser may elect to
     withdraw therefrom by written notice to the Company and the underwriter.
     The Registrable Securities and/or other securities so withdrawn from such
     underwriting shall also be withdrawn from such registration. In the event
     of such withdrawal, the Purchaser's demand registration rights under
     Section 2(a) shall immediately terminate.  If the underwriter has not
     limited the number of Registrable Securities to be underwritten, the
     Company may include securities for its own account or the account of others
     in such registration if the underwriter so agrees and if the number of
     Registrable Securities which would otherwise have been included in such
     registration and underwriting will not thereby be limited.
<PAGE>

      (c)  Delay of Registration.  If the Company shall furnish to the
           ---------------------
Purchaser: (i) a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed on or before the date filing would be
required, and (ii) a letter from the Company's underwriter confirming that the
filing of such registration statement would be severely detrimental to the
Company and its shareholders, then the Company may direct that such request for
registration be delayed for a period not in excess of ninety (90) days.

  3.  Piggyback Registration.
      ----------------------

      (a)  Piggyback Rights.  If at any time after the date hereof, the Company
           ----------------
shall determine to register for sale for cash any of its Common Stock, for its
own account or for the account of others (other than the Purchaser), other than
a registration relating solely to employee benefit plans or securities issued or
issuable to employees or consultants (including a registration on Form S-8), a
registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization or similar event or a registration on any registration form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company promptly will give to the Purchaser written notice
thereof and shall use its reasonable best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request, made within ten (10) days after
receipt of such written notice from the Company, by the Purchaser. However, the
Company may, without the consent of the Purchaser, withdraw such registration
statement prior to its becoming effective if the Company has abandoned its
proposal to register the securities proposed to be registered thereby.

      (b)  Underwriting. If the registration of which the Company gives notice
           ------------
is for a registered public offering involving an underwriting, the Company shall
so advise the Purchaser as a part of the written notice given pursuant to
Section 3(a). In such event the right of the Purchaser to registration pursuant
to Section 3(a) shall be conditioned upon the Purchaser's participation in such
underwriting and the inclusion of the Purchaser's Registrable Securities in the
underwriting to the extent provided herein. The Purchaser shall (together with
the Company and any other shareholders of the Company distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this Section
3(b), if the underwriter or the Company determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise the Purchaser, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting, if any, shall be determined as follows: The number of shares of
Common Stock that may be included in the registration and underwriting shall be
allocated first to the Company and then to all selling shareholders, including
the Purchaser, who have requested to sell in the registration on a pro rata
basis according to the number of shares of Common Stock, including Registrable
Securities, requested to be included.

      (c)  Exclusion.  No Registrable Securities excluded from the underwriting
           ---------
by reason of the underwriter's marketing limitation shall be included in such
registration. If the Purchaser disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration.

  4.  Registration Procedures.  In the event of a registration, qualification or
      -----------------------
compliance effected by the Company pursuant to Section 2 or Section 3, the
Company will keep the Purchaser advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense, the Company will use its reasonable best efforts to:

      (a)  Keep such registration, qualification or compliance effective for a
period of ninety (90) days or until the Purchaser has completed the distribution
described in the registration statement relating thereto, whichever first
occurs; and
<PAGE>

      (b)  Furnish such number of prospectuses and other documents incident
thereto as the Purchaser from time to time may reasonably request.

  5.  Rule 144(k).  Notwithstanding anything to the contrary contained herein,
      -----------
the Purchaser shall not have rights to a registration under Section 2 or Section
3 after the time that the Purchaser could sell any of its Registrable Securities
pursuant to Rule 144(k) promulgated under the Securities Act or any successor
rule thereto.

  6.  Registration Expenses.
      ---------------------

      (a)  With respect to a registration pursuant to Section 2, the Purchaser
and the Company shall each pay 50% of all registration, filing and NASD fees,
printing expenses, all fees and expenses of complying with securities or blue
sky laws, and the fees and disbursements of counsel for the Company and the
Purchaser and their respective independent accountants; provided that the
Company shall pay all of its own underwriting discounts, commissions, transfer
taxes and fees incurred as a result of the Company's inclusion of securities
(other than the Purchaser's Registrable Securities) in such offering.

      (b)  With respect to a registration pursuant to Section 3, the Company
shall pay all registration, filing and NASD fees, printing expenses, all fees
and expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that the Purchaser shall pay all of its own underwriting discounts,
commissions, transfer taxes and fees and disbursements of counsel and other
experts retained by the Purchaser.

