10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2006
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

Commission file number 1-143

GENERAL MOTORS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

STATE OF DELAWARE	38-0572515
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
300 Renaissance Center, Detroit, Michigan	48265-3000
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (313) 556-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ     Accelerated filer  o     Non-accelerated filer  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

As of July 31, 2006, there were outstanding 565,607,779 shares of the issuer’s $12/3 par value common stock.

Website Access to Company’s Reports

General Motor’s (GM’s) internet website address is www.gm.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Explanatory Note

General Motors Corporation’s (GM) net loss for the second quarter of 2006, previously announced as $3.2 billion in its earning release furnished in a Form 8-K dated August 1, 2006, has been increased by $200 million to $3.4 billion. The increase is attributable to the estimated tax provision relating to the loss related to the announced sale of 51% of GM’s interest in GMAC LLC (GMAC) to a consortium of investors. The previously estimated after-tax charge of $490 million has been increased to $690 million as the tax provision was adjusted to reflect the book to tax basis differences at several GMAC subsidiaries.

The tax increase does not result in a current cash cost to either GM or GMAC.

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

INDEX

			Page No.
Part I — Financial Information
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2006 and 2005		I-1
		Condensed Consolidated Balance Sheets as of June 30, 2006, December 31, 2005, and June 30, 2005		I-2
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005		I-3
		Notes to Condensed Consolidated Financial Statements		I-4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		I-28
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		I-62
	Item 4.	Controls and Procedures		I-62
Part II — Other Information
	Item 1.	Legal Proceedings		II-1
	Item 1A.	Risk Factors		II-2
	Item 2(c).	Purchases of Equity Securities		II-7
	Item 4.	Submission of Matters to a Vote of Security Holders		II-8
	Item 6.	Exhibits		II-10
Signatures				II-11

PART I

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 1.   Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions except per share amounts)
Net sales and revenues
Automotive sales	$	44,602		$	40,178		$	87,362		$	77,481
Financial services and insurance revenues		9,067			8,291			17,922			16,761
Other income		726			—			1,356			—
Total net sales and revenues	$	54,395		$	48,469		$	106,640		$	94,242
Costs and expenses
Automotive cost of sales		46,851			37,908			86,365			75,054
Selling, general, and administrative expenses		6,069			6,645			13,267			12,969
Interest expense		4,531			3,712			8,760			7,391
Provisions for financing and insurance operations credit and insurance losses		938			797			1,670			1,715
Other expenses		1,208			812			1,208			812
Total costs and expenses		59,597			49,874			111,270			97,941
Loss before income tax benefit, equity income (loss) and minority interests		(5,202	)		(1,405	)		(4,630	)		(3,699	)
Income tax benefit		(1,655	)		(245	)		(1,461	)		(1,217	)
Equity income (loss) and minority interests		168			173			235			242
Net loss	$	(3,379	)	$	(987	)	$	(2,934	)	$	(2,240	)
Loss per share attributable to common stock, basic and diluted	$	(5.97	)	$	(1.75	)	$	(5.19	)	$	(3.96	)
Weighted average common shares outstanding — basic and diluted (millions)		566			565			566			565

Reference should be made to the notes to condensed consolidated financial statements.

I-1

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	June 30,			December 31,			June 30,
	2006			2005			2005
	(Dollars in millions,
	except share information)
ASSETS
Current Assets
Cash and cash equivalents	$	19,997		$	15,187		$	12,445
Marketable securities		115			1,416			3,629
Total cash and marketable securities		20,112			16,603			16,074
Accounts and notes receivable (less allowances)		10,302			7,758			8,087
Inventories (less allowances)		14,449			13,851			12,818
Net equipment on operating leases — (less accumulated depreciation)		6,892			6,993			6,723
Deferred income taxes and other current assets		10,260			8,877			10,516
Total current assets		62,015			54,082			54,218
Financing and Insurance Operations
Cash and cash equivalents		2,848			15,539			19,816
Investments in securities		199			18,310			19,384
Finance receivables — net		4,284			180,793			178,137
Loans held for sale		—			21,865			26,903
Assets held for sale (less allowance)		274,294			19,030			—
Net equipment on operating leases (less accumulated depreciation)		16,533			31,194			29,353
Other assets		3,925			27,694			33,228
Total Financing and Insurance Operations assets		302,083			314,425			306,821
Non-Current Assets
Equity in net assets of nonconsolidated affiliates		1,901			3,291			4,156
Property — net		38,535			38,466			38,480
Intangible assets — net		1,662			1,862			1,658
Deferred income taxes		23,083			22,849			19,253
Other assets		41,227			41,103			41,415
Total non-current assets		106,408			107,571			104,962
Total assets	$	470,506		$	476,078		$	466,001
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable (principally trade)	$	27,674		$	26,182		$	25,361
Loans payable		1,254			1,519			1,563
Accrued expenses		48,441			42,665			44,517
Total current liabilities		77,369			70,366			71,441
Financing and Insurance Operations Liabilities
Accounts payable		23			3,731			3,333
Liabilities related to assets held for sale		267,551			10,941			—
Debt		12,849			253,217			251,015
Other liabilities and deferred income taxes		4,804			28,946			32,473
Total Financing and Insurance Operations liabilities		285,227			296,835			286,821
Non-Current Liabilities
Long-term debt		31,275			31,014			31,043
Postretirement benefits other than pensions		30,668			28,990			25,882
Pensions		11,502			11,214			9,619
Other liabilities and deferred income taxes		21,744			22,023			16,447
Total non-current liabilities		95,189			93,241			82,991
Total liabilities		457,785			460,442			441,253
Minority interests		1,081			1,039			902
Stockholders’ equity
$12/3 par value common stock (outstanding, 565,607,779; 565,518,106; and 565,503,422 shares)		943			943			943
Capital surplus (principally additional paid-in capital)		15,306			15,285			15,255
Retained earnings (accumulated deficit)		(869	)		2,361			11,252
Accumulated other comprehensive loss		(3,740	)		(3,992	)		(3,604	)
Total stockholders’ equity		11,640			14,597			23,846
Total liabilities and stockholders’ equity	$	470,506		$	476,078		$	466,001

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	June 30,
	2006			2005
	(Dollars in millions)
Net cash used in operating activities	$	(1,989	)	$	(1,781	)
Cash flows from investing activities
Expenditures for property		(3,274	)		(2,944	)
Investments in marketable securities — acquisitions		(11,580	)		(10,830	)
Investments in marketable securities — liquidations		11,909			10,269
Net change in mortgage servicing rights		(55	)		(185	)
Increase in finance receivables		(169	)		(2,569	)
Proceeds from sales of finance receivables		15,213			17,692
Proceeds from sale of business units/equity investments		10,518			—
Operating leases — acquisitions		(9,135	)		(8,378	)
Operating leases — liquidations		3,411			3,258
Investments in companies, net of cash acquired		(345	)		1,355
Other		(1,615	)		(2,141	)
Net cash provided by investing activities		14,878			5,527
Cash flows from financing activities
Net decrease in loans payable		(7,185	)		(8,411	)
Long-term debt — borrowings		42,651			30,440
Long-term debt — repayments		(43,584	)		(32,144	)
Cash dividends paid to stockholders		(283	)		(570	)
Other		1,918			3,619
Net cash used in financing activities		(6,483	)		(7,066	)
Effect of exchange rate changes on cash and cash equivalents		171			(412	)
Net increase (decrease) in cash and cash equivalents		6,577			(3,732	)
Cash and cash equivalents reclassified to assets held for sale		(14,458	)		—
Cash and cash equivalents at beginning of the period		30,726			35,993
Cash and cash equivalents at end of the period (a)	$	22,845		$	32,261

(a)  Consists of cash and cash equivalents of $19,997 million classified as current assets and $2,848 million from Financing and Insurance Operations as of June 30, 2006, and $12,445 million classified as current assets and $19,816 million from Financing and Insurance Operations as of June 30, 2005.

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.   Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information. In the opinion of management, all adjustments (consisting of only normal recurring items) that are necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year. The condensed consolidated financial statements include the accounts of General Motors Corporation and domestic and foreign subsidiaries that are more than 50% owned, principally GMAC LLC (GMAC, formerly known as General Motors Acceptance Corporation) (collectively referred to as the Corporation, General Motors, GM, we, or us). In addition, GM consolidates variable interest entities (VIEs) for which it is deemed to be the primary beneficiary. GM’s share of earnings or losses of affiliates that are less than 50% owned are included in the consolidated operating results using the equity method of accounting when GM is able to exercise significant influence over the operating and financial decisions of the investee. GM encourages reference to the GM Annual Report on Form 10-K for the period ended December 31, 2005, filed separately with the United States Securities and Exchange Commission (SEC).

All material inter-company accounts and transactions have been eliminated.

GM’s Automotive and Other Operations (Auto & Other) reportable operating segment consists of:

•  GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and

•  Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain retirees of Delphi Corporation (Delphi) and other companies, and certain corporate activities.

GM’s Financing and Insurance Operations (FIO) reportable operating segment consists of GMAC and Other Financing, which includes financing entities that are not consolidated by GMAC.

Consolidation of GM Daewoo

On February 3, 2005, GM completed the purchase of 16.6 million newly issued shares of common stock in GM Daewoo Auto & Technology Company (GM Daewoo) for approximately $49 million, which increased GM’s ownership in GM Daewoo to 48.2% from 44.6%. No other shareholders in GM Daewoo participated in the issue. On June 28, 2005, GM purchased from Suzuki Motor Corporation (Suzuki) 6.9 million shares of outstanding common stock in GM Daewoo for approximately $21 million. This increased GM’s ownership in GM Daewoo to 50.9%. Accordingly, as of June 30, 2005, GM began consolidating GM Daewoo.

The following unaudited financial information for the three and six months ended June 30, 2006 and 2005 represents amounts attributable to GM Daewoo on a basis consistent with giving effect to the increased ownership and consolidation as of January 1, 2005. The pro forma effect on net income (loss) is not significant compared to equity income recognized.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
	Actual		Pro Forma		Actual		Pro Forma
	(Dollars in millions)
Automotive sales	$	1,786	$	1,497	$	3,404	$	2,668

I-4

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 1.   Financial Statement Presentation — (continued)

Change in Accounting Principle

On January 1, 2006, GM adopted Statement of Financial Accounting Standards No. 156, “Accounting for Servicing of Financial Assets” (SFAS No. 156), which (1) provides revised guidance on when a servicing asset and servicing liability should be recognized, (2) requires all separately recognized servicing assets and liabilities to be initially measured at fair value, if practicable, (3) permits an entity to elect to measure servicing assets and liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur, (4) provides that upon initial adoption, a one time reclassification of available-for-sale securities to trading securities for securities which are identified as offsetting an entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects to subsequently measure at fair value, and (5) requires separate presentation of servicing assets and liabilities subsequently measured at fair value in the balance sheet and additional disclosures. GM recorded a reduction to retained earnings as of January 1, 2006 of $13 million, net of tax, as a cumulative effect of a change in accounting principle for the adoption of SFAS No. 156.

New Accounting Standards

In December 2005, the Financial Accounting Standard Board (FASB) released FASB Staff Position (FSP) SFAS No. 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards,” which provides a practical transition election related to accounting for the tax effects of share-based payment awards to employees. The Corporation is currently reviewing the transition alternatives and will elect the appropriate alternative no later than January 1, 2007.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS No. 140). This statement amends SFAS No. 133 to permit fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also eliminates the interim guidance in SFAS No. 133 Implementation Issue D-1, which provides that beneficial interests in securitized financial assets are not subject to the provisions of SFAS No. 133. Finally, this statement amends SFAS No. 140 to eliminate the restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for all financial instruments acquired or issued in first fiscal years beginning after September 15, 2006. Management is assessing the potential impact on GM’s financial condition and results of operations.

In April 2006, the FASB issued FSP FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46R,” which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46R, “Consolidation of Variable Interest Entities.” The variability is used in applying FIN 46R to determine whether an entity is a VIE, which interests are variable interests in the entity, and who is the primary beneficiary of the VIE. This statement is effective for all reporting periods beginning after June 15, 2006. Management does not expect this statement to have a significant impact on GM’s financial condition and results of operations.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income Taxes,” by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 1.    Financial Statement Presentation — (concluded)

Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on GM’s financial condition and results of operations.

In July 2006, the FASB issued FSP No. 13-2 “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction,” (FSP 13-2), which amends SFAS No. 13, “Accounting for Leases,” by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leverage lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management is assessing the potential impact on GM’s financial condition and results of operations.

Change in Presentation of Financial Statements

In periods presented prior to June 30, 2006, GM presented separate supplemental financial information for its reportable operating segments. GM’s pending sale of a controlling interest in GMAC has resulted in certain GMAC assets and liabilities being presented as held for sale at June 30, 2006, therefore the supplemental statements were no longer meaningful.

Note 2.   Assets Held for Sale

Loss on Controlling Interest in GMAC — Held for Sale

On April 2, 2006, GM and its wholly owned subsidiaries, GMAC and GM Finance Co. Holdings Inc., entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of $7.4 billion to FIM Holdings LLC (FIM Holdings). FIM Holdings is a consortium of investors including Cerberus, and Citigroup Inc., Aozora Bank Ltd., and a subsidiary of The PNC Financial Services Group, Inc. GM and the consortium will invest $1.9 billion of cash in new GMAC limited liability company interest, with $1.4 billion to be invested by GM and $500 million to be invested by the consortium. The transaction is subject to a number of U.S. and international regulatory and other approvals. GM expects to close the transaction in the fourth quarter of 2006, but it is possible that delays in obtaining the required approvals or in satisfying other required conditions could defer the closing until 2007. See Note 17.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2.   Assets Held for Sale — (continued)

For the three and six months ended June 30, 2006, GMAC’s earnings and cash flows are fully consolidated in GM’s Condensed Consolidated Statements of Operations and Statements of Cash Flows. However, as a result of the agreement to sell a 51% equity interest, certain assets and liabilities of GMAC have been classified as held for sale in GM’s Condensed Consolidated Balance Sheet at June 30, 2006. Pursuant to the requirements of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” GM has ceased depreciation on the GMAC long-lived assets that are classified as held for sale in GM’s consolidated financial statements. The following table presents GMAC’s major classes of assets and liabilities classified as held for sale as of June 30, 2006 (dollars in millions):

Cash and cash equivalents	$	14,458
Marketable securities		18,808
Finance receivables — net		174,009
Loans held for sale		20,455
Account and notes receivable		7,733
Inventories (less allowances)		558
Net equipment on operating leases (less accumulated depreciation)		18,805
Other assets		20,676
Allowance to reflect assets held for sale at fair value less cost to sell		(1,208	)
Total assets held for sale	$	274,294
Accounts payable	$	3,805
Notes and loans payable		233,801
Deferred income taxes		1,392
Accrued expenses and other liabilities		28,553
Total liabilities related to assets held for sale	$	267,551

The table above represents 100% of the respective assets and liabilities that are held for sale as of June 30, 2006, which excludes the asset and liability balances as of June 30, 2006 relating to items (i) through (vi) below, which will be retained by GM. The transaction will result in the divesture of a 51% interest in GMAC. The held for sale asset and liability balances at June 30, 2006 may differ from the respective balances at closing.

Prior to consummation of the transaction, (i) certain assets with respect to automotive leases and retail installment sales contracts owned by GMAC and its affiliates having a net book value of approximately $4 billion will be dividended to GM, (ii) GM will assume certain of GMAC’s postemployment benefit obligations, (iii) GMAC will transfer to GM certain entities that hold a fee interest in certain real properties, (iv) GMAC will pay dividends to GM in an amount up to the amount of GMAC net income prior to the acquisition, (v) GM will repay certain indebtedness owing to GMAC and specified intercompany unsecured obligations owing to GMAC shall be no greater than $1.5 billion and (vi) GMAC will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in GMAC’s equity value resulting from the transfer of a portion of GMAC’s net deferred tax liabilities arising from the conversion of GMAC and certain of its subsidiaries to limited liability company form. The total value of the cash proceeds and distributions to GM before it purchases preferred limited liability company interests of GMAC and repays any intercompany unsecured obligations will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price, the $4 billion of retained assets and the $2.7 billion cash dividend.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2.    Assets Held for Sale — (concluded)

GM recognized a non-cash pre-tax impairment charge of approximately $1.2 billion in other expenses in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006 to reflect the GMAC assets classified as held for sale at the lower of carrying value or fair value less costs to sell. The charge is comprised of impairment of the carrying value of GMAC assets held for sale partially offset by 51% of the effects of unrecognized net gains reflected in GMAC’s other comprehensive income. After the sale of the 51% controlling interest, the remaining 49% interest in GMAC, with carrying value based on GM’s historical cost, will be reflected in GM’s financial statements using the equity method of accounting.

