Document:

exv4w3

 

EXECUTION COPY

EXHIBIT 4.3

 

POOLING AND SERVICING AGREEMENT

BETWEEN

CAPITAL AUTO RECEIVABLES LLC

AND

GMAC LLC

DATED AS OF DECEMBER 14, 2006

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 1.01	 	Definitions	 	 	1	 
	 
	 	SECTION 1.02	 	Owner of a Receivable	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF RECEIVABLES	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 2.01	 	Purchase and Sale of Receivables	 	 	2	 
	 
	 	SECTION 2.02	 	Receivables Purchase Price	 	 	3	 
	 
	 	SECTION 2.03	 	The Closing	 	 	3	 
	 
	 	SECTION 2.04	 	Custody of Receivable Files	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 3.01	 	Duties of the Servicer	 	 	4	 
	 
	 	SECTION 3.02	 	Collection of Receivable Payments	 	 	5	 
	 
	 	SECTION 3.03	 	Rebates on Full Prepayments on Scheduled Interest Receivables	 	 	5	 
	 
	 	SECTION 3.04	 	Realization Upon Liquidating Receivables	 	 	5	 
	 
	 	SECTION 3.05	 	Maintenance of Insurance Policies	 	 	6	 
	 
	 	SECTION 3.06	 	Maintenance of Security Interests in Vehicles	 	 	6	 
	 
	 	SECTION 3.07	 	Covenants, Representations and Warranties of the Servicer	 	 	6	 
	 
	 	SECTION 3.08	 	Purchase of Receivables Upon Breach of Covenant	 	 	8	 
	 
	 	SECTION 3.09	 	Basic Servicing Fee; Payment of Certain Expenses by Servicer	 	 	8	 
	 
	 	SECTION 3.10	 	Servicer’s Accounting	 	 	8	 
	 
	 	SECTION 3.11	 	Application of Collections	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 4.01	 	Representations and Warranties as to the Receivables	 	 	10	 
	 
	 	SECTION 4.02	 	Additional Representations and Warranties of GMAC	 	 	12	 
	 
	 	SECTION 4.03	 	Representations and Warranties of CARI	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V ADDITIONAL AGREEMENTS	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 5.01	 	Conflicts With Further Transfer and Servicing Agreements	 	 	15	 
	 
	 	SECTION 5.02	 	Protection of Title	 	 	15	 
	 
	 	SECTION 5.03	 	Other Liens or Interests	 	 	15	 
	 
	 	SECTION 5.04	 	Repurchase Events	 	 	15	 
	 
	 	SECTION 5.05	 	Indemnification	 	 	16	 
	 
	 	SECTION 5.06	 	Further Assignments	 	 	16	 
	 
	 	SECTION 5.07	 	Pre-Closing Collections	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI CONDITIONS	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 6.01	 	Conditions to Obligation of CARI	 	 	16	 
	 
	 	SECTION 6.02	 	Conditions to Obligation of GMAC	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII MISCELLANEOUS PROVISIONS	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 7.01	 	Amendment	 	 	18	 
	 
	 	SECTION 7.02	 	Survival	 	 	18	 
	 
	 	SECTION 7.03	 	Notices	 	 	18	 
	 
	 	SECTION 7.04	 	Governing Law	 	 	18	 
	 
	 	SECTION 7.05	 	Waivers	 	 	18	 
	 
	 	SECTION 7.06	 	Costs and Expenses	 	 	18	 
	 
	 	SECTION 7.07	 	Confidential Information	 	 	18	 

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	 	 	 	 	 	 	Page	 
	 
	 	SECTION 7.08	 	Headings	 	 	18	 
	 
	 	SECTION 7.09	 	Counterparts	 	 	18	 
	 
	 	SECTION 7.10	 	No Petition Covenant	 	 	19	 
	 
	 	SECTION 7.11	 	Limitations on Rights of Others	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	EXHIBIT A	 	Form of First Step Receivables Assignment	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SCHEDULE A	 	Schedule of Receivables	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	APPENDIX A	 	Definitions, Rules of Construction and Notices	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	APPENDIX B	 	Additional Representations and Warranties	 	 	 	 

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     THIS POOLING AND SERVICING AGREEMENT, dated as of December 14, 2006, between CAPITAL AUTO
RECEIVABLES LLC, a Delaware limited liability company (“CARI”), and GMAC LLC, a Delaware
limited liability company (herein referred to as “GMAC” in its capacity as seller of the
Receivables and as the “Servicer” in its capacity as servicer of the Receivables).

     WHEREAS, CARI desires to purchase on the date hereof a portfolio of automobile and light truck
retail instalment sale contracts, direct purchase money loans and related rights owned by GMAC;

     WHEREAS, GMAC is willing to sell on the date hereof such contracts and related rights to CARI;

     WHEREAS, CARI may wish to sell or otherwise transfer on the date hereof such contracts and
related rights, or interests therein, to a trust, corporation, partnership or other entity (any
such entity being the “Issuing Entity”);

     WHEREAS, the Issuing Entity may issue debentures, notes, participations, certificates of
beneficial interest, partnership interests or other interests or securities (collectively, any such
issued interests or securities being “Securities”) to fund its acquisition of such
contracts and related rights;

     WHEREAS, the Issuing Entity may wish to provide in the agreements pursuant to which it
acquires its interest in such contracts and related rights and issues the Securities (the Second
Step Receivables Assignment, the Trust Agreement, the Notes, the Certificates, the Trust Sale and
Servicing Agreement and the Indenture being collectively the “Further Transfer and Servicing
Agreements”) that GMAC shall service such contracts;

     WHEREAS, the Servicer is willing to service such contracts in accordance with the terms hereof
for the benefit of CARI and, by its execution of the Further Transfer and Servicing Agreements,
will be willing to service such contracts in accordance with the terms of such Further Transfer and
Servicing Agreements for the benefit of the Issuing Entity and each other party identified or
described herein or in the Further Transfer and Servicing Agreements as having an interest as
owner, trustee, secured party, or holder of Securities (the Issuing Entity and all such parties
under the Further Transfer and Servicing Agreements being “Interested Parties”) with
respect to such contracts, and the proceeds thereof, as the interests of such parties may appear
from time to time.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     SECTION
1.01 Definitions. Certain capitalized terms used in this Agreement are defined
in and shall have the respective meanings assigned to them in Part I of Appendix A to this
Agreement. All references
herein to “the Agreement” or “this Agreement” are to this Pooling and
Servicing Agreement as it may be amended, supplemented or modified from time to

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time, and all
references herein to Articles and Sections are to Articles or Sections of this Agreement unless
otherwise specified. The rules of construction set forth in Part II of such Appendix A
shall be applicable to this Agreement.

     SECTION
1.02 Owner of a Receivable. For purposes of this Agreement, the “Owner”
of a Receivable shall mean CARI until the sale, transfer, assignment or other conveyance of such
Receivable by CARI pursuant to the terms of the Further Transfer and Servicing Agreements, and
thereafter shall mean the Issuing Entity; provided, that GMAC or CARI, as applicable, shall
be the “Owner” of any Receivable from and after the time that such Person shall acquire
such Receivable, whether pursuant to Section 3.08 or 5.04 of this Agreement, any
provision of the Further Transfer and Servicing Agreements or otherwise.

ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

     SECTION 2.01 Purchase and Sale of Receivables.

          (a) Purchase. On the Closing Date, subject to satisfaction of the conditions
specified in Article VI and the First Step Receivables Assignment (and, in any event, immediately
prior to consummation of the related transactions contemplated by the Further Transfer and
Servicing Agreements, if any), GMAC shall sell, transfer, assign and otherwise convey to CARI,
without recourse:

               (i) all right, title and interest of GMAC in, to and under the Receivables listed on the
Schedule of Receivables and (A) in the case of Receivables that are Scheduled Interest Receivables,
all monies due thereunder on and after the Cutoff Date and (B) in the case of Receivables that are
Simple Interest Receivables, all monies received thereon on and after the Cutoff Date, in each
case, exclusive of any amounts allocable to the premium for physical damage insurance force-placed
by GMAC covering any related Financed Vehicle;

               (ii) the interest of GMAC in the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by law, any accessions thereto;

               (iii) the interest of GMAC in any proceeds from claims on any physical damage, credit life,
credit disability or other insurance policies covering Financed Vehicles or Obligors;

               (iv) the interest of GMAC in any proceeds from recourse against Dealers on the Receivables;

               (v) all right, title and interest of GMAC in, to and under the First Step Receivables
Assignment; and

               (vi) the present and future claims, demands, causes and choses in action in respect of any or
all the foregoing described in clauses (i) through (v) above and all payments on or
under and all proceeds of every kind and nature whatsoever in respect of any or all the foregoing,
including all proceeds of the conversion of any or all of the foregoing,

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voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment
property, payment intangible, general intangibles, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments and other property which
at any time constitute all or part of or are included in the proceeds of any of the foregoing.

     The property described in clauses (i) through (vi) above is referred to herein
collectively as the “Purchased Property.”

          (b) It is the intention of GMAC and CARI that the transfer and assignment of Receivables
contemplated by this Agreement and the First Step Receivables Assignment shall constitute a sale of
the Receivables from GMAC to CARI and the beneficial interest in and title to the Receivables shall
not be part of GMAC’s estate in the event of the filing of a bankruptcy petition by or against GMAC
under any bankruptcy law.