  7.  Assignment of Rights.  The Purchaser may not assign its rights under this
      --------------------
Agreement to any party without the prior written consent of the Company which
consent shall not be unreasonably withheld or delayed, and any attempted
transfer in violation of this Section 7 shall be null and void.

  8.  Information of Purchaser.  The Purchaser shall promptly furnish to the
      ------------------------
Company such information regarding the Purchaser and the distribution proposed
by the Purchaser as the Company may request in writing for the preparation of
and/or inclusion in a registration statement.

  9.  Standstill Agreement.  In connection with each offering pursuant to a
      --------------------
registration statement for which the Purchaser is or may be eligible to include
Registrable Securities pursuant to this Agreement, the Purchaser shall refrain
from selling any Registrable Securities not included in such registration during
the period of distribution of securities by such underwriters pursuant to such
registration and the period in which the underwriting syndicate participates in
the after market; provided, however, that such period shall not exceed the
shortest such period applicable to any person subject to such restriction in
connection with such registration.  The Company may impose stop- transfer
instructions with respect to the shares (or securities) pursuant to the
foregoing restriction until the end of such period.

  10. Indemnification.
      ---------------

          (a)  In the event of the registration of Registrable Securities
     hereunder,, the Company shall indemnify and hold harmless the Purchaser
     against any losses, claims, damages or liabilities to which the Purchaser,
     insofar as such losses, claims, damages or liabilities (or actions or
     proceedings, whether commenced or threatened, in respect thereof) arise out
     of or are based upon any untrue statement or alleged untrue statement of
     any material fact contained in any registration statement under which such
     shares were registered under the Securities Act, any preliminary
     prospectus, final prospectus or summary prospectus contained therein, or
     any amendment or supplement thereto, or any omission or alleged omission to
     state therein a material fact required to be stated therein or necessary to
     make the statements therein in light of the circumstances in which they
     were made not misleading, and the Company shall reimburse the Purchaser for
     any legal or any other expenses reasonably incurred by him in connection
     with investigating or defending any such loss, claim, damage, liability,
     action or proceeding; provided that the Company shall not be liable in any
     such case to the extent that any such loss, claim, damage, liability (or
     action or proceeding in respect thereof) or expense arises out of or is
     based upon an untrue statement or alleged untrue statement in or omission
     or alleged omission from such registration statement, any such preliminary
     prospectus, final prospectus, summary prospectus, amendment or supplement
     in reliance upon and in
<PAGE>

      conformity with written information furnished to the Company through an
      instrument duly executed by or on behalf of the Purchaser. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or on behalf of the Company.

      (b)  In the event of the registration of Registrable Securities hereunder,
the Purchaser shall indemnify and hold harmless the Company, its directors and
officers and each other Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Company or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about the Purchaser furnished to the Company through an
instrument duly executed by the Purchaser specifically stating that it is for
use in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement.  Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling person
and shall survive the transfer by the Purchaser of such shares.

      (c)  Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 10(a) or (b) (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 10(a) or (b), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, the indemnifying party shall be entitled
to participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall be liable
for any settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.

  11. Miscellaneous.
      -------------

      (a)  Governing Law. This Agreement shall be governed by and construed in
           -------------
accordance with the laws of the State of Michigan applicable to contracts
entered into and to be performed entirely within the State of Michigan.

      (b)  Successors and Assigns.  Except as otherwise provided herein, the
           ----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

      (c)  Entire Agreement.  This Agreement constitutes the full and entire
           ----------------
understanding and agreement between the parties with regard to the subjects
hereof.

      (d)  Notices, etc.  All notices and other communications required or
           ------------
permitted hereunder shall be in writing and shall be effective three (3) days
after mailed by first-class mail, postage prepaid, or otherwise delivered by
hand or by messenger, addressed (a) if to a Purchaser, at such Purchaser's
address set forth in the introduction to this Agreement, or at such other
address as such Purchaser shall have furnished to the Company in writing, or (b)
if to the Company, at such address as the Company shall have furnished to the
Purchaser in writing.

      (e)  Counterparts.  This Agreement may be executed in any number of
           ------------
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
<PAGE>

      (f)  Severability.  In the case any provision of this Agreement shall be
           ------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

      (g)  Amendments.  The provisions of this Agreement may be amended at any
           ----------
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and the Purchaser.

  This Agreement is hereby executed as of the date first above written.

                         McLAREN PERFORMANCE TECHNOLOGIES, INC.

                         By:_________________________________
                              Steven Rossi, President

                         EMM McLAREN INVESTMENT COMPANY, L.L.C.

                         By:_________________________________
                         Its:________________________________

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