As part of the transaction, GM and GMAC will enter into a number of agreements that will require GMAC to continue to allocate capital to automotive financing consistent with historical practice, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While GMAC will retain the right to make individual credit decisions, GMAC will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdiction. Subject to GMAC’s fulfillment of certain conditions, GM will grant GMAC exclusivity for 10 years for U.S., Canadian, and international GM-sponsored retail and wholesale marketing incentives around the world, with the exception of Saturn branded products.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase from GMAC certain assets related to the automotive finance business of the North American Operations and International Operations of GMAC. GM’s exercise of the option is conditional on GM’s credit rating being investment grade or higher than GMAC’s credit rating. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of GMAC’s automotive finance business in either the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things, (i) receipt of ratings for the senior unsecured long-term indebtedness of GMAC and Residential Capital Corporation, a wholly owned subsidiary of GMAC, (ResCap) after giving effect to the transactions contemplated by the agreement, of at least BB and BBB- (or their respective equivalents), respectively, and an A.M. Best rating for GMAC’s significant insurance subsidiaries of at least B++, (ii) that no material adverse effect will have occurred with respect to the business, financial condition or results of operations of GMAC, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent, and (iii) the receipt of required regulatory approvals and licenses. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 31, 2007.

Sale of GMAC Commercial Mortgage

On March 23, 2006, GM (through GMAC) sold approximately 78% of its equity in GMAC Commercial Mortgage for approximately $1.5 billion in cash. Subsequent to the sale, the remaining interest in GMAC Commercial Mortgage is reflected under the equity method. At December 31, 2005, GMAC Commercial Mortgage’s assets and liabilities had been classified as held for sale in GM’s Consolidated Balance Sheet.

I-8

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3.   Inventories

Inventories included the following (dollars in millions):

	June 30,			Dec. 31,			June 30,
	2006			2005			2005
Auto & Other
Productive material, work in process, and supplies	$	6,281		$	5,471		$	5,364
Finished product, service parts, etc.		9,659			9,871			8,757
Total inventories at FIFO		15,940			15,342			14,121
Less LIFO allowance		(1,491	)		(1,491	)		(1,303	)
Total inventories (less allowances)	$	14,449		$	13,851		$	12,818
Financing and Insurance Operations
Off-lease vehicles		—			503			532
Total consolidated inventories (less allowances)	$	14,449		$	14,354		$	13,350

At June 30, 2006, FIO off-lease vehicles totaling $558 million are presented as held for sale.

Note 4.   Goodwill and Acquired Intangible Assets

The components of the Corporation’s intangible assets were as follows (dollars in millions):

	Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount
June 30, 2006
Auto & Other
Amortizing intangible assets:
Patents and intellectual property rights	$	521	$	172	$	349
Non-amortizing intangible assets:
Goodwill						768
Pension intangible asset						545
Total goodwill and intangible assets					$	1,662
June 30, 2005
Auto & Other
Amortizing intangible assets:
Patents and intellectual property rights	$	510	$	93	$	417
Non-amortizing intangible assets:
Goodwill						526
Pension intangible asset						715
Total goodwill and intangible assets					$	1,658
Financing and Insurance Operations
Amortizing intangible assets:
Customer lists and contracts	$	74	$	45		29
Trademarks and other		40		22		18
Total		114		67		47
Non-amortizing intangible assets:
Goodwill						3,242
Total goodwill and intangible assets						3,289
Total consolidated goodwill and intangible assets					$	4,947

I-9

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4.    Goodwill and Acquired Intangible Assets — (concluded)

At June 30, 2006, FIO goodwill and intangible assets totaling $2,542 million and $81 million, respectively, are presented as held for sale.

Estimated amortization expense, excluding FIO, in each of the next five years is as follows: 2007 — $56 million; 2008 — $52 million; 2009 — $45 million; 2010 — $23 million; and 2011 — $16 million.

The changes in the carrying amounts of goodwill for the quarters ended June 30, 2006, and 2005, were as follows (dollars in millions):

							Total
	GMNA			GME			Auto & Other			GMAC			Total GM
Balance as of December 31, 2005	$	383		$	374		$	757		$	2,446		$	3,203
Goodwill acquired during the period		10			—			10			73			83
Other		(23	)		—			(23	)		—			(23	)
Reclassification of GMAC goodwill to assets held for sale(a)		—			—			—			(2,542	)		(2,542	)
Transfer of business unit (See Note 16)		(63	)		63			—			—			—
Effect of foreign currency translation and other		(5	)		29			24			23			47
Balance as of June 30, 2006	$	302		$	466		$	768		$	—		$	768
Balance as of December 31, 2004	$	154		$	446		$	600		$	3,274		$	3,874
Goodwill acquired during the period		—			—			—			3			3
Effect of foreign currency translation and other		(7	)		(67	)		(74	)		(35	)		(109	)
Balance as of June 30, 2005	$	147		$	379		$	526		$	3,242		$	3,768

(a) Included in Other Assets in table of assets and related liabilities of GMAC, held for sale in Note 2.

Note 5.   Investment in Nonconsolidated Affiliates

Nonconsolidated affiliates of GM identified herein are those entities in which GM owns an equity interest and for which GM uses the equity method of accounting, because GM has the ability to exert significant influence over decisions relating to their operating and financial affairs. GM’s significant affiliates, and the percent of GM’s current equity ownership, or voting interest, in them include the following: Japan — Fuji Heavy Industries Ltd. (sold during fourth quarter of 2005, 20.1% at June 30, 2005), Suzuki (3.7% at June 30, 2006, and 20.2% at June 30, 2005); China — Shanghai General Motors Co., Ltd (50% at June 30, 2006 and 2005), SAIC GM Wuling Automobile Co., Ltd (34% at June 30, 2006 and 2005); Korea — GM Daewoo (fully consolidated — 50.9% at June 30, 2006 and 2005). Information regarding GM’s share of income (loss) for all nonconsolidated affiliates (as described above) in the following countries is included in the table below (in millions):

	Three Months				Six Months
	Ended				Ended
	June 30,				June 30,
	2006		2005		2006		2005
Italy	$	—	$	11	$	—	$	32
Japan	$	—	$	45	$	21	$	95
China	$	100	$	99	$	170	$	132
Korea	$	—	$	25	$	—	$	17

I-10

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5.    Investment in Nonconsolidated Affiliates — (concluded)

In April 2006, GMAC signed a definitive agreement to sell its entire interest in a regional home builder. In the second quarter of 2006, GMAC recognized a pre-tax gain of $415 million on the sale of its equity interest. Under the equity method of accounting, GMAC’s share of pretax income recorded from this investment was approximately $22.5 million and $21.8 million for the three months ended June 30, 2006 and 2005, respectively, and $42.4 million and $35.2 million for the six months ended June 30, 2006 and 2005, respectively.

In March 2006, GM sold 92.36 million shares of its investment in Suzuki, reducing GM’s equity stake in Suzuki from 20.4% to 3.7% (16.3 million shares). The sale of GM’s interest generated cash proceeds of $2.0 billion and a pretax gain on sale of $630 million for the six months ended June 30, 2006. Effective with completion of the sale, GM’s remaining investment in Suzuki is accounted for as an equity security, rather than as an equity-method investment, and GM will no longer recognize equity income with respect to it.

In the second quarter of 2005, GM recorded an after tax impairment charge of $788 million associated with its investment in the common stock of Fuji Heavy Industries Ltd., which is reflected in Other Expenses in the Consolidated Statement of Operations for the three and six months ended June 30, 2005.

Note 6.   Product Warranty Liability

Policy, product warranty, recall campaigns and certified used vehicles liability included the following (dollars in millions):

	Six Months			Twelve Months			Six Months
	Ended			Ended			Ended
	June 30, 2006			Dec. 31, 2005			June 30, 2005
Beginning balance	$	9,128		$	9,315		$	9,315
Payments		(2,193	)		(4,696	)		(2,366	)
Increase in liability (warranties issued during period)		2,223			5,159			2,867
Adjustments to liability (pre-existing warranties)		(420	)		(381	)		(264	)
Effect of foreign currency translation		113			(269	)		(263	)
Ending balance	$	8,851		$	9,128		$	9,289

Adjustments to the liability are made as Management reviews these estimates on a regular basis and adjusts the policy, product warranty and recall campaigns provisions as actual experience differs from historical estimates or other information becomes available.

Note 7.   GMNA Postemployment Benefit Costs

Costs to idle, consolidate or close facilities and provide postemployment benefits to employees idled on an other than temporary basis are accrued based on management’s best estimate of the wage and benefits costs that will be incurred for qualified employees under the JOBS bank provisions of the current labor agreement through the date of its expiration in September 2007, plus estimated costs expected to be paid thereafter taking into account policy changes that GM intends to negotiate into the JOBS program after the expiration of the current collective bargaining agreement. Costs related to the idling of employees that are expected to be temporary are expensed as incurred. GM reviews the adequacy and continuing need for these liabilities on an annual basis in conjunction with its year-end production and labor forecasts. Furthermore, GM reviews the reasonableness of the liabilities on a quarterly basis.

In 2005, GM recognized a pre-tax charge of $1.9 billion, or $1.2 billion after tax, for postemployment benefits related to the restructuring of its North American operations announced in November 2005 (the GMNA restructuring). Approximately 17,500 employees were included in the charge for locations included in this action, some leaving the company through attrition and some transferring to other sites.

I-11

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 7.   GMNA Postemployment Benefit Costs — (concluded)

On March 22, 2006, GM, Delphi and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) reached an agreement (UAW Attrition Agreement) intended to reduce the number of U.S. hourly employees through an accelerated attrition program (Attrition Program), as detailed in our Current Reports on Form 8-K filed on March 22 and April 7, 2006. The agreement provided for a combination of early retirement programs and other incentives designed to help reduce employment levels at GM. GM hourly employees had until June 23, 2006 to accept the terms of the Attrition Program followed by a seven-day rescission period from the date of acceptance. Approximately 34,400 GM hourly employees have agreed to the terms of the Attrition Program. As a result of the Attrition Program, in the second quarter of 2006, GM recorded a pre-tax charge of approximately $2.1 billion to recognize the wage and benefits cost of those accepting normal and voluntary retirements, buy-outs or pre-retirement leaves. Due to a higher than anticipated level of participation by employees at idled facilities and facilities to be idled that were previously accrued for under the JOBS bank provisions mentioned above in the second quarter of 2006, we adjusted the JOBS bank accrual by $853 million. These employees’ wage and benefit costs were then included in the accrual made in the second quarter of 2006 under the Attrition Program. This favorable adjustment, when combined with the favorable adjustment of $136 million made to the postemployment benefits reserve in the first quarter of 2006 results in a total favorable adjustment to the postemployment benefits reserve for the six months ended June 30, 2006 of $989 million. In addition, in the first quarter of 2006 a pre-tax charge of $81 million was recorded to reflect GM’s commitment under the Attrition Program to pay a lump-sum to certain UAW-represented GM retirees with recent retirements.

In the second quarter of 2006, GM announced plans to idle a shift at its Lordstown Assembly Plant in 2006 and to idle its service parts operations location at its Drayton Plains facility in 2008. A pre-tax charge of $13 million was recorded to recognize future wage and benefit obligations associated with these two facilities. Total additions to the postemployment benefits reserve for the six months ended June 30, 2006 were approximately $2.2 billion.

The postemployment benefits reserve as of June 30, 2006 was approximately $2.8 billion. This reserve reflects estimated future wages and benefits relating to approximately 12,300 employees, primarily at idled facilities and facilities to be idled as a result of previous announcements and 32,500 employees under the terms of the Attrition Program. The postemployment benefits reserve as of December 31, 2005 was approximately $2.0 billion related to the estimated future wages and benefits of approximately 18,400 employees, primarily at idled facilities and facilities to be idled as a result of previous announcements in 2005. The postemployment benefits reserve was $188 million related to numerous facilities and approximately 2,000 employees as of June 30, 2005. The following table summarizes the activity for this reserve (dollars in millions):

	Six Months			Twelve Months			Six Months
	Ended			Ended			Ended
	June 30, 2006			Dec. 31, 2005			June 30, 2005
Beginning balance	$	2,012		$	237		$	237
Payments		(447	)		(91	)		(52	)
Interest accretion		16			12			6
Additions		2,213			1,891			—
Adjustments		(989	)		(37	)		(3	)
Ending balance	$	2,805		$	2,012		$	188

I-12

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters

Commitments

GM has guarantees related to its performance under operating lease arrangements and the residual value of lease assets totaling $639 million. Expiration dates vary, and certain leases contain renewal options. The fair value of the underlying assets is expected to fully mitigate GM’s obligations under these guarantees. Accordingly, no liabilities were recorded with respect to such guarantees.

Also, GM has entered into agreements with certain suppliers and service providers that guarantee the value of the suppliers’ assets and agreements with third parties that guarantee fulfillment of certain suppliers’ commitments. The maximum exposure under these commitments amounts to $129 million.

GMAC has guaranteed certain amounts related to the securitization of mortgage loans, agency loan programs, loans sold with recourse, and the repayment of third-party debt. In addition, GMAC issues financial standby letters of credit as part of their financing and mortgage operations. At June 30, 2006 approximately $10 million was recorded with respect to these guarantees, the maximum exposure under which is approximately $7.5 billion.

In addition to guarantees, GM has entered into agreements indemnifying certain parties with respect to environmental conditions pertaining to ongoing or sold GM properties. Due to the nature of the indemnifications, GM’s maximum exposure under these agreements cannot be estimated. No amounts have been recorded for such indemnities.

In connection with certain divestitures prior to January 1, 2003, GM has provided guarantees with respect to benefits for former GM employees relating to pensions, postretirement health care, and life insurance. Other than items pertaining to the change in the fourth quarter of 2005 charge with respect to the contingent exposures relating to the Delphi Chapter 11 filing, including under the benefit guarantees, the maximum exposure under these agreements cannot be estimated due to the nature of these indemnities. No amounts have been recorded for such indemnities as the Corporation’s obligations under them are not probable and reasonably estimable.

In addition to the above, in the normal course of business GM periodically enters into agreements that incorporate indemnification provisions. While the maximum amount to which GM may be exposed under such agreements cannot be estimated, it is the opinion of management that these guarantees and indemnifications are not expected to have a material adverse effect on the Corporation’s consolidated financial position or results of operations.

Contingent Matters

Litigation is subject to uncertainties, and the outcome of individual litigated matters is not predictable with assurance. Various legal actions, governmental investigations, claims, and proceedings are pending against the Corporation, including a number of shareholder class actions, bondholder class actions, shareholder derivative suits and ERISA class action and other matters arising out of alleged product defects including asbestos-related claims; employment-related matters; governmental regulations relating to safety, emissions, and fuel economy; product warranties; financial services; dealer, supplier, and other contractual relationships; and environmental matters. GM has established reserves for matters in which losses are probable and can be reasonably estimated.

Some of the Corporation’s litigation may involve compensatory, punitive, or other treble damage claims, or demands for recall campaigns, incurred but not reported asbestos-related claims, environmental remediation programs, or sanctions, that if granted, could require the Corporation to pay damages or make other expenditures in amounts that could not be estimated at June 30, 2006. After discussion with counsel, it is the opinion of management that such liability is not expected to have a material adverse effect on the Corporation’s consolidated financial condition or results of operations.

I-13

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (continued)

Delphi Bankruptcy

On October 8, 2005, Delphi filed a petition for Chapter 11 proceedings under the United States Bankruptcy Code for itself and many of its U.S. subsidiaries. Delphi is GM’s largest supplier of automotive systems, components and parts, and GM is Delphi’s largest customer.

GM has worked and will continue to work constructively in the court proceedings with Delphi, Delphi’s unions, and other participants in Delphi’s restructuring process. GM’s goal is to pursue outcomes that are in the best interests of GM and its stockholders, and, to the extent conducive to those goals, that enable Delphi to continue as an important supplier to GM.

Delphi continues to assure GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process could create operating and financial risks for GM, that process is also expected to present opportunities for GM. These opportunities include reducing, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi, as well as improving the quality of systems, components and parts GM procures from Delphi as a result of the restructuring of Delphi through the Chapter 11 process. However, there can be no assurance that GM will be able to realize any benefits.

Delphi filed, on March 31, 2006, motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned until August 11, 2006, to allow Delphi, its unions, and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

Delphi also filed a motion on March 31, 2006 under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned by the court until after the hearings related to Delphi’s U.S. labor agreements and retiree welfare benefits are completed or otherwise resolved. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM could be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities.

Various financial obligations Delphi has to GM as of the date of Delphi’s Chapter 11 filing, including the $739 million payable for amounts that Delphi owed to GM relating to Delphi employees who were formerly GM employees and subsequently transferred back to GM as job openings became available to them under certain employee “flowback” arrangements, may be subject to compromise in the bankruptcy proceedings, which may result in GM receiving payment of only a portion, if any, of the face amount owed by Delphi.

GM is seeking to minimize this risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the bankruptcy court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be able to fully or partially setoff such amounts. However, to date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. Although GM believes that it is

I-14

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (continued)

probable that it will be able to collect all of the amounts due from Delphi, the financial impact of a substantial compromise of our right of setoff could have a material adverse impact on our financial position. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

In connection with GM’s spin-off of Delphi in 1999, GM entered into separate agreements with the UAW, the International Union of Electronics Workers — Communication Workers of America (IUE-CWA) and the United Steel Workers. In each of these three agreements (Benefit Guarantee Agreement(s)), GM provided contingent benefit guarantees to make payments for limited pension and postretirement health care expenses and life insurance (referred to as Other Postretirement Employee Benefits or OPEB) to certain former GM U.S. hourly employees who transferred to Delphi as part of the spin-off and meet the eligibility requirements for such payments (Covered Employees).