          (c) The transfer and assignment of Receivables contemplated by this Agreement and the First
Step Receivables Assignment does not constitute and is not intended to result in any assumption by
CARI of any obligation of GMAC to the Obligors, Dealers, insurers or any other Person in connection
with the Receivables, any Dealer Agreements, any insurance policies or any agreement or instrument
relating to any of them.

     SECTION 2.02 Receivables Purchase Price. In consideration for the Purchased Property,
CARI shall, on the Closing Date, pay to GMAC an amount equal to the Initial Aggregate Receivables
Principal Balance in respect of the Receivables and GMAC shall execute and deliver to CARI an
assignment in the form attached hereto as Exhibit A (the “First Step Receivables
Assignment”). A portion of the Initial Aggregate Receivables Principal Balance, which is equal
to $3,006,610,430.43, shall be paid to GMAC in immediately available funds, and the balance shall
be recorded as an advance from GMAC to CARI pursuant to the Intercompany Advance Agreement.

     SECTION 2.03 The Closing. The sale and purchase of the Receivables shall take place at
the offices of Kirkland & Ellis LLP, 200 East Randolph Drive, Chicago, Illinois 60601, on the
Closing Date at a time mutually agreeable to GMAC and CARI, and will occur simultaneously with the
closing of transactions contemplated by the Further Transfer and Servicing Agreements.

     SECTION 2.04 Custody of Receivable Files. In connection with the sale, transfer and
assignment of the Receivables to CARI pursuant to this Agreement and the First Step Receivables
Assignment, CARI, simultaneously with the execution and delivery of this Agreement, shall enter
into the Custodian Agreement with the Custodian, pursuant to which CARI shall revocably appoint the
Custodian, and the Custodian
shall accept such appointment, to act as the agent of CARI as Custodian of the following
documents or instruments which shall be constructively delivered to CARI with respect to each
Receivable:

          (a) the fully executed original of the instalment sale contract or direct purchase money loan,
as applicable, for such Receivable;

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          (b) documents evidencing or related to any Insurance Policy;

          (c) the original credit application of each Obligor, fully executed by each such Obligor on
GMAC’s customary form, or on a form approved by GMAC, for such application;

          (d) where permitted by law, the original certificate of title (when received) and otherwise
such documents, if any, that GMAC keeps on file in accordance with its customary procedures
indicating that the Financed Vehicle is owned by the Obligor and subject to the interest of GMAC as
first lienholder or secured party; and

          (e) any and all other documents that GMAC keeps on file in accordance with its customary
procedures relating to the individual Receivable, Obligor or Financed Vehicle.

ARTICLE III

ADMINISTRATION AND SERVICING OF RECEIVABLES

     SECTION 3.01 Duties of the Servicer. (a) The Servicer is hereby appointed and
authorized to act as agent for the Owner of the Receivables and in such capacity shall manage,
service, administer and make collections on the Receivables with reasonable care, using that degree
of skill and attention that the Servicer exercises with respect to comparable motor vehicle related
receivables that it services for itself or others. The Servicer hereby accepts such appointment
and authorization and agrees to perform the duties of Servicer with respect to the Receivables set
forth herein and in the Further Transfer and Servicing Agreements.

          (b) The Servicer’s duties shall include collection and posting of all payments, responding to
inquiries of Obligors, investigating delinquencies, sending payment coupons to Obligors, reporting
tax information to Obligors, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Owner of any Receivables with respect to distributions,
generating federal income tax information and performing the other duties specified herein.
Subject to the provisions of Section 3.02, the Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority, acting alone, to do any
and all things in connection with such managing, servicing, administration and collection that it
may deem necessary or desirable.

          (c) Without limiting the generality of the foregoing, the Servicer is hereby authorized and
empowered by the Owner of the Receivables, pursuant to this Section 3.01, to execute and
deliver, on behalf of all Interested Parties, or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and all other comparable
instruments, with respect to the Receivables and the Financed Vehicles. The Servicer is hereby
authorized to commence, in its own name or in the name of the Owner of such Receivable a legal
proceeding, whether through judicial process or (with respect to repossession of a Financed
Vehicle) non-judicial process, to enforce a Liquidating Receivable as contemplated by Section
3.04, to enforce all obligations of GMAC and CARI under this Agreement and under the Further
Transfer and Servicing Agreements or to commence or participate in a legal proceeding (including a
bankruptcy case) relating to or involving a Receivable or a Liquidating Receivable. If the
Servicer commences or participates in such a legal proceeding in its own name, the Servicer is
hereby authorized and empowered by the Owner of the Receivables pursuant to this

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Section
3.01 to obtain possession of the related Financed Vehicle and immediately and without further
action on the part of the Owner or the Servicer, the Owner of such Receivable shall thereupon
automatically assign in trust such Receivable and the security interest in the related Financed
Vehicle to the Servicer for the benefit of the Interested Parties for purposes of commencing or
participating in any such proceeding as a party or claimant. Upon such automatic assignment, the
Servicer will be, and will have all the rights and duties of, a secured party under the UCC and
other applicable law with respect to such Receivable and the related Financed Vehicle. At the
Servicer’s request from time to time, the Owner of a Receivable assigned under this Section
3.01 shall provide the Servicer with evidence of the assignment in trust for the benefit of the
Interested Parties as may be reasonably necessary for the Servicer to take any of the actions set
forth in the following sentence.

          (d) The Servicer is hereby authorized and empowered by the Owner of a Receivable to execute
and deliver in the Servicer’s name any notices, demands, claims, complaints, responses, affidavits
or other documents or instruments in connection with any such proceeding. Any Owner of Receivables
shall furnish the Servicer with any powers of attorney and other documents and take any other steps
which the Servicer may deem necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement and the Further Transfer and Servicing
Agreements. Except to the extent required by the preceding two sentences, the authority and rights
granted to the Servicer in this Section 3.01 shall be nonexclusive and shall not be
construed to be in derogation of the retention by the Owner of a Receivable of equivalent authority
and rights.

     SECTION 3.02 Collection of Receivable Payments. The Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection practices, policies and procedures
as it follows with respect to comparable motor vehicle related receivables that it services for
itself or others in connection therewith. Except as provided in Section 3.07(a)(iii), the
Servicer is hereby authorized to grant extensions, rebates or adjustments on a Receivable without
the prior consent of the Owner of such Receivable. The Servicer is authorized in its discretion to
waive any prepayment charge, late payment charge or any other fees that may be collected in the
ordinary course of servicing such Receivable.

     SECTION 3.03 Rebates on Full Prepayments on Scheduled Interest Receivables. If the
amount of a full Prepayment by an Obligor under a Scheduled Interest Receivable, after adjustment
for the Rebate, is less than the amount that would be payable under the actuarial
method if a full Prepayment were made at the end of the billing month under such Scheduled
Interest Receivable, either because the Rebate calculated under the terms of such Receivable is
greater than the amount calculable under the actuarial method or because the Servicer’s customary
servicing procedure is to credit a greater Rebate, the Servicer, as part of its servicing duties,
shall remit such difference to the Owner of such Receivable.

     SECTION 3.04 Realization Upon Liquidating Receivables. The Servicer shall use
reasonable efforts, consistent with its customary practices, policies and procedures, to repossess
or otherwise comparably convert the ownership of any Financed Vehicle that it has reasonably
determined should be repossessed or otherwise converted following a default under the Receivable
secured by the Financed Vehicle. The Servicer is authorized to follow such

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customary practices,
policies and procedures as it follows with respect to comparable motor vehicle related receivables
that it services for itself or others, which customary practices, policies and procedures may
include reasonable efforts to realize upon any recourse to Dealers, selling the related Financed
Vehicle at public or private sale and other actions by the Servicer in order to realize upon such a
Receivable. The foregoing is subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in connection with any
repair or towards the repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the proceeds of liquidation of the
related Receivable by an amount greater than the amount of such expenses. The Servicer shall be
entitled to receive Liquidation Expenses with respect to each Liquidating Receivable at such time
as the Receivable becomes a Liquidating Receivable (or as may otherwise be provided in the Further
Transfer and Servicing Agreements).

     SECTION 3.05 Maintenance of Insurance Policies. The Servicer shall, in accordance with
its customary practices, policies and procedures, require that each Obligor shall have obtained
physical damage insurance covering the Financed Vehicle as of the execution of the related
Receivable. The Servicer shall, in accordance with its customary practices, policies and
procedures, monitor such physical damage insurance with respect to each Receivable.

     SECTION 3.06 Maintenance of Security Interests in Vehicles. The Servicer shall, in
accordance with its customary practices, policies and procedures and at its own expense, take such
steps as are necessary to maintain perfection of the security interest created by each Receivable
in the related Financed Vehicle. The Owner of each Receivable hereby authorizes the Servicer to
re-perfect such security interest on behalf of such Owner, as necessary because of the relocation
of a Financed Vehicle, or for any other reason.

     SECTION 3.07 Covenants, Representations and Warranties of the Servicer. As of the
Closing Date, the Servicer hereby makes the following representations, warranties and covenants on
which CARI relies in accepting the Receivables hereunder and pursuant to the related First Step
Receivables Assignment, and on which the Issuing Entity shall
rely in accepting such Receivables and executing and delivering the Securities under the
Further Transfer and Servicing Agreements.

          (a) The Servicer covenants that from and after the closing hereunder:

               (i) Liens in Force. Except as contemplated in this Agreement or the Further Transfer
and Servicing Agreements, the Servicer shall not release in whole or in part any Financed Vehicle
from the security interest securing the related Receivable;

               (ii) No Impairment. The Servicer shall do nothing to impair the rights or security
interest of CARI or any Interested Party in and to the Purchased Property; and

               (iii) No Modifications. The Servicer shall not amend or otherwise modify any
Receivable such that the Amount Financed, the Annual Percentage Rate, the total number of Scheduled
Payments (in the case of a Scheduled Interest Receivable) or the number of originally scheduled due
dates (in the case of a Simple Interest Receivable) is altered or such that the last Scheduled
Payment (in the case of a Scheduled Interest Receivable) or the last scheduled

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due date (in the
case of a Simple Interest Receivable) occurs after the Final Scheduled Distribution Date.

          (b) Upon the execution of this Agreement and the Further Transfer and Servicing Agreements,
the Servicer represents and warrants to the Issuing Entity and CARI that as of the Closing Date, in
addition to the representations and warranties in Sections 4.01 and 4.02 being true:

               (i) Organization and Good Standing. The Servicer has been duly formed and is validly
existing and in good standing under the laws of its state of formation, with power and authority to
own its properties and to conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and now has, power, authority and
legal right to service the Receivables as provided herein and in the Further Transfer and Servicing
Agreements;

               (ii) Due Qualification. The Servicer is duly qualified to do business as a foreign
entity in good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of its business (including
the servicing of the Receivables) requires or shall require such qualification;

               (iii) Power and Authority. The Servicer has the power and authority to execute and
deliver this Agreement and the Further Transfer and Servicing Agreements and to carry out the terms
of such agreements; and the Servicer’s execution, delivery and performance of this Agreement and
the Further Transfer and Servicing Agreements have been duly authorized by the Servicer by all
necessary limited liability company action;

               (iv) Binding Obligation. The Further Transfer and Servicing Agreements and this
Agreement, when duly executed and delivered, shall constitute the legal, valid and binding
obligations of the Servicer 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 in general and by general
principles of equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law;

               (v) No Violation. The consummation by the Servicer of the transactions contemplated
by this Agreement and the Further Transfer and Servicing Agreements, and the fulfillment by the
Servicer of the terms hereof and thereof, shall 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 certificate of formation or limited liability company agreement of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the Servicer 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 Further Transfer and Servicing Agreements, or violate
any law or, to the best of the Servicer’s knowledge, any order, rule or regulation applicable to
the Servicer of any court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Servicer or any of its properties;
and

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               (vi) No Proceedings. To the Servicer’s knowledge, there are no proceedings or
investigations pending, or threatened, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over the Servicer or its
properties (A) asserting the invalidity of this Agreement and the Further Transfer and Servicing
Agreements or any Securities issued thereunder, (B) seeking to prevent the issuance of such
Securities or the consummation of any of the transactions contemplated by the Further Transfer and
Servicing Agreements, or (C) seeking any determination or ruling that might materially and
adversely affect this Agreement, the performance by the Servicer of its obligations under, or the
validity or enforceability of, the Further Transfer and Servicing Agreements.

     SECTION 3.08 Purchase of Receivables Upon Breach of Covenant. Upon discovery by any of
the Servicer, CARI or any party under the Further Transfer and Servicing Agreements of a breach of
any of the covenants set forth in Sections 3.06 and 3.07(a), the party discovering such
breach shall give prompt written notice thereof to the others. As of the last day of the second
Monthly Period following its discovering or receiving notice of such breach (or, at the Servicer’s
election, the last day of the first Monthly Period so following), the Servicer shall, unless it
shall have cured such breach in all material respects, purchase from the Owner thereof any
Receivable materially and adversely affected by such breach as determined by such Owner and, on the
related Distribution Date, the Servicer shall pay the Administrative Purchase Payment, and shall be
entitled to receive the Released Administrative Amount, if any. It is understood and agreed that
the obligation of the Servicer to purchase any Receivable with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute the sole remedy
against the Servicer for such breach available to CARI or any Interested Party.

     SECTION
3.09 Basic Servicing Fee; Payment of Certain Expenses by
Servicer. The
Servicer is entitled to receive the Basic Servicing Fee out of collections in respect of the
Receivables and other available funds, as and to the extent set forth in the Further Transfer and
Servicing Agreements. The Servicer shall also be entitled to Investment Earnings as, and to
the extent, set forth in the Further Transfer and Servicing Agreements. Subject to any limitations
on the Servicer’s liability under the Further Transfer and Servicing Agreements, the Servicer shall
be required to pay all expenses incurred by it in connection with its activities under this
Agreement and under the Further Transfer and Servicing Agreements (including fees and disbursements
of the Issuing Entity, any trustees and independent accountants, taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports to holders of Securities and all
other fees and expenses not expressly stated under this Agreement or the Further Transfer and
Servicing Agreements to be for the account of the holders of Securities).

     SECTION 3.10 Servicer’s Accounting. On each Determination Date under a Further
Transfer and Servicing Agreement, the Servicer shall deliver to each of the trustees and other
applicable parties under the Further Transfer and Servicing Agreements and to CARI and the Rating
Agencies a Servicer’s Accounting with respect to the immediately preceding Monthly Period executed
by the President or any Vice President of the Servicer containing all information necessary to each
such party for making any distributions required by the Further Transfer and Servicing Agreements,
and all information necessary to each such party for sending any statements required under the
Further Transfer and Servicing Agreements. Receivables to be

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purchased by the Servicer under
Sections 3.08 or 5.04 or to be repurchased by CARI or GMAC under the Further Transfer and
Servicing Agreements as of the last day of any Monthly Period shall be identified by Receivable
number (as set forth in the Schedule of Receivables). With respect to any Receivables for which
CARI is the Owner, the Servicer shall deliver to CARI such accountings relating to such Receivables
and the actions of the Servicer with respect thereto as CARI may reasonably request.

     SECTION 3.11 Application of Collections. For the purposes of this Agreement and the
Further Transfer and Servicing Agreements, no later than each Distribution Date all collections for
the related Monthly Period shall be applied by the Servicer as follows:

          (a) With respect to each Scheduled Interest Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments by or on behalf of the Obligor that are not
Supplemental Servicing Fees shall be applied first to reduce outstanding advances of shortfalls in
collections, if any, made pursuant to the Further Transfer and Servicing Agreements with respect to
such Receivable. Next, the amount of any such payments that are not Supplemental Servicing Fees
and are in excess of such advances with respect to such Receivable shall be applied to the
Scheduled Payment with respect to such Receivable. Any amount of such payments remaining after the
applications described in the preceding two sentences constitutes an Excess Payment with respect to
such Receivable, and such Excess Payment (to the extent it does not constitute a Payment Ahead)
shall be applied to prepay such Receivable. If the amounts applied under the first two sentences
of this Section 3.11(a) shall be less than the Scheduled Payment, whether as a result of
any extension granted to the Obligor or otherwise, then the Deferred Prepayment, if any, with
respect to such Receivable shall be applied by the Servicer to the extent of the shortfall, and
such Deferred Prepayment shall be reduced accordingly.

          (b) With respect to all Simple Interest Receivables (other than Administrative Receivables and
Warranty Receivables), payments by or on behalf of the Obligors that are not Supplemental Servicing
Fees shall be applied first to the payment to the Servicer of Excess Simple Interest Collections,
if any, and next to principal and interest on all such Simple Interest Receivables.

          (c) With respect to a Scheduled Interest Receivable or a Simple Interest Receivable that is
also an Administrative Receivable and Warranty Receivable, payments by or on behalf of the Obligor
shall be applied in the same manner as set forth in Section 3.11(a) or Section
3.11(b), as applicable, except that any Released Administrative Amount or Released Warranty
Amount shall be remitted to the Servicer or CARI, as applicable. In the case of a Scheduled
Interest Receivable, a Warranty Payment shall be applied first to reduce any advances described in
Section 3.11(a); and then the remaining amount of such Warranty Payment or an
Administrative Purchase Payment, as applicable, shall be applied to the Scheduled Payment, in each
case to the extent that the payments by or on behalf of the Obligor shall be insufficient to pay
such amount, and then to prepay such Receivable in full. In the case of a Simple Interest
Receivable, a Warranty Payment or an Administrative Purchase Payment, as applicable, shall be
applied to principal and interest on such Receivable.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

9

 

     SECTION 4.01 Representations and Warranties as to the Receivables. GMAC makes the
following representations and warranties as to the Receivables, on which CARI relies in accepting
the Receivables. Such representations and warranties speak as of the Closing Date, and shall
survive the sale, transfer and assignment of the Receivables to CARI and the subsequent assignment
and transfer pursuant to the Further Transfer and Servicing Agreements:

          (a) Characteristics of Receivables.

               (i) General. Each Receivable:

                    (1) is secured by a Financed Vehicle, was originated in the United States by GMAC or one of
its subsidiaries or a Dealer for the retail sale of a Financed Vehicle in the ordinary course of
business, was fully and properly executed by the parties thereto, if not originated by GMAC, was
purchased by GMAC from one of its subsidiaries or from such Dealer under an existing Dealer
Agreement, and was validly assigned by such subsidiary or such Dealer to GMAC in accordance with
its terms,

                    (2) has created or shall create a valid, binding and enforceable first priority security
interest in favor of GMAC in the Financed Vehicle, which security interest is assignable by GMAC to
CARI,

                    (3) contains customary and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for realization against the collateral of the benefits of the security,

                    (4) is a Scheduled Interest Receivable or a Simple Interest Receivable,

                    (5) provides for level monthly payments which may vary from one another by no more than $5,
which shall amortize the Amount Financed by maturity and shall yield interest at the Annual
Percentage Rate,

                    (6) has an original term of not less than six months and not greater than 72 months and a
remaining term of not less than six months, and

                    (7) at least one monthly payment has been made.