Each Benefit Guarantee Agreement contains separate benefit guarantees relating to pension and OPEB. These limited benefit guarantees each have separate triggering events that initiate potential GM liability if Delphi fails to provide the corresponding benefit at the required level. Therefore, it is possible that GM could incur liability under one of the guarantees (e.g., pension) without triggering the other guarantees (e.g., postretirement health care or life insurance). In addition, with respect to pension benefits, GM’s obligation under the pension benefit guarantees only arises to the extent that the combination of pension benefits provided by Delphi and the Pension Benefit Guaranty Corporation (PBGC) falls short of the amounts GM has guaranteed.

The Chapter 11 filing by Delphi does not by itself trigger any of the benefit guarantees. Moreover, Delphi’s filing of motions under the U.S. Bankruptcy Code to reject its U.S. labor agreements and modify retiree welfare benefits do not trigger any of the benefit guarantees. In addition, the benefit guarantees expire on October 18, 2007 if not previously triggered by Delphi’s failure to pay the specified benefits. If a benefit guarantee is triggered before its expiration date, GM’s obligation could extend for the lives of affected Covered Employees, subject to the applicable terms of the pertinent benefit plans or other relevant agreements.

The benefit guarantees do not obligate GM to guarantee any benefits for Delphi retirees in excess of the levels of corresponding benefits GM provides at any given time to GM’s own hourly retirees. Accordingly, if any of the benefits GM provides to its hourly retirees are reduced, there would be a similar reduction in GM’s obligations under the corresponding benefit guarantee.

A separate agreement between GM and Delphi requires Delphi to indemnify GM if and to the extent GM makes payments under the benefit guarantees to the UAW employees or retirees. GM received a notice from Delphi, dated October 8, 2005, that it was more likely than not that GM would become obligated to provide benefits pursuant to the benefit guarantees to the UAW employees or retirees. The notice stated that Delphi was unable at that time to estimate the timing and scope of any benefits GM might be required to provide under the benefit guarantees. Any recovery by GM under indemnity claims against Delphi might be subject to partial or complete discharge in the Delphi reorganization proceeding. As a result, GM’s claims for indemnity may not be paid in part or in full.

As part of GM’s health-care agreement negotiations with the UAW, GM provided former GM employees who became Delphi employees the potential to earn up to seven years of credited service for purposes of eligibility for certain health-care benefits under the GM/UAW benefit guarantee agreement.

As discussed in Note 7, GM together with Delphi and the UAW announced on March 22, 2006 that they had entered into the UAW Attrition Agreement, which is intended to reduce the number of U.S. hourly employees at GM and Delphi through the Attrition Program. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy Court), which has jurisdiction over Delphi’s Chapter 11 proceedings. On April 7, 2006, the Bankruptcy Court declared in a hearing that Delphi’s participation in the UAW Attrition Agreement was approved. The UAW

I-15

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (continued)

Attrition Agreement provides for a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi.

In the UAW Attrition Agreement, GM has agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to: (1) pay lump sums of $35,000 to certain employees who participate in the Attrition Program; (2) allow Delphi employees who agree to retire under the Attrition Program to flowback to GM for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a result after they flow back, pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain. As of June 30, 2006 approximately 12,500 Delphi employees had elected one of the retirement options available under the UAW Attrition Agreement.

On June 29, 2006 the Bankruptcy Court approved a motion by Delphi to offer similar attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the estate of Delphi for payments that it makes under the buyout program and a prepetition, general unsecured claim for costs, other than the $35,000 lump-sum payment, incurred in the IUE-CWA attrition program assertable against the estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than that the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty. The estimated cost to GM of these programs is comprehended in the pre-tax charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

GM believes that it is probable that it has incurred a contingent liability due to Delphi’s Chapter 11 filing. GM believes that the range of the contingent exposures is between $5.5 billion and $12 billion, with amounts near the low end of the range considered more possible than amounts near the high end of the range. GM established a liability of $5.5 billion ($3.6 billion after tax) for this contingent exposure in the fourth quarter of 2005, and has made no adjustments to that liability as of June 30, 2006. These views reflect GM’s current assessment that it is unlikely that a Chapter 11 process will result in both a termination of Delphi’s pension plan and complete elimination of its OPEB plans. The amount of this charge may change, depending on the result of discussions among GM, Delphi, and Delphi’s unions, and other factors. GM is currently unable to estimate the amount of additional charges, if any, which may arise from Delphi’s Chapter 11 filing. A consensual agreement to resolve the Delphi matter may cause GM to incur additional costs in exchange for benefits that would accrue to GM over time.

With respect to the possible cash flow effect on GM related to its ability to make either pension or OPEB payments to Delphi retirees, if any are required under the benefit guarantees, GM would expect to make such payments from ongoing operating cash flow and financings. Such payments, if any, are not expected to have a material effect on GM’s cash flows in the short-term. However, if payable, these payments would be likely to increase over time, and could have a material effect on GM’s liquidity in coming years. (For reference, Delphi’s 2005 Annual Report on Form 10-K reported that its benefits paid for 2005 was $231 million, which included

I-16

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.    Commitments and Contingent Matters — (concluded)

$182 million for both hourly and salaried retirees, the latter of whom are not covered under the Benefit Guarantee Agreements, plus $54 million in payments to GM for certain former Delphi hourly employees who flowed back to retire from GM, net of $5 million of payments from GM related to employees who flowed from GM to Delphi after the Delphi spin-off). If benefits to Delphi’s U.S. hourly employees under Delphi’s pension plan are reduced or terminated, the resulting effect on GM’s cash flows in future years due to the Benefit Guarantee Agreements is currently not reasonably estimable.

Note 9.   Comprehensive Income (Loss)

GM’s total comprehensive income (loss), net of tax, was as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30,						June 30
	2006			2005			2006			2005
Net loss	$	(3,379	)	$	(987	)	$	(2,934	)	$	(2,240	)
Other comprehensive income (loss)
Accumulated foreign currency translation	$	15		$	139		$	43		$	(451	)
Net gain/loss on derivatives		40			(281	)		416			(258	)
Net unrealized gains (losses) on securities		(323	)		152			(153	)		(64	)
Minimum pension liability adjustment		(6	)		(3	)		(54	)		54
Total other comprehensive income (loss)		(274	)		7			252			(719	)
Total comprehensive income (loss)	$	(3,653	)	$	(980	)	$	(2,682	)	$	(2,959	)

Note 10.   Earnings (Loss) Per Share Attributable to Common Stock

Earnings per share (EPS) attributable to GM common stock was determined based on earnings for the period divided by the weighted-average number of common shares outstanding during the period. Diluted EPS attributable to GM common stock considers the effect of potential common shares, unless the inclusion of the potential common shares would have an antidilutive effect. Due to the net losses for all periods presented, loss per share, basic and diluted are the same since the effect of potential common shares would have an antidilutive effect.

Certain stock options and convertible securities were not included in the computation of diluted EPS are for the periods presented since the instruments’ underlying exercise prices were greater than the average market prices of GM $12/3 par value common stock and inclusion would be antidilutive. Such shares not included in the computation of diluted EPS were 107 million and 112 million as of June 30, 2006 and 2005, respectively.

Note 11.   Depreciation and Amortization

Depreciation and amortization, including asset impairment charges, included in cost of sales and selling, general and administrative expenses were as follows (in millions):

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2006		2005		2006		2005
Depreciation	$	1,709	$	2,693	$	4,328	$	5,358
Amortization of special tools		1,112		803		1,845		1,619
Amortization of intangible assets		20		16		40		29
Total	$	2,841	$	3,512	$	6,213	$	7,006

I-17

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.   Pensions and Other Postretirement Benefits

	U.S. Plans						Non-U.S. Plans						U.S. Other						Non-U.S.
	Pension Benefits						Pension Benefits						Benefits						Other Benefits
	Three Months						Three Months						Three Months						Three Months
	Ended June 30,						Ended June 30,						Ended June 30,						Ended June 30,
	2006			2005			2006			2005			2006			2005			2006			2005
	(Dollars in millions)
Components of expense
Service cost	$	172		$	279		$	128		$	70		$	168		$	176		$	13		$	12
Interest cost		1,237			1,221			217			235			1,043			1,026			48			53
Expected return on plan assets		(2,044	)		(1,974	)		(177	)		(182	)		(375	)		(421	)		—			—
Amortization of prior service cost		184			291			26			26			(105	)		(17	)		(21	)		2
Recognized net actuarial loss		280			517			96			69			617			562			34			22
Curtailments, settlements, and other		4,367			21			18			25			—			—			—			2
Net expense	$	4,196		$	355		$	308		$	243		$	1,348		$	1,326		$	74		$	91

	U.S. Plans						Non-U.S. Plans						U.S. Other						Non-U.S.
	Pension Benefits						Pension Benefits						Benefits						Other Benefits
	Six Months						Six Months						Six Months						Six Months
	Ended June 30,						Ended June 30,						Ended June 30,						Ended June 30,
	2006			2005			2006			2005			2006			2005			2006			2005
	(Dollars in millions)
Components of expense
Service cost	$	425		$	559		$	241		$	142		$	344		$	352		$	26		$	24
Interest cost		2,456			2,442			428			476			2,120			2,053			95			107
Expected return on plan assets		(4,058	)		(3,948	)		(351	)		(367	)		(750	)		(842	)		—			—
Amortization of prior service cost		457			582			50			53			(133	)		(35	)		(41	)		4
Recognized net actuarial loss		686			1,033			190			138			1,236			1,124			66			44
Curtailments, settlements, and other		4,390			112			31			84			—			—			—			2
Net expense	$	4,356		$	780		$	589		$	526		$	2,817		$	2,652		$	146		$	181

On February 7, 2006, GM announced it would increase the U.S. salaried workforce’s participation in the cost of health care, capping GM’s contributions to salaried retiree health care at the level of 2006 expenditures. On March 7, 2006, GM announced it would modify the terms of the U.S. salaried pension plan. The remeasurement of the U.S. salaried OPEB plans as of February 9, 2006 as a result of these benefit modifications generated a $0.1 billion reduction in OPEB expense for the three and six months ended June 30, 2006. The remeasurement of GM’s U.S. salaried pension plan as of March 31, 2006 as a result of these benefit modifications generated a $0.1 billion reduction in pension expense for the three and six months ended June 30, 2006. Both of these impacts are reflected in the table above.

Effective March 31, 2006, the U.S. District Court for the Eastern District of Michigan approved the tentative settlement agreement with the UAW (UAW Settlement Agreement) related to reductions in hourly retiree health care; this approval is now under appeal. Given the significance of these events, the plans were remeasured. The remeasurement of the U.S. hourly OPEB plans as of March 31, 2006 due to the previously announced UAW Settlement Agreement will generate a change in OPEB expense beginning three months subsequent to the remeasurement date. Accordingly, the second quarter of 2006 OPEB expense in the tables above does not reflect

I-18

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.   Pensions and Other Postretirement Benefits — (continued)

any amount associated with this hourly plan remeasurement. The effect of the hourly retiree health care remeasurement will be reflected in U.S. OPEB expense in the third quarter of 2006.

GM will account for the reduced health care coverage provisions of the UAW Settlement Agreement as an amendment of GM’s Health Care Program for Hourly Employees (the Modified Plan). The reduced healthcare coverage provisions of the UAW Settlement Agreement negotiated earlier this year were previously estimated to result in an approximately $15 billion reduction of GM’s OPEB obligations related to the Modified Plan. In conjunction with the measurement of the Modified Plan as of March 31, 2006, the estimated reduction of GM’s OPEB obligations increased from $15 billion to $17 billion attributable primarily to an increase in the discount rate utilized in the March 31, 2006 measurement. The reduction will be amortized on a straight-line basis over the remaining service lives of active UAW hourly employees (7.4 years) as a reduction of OPEB expense. This reduction of expense will be partially offset by the amortization of approximately $3 billion related to contributions to the Mitigation Plan as discussed below, and the expense related to previously negotiated wage increases for active employees now diverted to the Mitigation Plan.

The Settlement Agreement also provides that GM will make contributions to a new independent Voluntary Employees’ Beneficiary Association (the Mitigation Plan). The assets of the Mitigation Plan will be used to mitigate the effect of reduced GM health care coverage on individual UAW retirees and, depending on the level of mitigation, are expected to be available for a number of years. The new independent Mitigation Plan will be partially funded by GM contributions of $1 billion in each of 2006, 2007, and 2011. The 2011 contribution may be accelerated under specified circumstances. GM will also make future contributions subject to provisions of the Settlement Agreement that relate to profit sharing payments, increases in the value of a notional number of shares of GM’s $12/3 par value common stock, as well as wage deferral payments, and dividend payments. During the second quarter of 2006, as required in the UAW Settlement Agreement, GM made a $1 billion contribution to the independent Voluntary Employees’ Beneficiary Association (VEBA).

As detailed in Note 7, GM, Delphi, and the UAW reached an agreement on March 22, 2006 intended to reduce the number of U.S. hourly employees through the Attrition Program. As a result of the Attrition Program, GM will recognize curtailment losses under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” due to the significant reduction in the expected aggregate years of future service of the employees in the U.S. hourly pension and OPEB plans, respectively. The curtailment losses will include recognition of the change in the projected benefit obligation (PBO) or accumulated postretirement benefit obligation (APBO) and a portion of the previously unrecognized prior service cost reflecting the reduction in expected future service. GM recognized a curtailment loss related to the U.S. hourly pension plan measured at April 30, 2006 of approximately $4.4 billion, which is recorded in Automotive cost of sales in GM’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006. The impact of the curtailment loss related to the U.S. hourly OPEB plans measured at May 31, 2006 as a result of the Attrition Program is expected to be approximately $0.3 billion. This U.S. hourly OPEB curtailment loss will be recorded in the third quarter of 2006 resulting from the use of a measurement date of September 30 as compared to GM’s December 31 year end.

The remeasurement of GM’s U.S. hourly pension plan as of April 30, 2006 as a result of the Attrition Program generated a $0.2 billion reduction in pension expense for the three and six months ended June 30, 2006. The remeasurement included a change in retirement assumptions including an increase in the average remaining service life for the remaining active employees. This impact is reflected in the table above. The remeasurement of the U.S. hourly OPEB plans as of May 31, 2006 as a result of the Attrition Program will generate a change in OPEB expense beginning three months subsequent to the remeasurement date. Accordingly, the second quarter of 2006 OPEB expense in the tables above does not reflect any amount associated with this hourly plan remeasurement. The effect of the Attrition Program remeasurement will be reflected in U.S. OPEB expense in the third quarter of 2006.

I-19

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.    Pensions and Other Postretirement Benefits — (concluded)

The remeasurements of the U.S. salaried and hourly pension plans reduced the U.S. pension PBO by $3.9 billion. The weighted average discount rate used to determine the benefit obligation was 6.15%. This represents a 45 basis point increase from the 5.70% weighted average discount rate used at year-end 2005. The remeasurements for U.S. salaried and hourly OPEB for health care benefit modifications reduced the U.S. OPEB APBO by $19.3 billion. The weighted average discount rate used to determine the benefit obligation was 5.95%. This represents a 50 basis point increase from the 5.45% weighted average discount rate used at year-end 2005.

During the second quarter of 2006, GM had no withdrawals from the VEBA trust. During the first quarter of 2006, GM made a $2 billion withdrawal from the VEBA trust. On July 31, 2006, GM withdrew $2 billion from the VEBA trust to reimburse GM payments for hourly retiree health-care and life insurance. On a quarterly basis, GM evaluates the need for additional VEBA withdrawals.

Note 13.   Impairments, Restructuring and Other Initiatives

Impairments

In the second quarter of 2006, GM recorded impairment charges totaling $363 million ($234 million after tax) related to product specific assets. Of this, $303 million ($197 million after tax) was at GMNA and $60 million ($37 million after tax) was at GME. In addition, GM recorded an asset impairment charge of $84 million pre-tax ($57 million after tax), in connection with the announced closure of GM’s Portugal assembly plant, which is scheduled to close in December 2006. Asset impairment charges are recorded in Automotive cost of sales in the Condensed Consolidated Statements of Operations.

GMNA results in the first quarter of 2005 include a charge of $84 million after tax, for the write-down to fair market value of various plant assets in connection with the first quarter 2005 announcement to discontinue production at the Lansing assembly plant during the second quarter of 2005.

GM assesses the carrying value of long-lived assets held and used, other than goodwill and intangible assets with indefinite lives, in connection with the annual business planning cycle or when events and circumstances indicate the need for such reviews. An impairment analysis is performed by comparing projected cash flows to the carrying value of specific product-related assets. As a result of the lack of improved performance on particular product related assets, these reviews resulted in certain assets not being recoverable.

Restructuring and Other Initiatives

GMNA results in the first quarter of 2006 include a charge of $65 million after tax, related to costs expected to be incurred in 2006 under a new salaried severance program, which allows involuntarily terminated employees to receive continued salary and benefits for a period of time after termination. See Note 7.