               (ii) Receivables. In addition to the characteristics set forth in Section
4.01(a)(i) above, each Receivable (1) has a first scheduled payment due date on or after June
30, 2000, (2) was originated on or after May 31, 2000, (3) as of the Cutoff Date, was not
considered past due (that is, no payments due on that Receivable in excess of $25 were more than
thirty (30) days delinquent), and was not a Liquidating Receivable, and (4) has an Annual
Percentage Rate not greater than 20.00%.

          In addition, Scheduled Interest Receivables represent (based on Principal Balances) 59.16% of
the Aggregate Amount Financed as of the Cutoff Date, with the balance of the Receivables being
Simple Interest Receivables.

10

 

          (b) Creation, Perfection and Priority of Security Interests. The representations and
warranties regarding creation, perfection and priority of security interests in the Purchased
Property, which are attached to this Agreement as Appendix B, are true and correct to the
extent that they are applicable.

          (c) Schedule of Receivables. The information set forth in the Schedule of Receivables
is true and correct in all material respects, and no selection procedures believed to be adverse to
CARI or to holders of the Securities issued under the Further Transfer and Servicing Agreements
were utilized in selecting the Receivables from those receivables of GMAC that meet the selection
criteria set forth in this Agreement.

          (d) Compliance With Law. All requirements of applicable federal, state and local
laws, and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board’s Regulations “B” and “Z”, the Servicemembers Civil Relief Act of 2003, the
Texas Consumer Credit Code, and state adaptations of the National Consumer Act and the Uniform
Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure
laws, in respect of any of the Receivables and other Purchased Property, have been complied with in
all material respects, and each Receivable and the sale of the Financed Vehicle evidenced thereby
complied at the time it was originated or made and now complies in all material respects with all
legal requirements of the jurisdiction in which it was originated or made.

          (e) Binding Obligation. Each Receivable represents the genuine, legal, valid and
binding payment obligation in writing of the Obligor thereon, enforceable by the holder thereof in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors’ rights in general and by
equity, regardless of whether such enforceability is considered in a proceeding in equity or at
law.

          (f) Security Interest in Financed Vehicle. Immediately prior to the sale, transfer
and assignment thereof pursuant hereto and the First Step Receivables Assignment, each Receivable
was secured by a validly perfected first priority security interest in the Financed Vehicle in
favor of GMAC as secured party or all necessary and appropriate action had been commenced that
would result in the valid perfection of a first priority security interest in the Financed Vehicle
in favor of GMAC as secured party.

          (g) Receivables In Force. No Receivable has been satisfied, subordinated or
rescinded, and the Financed Vehicle securing each such Receivable has not been released from the
lien of the related Receivable in whole or in part.

          (h) No Waiver. Since the Cutoff Date no provision of a Receivable has been waived,
altered or modified in any respect.

          (i) No Defenses. No right of rescission, setoff, counterclaim or defense has been
asserted or threatened with respect to any Receivable.

11

 

          (j) No Liens. To the best of GMAC’s knowledge: (1) there are no liens or claims that
have been filed for work, labor or materials affecting any Financed Vehicle securing any Receivable
that are or may be liens prior to, or equal or coordinate with, the security interest in the
Financed Vehicle granted by the Receivable; (2) no contribution failure has occurred with respect
to any Benefit Plan which is sufficient to give rise to a lien under Section 302 (f) of ERISA with
respect to any Receivable; and (3) no tax lien has been filed and no claim related thereto is being
asserted with respect to any Receivable.

          (k) Insurance. Each Obligor is required to maintain a physical damage insurance
policy of the type that GMAC requires in accordance with its customary underwriting standards for
the purchase of motor vehicle related receivables.

          (l) Good Title. No Receivable has been sold, transferred, assigned or pledged by GMAC
to any Person other than CARI; immediately prior to the conveyance of the Receivables pursuant to
this Agreement and the First Step Receivables Assignment, GMAC had good and marketable title
thereto, free of any Lien; and, upon execution and delivery of this Agreement by GMAC, CARI shall
have all of the right, title and interest of GMAC in and to the Receivables, the unpaid
indebtedness evidenced thereby and the collateral security therefor, free of any Lien.

          (m) Lawful Assignment. No Receivable was originated in, or is subject to the laws of,
any jurisdiction the laws of which would make unlawful the sale, transfer and assignment of such
Receivable under this Agreement, the Trust Sale and Servicing Agreement or the Indenture, as
applicable.

          (n) All Filings Made. All filings (including UCC filings) necessary in any
jurisdiction to give CARI a first priority perfected ownership interest in the Receivables shall
have been made.

          (o) One Original. There is only one original executed copy of each Receivable.

          (p) No Documents or Instruments. No Receivable, or constituent part thereof,
constitutes a “negotiable instrument” or “negotiable document of title” (as such
terms are used in the UCC).

          (q) No Amendment. No Receivable has been amended or otherwise modified such that the
total number of the Obligor’s Scheduled Payments (in the case of a Scheduled Interest Receivable)
or the number of originally scheduled due dates (in the case of a Simple Interest Receivable) has
been increased or such that the Amount Financed has been increased.

     SECTION 4.02 Additional Representations and Warranties of GMAC. GMAC hereby represents
and warrants to CARI as of the Closing Date, both in its capacity as the seller of the Receivables
hereunder and in its capacity as Servicer, that:

          (a) Organization and Good Standing. GMAC has been duly formed and is validly existing
as an entity in good standing under the laws of the State of Delaware, with power

12

 

and authority to
own its properties and to conduct its business as such properties are presently owned and such
business is presently conducted;

          (b) Due Qualification. GMAC is duly qualified to do business as a foreign entity in
good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business (including the servicing of the
Receivables) requires or shall require such qualification;

          (c) Power and Authority. GMAC has the power and authority to execute and deliver this
Agreement and the First Step Receivables Assignment and to carry out its terms; GMAC has full power
and authority to sell and assign the property to be sold and assigned to CARI and to service the
Receivables as provided herein and in the Further Transfer and Servicing Agreements, and has duly
authorized such sale and assignment to CARI by all necessary limited liability company action; and
the execution, delivery and performance of this Agreement and the First Step Receivables Assignment
have been duly authorized by GMAC by all necessary limited liability company action;

          (d) Valid Sale; Binding Obligation. This Agreement and the First Step Receivables
Assignment, when duly executed and delivered, shall constitute a valid sale, transfer and
assignment of the Receivables, in each case, enforceable against creditors of and purchasers from
GMAC; and this Agreement together with the First Step Receivables Assignment, when duly executed
and delivered, shall constitute a legal, valid and binding obligation of GMAC 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 in
general and by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law;

          (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the First Step Receivables Assignment and the fulfillment of the terms of this Agreement and
the First Step Receivables Assignment shall 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 certificate of formation or limited liability company agreement of GMAC, or any indenture,
agreement, mortgage, deed of trust or other instrument to which GMAC 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 First Step Receivables Assignment or violate any law or, to the best of
GMAC’s knowledge, any order, rule or regulation applicable to GMAC of any court or of any federal
or state regulatory body, administrative agency or other governmental instrumentality having
jurisdiction over GMAC or any of its properties; and

          (f) No Proceedings. To GMAC’s knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over GMAC or its properties (A) asserting the
invalidity of this Agreement and the First Step Receivables Assignment, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement and the First Step
Receivables Assignment, or (C) seeking any determination or ruling that might materially and
adversely affect the performance by GMAC of its obligations

13

 

under, or the validity or
enforceability of, this Agreement and the First Step Receivables Assignment.

     SECTION 4.03 Representations and Warranties of CARI. CARI hereby represents and
warrants to GMAC as of the Closing Date:

          (a) Organization and Good Standing. CARI has been duly formed and is validly existing
as an entity 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 presently owned and such
business is presently conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire and own the Receivables;

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

          (c) Power and Authority. CARI has the power and authority to execute and deliver this
Agreement and the First Step Receivables Assignment and to carry out its terms and the execution,
delivery and performance of this Agreement and the First Step Receivables Assignment have been duly
authorized by CARI by all necessary limited liability company action;

          (d) No Violation. The consummation of the transactions contemplated by this Agreement
and the First Step Receivables Assignment and the fulfillment of the terms of this Agreement and
the First Step Receivables Assignment shall 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 certificate of formation or limited liability company agreement of CARI, or any indenture,
agreement, mortgage, deed of trust or other instrument to which CARI 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 or other instrument, other than any Further Transfer and
Servicing Agreement or violate any law or, to the best of CARI’s knowledge, any order, rule or
regulation applicable to CARI of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction over CARI or any of
its properties; and

          (e) No Proceedings. To CARI’s knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over CARI or its properties (i) asserting the
invalidity of this Agreement and the First Step Receivables Assignment, or (ii) seeking any
determination or ruling that might materially and adversely affect the performance by CARI of its
obligations under, or the validity or enforceability of, this Agreement and the First Step
Receivables Assignment.

14

 

ARTICLE V

ADDITIONAL AGREEMENTS

     SECTION 5.01 Conflicts With Further Transfer and Servicing Agreements. To the extent
that any provision of Sections 5.02 through 5.04 of this Agreement conflicts with any
provision of the Further Transfer and Servicing Agreements, the Further Transfer and Servicing
Agreements shall govern.

     SECTION 5.02 Protection of Title.

          (a) Filings. GMAC shall authorize and execute, as applicable, and file such financing
statements and cause to be authorized and executed, as applicable, and filed such continuation and
other statements, all in such manner and in such places as may be required by law fully to
preserve, maintain and protect the interest of CARI under this Agreement and the First Step
Receivables Assignment in the Receivables and the other Purchased Property and in the proceeds
thereof. GMAC shall deliver (or cause to be delivered) to CARI file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available following such filing GMAC
hereby authorizes CARI and its assigns to file all such financing statements without its signature.

          (b) Name Change. GMAC shall not change its state of formation or its name, identity
or entity structure in any manner that would, could or might make any financing statement or
continuation statement filed by GMAC, CARI or CARI’s assigns in accordance with Section
5.02(a) seriously misleading within the meaning of the UCC, unless it shall have given CARI at
least sixty (60) days prior written notice thereof.

          (c) Executive Office; Maintenance of Offices. GMAC shall give CARI at least sixty
(60) days prior written notice of any relocation of its principal executive office if, as a result
of such relocation, the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new financing statement.
GMAC shall at all times maintain each office from which it services Receivables and its principal
executive office within the United States of America.

          (d) New Debtor. In the event that GMAC shall change the jurisdiction in which it is
formed or otherwise enter into any transaction which would result in a “new debtor” (as
defined in the UCC) succeeding to the obligations of GMAC hereunder, GMAC shall comply fully with
the obligations of Section 5.02(a).

     SECTION 5.03 Other Liens or Interests. Except for the conveyances hereunder and under
the First Step Receivables Assignment and as contemplated by the Further Transfer and Servicing
Agreements, GMAC shall not sell, pledge, assign or transfer the Receivables or other Purchased
Property to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any
interest therein, and GMAC shall defend the right, title and interest of CARI in, to and under such
Receivables or other Purchased Property against all claims of third parties claiming through or
under GMAC.

     SECTION 5.04 Repurchase Events. By its execution of the Further Transfer and Servicing
Agreements to which it is a party, GMAC shall acknowledge the assignment by CARI

15

 

of such of its
right, title and interest in, to and under this Agreement and the First Step Receivables Assignment
to the Issuing Entity as shall be provided in the Further Transfer and Servicing Agreements. GMAC
hereby covenants and agrees with CARI for the benefit of CARI and the Interested Parties that in
the event of a breach of any of GMAC’s representations and warranties contained in Section
4.01 hereof with respect to any Receivable (a “Repurchase Event”), GMAC will repurchase
such Receivable from the Issuing Entity (if the Issuing Entity is then the Owner of such
Receivable) on the date and for the amount specified in the Further Transfer and Servicing
Agreements, without further notice from CARI hereunder. Upon the occurrence of a Repurchase Event
with respect to a Receivable for which CARI is the Owner, GMAC agrees to repurchase such Receivable
from CARI for an amount and upon the same terms as GMAC would be obligated to repurchase such
Receivable from the Issuing Entity if the Issuing Entity was then the Owner thereof, and upon
payment of such amount, GMAC shall have such rights with respect to such Receivable as if GMAC had
purchased such Receivable from the Issuing Entity as the Owner thereof. It is understood and
agreed that the obligation of GMAC to repurchase any Receivable as to which a breach has occurred
and is continuing shall, if such obligation is fulfilled, constitute the sole remedy against GMAC
for such breach available to CARI or any Interested Party.

     SECTION 5.05 Indemnification. GMAC shall indemnify CARI for any liability as a result
of the failure of a Receivable to be originated in compliance with all requirements of law. This
indemnity obligation shall be in addition to any obligation that GMAC may otherwise have.

     SECTION 5.06 Further Assignments. GMAC acknowledges that CARI may, pursuant to the
Further Transfer and Servicing Agreements, sell the Receivables to the Issuing Entity and assign
its rights hereunder and under the First Step Receivables Assignment to the Issuing Entity, subject
to the terms and conditions of the Further Transfer and Servicing Agreements, and that the Issuing
Entity may in turn further pledge, assign or transfer its rights in the Receivables and this
Agreement and the First Step Receivables Assignment. GMAC further acknowledges that CARI may
assign its rights under the Custodian Agreement to the Issuing Entity.

     SECTION 5.07 Pre-Closing Collections. Within two (2) Business Days after the Closing
Date GMAC shall transfer to the account or accounts designated by CARI (or by the Issuing Entity
under the Further Transfer and Servicing Agreements) all collections on the Receivables held by
GMAC on the Closing Date, and conveyed to CARI pursuant to Section 2.01; provided that so
long as the Monthly Remittance Conditions are satisfied, such collections need not be transferred
until the first Distribution Date.

ARTICLE VI

CONDITIONS

     SECTION 6.01 Conditions to Obligation of CARI. The obligation of CARI to purchase the
Receivables hereunder and pursuant to the First Step Receivables Assignment is subject to the
satisfaction of the following conditions:

16

 

          (a) Representations and Warranties True. The representations and warranties of GMAC
hereunder shall be true and correct at the time of the Closing Date, and GMAC shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.

          (b) No Repurchase Event. No Repurchase Event shall have occurred on or prior to the
Closing Date.

          (c) Computer Files Marked. GMAC shall, at its own expense, on or prior to the Closing
Date, indicate in its computer files created in connection with the Receivables that the
Receivables have been sold to CARI pursuant to this Agreement and the First Step Receivables
Assignment and deliver to CARI the Schedule of Receivables, certified by an officer of GMAC to be
true, correct and complete.

          (d) Documents to be Delivered By GMAC.

               (i) The Assignments. On the Closing Date, GMAC shall execute and deliver the First
Step Receivables Assignment.

               (ii) Evidence of UCC Filing. On or prior to the Closing Date, GMAC shall record and
file, at its own expense, a UCC-1 financing statement in each jurisdiction in which required by
applicable law, authorized by and naming GMAC as seller or debtor, naming
CARI as purchaser or secured party, naming the Receivables and the other Purchased Property as
collateral, meeting the requirements of the laws of each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and conveyance of such Receivables to CARI.
GMAC shall deliver a file-stamped copy, or other evidence satisfactory to CARI of such filing, to
CARI on or prior to the Closing Date.

               (iii) Other Documents. On the Closing Date GMAC shall provide such other documents as
CARI may reasonably request.

          (e) Other Transactions. The transactions contemplated by the Further Transfer and
Servicing Agreements shall be consummated to the extent that such transactions are intended to be
substantially contemporaneous with the transactions hereunder.

     SECTION 6.02 Conditions to Obligation of GMAC. The obligation of GMAC to sell the
Receivables to CARI hereunder or pursuant to the First Step Receivables Assignment is subject to
the satisfaction of the following conditions:

          (a) Representations and Warranties True. The representations and warranties of CARI
hereunder shall be true and correct as of the Closing Date with respect to the Receivables, and
CARI shall have performed all obligations to be performed by it hereunder or pursuant to the First
Step Receivables Assignment on or prior to the closing hereunder.

          (b) Receivables Purchase Price. On the Closing Date, CARI shall pay to GMAC that
portion of the Initial Aggregate Receivables Principal Balance as provided in Section 2.02.

17

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

     SECTION 7.01 Amendment. This Agreement may be amended from time to time (subject to
any expressly applicable amendment provision of the Further Transfer and Servicing Agreements) by a
written amendment duly executed and delivered by GMAC and CARI.

     SECTION 7.02 Survival. The representations and warranties of GMAC set forth in
Articles IV and V of this Agreement and of Servicer set forth in Section 3.07 of
this Agreement shall remain in full force and effect and shall survive the Closing Date under
Section 2.03 hereof and the closing under the Further Transfer and Servicing Agreements.

     SECTION 7.03 Notices. All demands, notices and communications upon or to GMAC or CARI
under this Agreement shall be delivered as specified in Part III of Appendix A to this
Agreement.

     SECTION 7.04 Governing Law. THIS AGREEMENT AND THE FIRST STEP RECEIVABLES ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OR OF ANY OTHER JURISDICTION OTHER
THAN SECTION 5-1401 AND SECTION 15-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

     SECTION 7.05 Waivers. No failure or delay on the part of CARI in exercising any power,
right or remedy under this Agreement or the First Step Receivables Assignment shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the exercise of any other power, right or remedy.

     SECTION 7.06 Costs and Expenses. GMAC agrees to pay all reasonable out-of-pocket costs
and expenses of CARI, including fees and expenses of counsel, in connection with the perfection as
against third parties of CARI’s right, title and interest in, to and under the Receivables and the
enforcement of any obligation of GMAC hereunder.

     SECTION 7.07 Confidential Information. CARI agrees that it shall neither use nor
disclose to any person the names and addresses of the Obligors, except in connection with the
enforcement of CARI’s rights hereunder, under the Receivables, under the Further Transfer and
Servicing Agreements or as required by law.

     SECTION 7.08 Headings. The headings of the various Articles and Sections herein are
for convenience of reference only and shall not define or limit any of the terms or provisions
hereof.