GME results for the three- and six-month periods ended June 30, 2006 include after-tax charges for separations and contract cancellations of $88 million and $128 million, respectively. The charges in the second quarter of 2006 relate to the restructuring plan announced in the fourth quarter of 2004 as well as to the closure of GM’s Portugal assembly plant and to the reduction of one shift at the Ellesmere Port plant in the U.K. The charge in the second quarter of 2006 for the restructuring plan announced in 2004 was $39 million, after tax. The original plan targeted a total reduction of 12,000 employees over the period 2005 through 2007 through separation programs, early retirements, and selected outsourcing initiatives. As of June 30, 2006 approximately 10,300 employees have left GM under this restructuring program and the program is on target to achieve the total headcount reduction, as well as the targeted annual structural cost reduction of $600 million by 2006. Additional charges related to this program of about $70 million, after tax, are expected through the end of 2007. The charge in the second quarter for the closure of the Portugal plant was $23 million, after tax, and was related to separations and contract cancellations. The plant is scheduled to close in December 2006, resulting in a total separation of approximately 1,100 employees.

I-20

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 13.    Impairments, Restructuring and Other Initiatives — (concluded)

Further charges are expected in the coming quarters of 2006 as the restructuring activities develop. The charge in the second quarter for the shift reduction in Ellesmere Port was $26 million, after tax. The shift reduction is targeted to reduce the work force in the U.K. by approximately 1,100 employees by the end of 2006. Additional separation charges will be recorded in the coming quarters of 2006 as further employees sign up for this separation program. The estimated total cost of the program is approximately $90 million, after tax. For the three- and six-month periods ended June 30, 2005 the after-tax charge was $126 million and $548 million, respectively. These charges were mainly related to the restructuring plan announced in the fourth quarter of 2004 (as discussed further above) and covered about 6,250 people for the six-month period. The charge in the second quarter of 2005 also included costs related to the dissolution of the Powertrain joint ventures with Fiat.

Results for the three-and six-month periods ended June 30, 2006 include after tax restructuring charges recognized at GMLAAM of $15 million and $42 million, respectively. These restructuring charges relate to the costs of voluntary employee separations at GM do Brasil.

Results in the first quarter of 2005 include after tax charges of $140 million in GMNA and $8 million in Other Operations related to voluntary early retirement and other separation programs with respect to certain salaried employees in the U.S.

Note 14.   Stock Incentive Plans

GM’s stock incentive plans consist of the General Motors 2002 Stock Incentive Plan, formerly the 1997 General Motors Amended Stock Incentive Plan (GMSIP), the General Motors 1998 Salaried Stock Option Plan (GMSSOP), the General Motors 2002 Long Term Incentive Plan (GMLTIP) and the General Motors 2006 Cash-Based Restricted Stock Unit Plan (GMCRSU), collectively the Plans. The GMSIP, the GMLTIP and the GMCRSU are administered by the Executive Compensation Committee of GM’s Board of Directors. The GMSSOP is administered by the Vice President of Global Human Resources.

The compensation cost that has been charged against income for the above plans was approximately $51.6 million and $25.5 million for the three months ended June 30, 2006 and 2005, respectively and $84 million and $50.9 million for the six months ended June 30, 2006 and 2005, respectively. The total income tax benefit recognized in the statement of operations for share-based compensation arrangements was approximately $18.1 million and $9.6 million for the three months ended June 30, 2006 and 2005, respectively and $28 million and $19.3 million for the six months ended June 30, 2006 and 2005, respectively.

GMSIP and GMSSOP

Under the GMSIP, 27.4 million shares of GM $12/3 par value common stock may be granted from June 1, 2002, through May 31, 2007, of which approximately 4 million were available for grants at June 30, 2006. Any shares granted and undelivered under the GMSIP, due primarily to expiration or termination, become again available for grant. Options granted prior to 1997 under the GMSIP generally are exercisable one-half after one year and one-half after two years from the dates of grant. Stock option grants awarded since 1997 are generally exercisable one-third after one year, one-third after two years and fully after three years from the dates of grant. Option prices are 100% of fair market value on the dates of grant and the options generally expire 10 years from the dates of grant, subject to earlier termination under certain conditions.

Under the GMSSOP, which commenced January 1, 1998 and ends December 31, 2007, the number of shares of GM $12/3 par value common stock that may be granted each year is determined by management. Approximately 1.2 million shares of GM $12/3 par value common stock were available for grants at June 30, 2006. Stock options vest one year following the date of grant and are exercisable two years from the date of grant. Option prices are 100% of fair market value on the dates of grant and the options generally expire 10 years and two days from the dates of grant subject to earlier termination under certain conditions.

I-21

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.   Stock Incentive Plans — (continued)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the weighted-average assumptions noted in the following table. Expected volatilities are based on both the implied and historical volatility of the Corporation’s stock. The Corporation uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding. The interest rate for periods during the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

	Three Months Ended June 30,
	2006			2005
	GMSIP			GMSIP
Interest rate		4.63	%		3.74	%
Expected life (years)		6			6
Expected volatility		48.37	%		32.37	%
Dividend yield		4.78	%		5.5	%

Changes in the status of outstanding options were as follows:

	GMSIP
	$12/3 Par Value Common
					Weighted
			Weighted-		Average
			Average		Remaining		Aggregate
	Shares under		Exercise		Contractual		Intrinsic
	Option		Price		Term		Value
Options outstanding at January 1, 2006		84,130,586	$	53.11
Granted		2,702,796		20.90
Exercised		—		—
Terminated		3,906,131	$	45.62
Options outstanding at June 30, 2006		82,927,251	$	52.41		5.0	$	23,824,668
Options exercisable at June 30, 2006		72,722,297	$	54.64		4.5		—

	GMSSOP
	$12/3 Par Value Common
					Weighted
			Weighted-		Average
			Average		Remaining		Aggregate
	Shares under		Exercise		Contractual		Intrinsic
	Option		Price		Term		Value
Options outstanding at January 1, 2006		27,213,635	$	55.19
Granted		—		—
Exercised		—		—
Terminated		442,235	$	53.76
Options outstanding at June 30, 2006		26,771,400	$	55.22		5.3		—
Options exercisable at June 30, 2006		26,771,400	$	55.22		5.3		—

The weighted-average grant-date fair value was $7.06 and $7.21 for the GMSIP options granted during the three- and six-month periods ended June 30, 2006 and 2005, respectively. There were no options granted or exercised under the GMSSOP during the three and six month periods ended June 30, 2006 and 2005.

I-22

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GMLTIP

The GMLTIP consists of award opportunities granted to participants that are based on the achievement of specific corporate business criteria. The target number of shares of GM $12/3 par value common stock that may be granted each year is determined by management. These grants are subject to a three-year performance period and the final award payout may vary based on the achievement of those criteria. The condition for all three plans is a minimum percentile ranking of GM’s TSR among the companies in the S&P 500.

At June 30, 2006, approximately 5.8 million target shares were outstanding under the GMLTIP. Of these outstanding shares, a total of 1.3 million were granted in 2004 at a grant-date fair value of $53.92. Management intends to settle these awards with GM $12/3 par value common stock. Of the remaining outstanding shares, approximately 2.0 million were granted in 2005 at a fair value of $36.37, and 2.5 million were granted for the six month period ended June 30, 2006 at a fair value of $24.81. Management is required to settle these awards in cash. As a result, these cash-settled awards are recorded as a liability until the date of final award payout. In accordance with SFAS No. 123R, the fair value of each cash-settled award is recalculated at the end of each reporting period and the liability and expense adjusted based on the change in fair value. The preceding is the targeted number of shares that would be used in the final award calculation should the targeted performance condition be achieved. Final payout is subject to approval by the Executive Compensation Committee of the Board of Directors. The fair value at June 30, 2006 was $42.92 for the awards granted during the three month period ended June 30, 2006 and $22.39 for the awards granted in 2005.

Prior to the adoption of SFAS No. 123R, the fair value of each award under the GMLTIP was equal to the fair market value of the underlying shares on the date of grant. Beginning January 1, 2006 in accordance with the adoption of SFAS No. 123R, the fair value of each cash-settled award under the GMLTIP is estimated on the date of grant, and each subsequent reporting period, using a lattice-based option valuation model that uses the assumptions noted in the following table. Because lattice-based valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on the implied volatility from GM’s tradable options. The expected term of these target awards represent the remaining time in the performance period. The risk-free rate for periods during the contractual life of the performance shares is based on the U.S. Treasury yield curve in effect at the time of valuation. Because the payout depends on the Corporation’s performance ranked with the S&P 500, the valuation also depends on the performance of other stocks in the S&P 500 from the grant date to the exercise date as well as estimates of the correlations among their future performances.

	Six Months Ended
	June 30, 2006
Expected volatility		50.3	%
Expected dividends		N/A
Expected term (years)		2
Risk-free interest rate		5.72	%

The weighted average remaining contractual term was 1.71 years for target awards outstanding at June 30, 2006. There were no shares delivered or cash paid during the three- and six-month periods ended June 30, 2006 and 2005.

GMCRSU

In 2006, the Corporation established a cash-based restricted stock unit plan that provides restricted share units to certain global executives. Awards under the plan vest and are paid in one-third increments on each anniversary date of the award over a three-year period. Compensation expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. Since the awards are settled in cash, these cash-settled awards are recorded as a liability until the date of exercise. In accordance with SFAS No. 123(R), the

I-23

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.    Stock Incentive Plans — (concluded)

fair value of each cash-settled award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value.

The fair value of each RSU is based on the Corporation’s stock price on the date of grant and each subsequent reporting period until date of settlement. There were 4.2 million RSUs granted during the six month period ended June 30, 2006 with a fair value of $20.90 per share. The fair value at June 30, 2006 was $29.79 per share.

The weighted average remaining contractual term was 2.5 years for the RSUs outstanding June 30, 2006. There were no share units vested or delivered during the three and six-month period ended June 30, 2006.

Summary

A summary of the status of the Corporation’s options as of June 30, 2006 and the changes during the six month period then ended, is presented below:

			Weighted-
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at January 1, 2006		15,923,106	$	9.28
Granted		2,702,796		7.06
Vested		8,267,541		9.47
Forfeited		153,407		8.54
Nonvested at June 30, 2006		10,204,954	$	8.55

As of June 30, 2006, there was $31.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 0.7 years.

Cash received from option exercise under all share-based payment arrangements for the six months ended June 30, 2006 and 2005 was $0 and $2.1 million, respectively. The tax benefit from the exercise of the share-based payment arrangements totaled $0 and $0.8 million, respectively, for the six-months ended June 30, 2006 and 2005.

Note 15.   Other Income and Other Expenses

Other income included the following (dollars in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
Gain on sale of Isuzu interest	$	311	$	—	$	311	$	—
Gain on sale of Suzuki interest (See Note 5)						630		—
Gain on sale of GMAC investment in a regional homebuilder (See Note 5)		415		—		415		—
Total Other Income	$	726	$	—	$	1,356	$	—

I-24

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 15.   Other Income and Other Expenses — (concluded)

In April 2006, GM sold its 7.9% equity interest (90.09 million shares) in Isuzu Motors Ltd. (Isuzu). The sale of GM’s interest in Isuzu generated cash proceeds of $311 million and a pretax gain on sale of $311 million ($212 million after tax), which is reflected in Other Income in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006. GM’s basis in its investment was written down to zero in 2001.

Other expenses included the following (dollars in millions):

	Three Months				Six Month
	Ended June 30,				Ended June 30,
	2006		2005		2006		2005
Impairment loss on controlling interest of GMAC (See Note 2)	$	1,208	$	—	$	1,208	$	—
FHI impairment loss (See Note 5)		—		812		—		812
Total other expenses	$	1,208	$	812	$	1,208	$	812

Note 16.   Segment Reporting

																							Other
							GM					Total						Auto &					Financing			Total
	GMNA			GME			LAAM		GMAP			GMA			Other			Other			GMAC		(d)			Financing		Total
	(Dollars in millions)
For the Three Months Ended June 30, 2006
Automotive sales
External customers	$	30,178		$	8,237		$	3,687	$	2,831		$	44,933		$	(331	)	$	44,602		$	—	$	—		$	—	$	44,602
Intersegment		(1,588	)		506			133		949			—			—			—			—		—			—		—
Total automotive sales		28,590			8,743			3,820		3,780			44,933			(331	)		44,602			—		—			—		44,602
Financial services and insurance revenues		—			—			—		—			—			—			—			9,027		40			9,067		9,067
Other income		—			—			—		311			311			—			311			415		—			415		726
Total net sales and revenues	$	28,590		$	8,743		$	3,820	$	4,091		$	45,244		$	(331	)	$	44,913		$	9,442	$	40		$	9,482	$	54,395
Interest income(a)	$	293		$	125		$	26	$	26		$	470		$	(291	)	$	179		$	701	$	(157	)	$	544	$	723
Interest expense	$	823		$	159		$	73	$	52		$	1,107		$	(384	)	$	723		$	3,819	$	(11	)	$	3,808	$	4,531
Net income (loss)(c)	$	(3,941	)	$	(58	)	$	140	$	379		$	(3,480	)	$	(108	)	$	(3,588	)	$	898	$	(689	)	$	209	$	(3,379	)
Segment assets	$	128,653		$	24,206		$	4,615	$	11,662		$	169,136		$	(713	)	$	168,423		$	308,372	$	(6,289	)	$	302,083	$	470,506
For the Three Months Ended June 30, 2005(b)
Automotive sales
External customers	$	27,967		$	8,096		$	2,742	$	1,640		$	40,445		$	(267	)	$	40,178		$	—	$	—		$	—	$	40,178
Intersegment		(969	)		494			193		282			—			—			—			—		—			—		—
Total automotive sales		26,998			8,590			2,935		1,922			40,445			(267	)		40,178			—		—			—		40,178
Financial services and insurance revenues		—			—			—		—			—			—			—			8,319		(28	)		8,291		8,291
Other income		—			—			—		—			—			—			—			—		—			—		—
Total net sales and revenues	$	26,998		$	8,590		$	2,935	$	1,922		$	40,445		$	(267	)	$	40,178		$	8,319	$	(28	)	$	8,291	$	48,469
Interest income(a)	$	318		$	112		$	10	$	2		$	442		$	(252	)	$	190		$	432	$	(70	)	$	362	$	552
Interest expense	$	752		$	135		$	38	$	9		$	934		$	(263	)	$	671		$	3,050	$	(9	)	$	3,041	$	3,712
Net income (loss)	$	(1,137	)	$	(96	)	$	25	$	(605	)	$	(1,813	)	$	18		$	(1,795	)	$	816	$	(8	)	$	808	$	(987	)
Segment assets	$	123,941		$	24,594		$	4,869	$	9,356		$	162,760		$	(3,580	)	$	159,180		$	309,984	$	(3,163	)	$	306,821	$	466,001

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 16.   Segment Reporting — (concluded)

																							Other
							GM					Total						Auto &					Financing			Total
	GMNA			GME			LAAM		GMAP			GMA			Other			Other			GMAC		(d)			Financing		Total
	(Dollars in millions)
For the Six Months Ended June 30, 2006
Automotive sales
External customers	$	60,048		$	15,838		$	6,649	$	5,463		$	87,998		$	(636	)	$	87,362		$	—	$	—		$	—	$	87,362
Intersegment		(2,927	)		996			311		1,620			—			—			—			—		—			—		—
Total automotive sales		57,121			16,834			6,960		7,083			87,998			(636	)		87,362			—		—			—		87,362
Financial services and insurance revenues		—			—			—		—			—			—			—			17,849		73			17,922		17,922
Other income		—			—			—		941			941			—			941			415		—			415		1,356
Total net sales and revenues	$	57,121		$	16,834		$	6,960	$	8,024		$	88,939		$	(636	)	$	88,303		$	18,264	$	73		$	18,337	$	106,640
Interest income(a)	$	598		$	232		$	46	$	51		$	927		$	(556	)	$	371		$	1,306	$	(311	)	$	995	$	1,366
Interest expense	$	1,621		$	312		$	101	$	107		$	2,141		$	(734	)	$	1,407		$	7,381	$	(28	)	$	7,353	$	8,760
Net income (loss)(c)	$	(4,444	)	$	(10	)	$	169	$	832		$	(3,453	)	$	(328	)	$	(3,781	)	$	1,535	$	(688	)	$	847	$	(2,934	)
For the Six Months Ended June 30, 2005(b)
Automotive sales
External customers	$	53,968		$	15,753		$	4,876	$	3,175		$	77,772		$	(291	)	$	77,481		$	—	$	—		$	—	$	77,481
Intersegment		(1,743	)		945			358		441			1			(1	)		—			—		—			—		—
Total automotive sales		52,225			16,698			5,234		3,616			77,773			(292	)		77,481			—		—			—		77,481
Financial services and insurance revenues		—			—			—		—			—			—			—			16,540		221			16,761		16,761
Other income		—			—			—		—			—			—			—			—		—			—		—
Total net sales and revenues	$	52,225		$	16,698		$	5,234	$	3,616		$	77,773		$	(292	)	$	77,481		$	16,540	$	221		$	16,761	$	94,242
Interest income(a)	$	614		$	203		$	29	$	5		$	851		$	(452	)	$	399		$	909	$	(164	)	$	745	$	1,144
Interest expense	$	1,507		$	249		$	62	$	16		$	1,834		$	(478	)	$	1,356		$	6,051	$	(16	)	$	6,035	$	7,391
Net income (loss)	$	(2,874	)	$	(610	)	$	56	$	(535	)	$	(3,963	)	$	186		$	(3,777	)	$	1,544	$	(7	)	$	1,537	$	(2,240	)

(a)	Interest income is included in net sales and revenues from external customers.
(b)	Effective January 1, 2006, four powertrain entities were transferred from GMNA to GME for management reporting. Accordingly, second quarter of 2005 amounts have been revised for comparability by reclassifying $127 million of revenue, $16 million of net income and $383 million of segment assets from GMNA to GME. For the six months ended June 30, 2005, amounts have been revised by reclassifying $278 million of revenue and $49 million of net income from GMNA to GME.
(c)	In the second quarter of 2006, GM recognized a non-cash pretax impairment charge of $1.2 billion on the pending sale of a controlling interest in GMAC which is reflected in the column “Other Financing.” Refer to Note 2.
(d)	Other Financing includes the elimination from total assets of net receivables from Auto & Other. Receivables eliminated were $4.6 billion and $2.8 billion at June 30, 2006 and 2005, respectively.