     SECTION 7.09 Counterparts. This Agreement may be executed in two or more counterparts
and by different parties on separate counterparts, each of which shall be an original, but all of
which together shall constitute one and the same instrument.

18

 

     SECTION 7.10 No Petition Covenant. Notwithstanding any prior termination of this
Agreement, GMAC shall not, prior to the date which is one year and one day after the final
distribution with respect to the Notes to the Note Distribution Account, acquiesce, petition or
otherwise invoke or cause CARI or the Issuing Entity to invoke the process of any court or
government authority for the purpose of
commencing or sustaining a case against CARI or the Issuing Entity under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of CARI or the Issuing Entity or any substantial
part of the property of either of them, or ordering the winding up or liquidation of the affairs of
CARI or the Issuing Entity.

     SECTION 7.11 Limitations on Rights of Others. The provisions of this Agreement and the
First Step Receivables Assignment are solely for the benefit of GMAC and CARI and, to the extent
expressly provided herein, the Interested Parties, and nothing in this Agreement, whether express
or implied, shall be construed to give to any other Person any legal or equitable right, remedy or
claim in, under, or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

*  *  *  *  *

19

 

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

	 	 	 	 	 
	 	GMAC LLC

 	 
	 	By:  	/s/ CARL      J. VANNATTER
 	 
	 	 	Name:  	Carl J. Vannatter 	 
	 	 	Title:  	Director - Global Securitization 	 
	 
	 	CAPITAL AUTO RECEIVABLES LLC

 	 
	 	By:  	/s/ NANCY L. BUGG
 	 
	 	 	Name:  	Nancy L. Bugg 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Pooling and Servicing Agreement]

 

 

EXHIBIT A

FORM OF

FIRST STEP RECEIVABLES ASSIGNMENT

PURSUANT TO POOLING AND SERVICING AGREEMENT

     For value received, in accordance with the Pooling and Servicing Agreement, dated as of
December 14, 2006 (the “Pooling and Servicing Agreement”), between GMAC LLC, a Delaware
limited liability company (“GMAC”), and Capital Auto Receivables LLC, a Delaware limited
liability company (“CARI”), GMAC does hereby sell, assign, transfer and otherwise convey
unto CARI, without recourse, (i) all right, title and interest of GMAC in, to and under the
Receivables listed on the Schedule of Receivables attached hereto and (a) in the case of
Receivables that are Scheduled Interest Receivables, all monies due thereunder on and after the
Cutoff Date and (b) in the case of Receivables that are Simple Interest Receivables, all monies
received thereon on and after the Cutoff Date, in each case exclusive of any amounts allocable to
the premium for physical damage insurance force-placed by GMAC covering any related Financed
Vehicle; (ii) the interest of GMAC in the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by law, any accessions thereto;
(iii) the interest of GMAC in any proceeds from claims on any physical damage, credit life, credit
disability or other insurance policies covering Financed Vehicles or Obligors; (iv) the interest of
GMAC in any proceeds from recourse against Dealers on the Receivables; and (v) all right, title and
interest of GMAC in, to and under the First Step Receivables Assignment; and (vi) the present and
future claims, demands, causes and choses in action in respect of any or all the foregoing
described in clauses (i), (ii), (iii), (iv), and (v) above and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all the foregoing, including all
proceeds of the conversion of any or all of the foregoing, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property,
payment intangible, general intangibles, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of the foregoing.

     It is the intention of GMAC and CARI that the transfer and assignment of Receivables
contemplated by this First Step Receivables Assignment shall constitute a sale of the Receivables
from GMAC to CARI and the beneficial interest in and title to the Receivables shall not be part of
GMAC’s estate in the event of the filing of a bankruptcy petition by or against GMAC under any
bankruptcy law.

     The foregoing transfer and assignment of Receivables contemplated by the Pooling and Servicing
Agreement and this First Step Receivables Assignment does not constitute and is not intended to
result in any assumption by CARI of any obligation of the undersigned to the Obligors, Dealers,
insurers or any other Person in connection with the Receivables, any Dealer Agreements, any
insurance policies or any agreement or instrument relating to any of them.

     This First Step Receivables Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the

1

 

Pooling and Servicing Agreement and is to be governed by the Pooling and Servicing Agreement.

     Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned
to them in the Pooling and Servicing Agreement.

*  *  *  *  *

2

 

     IN WITNESS WHEREOF, the undersigned has caused this First Step Receivables Assignment to be
duly executed as of December 14, 2006.

	 	 	 	 	 
	 	GMAC LLC

 	 
	 	By:  	 	 
	 	Name:  	Carl J. Vannatter 	 
	 	Title:  	Director - Global Securitization 	 

 

 

	 	 	 	 	 

SCHEDULE A

SCHEDULE OF RECEIVABLES

The Schedule of Receivables is

on file at the offices of:

	 	1.	 	The Indenture Trustee
	 
	 	2.	 	The Owner Trustee
	 
	 	3.	 	GMAC LLC
	 
	 	4.	 	Capital Auto Receivables LLC

 

 

APPENDIX A

Part I

          For ease of reference, capitalized terms defined herein have been consolidated with and are
contained in Part I of Appendix A to the Trust Sale and Servicing Agreement of even date herewith
among GMAC, CARI and Capital Auto Receivables Asset Trust 2006-2, as amended and supplemented from
time to time.

Part II

          For ease of reference, the rules of construction have been consolidated with and are contained
in Part II of Appendix A to the Trust Sale and Servicing Agreement of even date herewith among
GMAC, CARI and Capital Auto Receivables Asset Trust 2006-2, as amended and supplemented from time
to time.

Part III

          For ease of reference, the notice addresses and procedures have been consolidated with and are
contained in Appendix B to the Trust Sale and Servicing Agreement of even date herewith among GMAC,
CARI and Capital Auto Receivables Asset Trust 2006-2, as amended and supplemented from time to
time.

 

 

APPENDIX B

Additional Representations and Warranties

	1.	 	While it is the intention of GMAC and CARI that the transfer and assignment contemplated by
this Agreement and the First Step Receivables Assignment shall constitute sales of the
Purchased Property from GMAC to CARI, this Agreement, the Trust Sale and Servicing Agreement
and the Indenture create a valid and continuing security interest (as defined in the
applicable UCC) in the Purchased Property in favor of CARI, the Trust and the Indenture
Trustee, as applicable, which security interest is prior to all other Liens, and is
enforceable as such as against creditors of and purchasers from GMAC, CARI and the Issuing
Entity, respectively.
	 
	2.	 	All steps necessary to perfect GMAC’s security interest against each Obligor in the property
securing the Purchased Property have been taken.
	 
	3.	 	Prior to the sale of the Purchased Property to CARI under this Agreement, the Receivables
constitute “tangible chattel paper” within the meaning of the applicable UCC.
	 
	4.	 	GMAC owns and has good and marketable title to the Purchased Property free and clear of any
Lien, claim or encumbrance of any Person.
	 
	5.	 	GMAC has caused or will have caused, within ten (10) days, the filing of all appropriate
financing statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Purchased Property granted to
CARI hereunder, the Issuing Entity under the Trust Sale and Servicing Agreement and the
Indenture Trustee under the Indenture.
	 
	6.	 	Other than the security interest granted to CARI pursuant to the Basic Documents, the Issuing
Entity under the Trust Sale and Servicing Agreement and the Indenture Trustee under the
Indenture none of GMAC, CARI or the Issuing Entity has pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Purchased Property. None of GMAC, CARI
or the Issuing Entity has authorized the filing of, nor is GMAC aware of, any financing
statements against GMAC, CARI or the Issuing Entity that include a description of collateral
covering the Purchased Property other than the financing statements relating to the security
interests granted to CARI, the Issuing Entity and the Indenture Trustee under the Basic
Documents or any financing statement that has been terminated. GMAC is not aware of any
judgment or tax lien filings against GMAC, CARI or the Issuing Entity.
	 
	7.	 	GMAC, as Servicer, has in its possession or with third party vendors all original copies of
the Receivables Files and other documents that constitute or evidence the Receivables and the
Purchased Property. The Receivables Files and other documents that constitute or evidence the
Purchased Property do not have any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than CARI.exv10w1

 

Exhibit 10.1

MANUFACTURING AGREEMENT

Agreement made, entered into and effective as of the last date of signing, by
and between Novint Technologies Incorporated (hereinafter called Client), having
an office for the transaction of business in Albuquerque, New Mexico, USA, and
VTech Communications Ltd. (herein after called VTech), a limited company
existing under the laws of Hong Kong and having an office for the transaction of
business in Hong Kong, 23rd Floor, Tai Ping Industrial Centre, Block 1, 57 Ting
Kok Road, Tai Po, New Territories, Hong Kong.

Witnesses that, the parties hereto agree as follows:

ARTICLE 1.0 UNDERTAKING OF MANUFACTURE

VTech shall manufacture the Products for Client according to the design and
specifications provided by Client.

ARTICLE 2.0 DEFINITIONS

	2.1	 	“Product” or “Products” shall mean each of the Products described on the
order forecast or the confirmed Purchase Orders from the client, as such
products may be changed, developed, improved or modified in accordance with the
terms of this Agreement from time to time by or on the behalf of either Client
or VTech, provided that the Client agrees to pay a mutually agreeable price
adjustment (increase or decrease) reflecting the cost of the changes,
developments, improvements or modifications versus the original cost and accepts
any reasonable related delivery schedule changes.
	 
	2.2	 	“Technical Information” shall mean all technical know-how, information,
data, drawings, trade secrets, manufacturing and test data, and specifications
involving or relating to the manufacture, production, maintenance and operation
of the Products as have heretofore been or may hereafter be disclosed by Client
to VTech.
	 
	2.3	 	“Delivery” shall mean Delivery of Products to Client, F.O.B. VTech factory,
or to any other place with the prior written consent from Client, which consent
shall not be unreasonably withheld by Client, taking into account any increased
shipping costs.
	 
	2.4	 	“Engineering Change” shall mean any change(s) to the electrical or
mechanical design of the Product(s) and/or manufacturing process therefor
proposed by Client and/or VTech and which would affect the cost, performance,
reliability, safety, serviceability, appearance, dimensions, tolerances, or
composition of materials thereof. All such changes shall include testing for
reliability and safety.

ARTICLE 3.0 GENERAL

	3.1	 	Client shall provide VTech with all Technical Information, which is
reasonably necessary to enable VTech to manufacture the Products, covered by
this Agreement.

Page 1 of 10

 

	3.2	 	VTech acknowledges that it does not obtain any right, title or interest in
or to the Technical Information or to any change, development, improvement, or
modification involving or relating to the Technical Information of Client made
or conceived exclusively by Client, other than is necessary for VTech to perform
its obligations hereunder.
	 
	3.3	 	Any changes to the Product(s) requiring rework of the design or
manufacturing process will be negotiated between the parties.
	 
	3.4	 	VTech will package individual units of the Products according to the
Packaging Specification as defined by the appropriate Bill of Materials or an acceptable substitute as may
be agreed between Client and VTech.
	 
	3.5	 	Client may make available to VTech certain materials for use in
manufacturing the Product, which VTech shall take for such purpose and pay
therefore; with price and payment terms to be negotiated between the parties.

ARTICLE 4.0 ORDERS. PRICE, AND PAYMENTS

	4.1	 	The manufacture and sale of Products under this Agreement shall be
implemented through purchase orders placed by Client and accepted by VTech.
Client shall provide VTech with a separate Purchase Order for any Tooling
Charges necessary for the manufacture of the Product(s). Such Tooling Charges
will be clearly delineated and detailed to Client by VTech.
Payment of the Tooling Charges shall be made 50% in advance and the balance to
be paid upon completion and approval of tooling. Client shall own all such
tooling, which tooling VTech shall reasonably safeguard from loss or damage, and
which tooling VTech shall use only for production of Product(s) for Client and
not for any other purpose, and which tooling shall be delivered by VTech to
Client or Client’s designee at Client’s expense promptly upon Client’s written
request.
	 
	4.2	 	Client shall provide VTech with order forecasts six (6) months prior to the
desired date of delivery and shall issue a confirmed purchase order to VTech at
least four (4) months prior to the shipment date designated therein. When a
six-month forecast of orders is released, Client shall advise shipment method
(whether by sea or air) for the shipment to be effected within the month of
projected release.
	 
	4.3	 	According to Client’s rolling forecast and purchase order, VTech shall
procure material so as to meet the delivery in the first four (4) months of the
forecast. Furthermore, VTech shall render to Client a list of long-lead time
material within a week after receiving the rolling forecast from Client. VTech
shall seek approval from Client to procure the long lead time material in order
to meet the shipment forecast during the fifth to sixth month or later and shall
proceed with the procurement upon receipt of an approval from Client. Any
material, which is procured according to the forecast and the approval of long
lead time items, but subsequently not used due to cancellations or rescheduling
by Client will be the responsibility of Client. However, VTech will apply its
best effort to use any excess parts in other products ordered by Client. VTech
will use its reasonable efforts to maintain its inventory so as to be able to
meet the forecast and in a manner so as to minimize Client’s exposure for
potentially unused material.
	 
	4.4	 	For the first Purchase Order under this Agreement, the F.O.B. price (Hong
Kong) for Products covered hereby shall be as set forth in Exhibit A. Unless
otherwise stated, all prices are exclusive of: (1) state and local sales, use
and similar taxes; and (2) freight and insurance charges.
	 
	4.5	 	Clients payment for Products purchased hereunder shall be settled by an
Irrevocable Letter of Credit at sight opened by Client with the Bank of their
choice, together with Purchase Order, in which letter of credit shall be payable
in the currency of the United States of America and shall

Page 2 of 10

 

	 	 	name VTech as Beneficiary and which shall be redeemable by VTech. The
Irrevocable Letter of Credit allows VTech to draw with Beneficiary’s signed
statement worded as follows: “The amount drawn represents and covers the
material and /or merchandise purchased on behalf of Client relating to Purchase
Order with purchase order number of Client and partial drawings are permitted.”

ARTICLE 5.0 CHANGES TO ORDERS

	5.1	 	No changes are allowed within 8 weeks from the date of scheduled ex-factory
date. 25% changes are allowed between 8 to 12 weeks from the date of scheduled
ex-factory date. Any changes are allowed beyond 12 weeks from the date of
scheduled ex-factory date. If there is any excess material created by the Client
due to the change, 1% carrying cost per month will be paid by the Client. If the
excess material is not consumed in six months, VTech will charge and bill the
Client for the cost of the material and the bill(s) should be paid within 30
days.
	 
	5.2	 	Engineering Changes (ECO’s and ECN’s) for processes or components may be
made by the Client or VTech. Such changes must be documented in writing using
forms and procedures to be agreed upon between VTech and Client. In the case of
a change precipitated by VTech, approval must be granted by Client before the
change is implemented. If an engineering change creates unused material or order
cancellations, all excess material shall be the responsibility of Client.

ARTICLE 6.0 SHIPMENT

	6.1	 	The VTech factory is in China and the port of export is in
Hong Kong.
	 
	6.2	 	Client may at its option and expense elect to have the Product(s) shipped by
airfreight, in which event VTech shall cooperate.
	 
	6.3	 	The title to and risk of the Products shall transfer to Client when the
Products reach the Client’s facility, based on the F.O.B. terms and pricing.

ARTICLE 7.0 TESTS, QUALITY CONTROL AND INSPECTION

	7.1	 	VTech will build the product according to IPC-A-610D and/or Test
Specifications as provided by Client and accepted by VTech.
	 
	7.2	 	Client will inspect each shipment from VTech according to MIL-STD-105E,
Single Sampling Plan, Level II with an Acceptable Quality Level (AQL) of 1.0%
for major defects and 2.5% for minor defects. Client shall inspect each shipment
and confirm non-acceptance of the shipment within 15 days after receipt of the
shipment. In case a shipment fails to meet the quality criteria, Client shall
notify VTech in writing of the nature of the defect and VTech will use its
reasonable efforts to correct the problem and will confer with Client
to reach agreement upon a recovery plan.

ARTICLE 8.0 WARRANTY

	8.1	 	VTech warrants to Client that all Products manufactured for Client under
this Agreement will strictly comply with the specifications and designs supplied
to VTech by Client and will be free from all defects in workmanship and
materials for a period of one year from the date of delivery. However, this
warranty will not cover defects caused by any additional manufacturing processes

Page 3 of 10

 

	 	 	at Client or any third party, or by any actions of the Product’s end users.
VTech shall, at its option, either repair or provide replacement parts for the
defective Product qualified for this warranty.
	 
	8.2	 	There are no other warranties than those stated in this Agreement. VTech
disclaims all other warranties to Client or third parties by virtue of this
Agreement or otherwise, either expressed or implied, including but not limited
to implied warranties of merchantability, of fitness for a particular purpose,
and arising from usage of trade or course of dealing or performance, with
respect to the Products and accompanying written materials. This limited
warranty gives you specific legal rights, you may have others which vary from
state to state or country to country.
	 
	8.3	 	Except as stated herein, in no event shall either party be
liable to the
other, its suppliers, customers or any other third parties by virtue of this
Agreement or otherwise, for any damages whatsoever including any consequential,
incidental, indirect or special damages, whether based on contract, tort,
warranty or other legal or equitable grounds, including, without limitation,
damages for loss of business profits, business interruption, loss of
business information, or other pecuniary loss, arising out of the use of or inability to
use the Products, even if advised of the possibility of such damages. Because
some states or countries do not allow the exclusion or limitation of liability
for consequential or incidental damages, the above limitation may not apply.
	 
	8.4	 	In no event will VTech’s aggregate liability to Client or third parties for
delayed delivery or failure to deliver Product(s) exceed the cost of the delayed
or undelivered Products as determined by the net price invoiced to Client in
respect of any single occurrence or series of occurrences. Client understands
that VTech’s charges depend in part on these limitations.

ARTICLE 9.0 CONFIDENTIALITY

	9.1	 	VTecft agrees that all confidential information, including, without
limitation, the Technical Information, furnished to it by or belonging to
Client, will be received and held in confidence by VTech and will be used by
VTech for the sole purpose of manufacturing the Products as set forth herein.
VTech shall take at least as stringent measures to safeguard such confidential
information or Technical Information as it uses for its own confidential
information. All such confidential information or Technical Information shall be
the sole and exclusive property of Client. VTech has or will require all of its
employees, consultants, agents, or others who have access to any of such
confidential information or Technical Information owned by Client to execute
agreements with it similar in content to this Article 9.1 and will exercise due
diligence to obtain compliance therewith.
	 