Note 17.   Subsequent Events

Amended and Restated Credit Agreement

On July 20, 2006, GM executed a $4.63 billion amended and restated credit agreement with a syndicate of banks, which replaced GM’s $5.6 billion unsecured line of credit. The amended and restated credit agreement removes the uncertainty that the Corporation previously reported as to whether the bank syndicate would be required to honor a borrowing request.

The amended and restated credit agreement provides additional available liquidity that GM anticipates to draw on from time to time to fund working capital and other needs. The facility is comprised of a $4.48 billion secured line of credit that terminates in July 2011 and a $0.15 billion unsecured line of credit that terminates in June 2008. Under the $4.48 billion secured facility, borrowings are limited to an amount based on the value of the underlying collateral, which consists of certain North American accounts receivable and inventory of General Motors

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Concluded)

Note 17.   Subsequent Events — (concluded)

Corporation, Saturn Corporation, and General Motors of Canada, Limited, certain plants, property and equipment of General Motors of Canada, Limited, and a pledge of 65% of the stock of the holding company for GM’s indirect subsidiary GM de Mexico. In addition to the $4.48 billion secured line of credit, the collateral also secures certain lines of credit, automatic clearinghouse and overdraft arrangements and letters of credit provided by the same secured lenders of approximately $1.5 billion. At GM’s current credit rating, all-in cost of borrowings from the secured line of credit would be LIBOR (London InterBank Offered Rate) plus 225 basis points, while all-in costs of borrowings from the unsecured line of credit would be LIBOR plus 200 basis points. In addition, secured lenders received a consent fee of 40 basis points. In the event of certain work stoppages, the secured facility would be temporarily reduced to $3.5 billion.

Conditions and Approvals on the Pending Sale of the Controlling Interest in GMAC

As disclosed in Note 2, the Purchase and Sale Agreement (the “Agreement”) by GM, GMAC, and the consortium sets forth a number of conditions to the Purchaser’s obligation to consummate the GMAC transaction. These conditions include, among others, reasonable satisfaction by the consortium, from the Pension Benefit Guaranty Corporation (“PBGC”), that after the closing of the GMAC transaction, GMAC and its subsidiaries will not have any liability with respect to benefit plans of GM that are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).

The consortium has informed GM and GMAC that they deem this condition has been satisfied by a letter from the PBGC stating that it will not as a result of the GMAC Transaction take action under ERISA to terminate GM’s pension plans or impose liability on the Purchaser, any of the LLC Members, GMAC, or any of its subsidiaries.

On July 28, 2006, the Federal Deposit Insurance Corporation (the FDIC) announced a six-month moratorium on final decisions on notices filed under the Change in Bank Control Act with regard to industrial loan companies (ILC). In connection with the sale of the controlling interest in GMAC, a notice was submitted to the FDIC. It appears the timing of any approval by the FDIC is likely to be affected by the moratorium. GM and GMAC are now working with the consortium to consider ways to try to avoid delaying the targeted closing date until 2007, since FDIC regulatory approval is a condition of the Agreement.

VEBA

On July 31, 2006, GM withdrew $2 billion from the VEBA trust to reimburse GM payments for hourly retiree health-care and life insurance.

* * * * *

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

General Motors Corporation (together with its subsidiaries, the Corporation, General Motors, GM, we or us) is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, having its largest operating presence in North America. GM’s finance and insurance operations primarily relate to GMAC LLC (formerly known as General Motors Acceptance Corporation GMAC), a wholly owned subsidiary of GM, which provides a broad range of financial services, including automotive finance and mortgage products and services. As discussed below, the sale of a 51% interest in GMAC to a consortium of investors is pending.

Financial Results

GM’s consolidated net sales and revenues increased to $54.4 billion in the second quarter of 2006 compared to $48.5 billion in the second quarter of 2005. The second quarter 2006 revenue levels were a record quarterly high for GM, representing an increase of more than 12% from the second quarter of 2005. GM recorded a consolidated net loss of $3.4 billion in the second quarter of 2006, compared to a net loss of $987 million in the second quarter of 2005. GMAC’s net income in the second quarter of 2006 increased by $82 million to $898 million, compared to $816 million in the second quarter of 2005.

For the first six months of 2006, GM’s consolidated net sales and revenues were $106.6 billion, an increase of $12.4 billion, or more than 13%, over the $94.2 billion in the first half of 2005. GM has experienced two consecutive quarters of record revenue for the first half of 2006. GM incurred a net loss of $2.9 billion for the first six months of 2006 as compared to a net loss of $2.2 billion for the same period in 2005.

GM’s results of operations for the first half of 2006 were most significantly affected by the following trends and significant events:

Automotive Operations

Total Automotive revenues were $88.9 billion for the first half of 2006, which includes two consecutive quarters of record revenue. GM experienced revenue improvements from all regions. Notably GMNA’s revenues increased 9.4% from the same period in 2005 due to favorable net price obtained through a reduction in sales incentive spending, as well as improvements in pricing on recently launched full size utility vehicles such as the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade. GMAP’s revenues doubled from the previous period due to the consolidation of GM Daewoo Auto & Technology Company (GM Daewoo) beginning in June 2005. During the first half of 2006, GM achieved certain cost cutting measures that were previously communicated as part of its turnaround plan. Specifically, we continued to experience better vehicle quality than our accrual rate for warranty claims per car which allowed us to decrease our warranty accruals by $0.3 billion after-tax. In addition we achieved savings of $0.3 billion after tax due to the Attrition Program and other changes to our salaried pension and OPEB plans that were previously announced. Other structural costs were reduced by $0.5 billion after-tax in such areas as engineering and marketing expense.

GMNA is increasing its target for reduction of structural costs from the amount previously stated in GM’s 2005 Annual Report on Form 10-K by $2 billion to $9 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented. GM expects $6 billion of the structural cost reduction to be realized during 2006, exceeding the $4 billion of structural cost reductions previously estimated for calendar year 2006 in GM’s 2005 Annual Report on Form 10-K. This improvement is due to the financial impact of the UAW Attrition Agreement, including the effect of the pension remeasurement, and with the impact of the previously disclosed change in accounting treatment for the contributions related to the independent VEBA established under the UAW Settlement Agreement. The expected total annual cash savings from structural cost reductions remains $5 billion.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Financial Results — (continued)

GM-UAW-Delphi Special Attrition Program Agreement

As part of the initiatives to accelerate cost reductions and bring our structural cost and employment levels in line with revenues and demand for our vehicles, GM together with Delphi and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) announced on March 22, 2006 that they had entered into the UAW-GM-Delphi Special Attrition Program Agreement (UAW Attrition Agreement), which was intended to reduce the number of U.S. hourly employees at GM and Delphi through the Attrition Program. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy Court), which has jurisdiction over Delphi’s Chapter 11 proceedings, and such approval was granted on April 7, 2006. The UAW Attrition Agreement provides for a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi, and by which GM will be able to reduce the number of employees who are and will be in the JOBS bank in a cost effective manner.

In the UAW Attrition Agreement, GM agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to (1) pay lump sums of $35,000 to certain employees who participate in the UAW Attrition Agreement; (2) allow Delphi employees who agree to retire under the UAW Attrition Agreement to flowback to GM for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a result after their flow-back, pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain. Refer to our discussion of issues related to the Delphi restructuring in the “GM North America Restructuring Plan — Update” section.

Also under the UAW Attrition Agreement, GM provided certain UAW-represented employees at GM with (i) a lump sum payment of $35,000 for normal or early voluntary retirements retroactive to October 1, 2005; (ii) a mutually satisfactory retirement for employees 50 years of age or older with at least 10 years of credited service; (iii) payment of gross monthly wages ranging from $2,750 to $2,900 to those employees who participate in a special voluntary pre-retirement program depending on years of credited service and plant work location; and (iv) a buyout of $140,000 for employees with ten or more years of seniority, or of $70,000 for employees with less than 10 years seniority, provided such employees sever all ties with GM and Delphi except for any vested pension benefits.

GM employees had until June 23, 2006 to accept and participate in the terms established under the UAW Attrition Agreement followed by a seven day rescission period from the date of acceptance. Approximately 34,400 GM hourly employees (33,100 UAW-represented and 1,300 represented by the IUE-CWA) have agreed to participate in the program. Employees who chose to leave GM will retire or leave no later than January 1, 2007. GM will use temporary employees as necessary while permanent replacements are put in place.

In addition, as of June 30, 2006, approximately 12,500 Delphi employees had chosen to participate in the Attrition Program. On June 29, 2006, the Bankruptcy Court approved a motion by Delphi to offer attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA, and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the bankruptcy estate of Delphi for payment that it makes under the buyout programs and a prepetition, general unsecured claim for costs, other than the $35,000 lump sum payment, incurred in the IUE-CWA attrition

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  Financial Results — (continued)

program assertable against the bankruptcy estate of Delphi under certain existing agreements. The estimated cost to GM of these programs is comprehended in the pretax charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

GMNA recorded an after-tax charge of $3.7 billion in the second quarter of 2006 related to the UAW Attrition Agreement. This charge was comprised of the following: (1) an after-tax charge of approximately $1.4 billion associated with the $35,000 lump sum payments for normal or early voluntary retirements between June 30, 2006 and the October 1, 2005 retroactive agreement date described above; (2) curtailment loss of $2.9 billion after tax with respect to its pension plan in conjunction with termination of a significant number of employees as part of the plan to reduce its workforce; and (3) a favorable offset of $0.6 billion after tax for reduction in capacity action charges taken in the fourth quarter 2005 due to lower than anticipated JOBS expense. The impact of the UAW Attrition Agreement on other postretirement benefits will be shown in our results for the third quarter of 2006 and is expected to be approximately $0.3 billion.

GMAC — Pending Sale of 51% Controlling Interest

On April 2, 2006, GM and its wholly owned subsidiaries, GMAC and GM Finance Co. Holdings Inc., entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of $7.4 billion to FIM Holdings LLC (FIM Holdings). FIM Holdings is a consortium of investors including Cerberus, FIM Investors LLC, the sole managing member, and Citigroup Inc., Aozora Bank Ltd. and a subsidiary of the PNC Financial Services Group, Inc. GM will retain a 49% equity interest in GMAC. In addition, GM and the consortium will invest $1.9 billion of cash in new GMAC preferred equity, with $1.4 billion to be invested by GM and $500 million to be invested by the consortium. The transaction is subject to a number of U.S. and international regulatory and other approvals.

This agreement is an important element in GM’s current turnaround efforts, and is expected to provide the following:

•  Strong long term services agreement between GM and GMAC — As part of the transaction, GM and GMAC will enter into a number of agreements that will require that GMAC continue to allocate capital to automotive financing consistent with historical practices, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While GMAC will retain the right to make individual credit decisions, GMAC will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdictions. Subject to GMAC’s fulfillment of certain conditions, GM will grant GMAC exclusivity for 10 years for U.S., Canadian and international GM-sponsored consumer and wholesale marketing incentives, with the exception of Saturn branded products.

•  Improved Liquidity — Significant upfront sales proceeds to bolster GM liquidity, strengthening GM’s balance sheet and funding the turnaround plan.

•  Enhanced stockholder value through a stronger GMAC — GM will retain a 49% equity interest in GMAC, and will be able to continue to participate in GMAC’s strong profitability levels.

•  Expected delinkage of GMAC’s credit rating from GM — GM expects the introduction of a new controlling investor for GMAC, new capital at GMAC, and significantly reduced intercompany exposures to GM will provide GMAC with a solid foundation to improve its current credit rating, and delink the GMAC credit ratings from GM.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase from GMAC certain assets related to the automotive finance business of the North American Operations and International Operations of GMAC. GM’s exercise of the option is conditional on GM’s credit rating being investment grade or higher than GMAC’s credit rating. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of GMAC’s automotive finance business in either

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Financial Results — (continued)

the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

GMAC expects to arrange two asset-backed funding facilities that total up to $25 billion that will support GMAC’s ongoing business and enhance GMAC’s liquidity position. A $10 billion facility is expected to be available before closing and the other facility is expected to be available on or after closing. Citigroup has committed $12.5 billion in the aggregate to those two facilities. The funding facilities are in addition to Citigroup’s initial equity investment in GMAC.

Prior to consummation of the agreement, (i) certain assets with respect to automotive leases and retail installment sales contracts owned by GMAC and its affiliates having a net book value of approximately $4 billion, will be dividended to GM, (ii) GM will assume certain of GMAC’s postemployment benefit obligations, (iii) GMAC will transfer to GM certain entities that hold a fee interest in certain real properties, (iv) GMAC will pay dividends to GM in an amount up to the amount of GMAC net income prior to the consummation of the transaction, (v) GM will repay certain indebtedness owing to GMAC and specified intercompany unsecured obligations owing to GMAC shall be no greater than $1.5 billion and (vi) GMAC will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in GMAC’s equity value resulting from the transfer of a portion of GMAC’s net deferred tax liabilities arising from the conversion of GMAC and certain of its subsidiaries to limited liability company form. The total value of the cash proceeds and distributions to GM before it purchases preferred limited liability company interests of GMAC and repays any intercompany unsecured obligations will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price, the $4 billion of retained assets and the $2.7 billion cash dividend. From the proceeds GM will invest $1.4 billion of cash in new preferred limited liability company interests of GMAC.

For the first half of 2006, GMAC’s earnings and cash flows are fully consolidated with GM’s operating results. However, as a result of the agreement to sell a 51% controlling interest, certain assets and liabilities of GMAC have been presented as held for sale at June 30, 2006. GM recognized a non-cash pre-tax impairment charge of $1.2 billion in the second quarter of 2006 in conjunction with the pending sale of 51% equity interest. After the sale of the 51% controlling interest, the remaining 49% interest in GMAC will be reflected in GM’s financial statements using the equity method of accounting.

Approximately $433 million of the $1.2 billion pre-tax charge is attributable to differences between tangible book value to be paid by the consortium of investors and GMAC’s actual book value, partially offset by 51% of the effects of unrecognized net gains reflected in GMAC’s other comprehensive income. The remaining $775 million of the pre-tax charge is attributable to GMAC operating lease assets classified as held for sale. Pursuant to the requirements of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144) GM is required to cease depreciation on long lived assets classified as held for sale in GM’s consolidated financial statements. Accordingly, pre-tax income in the second quarter was higher by $775 million as reported in the “Selling, general and administrative expenses” line item in the Condensed Consolidated Statement of Operations. However, because that higher income amount is not recoverable at close in the sales price or from a dividend prior to closing, a corresponding increase of $775 million was recorded as part of the $1.2 billion pre-tax charge, thereby impairing the carrying value of the operating lease assets held for sale as of June 30, 2006. As the transaction progresses towards closing, similar benefits from ceasing depreciation will not be recoverable in the sales price. Therefore, GM expects to increase the pre-tax charge in the third quarter and any other subsequent quarter until closing related to further operating lease asset impairments. However these increases are expected to be offset by the favorable impacts of ceasing depreciation on GMAC assets held for sale and therefore will not have any impact on earnings. In addition, the pre-tax charge will be adjusted each quarter until closing for any changes in fair value of the assets.

While GM expects to record tax benefits associated with the pre-tax impairment charge of $1.2 billion, these benefits in the second quarter will be offset by approximately $409 million of incremental tax costs created

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Financial Results — (continued)

primarily by book to tax differences now recognized due to the pending sale. Both of these items are recorded in the “Income Tax Benefit” line item of the Condensed Consolidated Statement of Operations.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things, (i) receipt of ratings for the senior unsecured long-term indebtedness of GMAC and Rescap, an indirect wholly owned subsidiary of GMAC, after giving effect to the transactions contemplated by the agreement, of at least BB and BBB− (or their respective equivalents), respectively, and an A.M. Best rating for GMAC’s significant insurance subsidiaries of at least B++; and (ii) that no material adverse effect will have occurred with respect to the business, financial condition or results of operations of GMAC, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent, and (iii) the receipt of required regulatory approvals and licenses. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 30, 2007. There can be no assurance that the transaction will be completed or if it is completed, that the terms of the transaction will not be different from those set forth in the definitive agreement. Furthermore, even if the sale transaction is completed on the agreed-upon terms, there is no assurance that it will delink GMAC’s credit rating from GM’s credit rating or maintain ResCap’s credit rating at investment grade.