	9.2	 	VTech agrees that it will not publish or otherwise use for its own benefit
confidential information or Technical Information received from Client without
the prior written consent of Client. The provisions of this Article 9 shall
survive any expiration or termination of this Agreement, but shall not apply to
confidential information of Client which (i) was known to VTech, as evidenced by
its written records, prior to the receipt of such confidential information, (ii)
was publicly available at the time of disclosure or subsequently becomes
publicly available through no fault of VTech or (iii) is subsequently disclosed
to VTech by a third party who is under no obligation of confidentiality to
Client, (iv) is developed by VTech independent of the received material from the
Client.

ARTICLE 10.0 INDEMNIFICATION AND LIMITATION OF LIABILITY

	10.1	 	VTech shall indemnify and hold the Client harmless from and against all
losses, costs, claims and damages relating to or arising out of any allegation
that VTech’s manufacturing processes furnished under this Agreement infringe or
violate any patent, copyright, trade secret or any other

Page 4 of 10

 

	 	 	proprietary right provided that this indemnity shall not apply to any
infringement which is due wholly to VTech’s compliance with the design or
instruction furnished or given by the Client.
	 
	10.2	 	Client shall indemnify and hold VTech harmless from and against all losses,
costs, claims and damages resulting from VTech’s reasonable compliance with the
design or instruction furnished or given by the Client. Client shall have no
obligations to indemnify and hold VTech harmless from and against any losses,
costs, claims and damages resulting from the willful misconduct or negligence
of VTech or its agents.
	 
	10.3	 	VTech shall indemnify and hold Client harmless from and against all losses,
costs, claims and damages resulting from the willful misconduct or negligence of
VTech or its agents.

ARTICLE 11.0 TERM OF AGREEMENT

	11.1	 	This Agreement, which shall become effective upon the Effective Date, shall
continue for a period of eighteen (18) months after the date of first Delivery
to Client at the port of export, unless this Agreement is otherwise terminated
pursuant to Article 12 hereof, and shall be renewed every twelve (12) months
thereafter unless either party gives the other written notice of termination at
least one hundred twenty (120) days prior to the expiration of the original term
or any extension thereof.

ARTICLE 12.0 TERMINATION OF AGREEMENT

	12.1	 	Client and VTech shall be entitled to terminate this Agreement and cancel
all outstanding purchase orders immediately upon written notice to the other
party on the occurrence of any of the following events:

	 	12.1.1	 	Client or VTech breaches any provision of this Agreement or fails to
perform any of its obligations hereunder, which breach or failure shall not have
been remedied by the breaching party within thirty (30) days after written
notice thereof;
	 
	 	12.1.2	 	under the law of any applicable jurisdiction, Client or VTech becomes
insolvent, suspends business or goes into liquidation, bankruptcy or
receivership or becomes a party to any procedure for the settlement of its debts
or to a dissolution proceeding, or the equivalent or any of the foregoing in
their own country; or
	 
	 	12.1.3	 	upon one hundred twenty (120) days written notice to the other party
following the merger or consolidation of Client or VTech with, or the sale or
assignment by Client or VTech (or the sale or assignment by its stockholders) or
a majority of its voting stock to, or the sale, assignment, lease or other
disposition of/or voluntary parting with the control (whether in one transaction
or series of transactions) of a material portion of the assets of Client or
VTech to any person or entity except for sales or other dispositions of assets
in the ordinary course of business.

	12.2	 	Client may cancel purchase releases under this Agreement for any reason by
notifying VTech in writing. Cancellation shall become effective after
twenty-four (24) hours following the sending by a telex or cable to VTech
promptly followed by VTech’s receipt from Client of a written cancellation
notice in the form of a registered air mail letter from Client, or thereafter
upon the date specified in such telex, cable, facsimile, or letter. VTech shall
cease operation on all existing purchase order(s) in accordance with the
cancellation notice. Client shall have no liability for cancelled purchase
orders other than as set forth in this subsection. In the event of a
cancellation under this subsection, Client will pay VTech for the materials and
labor costs incurred prior to the

Page 5 of 10

 

	 	 	effective date of the cancellation for Products which are in process or
completed under the outstanding Client purchase orders, and VTech will deliver
to Client all completed products, assemblies in process, manuals, spare parts,
and all components processed on account of outstanding purchase orders.
	12.3	 	Upon termination of this Agreement, VTech shall promptly return to Client
all confidential information and related data that is then in the possession of
VTech, custody or control, including, but not limited to, all documentation
concerning the Product provided by VTech at any time during the term of this
Agreement, and VTech shall warrant to Client in writing, within ten (10) days of
returning all confidential information, that it no longer possesses any of the
Proprietary Information in any form.

ARTICLE 13.0 FORCE MAJEURE

	13.1	 	Any failure of Client or VTech to comply with the terms of this Agreement
if such failure is caused by circumstances not directly under the control of the
party concerned, including but not limited to, failures resulting from force
majeure, acts of nature, natural disasters, fire, storm, flood, earthquake,
explosion, acts of the public enemy, war, rebellion, insurrection, sabotage,
epidemic, quarantine restrictions, riots, transportation embargoes, boycotts,
failures or delays in transportation or the mails, inability to secure necessary
materials (including but not limited to fuel), acts of any government, whether
national, state, local or otherwise, or any agency thereof, or judicial action,
shall be excused for performance continues, provided that the nonperforming
party makes a reasonable effort to anticipate the effect of the intervening
condition, and promptly performs when said condition ceases to exist. In the
event that any delivery of Product(s) is delayed by more than 60 days for event
under VTech control, then Client shall have the right but not the obligation to
at any time prior to the delivery of the delayed Product(s) (a) cancel the
corresponding Purchase Order, and Client shall pay only for that portion of the
delayed Product(s) actually completed.

ARTICLE 14.0 NOTICES

	14.1	 	Any notice required or permitted to be given hereunder shall be in writing
and shall be deemed to be properly given when sent by registered air mail,
return receipt requested, or fax addressed as follows:

If to Client:

Tom Anderson

Chief Executive Officer

Novint Technologies Incorporated

4109 Bryan Avenue NW

Albuquerque, NM 87114

USA

Tel: 866-298-4420

Fax: 866-298-4420

If to VTech:

Andy Leung

Chief Executive Officer

VTech Communications Ltd. (Contract Manufacturing Services)

Page 6 of 10

 

23/F,
Tai Ping Industrial Centre

Block 1, 57 Ting Kok Road

Tai Po, N.T. Hong Kong

Tel: 852-26801000

Fax: 852-26677175

or to such other address as either party may give the other party notice of
pursuant to this Article 15.0. Any notice given by mail shall be deemed to have
been given on the tenth day after the mailing thereof; provided, however, that
if the contents of any such notice are sent by fax, such notice shall be deemed
to have been received on the business day following the date of such fax.

ARTICLE 15.0 GOVERNING LAW

	15.1	 	It is expressly agreed that the validity, performance and construction of
this Agreement shall be governed by, and construed in accordance with, the laws
of New Mexico.

ARTICLE 16.0 WAIVERS: AMENDMENTS

	16.1	 	No waiver of any right hereunder by either party shall operate as a waiver
of any other rights, or of the same right with respect to any subsequent
occasion for its exercise, or of any right to damages. No waiver by either party
of any breach of this Agreement shall be held to constitute a waiver of any
other breach or a continuation of the same breach. All remedies provided by this
Agreement are in addition to all other remedies provided by law. This agreement
may not be amended except by writing signed by each of the parties hereto.

ARTICLE
17.0 ASSIGNMENT

	17.1	 	VTech shall be entitled to subcontract or assign some or all of its rights
and obligations hereunder, provided, however, that any such transfer should not
relieve VTech’s of its responsibilities hereunder incurred prior to the
assignment.
	 
	17.2	 	Any assignment by Client of any of its rights or obligations hereunder
without VTech’s prior written consent shall be void, which consent shall not be
unreasonably withheld or delayed or conditioned on the payment of money beyond
amounts required by this Agreement.

ARTICLE 18.0 SEVERABILITY

	18.1	 	Every provision hereof is intended to be severable. The unenforceability,
invalidity, or illegality of any provision for any reason whatsoever, shall not
render the other provisions unenforceable, invalid or illegal. If any provision
of this Agreement is or becomes or is deemed invalid, illegal or unenforceable
under the applicable laws or regulations of any jurisdiction, either such
provision will be deemed amended to conform to applicable laws or regulations
or, if it cannot be so amended without materially altering the intention of the
parties, then either (a) it shall be stricken and the remainder of this
Agreement shall remain full force and effect, or (b) the party most
disadvantaged by such striking of the provision shall have the right to
terminate the Agreement immediately and be excused from those obligations that
would have arisen had the other party performed under the stricken provision.

ARTICLE 19.0 ENTIRETY

Page 7 of 10

 

	19.1	 	The foregoing Agreement by reference and purchase orders issued hereunder,
constitutes the entire agreement of the parties and supersedes and cancels all
prior communications, negotiations and agreements, oral and written, with
respect to the subject matter hereof.

Page 8 of 10

 

IN WITNESS
WHEREOF, Client and VTech have caused this Agreement to be executed
by their respective officers duly authorized as of the date first written
above.

			
	
	 	

Page 9 of 10

 

Exhibit A

See Novint Purchase Order 1056 Dated December 13, 2006.

Page 10 of 10

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