On July 28, 2006, the Federal Deposit Insurance Corporation (the “FDIC”) announced a six-month moratorium on the acceptance of, or final decisions on, notices filed under the Change in Bank Control Act with regard to industrial loan companies (“ILCs”). In connection with the proposed sale of a controlling interest in GMAC, the consortium and its members have submitted such notices with respect to GMAC’s ILC, GMAC Automotive Bank. GM and GMAC are currently evaluating the effect of the FDIC’s action on these pending notices, but it appears that the timing of any approval of the notices is likely to be affected by the moratorium. Since FDIC approval of the Change in Bank Control Act notices with regard to GMAC Automotive Bank is a condition to closing the transaction, GM expects to close the transaction in the fourth quarter of 2006, but it is possible that delays in obtaining such approvals or in satisfying other required conditions could defer the closing.

The sale of a controlling interest in GMAC will reduce a significant portion of the GMAC U.S. pre-tax income available to GM. Given this anticipated decline in U.S. pre-tax income as a result of the transaction, we have reassessed the need for a valuation allowance against our U.S. net deferred tax assets balance of $24.4 billion as of June 30, 2006. At this time, we consider it more likely than not that we will have U.S. taxable income in the future that will allow us to realize these deferred tax assets. However, it is possible that some or all of these deferred tax assets could ultimately expire unused, especially if our GMNA turnaround plan is not successful or if GMAC’s income declines.

Sale of Isuzu Investment

In April 2006, GM sold its 7.9% equity interest (90.09 million shares) in Isuzu Motors Ltd (Isuzu) to Isuzu’s strategic business partners and major shareholders, Mitsubishi Corp., Itochu Corp. and Mizuho Corporate Bank. The sale of GM’s interest in Isuzu generated cash proceeds of $311 million and a pre-tax gain on sale of $311 million ($212 million after tax). GM’s basis in its investment was written down to zero in 2001. The proceeds were used to support the GMNA turnaround plan, finance future growth initiatives, strengthen the balance sheet and fund other corporate priorities.

Sale of Regional Homebuilder

In April 2006 GMAC signed a definitive agreement to sell its entire interest in a regional home builder. In the second quarter of 2006, GMAC recognized a pre-tax gain of $415 million ($259 million after tax) on the sale of its equity interest. Under the equity method of accounting, GMAC’s share of pretax income recorded from this investment was approximately $22.5 million and $21.8 million for the three months ended June 30, 2006 and 2005, respectively and $42.4 million and $35.2 million for the six months ended June 30, 2006 and 2005, respectively.

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  Financial Results — (concluded)

Sale of Suzuki Investment

During the first quarter of 2006, GM reduced its equity stake in Suzuki Motor Corporation (Suzuki) from 20.4% to 3.7%. The sale of the investment resulted in an after-tax gain of $372 million recognized by GMAP. In addition to the favorable net income impact, the transaction generated cash proceeds of approximately $2.0 billion which enhance GM’s liquidity position as well as the strength of its balance sheet. GM maintains a 3.7% equity ownership in Suzuki after the transaction, and will continue its strategic alliance with Suzuki.

Strategy

GM’s primary focus continues to be the return of its North American operations to profitability and positive cash flow. The 2006 second quarter results demonstrate initial steps towards this goal, although additional progress will be required to implement the plan fully. GM remains committed to the turnaround efforts not only to return GM to profitability, but to position GM to be competitive in the long term through managing our business’ cost, revenue, and liquidity.

With regard to costs, our primary goals were to address our legacy cost burden and reduce our structural costs in line with current levels of revenue. Legacy costs are primarily related to the cost of benefits provided to retired employees and their dependents, and costs associated with employees and their dependents of businesses divested by GM. Structural costs, such as the cost of unionized employees, are those costs that do not vary with production and include all costs other than material, freight, and policy and warranty costs. Some of these costs are within our control, while others such as interest rates or return on investments (which influence our pension and OPEB expenses) are more dependent on outside factors. To reduce legacy costs and structural costs, GM has taken action in a number of areas. To contain legacy health care costs for retired hourly employees, GM entered into the UAW Health Care Settlement Agreement, which received court approval on March 31, 2006, and a tentative agreement with the IUE-CWA providing similar terms, which was announced on April 10, 2006. In addition, on February 7, 2006 GM announced it would cap its contributions to salaried retiree health care at the level of 2006 expenditures. To control pension costs, GM announced on March 7, 2006 that it would freeze accrued pension benefits for U.S. salaried employees and implement a new benefit structure for future accruals. GM has also taken actions to reduce hourly headcount, beginning in November 2005 when GM announced plans to idle 12 facilities and reduce manufacturing employment levels by approximately 30,000 employees by the end of 2008. GM now expects to reach the reduced employment level by January 1, 2007, about two years ahead of the previously announced target. During the first quarter of 2006, two assembly plants referred to in the original announcement stopped production. On March 22, 2006, GM, the UAW, and Delphi announced they had entered into the UAW Attrition Agreement to reduce the number of hourly employees of GM and of Delphi through the a special attrition program, and in late June, GM announced that approximately 34,400 hourly employees (33,100 UAW-represented and 1,300 IUE-CWA-represented) would participate in the program.

Revenues in the second quarter of 2006 were strengthened by sales of vehicles recently launched by GMNA, such as the Chevrolet Tahoe, GMC Yukon, and Cadillac Escalade full size utility trucks, as well as the Chevrolet HHR, the Buick Lucerne and the Pontiac G6 and Torrent. Market share is down from the same period a year earlier, which we believe is due to strategic reductions in incentives and daily rentals, but GM is seeing benefits associated with the “Total Value Promise” initiative announced in January 2006, which reduced GMNA incentive levels while increasing vehicle transaction prices. We will continue to introduce an array of new vehicles throughout 2006, including the Saturn AURA, all-new Chevrolet Silverado and GMC Sierra full-size pickups, the fuel-efficient Saturn Vue Green Line Hybrid, and GMC Acadia and Saturn Outlook crossover vehicles. In addition, we experienced growth in revenue in each of our geographic regions and improved profitability in three of our four regions, a continuation of progress made in the first quarter.

GM has also taken actions to improve liquidity. In February 2006, GM’s Board of Directors reduced the quarterly dividend by 50%, which will conserve about $500 million on an annual basis. Since the fourth quarter of 2005, we have sold all or part of our equity stakes in each of Fuji Heavy Industries, Isuzu and Suzuki, adding more

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  Strategy — (concluded)

than $3 billion to GM’s liquidity. In addition to these actions, on July 20, 2006, GM executed a $4.63 billion amended and restated credit agreement with a syndicate of banks restating and amending the $5.6 billion unsecured line of credit. This agreement provides additional available liquidity that GM anticipates to draw on from time to time to fund working capital and other needs. Also, on April 2, 2006 GM entered into a definitive agreement to sell a 51% controlling interest in GMAC to a consortium of investors. GM’s goal in selling the 51% interest in GMAC was improving GMAC’s current credit rating position for GMAC’s long term growth and provide a stronger foundation to support GM sales and dealers. The transaction also improves liquidity and results in total value of cash proceeds and distributions to GM of approximately $14 billion over three years, comprised of $7.4 billion purchase price, $4 billion of retained assets and $2.7 billion cash dividend. We expect to receive approximately $10 billion at closing. $1.4 billion will be invested by GM in new GMAC preferred equity.

In addition to restoring GMNA operations to profitability, GM needs to address near term issues associated with its largest supplier, Delphi. On March 31, 2006 Delphi filed motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned until August 11, 2006, to allow Delphi, its unions and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts that we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

Delphi also filed on March 31, 2006 a motion under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned by the court until after the hearings related to Delphi’s U.S. labor agreements and retiree welfare benefits are completed or otherwise resolved. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM could be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities.

Please refer to the Key Factors Affecting Future Results section below for further discussion on the above topics.

Basis of Presentation

This management’s discussion and analysis of financial condition and results of operations (MD&A) should be read in conjunction with the December 31, 2005 consolidated financial statements and notes thereto (the 2005 Consolidated Financial Statements), along with the MD&A included in General Motors Corporation’s (the Corporation, General Motors, or GM) 2005 Annual Report on Form 10-K, filed separately with the U.S. Securities and Exchange Commission (SEC). All earnings per share amounts included in the MD&A are reported on a fully diluted basis. See related discussion in Item 2 of the General Motors Acceptance Corporation (GMAC) Form 10-Q for the quarterly period ended June 30, 2006, which is herein incorporated by reference.

GM’s Auto & Other Reportable Operating Segment Consists of:

•  GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and

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Basis of Presentation — (concluded)

•  Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain Delphi Corporation (Delphi) and other retirees, and certain corporate activities.

GM’s FIO reportable operating segment consists of GMAC and Other Financing, which includes financing entities that are not consolidated by GMAC.

The disaggregated financial results for GMA have been prepared using a management approach, which is consistent with the basis and manner in which GM management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In this regard, certain common expenses were allocated among regions less precisely than would be required for stand-alone financial information prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The financial results represent the historical information used by management for internal decision-making purposes; therefore, other data prepared to represent the way in which the business will operate in the future, or data prepared in accordance with GAAP, may be materially different.

Consistent with industry practice, market share information employs estimates of sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis.

Consolidated Results of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Consolidated:
Total net sales and revenues	$	54,395		$	48,469		$	106,640		$	94,242
Net income (loss)	$	(3,379	)	$	(987	)	$	(2,934	)	$	(2,240	)
Net margin		(6.2	)%		(2.0	)%		(2.8	)%		(2.4	)%
Automotive and Other Operations:
Total net sales and revenues	$	44,913		$	40,178		$	88,303		$	77,481
Net income (loss)	$	(3,588	)	$	(1,795	)	$	(3,781	)	$	(3,777	)
Financing and Insurance Operations:
Total revenues	$	9,482		$	8,291		$	18,337		$	16,761
GMAC net income	$	898		$	816		$	1,535		$	1,544
Other financing net income	$	(689	)	$	(8	)	$	(688	)	$	(7	)
Total FIO net income	$	209		$	808		$	847		$	1,537

The increase in second quarter 2006 total net sales and revenues of 12%, compared with second quarter 2005, was due to higher GMA revenue of $4.8 billion, primarily driven by an increase in global production volume of 4%, with all regions showing increases, and increased FIO revenue of $1.2 billion, more than 14% over 2005. Similarly, year to date total net sales and revenues were $12 billion higher, an increase of 13% over 2005.

Consolidated results declined by about $2.4 billion to net loss of $3.4 billion in the second quarter of 2006, compared to a net loss of $987 million in the second quarter of 2005. The deterioration was more than accounted for by the $3.7 billion charge for the UAW Attrition Agreement previously discussed. For the first six months of 2006, GM reported a consolidated net loss of $2.9 billion, $694 million greater than the loss of $2.2 billion in 2005.

Second quarter 2006 results included:

•  Consolidated net loss of $3.4 billion;

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Consolidated Results of Operations — (concluded)

•  Announcement of agreement to sell 51% controlling interest in GMAC, resulting in a loss of $690 million, after tax;

•  Implementation of the Attrition Program, resulting in a charge of $3.7 billion;

•  Strong revenue and cost performance at GMNA;

•  Continued profitability at GMLAAM and GMAP;

•  Continued profitability at GMAC; and

•  Strengthened liquidity position at Auto & Other.

More detailed discussions on the results of operations for the automotive regions, other operations, and GMAC can be found in the following sections.

GM Automotive and Other Operations Financial Review

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Auto & Other:
Total net sales and revenues	$	44,913		$	40,178		$	88,303		$	77,481
Net income (loss)	$	(3,588	)	$	(1,795	)	$	(3,781	)	$	(3,777	)
GMA net income (loss) by region:
GMNA	$	(3,941	)	$	(1,137	)	$	(4,444	)	$	(2,874	)
GME		(58	)		(96	)		(10	)		(610	)
GMLAAM		140			25			169			56
GMAP		379			(605	)		832			(535	)
Net income (loss)	$	(3,480	)	$	(1,813	)	$	(3,453	)	$	(3,963	)
Net margin		(7.7	)%		(4.5	)%		(3.9	)%		(5.1	)%
GM global automotive market share		13.8	%		15.1	%		13.5	%		14.3	%
Other:
Net income (loss)	$	(108	)	$	18		$	(328	)	$	186

GM Auto & Other’s net sales and revenues increased $4.7 billion, or nearly 12%, in the second quarter of 2006, compared to the same quarter of 2005. The improvement was driven by a $1.6 billion or 6% increase at GMNA and an increase at GMAP of more than $2 billion from 2005, largely due to the consolidation of GM Daewoo, which was reported under the equity method of accounting in the second quarter of 2005. GMLAAM’s revenue increased 30%, while GME’s revenue increased slightly. For the first six months of 2006, net sales and revenues at Auto & Other increased $10.8 billion over 2005, or 14%, again led by GMNA and GMAP, with increases of $4.9 billion and $4.4 billion, respectively.

GM’s global market share was 13.8% and 15.1% for the second quarters of 2006 and 2005, respectively. GMNA’s market share decreased 3.3 percentage points, to 24.0% for the quarter, compared to 2005. Market share increased in GMAP, while GME and GMLAAM declined. In the first six months of 2006, global market share declined 0.8 percentage point to 13.5%, from 14.3% at June 30, 2005. The decrease was driven by declines at GMNA and GME, partly offset by increases at GMLAAM and GMAP.

GMA reported a net loss of $3.5 billion in the second quarter 2006, a decline of $1.7 billion compared to a net loss of $1.8 billion in 2005, with all regions except GMNA showing improved results. GMA’s net loss of $3.5 billion for the first six months of 2006 was an improvement of $510 million over 2005.

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GM Automotive Regional Results

GM North America

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
GMNA:
Total net sales and revenues	$	28,590		$	26,998		$	57,121		$	52,225
Net income (loss)	$	(3,941	)	$	(1,137	)	$	(4,444	)	$	(2,874	)
Net margin		(13.8	)%		(4.2	)%		(7.8	)%		(5.5	)%
Production volume	(Volume in thousands)
Cars		462			458			958			928
Trucks		775			789			1,534			1,501
Total GMNA		1,237			1,247			2,492			2,429
Vehicle unit sales
Industry — North America		5,400			5,634			10,163			10,322
GM as a percentage of industry		24.0	%		27.3	%		23.8	%		26.4	%
Industry — U.S.		4,571			4,802			8,626			8,803
GM as a percentage of industry		24.2	%		27.8	%		24.0	%		26.7	%
GM cars		20.0	%		23.5	%		20.3	%		23.4	%
GM trucks		27.9	%		31.3	%		27.1	%		29.4	%

North American industry vehicle unit sales decreased 4% to 5.4 million in the second quarter of 2006 compared to 2005, driven by lower U.S. industry volume, of 4.6 million units, compared to 4.8 million units in the second quarter of 2005.

U.S. industry volume in the second quarter of 2006 represents a seasonally adjusted annual rate of 17.4 million, compared to 17.2 million in the second quarter of 2005. GM’s U.S. market share decreased by 3.6 percentage points, to 24.2%, compared to the second quarter of 2005, reflecting a decline in vehicle unit deliveries of approximately 233 thousand units, or 17.4%. GM’s U.S. car market share declined by 3.5 percentage points to 20.0%, while GM’s U.S. truck market share declined to 27.9%, down 3.4 percentage points. GM’s sales in the second quarter of 2005 were particularly strong, in part the result of marketing programs, including employee pricing offers and other incentives, that were not offered in 2006.

GMNA production volumes were slightly lower in 2006, by approximately 10 thousand units, at 1.237 million units for the quarter, compared to the second quarter of 2005. Dealer inventories in the U.S. increased year over year by approximately 151 thousand units, to 1.169 million units at June 30, 2006 from 1.018 million units at June 30, 2005. Year to date production increased 63 thousand units, to 2.492 million in 2006.

North American industry vehicle unit sales decreased 1.5% to 10.2 million in the first six months of 2006 from 10.3 million in the first six months of 2005, while GMNA’s market share decreased by 2.6 percentage points to 23.8% in 2006 year-to-date, compared to 26.4% in 2005.

For the first six months of 2006, industry vehicle unit sales in the United States decreased 2.0% to 8.6 million units from 8.8 million units in the first six months of 2005. GM’s 2006 year-to-date U.S. market share declined 2.7 percentage points, to 24.0%. U.S. car market share declined by 3.1 percentage points to 20.3%, while U.S. truck market share decreased to 27.1%, down 2.3 percentage points from 2005.

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GM Automotive Regional Results — (continued)

  GM North America — (concluded)

In the second quarter of 2006, GMNA incurred a net loss of $3.9 billion as compared to a net loss of $1.1 billion for the comparable period of 2005. The decline in results was due primarily to the following factors:

•  The charge of $3.7 billion, after tax, related to the UAW Attrition Agreement, which is more fully discussed in the section titled “GM-UAW-Delphi Special Attrition Program Agreement” above. This charge included the favorable impact of $0.6 billion after tax for the reduction in capacity action charges reflected in the fourth quarter of 2005 due to lower than anticipated expense related to the JOBS bank.

•  An impairment charge of $303 million (after-tax charge of $197 million), for the write-down of product specific assets.

•  A favorable adjustment of approximately $300 million after tax related to a decrease in the liability for policy, product warranty and recall campaigns due to lower spending as a result of better vehicle quality.

•  Lower pension and OPEB costs of approximately $300 million, primarily due to the effects of the changes in salaried retiree benefits plans announced in the first quarter of 2006, and the hourly pension savings as a result of the Attrition Program.

•  Savings in other structural costs of approximately $500 million, including engineering, marketing and other cost reductions of $0.4 billion, and a $0.1 billion reduction to the product liability reserve, partially offset by higher freight costs of approximately $150 million. The contribution margins were lower in the second quarter and the first six months of 2006 primarily due to the previously mentioned freight costs and, to a much lesser extent, an increase in material costs and product mix considerations.

For the first six months of 2006, GMNA incurred a net loss of $4.4 billion, compared to a net loss of $2.9 billion in the 2005 period. In addition to the second quarter 2006 charges and other items noted above, 2006 results were affected by:

•  Increased production volumes primarily in the first quarter, which contributed approximately $470 million to GMNA results for the first half of 2006.

•  Favorable pricing, primarily in the first quarter, which contributed approximately $390 million to the first half of 2006 results.

•  Estimated charges of $65 million after tax related to other separations of U.S. salaried employees.

In addition, first half of 2005 results included after-tax charges of $84 million related to the write-down of various plant assets in connection with the cessation of production at the Lansing assembly plant and $148 million related to voluntary early retirement and other separation programs with respect to certain U.S. salaried employees.

GM Europe

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total net sales and revenues	$	8,743		$	8,590		$	16,834		$	16,698
GME net loss	$	(58	)	$	(96	)	$	(10	)	$	(610	)
GME net margin		(0.7	)%		(1.1	)%		(0.1	)%		(3.7	)%
	(Volume in thousands)
Production volume		502			501			996			1,003
Vehicle unit sales Industry		5,887			5,755			11,450			11,041
GM as a percentage of industry		9.3	%		9.6	%		9.3	%		9.7	%
GM market share — Germany		10.2	%		11.2	%		10.2	%		11.1	%
GM market share — United Kingdom		15.1	%		15.6	%		14.8	%		15.2	%

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GM Automotive Regional Results — (continued)

  GM Europe — (concluded)

Industry vehicle unit sales increased in Europe during the second quarter of 2006 by approximately 2.3% compared to the second quarter of 2005. GME vehicle unit deliveries decreased by approximately 7 thousand units in the second quarter of 2006 versus the same period in 2005 leading to a decline in GME’s market share to 9.3%, representing a 0.3 percentage point reduction versus the same period in 2005. GME experienced market share losses for the two largest markets in Europe, Germany and the United Kingdom, in the second quarter of 2006 compared to the second quarter of 2005.

For the first six months of 2006, European industry vehicle unit sales increased 3.7% over 2005, while GME sales were essentially flat, up 2 thousand units over 2005. This resulted in a decline in GME’s first half market share, to 9.3%, down 0.4 percentage point from 2005.

GME recorded a net loss of $58 million in the second quarter of 2006, compared to a net loss of $96 million in the second quarter of 2005. The improved results were affected in part by the following factors:

•  Restructuring charges for separation and contract cancellation charges totaling $88 million, after tax, were recognized. The charge in the second quarter of 2006 relates to the restructuring plan announced in the fourth quarter of 2004 as well as to the closure of GM’s Portugal assembly plant and to the reduction of one shift at the Ellesmere Port plant in the U.K. These items are further discussed in Note 13, Impairments, Restructuring and Other Initiatives.

•  Product-specific asset impairment charge of $37 million, after tax, was recorded in the second quarter of 2006.

•  Asset impairment charge of $57 million, after tax, in connection with the announced closure of GM’s Portugal assembly plant was recorded in the second quarter of 2006. The plant is scheduled to close in December 2006.

•  Results for the second quarter of 2005 included an after-tax restructuring charge of $126 million related to separations and to costs incurred in dissolving GM’s Powertrain and Fiat S.p.A (Fiat) joint ventures.

•  Material cost reductions as well as favorable pricing of approximately $100 million improvement.

For the first six months of 2006, GME incurred a net loss of $10 million, representing a significant improvement from the loss of $610 million for the first half of 2005. Factors affecting results included:

•  Total restructuring and impairment charges for the first six months of 2006 of $222 million, after tax. The second quarter charge of $182 million consists of the charges for separations, contract cancellations and asset impairments discussed above. The first quarter 2006 charge of $40 million, after tax, primarily relates to the restructuring plan announced in the fourth quarter of 2004, discussed further above. Total restructuring charges for the first half of 2005 were $548 million, after tax. These charges were related mainly to the restructuring plan announced in the fourth quarter of 2004 and covered about 6,250 people for the six-month period. The charge in the second quarter of 2005 also included costs related to the dissolution of the Powertrain joint ventures with Fiat.

•  For the first half of 2006 material cost reductions and favorable structural cost performance improved, contributing approximately $200 million compared to the first half of 2005.

Effective January 1, 2006, four powertrain entities were transferred from GMNA to GME for management reporting. Accordingly, second quarter 2005 amounts have been revised for comparability by reclassifying $127 million of revenue and $16 million of net income from GMNA to GME. Year to date 2005 amounts have been revised by reclassifying $278 million of revenue and $49 million of net income from GMNA to GME.

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GM Automotive Regional Results — (continued)

GM Latin America/Africa/Mid-East

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total net sales and revenues	$	3,820		$	2,935		$	6,960		$	5,234
GMLAAM net income	$	140		$	25		$	169		$	56
GMLAAM net margin		3.7	%		0.9	%		2.4	%		1.1	%
	(Volume in thousands)
Production volume		207			195			401			380
Vehicle unit sales
Industry		1,401			1,285			2,766			2,473
GM as a percentage of industry		17.5	%		17.6	%		17.2	%		16.5	%
GM market share — Brazil		21.6	%		21.9	%		21.5	%		20.6	%

Industry vehicle unit sales in the GMLAAM region increased 9% in the second quarter of 2006, to 1.401 million units, compared to the second quarter of 2005. GMLAAM’s vehicle unit sales increased by 8.4%, resulting in a slight decrease in market share to 17.5% in the second quarter of 2006. The market share loss was primarily the result of a 0.3 percentage point decrease in Brazil as well as 1.1 percentage points decrease in Argentina market share, both of which had increases in sales but experienced strong local industry growth.

In the first six months of 2006, the region’s industry grew by almost 12%, while GMLAAM’s vehicle unit sales increased more than 16%, driving a 0.7 percentage point increase in GMLAAM’s market share over 2005, to 17.2%.

GMLAAM had net income of $140 million in the second quarter of 2006, compared to net income of $25 million in the second quarter of 2005. Favorable pricing contributed approximately $130 million of the improvement, and higher production volumes and improved product mix contributed approximately $80 million. This performance was partially offset by unfavorable currency movement and other factors of approximately $95 million.

Second quarter results for 2006 also included a $15 million charge for restructuring while the first quarter of 2006 results include a restructuring charge of $27 million. Both restructuring charges relate to the costs of voluntary employee separations at GM do Brasil.

For the first six months of 2006, GMLAAM earned $169 million compared to $56 million for the first six months of 2005.

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

GM Asia Pacific

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total net sales and revenues	$	4,091		$	1,922		$	8,024		$	3,616
GMAP net income	$	379		$	(605	)	$	832		$	(535	)
GMAP net margin		9.3	%		(31.5	)%		10.4	%		(14.8	)%
	(Volume in thousands)
Production volume		489			398			961			733
Vehicle unit sales
Industry		4,693			4,526			9,840			9,180
GM as a percentage of industry		6.7	%		6.2	%		6.5	%		5.6	%
GM market share — Australia		14.7	%		17.9	%		15.6	%		18.2	%
GM market share — China		12.0	%		11.3	%		12.5	%		10.8	%

Industry vehicle unit sales in the Asia Pacific region increased by nearly 4%, to 4.7 million units, in the second quarter of 2006 compared to the second quarter of 2005, by significant gains in China. GMAP increased its vehicle unit sales in this region by approximately 33 thousand units, or almost 12%, in the second quarter of 2006, primarily due to a nearly 26% increase in China. GMAP sales volume includes Wuling sales in China. GMAP’s second quarter of 2006 market share increased to 6.7%, from 6.2% in the second quarter of 2005. In China, GMAP increased its market share to 12.0%, up from 11.3% in the second quarter of 2005.

In the first six months of 2006, industry vehicle unit sales in the region increased 660 thousand units, or more than 7%, to 9.8 million, from the same period of 2005. GMAP’s sales increased by 124 thousand units, or 24%, to 637 thousand from the same period in 2005. GMAP’s sales growth was primarily due to the increase in China, where sales were up 47% and market share grew 1.7 percentage points to 12.5% for the first half of 2006. Overall in the region, GMAP’s market share increased 0.9 percentage point, to 6.5%, in the period.

Net income from GMAP was $379 million in the second quarter of 2006 compared to a net loss of $605 million in 2005. The increase in GMAP’s 2006 net income was primarily due to the following factors:

•  An after-tax gain of $212 million, from the sale of approximately 90 million shares of Isuzu stock in the second quarter of 2006, as discussed above.

•  A loss of $788 million, recognized in the second quarter of 2005, from the write-down to fair market value of GM’s investment in approximately 20% of the common stock of Fuji Heavy Industries (FHI).

For the first six months of 2006, GMAP earned net income of $832 million, compared to a net loss of $535 million for the first half of 2005. In addition to the second quarter items noted above, the following contributed to the improved performance in 2006:

•  An after-tax gain of $372 million from the sale of approximately 85% of GM’s investment in Suzuki, discussed above.

•  Improved results at GM Daewoo and GM’s joint ventures in China, partially offset by unfavorable results at Holden and Thailand.

GMAP results reflect the consolidation of GM Daewoo beginning on June 30, 2005.

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Other Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Other:
Total net sales, revenues, and eliminations	$	(331	)	$	(267	)	$	(636	)	$	(292	)
Net income (loss)	$	(108	)	$	18		$	(328	)	$	186

Other Operations reflect a net loss of $108 million in the second quarter of 2006 as compared to net income of $18 million for the comparable period in 2005. Second quarter of 2005 results included tax benefits that contributed $389 million. Other Operations also include after-tax legacy costs of $114 million and $129 million for the second quarters of 2006 and 2005, respectively, related to employee benefit costs of divested businesses, primarily Delphi, for which GM has retained responsibility.

For the first half of 2006, Other Operations reflect a net loss of $328 million as compared to net income of $186 million in the same period of 2005. 2005 included tax benefits of $547 million. The results for the first half of 2006 also include an after-tax charge of $3 million related to curtailment charges with respect to U.S. salaried pension changes, while 2005 results include an $8 million after-tax charge related to early retirement and other separation programs for certain U.S. salaried employees. Other Operations also include after-tax legacy costs of $253 million and $241 million for the six months of 2006 and 2005, respectively.

GMAC Financial Review

GMAC earned a record $898 million in the second quarter of 2006, an increase of $82 million from second quarter 2005 earnings of $816 million. Gross revenues increased to $9.4 billion in the second quarter of 2006 from $8.3 billion in 2005. The increase in second quarter earnings was due to strong earnings at ResCap that more than offset lower earnings from Automotive Finance and Insurance. GMAC also provided a significant source of cash flow to GM through the payment of a $1.4 billion dividend in the second quarter of 2006. For the first six months of 2006, net income declined $9 million to $1.535 billion.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
	(Dollars in millions)
Automotive financing operations	$	251	$	366	$	510	$	600
ResCap		547		300		745		622
Insurance operations		80		100		209		195
Other / eliminations		20		50		71		127
Net income	$	898	$	816	$	1,535	$	1,544

Results for Automotive Finance were $251 million in the second quarter of 2006, down $115 million from $366 million earned in the same period in the prior year. The decrease is due to a combination of continued margin pressures, lower remarketing results in the U.S. and Canada and higher consumer credit provisions, slightly offset by certain favorable non-U.S. tax rate changes and increases in investment income. The lower second quarter 2006 results compared to 2005 more than offset increased first quarter income, resulting in a decline of $90 million for the first six months of 2006, compared to 2005.

ResCap earnings were $547 million in the second quarter of 2006, up $247 million from $300 million earned in 2005. The increase in earnings was due primarily to a $259 million gain on sale of GMAC’s equity investment in a regional homebuilder. Absent the effect of the equity sale, ResCap earnings declined slightly in comparison to the same period last year. For the first six months of 2006, ResCap’s net income increased $123 million over 2005, to $745 million. The decline in income excluding the gain noted above was due primarily to lower net margins

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GMAC Financial Review — (continued)

resulting from both pricing pressures and higher funding costs, despite increased revenues from higher asset levels. Mortgage originations were $47.0 billion and $88.6 billion for the second quarter and first six months of 2006, respectively, compared to $42.6 billion and $79.0 billion in the 2005 periods.

GMAC’s Insurance operations earned $80 million in the second quarter of 2006, down $20 million from earnings of $100 million in the second quarter of 2005, which was primarily due to a combination of lower capital gains and wholesale losses related to hail storms in the Midwest. Strong underwriting results and the acquisition of MEEMIC Insurance Co. in the first quarter of 2006 contributed to an increase in Insurance earnings of $14 million for the first six months of 2006, compared to the first half of 2005. In addition, GMAC Insurance maintained a strong investment portfolio with a market value of $7.7 billion at June 30, 2006, including after-tax net unrealized capital gains of $545 million.

In addition, second quarter 2006 earnings for GMAC’s Other segment, which includes the Commercial Finance business unit and GMAC’s equity investment in Capmark (formerly GMAC Commercial Mortgage) were $20 million, down $30 million from $50 million earned in the same period of 2005. For the first six months of 2006, Other segment income declined $56 million, to $71 million, from $127 million in 2005. In the first quarter of 2006, GMAC completed the sale of approximately 78% of Capmark. Cash proceeds from the sale were approximately $1.5 billion. At the closing, Capmark also repaid to GMAC approximately $7.3 billion in intercompany loans, bringing the total cash from the sale to $8.8 billion.

GMAC continues to maintain adequate liquidity with cash reserve balances at June 30, 2006 of $22.7 billion, comprised of $17.2 billion in cash and cash equivalents and $5.5 billion invested in marketable securities.

GM expects to close the GMAC transaction in the fourth quarter of 2006, but it is possible that delays in obtaining required approvals or in satisfying other required conditions could defer the closing until 2007. In addition to continuing to enable GMAC to support the sale of GM vehicles, the transaction is intended to support GMAC’s strategic goal of a stable investment grade rating and profitable growth.

GM North America Restructuring Plan — Update

Over the past year, one of our top priorities has been improving our business in North America, thus positioning GM for long-term success. GM has been systematically and aggressively implementing its turnaround plan for GMNA’s business to return the operations to profitability and positive cash flow as soon as possible. This plan is built on four elements:

•  Product Excellence

•  Revitalize Sales and Marketing Strategy

•  Accelerate Cost Reductions and Quality Improvements

•  Address Health Care Burden

The following update describes what we have done so far to achieve these elements:

Product Excellence

GM continues to focus significant attention on introducing new vehicles, such as the Chevy HHR, Saturn Sky, Pontiac G-6 convertible, GMC Yukon, Buick Lucerne, Saab 9-3 SportCombi, Hummer H3, and the Cadillac DTS, and in 2006 we anticipate that approximately 30% of GMNA’s sales volume will come from recently launched cars and trucks, increasing to approximately 40% in 2007. In support of new car and truck programs, GM anticipates total capital spending on product development in 2006 of $8.7 billion, of which $5.7 billion will be devoted to GMNA. GMNA is also allocating capital and engineering to support more fuel-efficient vehicles, including hybrid vehicles in the United States, and is increasing production of active fuel management engines and six-speed transmissions. In addition, GM is undertaking a major initiative in alternate fuels through sustainable technologies

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  GM North America Restructuring Plan — Update — (continued)

such as ethanol/gasoline blended (E85) FlexFuel vehicles. In fact, GM has 1.9 million E85 vehicles on the road today, with plans to build over two million more in the next five years. GM is also adding five more E85-capable models to our lineup for 2007, raising GM’s total flex-fuel offerings to 14 vehicles.

Revitalize Sales and Marketing Strategy

GM is pursuing a revised sales and marketing strategy by focusing on clearly differentiating our brands, optimizing our distribution network, growing in key metropolitan markets, and re-focusing our marketing efforts on the strength and value of our products.

In this regard, in January 2006 GM significantly lowered manufacturer’s suggested retail prices on vehicles that account for about 80% of its 2006 model year automotive sales volume. GM’s promotion strategy now emphasizes its brands and vehicles, rather than price incentives. In addition, GM has increased advertising in support of new products and specific marketing initiatives to improve GM’s sales performance in certain metropolitan markets. Since introducing this fundamental shift in sales and marketing, GM has experienced an increase in average sales price per vehicle.

Accelerate Cost Reductions and Quality Improvements

Following our November 2005 announcement of our strategy to reduce structural costs in the manufacturing area, GM has introduced a variety of initiatives to accomplish that strategy.

In November 2005, GM announced the cessation of operations at 12 manufacturing facilities by 2008, and a reduction in manufacturing employment levels of approximately 30,000 employees by the end of 2008. GM now expects to reach the reduced employment levels by January 1, 2007. To support the structural cost initiatives further, on March 22, 2006 GM, the UAW and Delphi announced they had entered into the UAW Attrition Agreement designed to reduce the number of hourly employees of GM and of the Delphi through a special attrition program in which approximately 34,400 employees will participate. See the “GM-UAW-Delphi Special Attrition Program Agreement” section for a further description of the UAW Attrition Agreement. GM believes these actions collectively will reduce our excess capacity by one million units, in addition to the one million unit capacity we eliminated between 2002 and 2005, and by reducing structural costs to assist in closing the cost gap with other vehicle manufacturers. To achieve further cost reductions, GM’s management is putting a high priority on negotiating a more competitive collective bargaining agreement with the UAW in 2007.

In the first quarter of 2006, GM announced plans to substantially alter pension benefits for current U.S. salaried employees by freezing accrued benefits in the current plan and implementing a new benefit structure for future accruals, which will include a reduced defined benefit plan for some salaried employees and a new defined contribution plan for the other salaried employees. These pension plan changes will not affect retirees or surviving spouses who are currently drawing benefits from the Salaried Retirement Program.

In addition to the structural cost reductions, GMNA was also targeting a net reduction in material costs in 2006 of $1.0 billion, prior to factoring in the cost of government mandated product improvements. Reducing material costs remains a critical part of GMNA’s overall long-term cost reduction plans. Attainment of this target, however, has been challenged by higher commodity prices and troubled supplier situations. GMNA will continue its aggressive pursuit of material cost reduction via improvements in its global processes for product development, which will enable further part commonization and reuse among architectures, as well as through the continued use of the most competitive supply sources globally.

GMNA is also seeking cost efficiencies in most other areas of the business including engineering, advertising, salaried employments levels, and indirect material costs. Engineering will seek to reduce development costs through the use of common vehicle architectures that can be used on a global basis. Advertising will seek more efficient and focused spending in line with brand focus.

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  GM North America Restructuring Plan — Update — (concluded)

Address Health-Care Burden

In October 2005, we announced an agreement with the UAW that will reduce GM’s hourly retiree health-care obligations. GM will commence recognition of the benefit from the UAW Settlement Agreement in the third quarter of 2006. Refer to Note 12 for the financial impact of the UAW Settlement Agreement.

The UAW Settlement Agreement will remain in effect until at least September 2011, after which either GM or the UAW may cancel the agreement upon 90 days written notice. Similarly, GM’s contractual obligations to provide health care benefits to UAW hourly retirees extends to at least September 2011 and will continue thereafter until terminated by either GM or the UAW. As a result, the provisions of the UAW Settlement Agreement will continue in effect for the UAW retirees beyond the expiration in September 2007 of the current collective bargaining agreement between GM and the UAW.

On April 10, 2006, GM and the IUE-CWA also reached a tentative agreement to reduce health-care costs that is similar to the UAW Settlement Agreement. Court approval of the agreement, which was ratified by the IUE-CWA membership on April 21, 2006, is expected during 2006, and GM will begin recognizing the benefits of the agreement 90 days after the approval date. The savings achieved under the IUE-CWA agreement, while not significant, will contribute to the reduction of OPEB liabilities and annual employee health-care expenses in the next year.

GM is also increasing the U.S. salaried workforce’s participation in the cost of health care. On February 7, 2006, GM announced that beginning January 1, 2007, it will cap its contributions to salaried retiree health care at the level of its 2006 expenditures. This change affects employees and retirees who are eligible for the salaried postretirement health-care benefit, their surviving spouses, and their eligible dependents. Salaried employees who were hired after January 1, 1993, are not eligible for retiree health-care benefits, so they are not affected by these changes. After 2006, when average costs exceed established limits, additional plan changes that affect cost-sharing features of program coverage will occur, effective with the start of the next calendar year. Program changes may include, but are not limited to, higher monthly contributions, deductibles, coinsurance, out-of-pocket maximums, and prescription drug payments. Plan changes may be implemented in medical, dental, vision, and prescription drug plans.

General

Based on the cost savings initiatives described above, GMNA is increasing its target for reduction of structural costs from the amount previously stated in GM’s 2005 Annual Report on Form 10-K by $2 billion to $9 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented. GM expects $6 billion of the structural cost reduction to be realized during 2006, exceeding the $4 billion of structural cost reductions previously estimated for calendar year 2006 in GM’s 2005 Annual Report on Form 10-K. This improvement is due to the Attrition Program, including the effect of the pension remeasurement, and a reduction by $1 billion in previously-expected charges associated with the UAW healthcare settlement agreement in the first quarter of 2006, partially offset by an increase in the prior service cost amortization component of OPEB expense related to the $1 billion and future contributions associated with the independent VEBA established under the UAW health care settlement agreement. The expected total annual cash savings from structural cost reductions remains $5 billion.

Delphi Bankruptcy

On October 8, 2005, Delphi filed a petition for Chapter 11 proceedings under the United States Bankruptcy Code for itself and many of its U.S. subsidiaries. Delphi is GM’s largest supplier of automotive systems, components and parts, and GM is Delphi’s largest customer.

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  Delphi Bankruptcy — (continued)

GM has worked and will continue to work constructively in the court proceedings with Delphi, Delphi’s unions, and other participants in Delphi’s restructuring process. GM’s goal is to pursue outcomes that are in the best interests of GM and its stockholders, and that enable Delphi to continue as an important supplier to GM.

Delphi continues to assure GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process could create operating and financial risks for GM that process is also expected to present opportunities for GM. These opportunities include reducing, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi, as well as improving the quality of systems, components and parts GM procures from Delphi as a result of the restructuring of Delphi through the Chapter 11 process. However, there can be no assurance that GM will be able to realize any benefits.

Delphi filed, on March 31, 2006, motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned until August 11, 2006, to allow Delphi, its unions, and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

On March 31, 2006, Delphi also filed a motion under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned by the court until after the hearings related to Delphi’s U.S. labor agreements and retiree welfare benefits are completed or otherwise resolved. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM might be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities.

Various financial obligations Delphi has to GM as of the date of Delphi’s Chapter 11 filing, including the $739 million payable for amounts that Delphi owed to GM relating to Delphi employees who were formerly GM employees and subsequently transferred back to GM as job openings became available to them under certain employee “flowback” arrangements, may be subject to compromise in the bankruptcy proceedings, which may result in GM receiving payment of only a portion, if any, of the face amount owed by Delphi.

GM is seeking to minimize this risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the bankruptcy court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be able to fully or partially setoff such amounts. However, to date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. Although GM believes that it is probable that it will be able to collect all of the amounts due from Delphi, the financial impact of a substantial compromise of our right of setoff, however, could have a material adverse impact on our financial position. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

In connection with GM’s spin-off of Delphi in 1999, GM entered into separate agreements with the UAW, the IUE-CWA and the United Steel Workers. In each of these three agreements (Benefit Guarantee Agreement(s)), GM

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  Delphi Bankruptcy — (continued)

provided contingent benefit guarantees to make payments for limited pension and OPEB expenses to certain former GM U.S. hourly employees who transferred to Delphi as part of the spin-off and meet the eligibility requirements for such payments (Covered Employees).

Each Benefit Guarantee Agreement contains separate benefit guarantees relating to pension, postretirement health care and life insurance benefits. These limited benefit guarantees each have separate triggering events that initiate potential GM liability if Delphi fails to provide the corresponding benefit at the required level. Therefore, it is possible that GM could incur liability under one of the guarantees (e.g., pension) without triggering the other guarantees (e.g., postretirement health care or life insurance). In addition, with respect to pension benefits, GM’s obligation under the pension benefit guarantees only arises to the extent that the combination of pension benefits provided by Delphi and the Pension Benefit Guaranty Corporation (PBGC) falls short of the amounts GM has guaranteed.

The Chapter 11 filing by Delphi does not by itself trigger any of the benefit guarantees. Moreover, Delphi’s filing of motions under the U.S. Bankruptcy Code to reject its U.S. labor agreements and modify retiree welfare benefits does not by itself trigger any of the benefit guarantees. In addition, the benefit guarantees expire on October 18, 2007 if not previously triggered by Delphi’s failure to pay the specified benefits. If a benefit guarantee is triggered before its expiration date, GM’s obligation could extend for the lives of affected Covered Employees, subject to the applicable terms of the pertinent benefit plans or other relevant agreements.

The benefit guarantees do not obligate GM to guarantee any benefits for Delphi retirees in excess of the levels of corresponding benefits GM provides at any given time to GM’s own hourly retirees. Accordingly, if any of the benefits GM provides to its hourly retirees are reduced, there would be a similar reduction in GM’s obligations under the corresponding benefit guarantee.

A separate agreement between GM and Delphi requires Delphi to indemnify GM if and to the extent GM makes payments under the benefit guarantees to the UAW employees or retirees. GM received a notice from Delphi, dated October 8, 2005, that it was more likely than not that GM would become obligated to provide benefits pursuant to the benefit guarantees to the UAW employees or retirees. The notice stated that Delphi was unable at that time to estimate the timing and scope of any benefits GM might be required to provide under those benefit guarantees. Any recovery by GM under indemnity claims against Delphi might be subject to partial or complete discharge in the Delphi reorganization proceeding. As a result, GM’s claims for indemnity may not be paid partially or in full.

As part of GM’s health-care agreement negotiations with the UAW, GM provided former GM employees who became Delphi employees the potential to earn up to seven years of credited service for purposes of eligibility for certain health-care benefits under the GM/UAW Benefit Guarantee Agreement.

As discussed above, GM together with Delphi and the UAW announced on March 22, 2006 that they had entered into the UAW Attrition Agreement which is intended to reduce the number of U.S. hourly employees at GM and Delphi through the Agreement. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the Bankruptcy Court, which has jurisdiction over Delphi’s Chapter 11 proceedings. On April 7, 2006, the Bankruptcy Court declared in a hearing that Delphi’s participation in the UAW Attrition Agreement was approved. The UAW Attrition Agreement provides for a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi.

In the UAW Attrition Agreement, GM has agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to (1) pay lump sums of $35,000 to certain employees who participate in the UAW Attrition Agreement; (2) allow Delphi employees who agree to retire under the UAW Attrition Agreement to flowback to GM for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a

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  Delphi Bankruptcy — (continued)

result after they flow back, pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain. As of June 30, 2006 approximately 12,500 Delphi employees had elected one of the retirement options available under the UAW Attrition Agreement.

On June 29, 2006 the Bankruptcy Court approved a motion by Delphi to offer similar attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the estate of Delphi for payments that it makes under the buyout program and a prepetition, general unsecured claim for costs, other than the $35,000 lump-sum payment, incurred in the IUE-CWA attrition program assertable against the estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than that the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty. The estimated cost to GM of these programs is comprehended in the pretax charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

GM believes that it is probable that it has incurred a contingent liability due to Delphi’s Chapter 11 filing. GM believes that the range of the contingent exposures is between $5.5 billion and $12 billion, with amounts near the low end of the range considered more possible than amounts near the high end of the range. GM established a reserve of $5.5 billion ($3.6 billion after tax) for this contingent liability in the fourth quarter of 2005 and has made no adjustments to that reserve balance as of June 30, 2006. These views reflect GM’s current assessment that it is unlikely that a Chapter 11 process will result in both a termination of Delphi’s pension plan and complete elimination of its OPEB plans. The amount of this charge may change, depending on the result of discussions among GM, Delphi, and Delphi’s unions, and other factors. GM is currently unable to estimate the amount of additional charges, if any, which may arise from Delphi’s Chapter 11 filing. A consensual agreement to resolve the Delphi matter may cause GM to incur additional costs in exchange for benefits that would accrue to GM over time.

With respect to the possible cash flow effect on GM related to its ability to make either pension or OPEB payments, if any are required under the benefit guarantees, GM would expect to make such payments from ongoing operating cash flow and financings. Such payments, if any, are not expected to have a material effect on GM’s cash flows in the short-term. However, if payable, these payments would be likely to increase over time, and could have a material effect on GM’s liquidity in coming years. (For reference, Delphi’s 2005 Form 10-K reported that its total cash outlay for benefits for 2005 was $231 million, which included $182 million for both hourly and salaried retirees, the latter of whom are not covered under the benefit guarantees, plus $54 million in payments to GM for certain former Delphi hourly employees who flowed back to retire from GM, net of $5 million of payments from GM related to employees who flowed from GM to Delphi after the Delphi spin-off). If benefits to Delphi’s U.S. hourly employees under Delphi’s pension plan are reduced or terminated, the resulting effect on GM cash flows in future years due to the Benefit Guarantee Agreements is currently not reasonably estimable.

Investigations

As previously reported, GM has been cooperating with the government in connection with a number of investigations.

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  Investigations  (concluded)

The SEC has issued subpoenas to GM in connection with various matters involving GM that it has under investigation. These matters include GM’s financial reporting concerning pension and OPEB, certain transactions between GM and Delphi, supplier price reductions or credits, and any obligation GM may have to fund pension and OPEB costs in connection with Delphi’s proceedings under Chapter 11 of the U.S. Bankruptcy Code. In addition, the SEC has issued a subpoena in connection with an investigation of our transactions in precious metal raw materials used in our automotive manufacturing operations, and a federal grand jury issued a subpoena in connection with supplier credits.

Separately, SEC and federal grand jury subpoenas have been served on GMAC entities in connection with industry wide investigations into practices in the insurance industry relating to loss mitigation insurance products such as finite risk insurance.

Liquidity and Capital Resources

Investors or potential investors in GM and GMAC securities consider cash flows of each reportable operating segment as a relevant measure in the analysis of GM’s and GMAC’s various securities that trade in public markets. Accordingly, GM provides supplemental condensed reportable operating segment statements of cash flows to aid users of GM’s consolidated financial statements in the analysis of performance and liquidity and capital resources.

This information reconciles to the Condensed Consolidated Statements of Cash Flows after the elimination of “Net investing activity with Financing and Insurance Operations” and “Net financing activity with Automotive and Other” line items shown in the table below. Following are such statements for the six months ended June 30, 2006 and 2005:

	Automotive and Other						Financing and Insurance
	Six Months Ended June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	5,468		$	(2,138	)	$	(7,457	)	$	357
Cash flows from investing activities
Expenditures for property		(3,139	)		(2,813	)		(135	)		(131	)
Investments in marketable securities — acquisitions		(62	)		(271	)		(11,518	)		(10,559	)
Investments in marketable securities — liquidations		1,663			3,137			10,246			7,132
Net change in mortgage servicing rights		—			—			(55	)		(185	)
Increase (decrease) in finance receivables		—			—			(169	)		(2,569	)
Proceeds from sales of finance receivables		—			—			15,213			17,692
Proceeds from the sale of business units/equity investments		1,968			—			8,550			—
Operating leases — acquisitions		—			—			(9,135	)		(8,378	)
Operating leases — liquidations		—			—			3,411			3,258
Net investing activity with Financing and Insurance Operations		1,411			1,000			—			—
Investments in companies, net of cash acquired		(21	)		1,355			(324	)		—
Other		(1,035	)		(591	)		(580	)		(1,550	)
Net cash provided by (used in) investing activities		785			1,817			15,504			4,710

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Liquidity and Capital Resources — (concluded)

	Automotive and Other						Financing and Insurance
	Six Months Ended June 30,
	2006			2005			2006			2005
	(Dollars in millions)
Cash flows from financing activities
Net increase (decrease) in loans payable		(332	)		46			(6,853	)		(8,457	)
Long-term debt — borrowings		425			25			42,226			30,415
Long-term debt — repayments		(379	)		(20	)		(43,205	)		(32,124	)
Net financing activity with Automotive & Other		—			—			(1,411	)		(1,000	)
Cash dividends paid to stockholders		(283	)		(570	)		—			—
Other		—			—			1,918			3,619
Net cash provided by (used in) financing activities		(569	)		(519	)		(7,325	)		(7,547	)
Effect of exchange rate changes on cash and cash equivalents		73			(283	)		98			(129	)
Net transactions with Automotive/Financing Operations		(947	)		420			947			(420	)
Net increase (decrease) in cash and cash equivalents		4,810			(703	)		1,767			(3,029	)
Cash and cash equivalents reclassified to assets held for sale		—			—			(14,458	)		—
Cash and cash equivalents at beginning of the period		15,187			13,148			15,539			22,845
Cash and cash equivalents at end of the period	$	19,997		$	12,445		$	2,848		$	19,816

Automotive and Other Operations

Available Liquidity

GM believes it has sufficient liquidity and financial flexibility to meet its capital requirements over the short and medium-term under reasonably foreseeable circumstances. Over the long term, GM believes its ability to meet its capital requirements will primarily depend on the execution of its turnaround plan and the return of its North American operations to profitability and positive cash flow. GM Auto & Other’s available liquidity includes its cash balances, marketable securities and readily-available assets of its VEBA trusts. At June 30, 2006, GM Auto & Other’s available liquidity was $22.9 billion compared with $21.6 billion at March 31, 2006, $20.4 billion at December 31, 2005 and $20.2 billion at June 30, 2005. The amount of GM’s consolidated cash and marketable securities is subject to intra-month and seasonal fluctuations, with a significant portion of GM’s trade accounts payable due shortly after the beginning of each month, and such amounts include balances held by various GM business units and subsidiaries worldwide that are needed to fund their operations.

	June 30, 2006		Dec. 31, 2005		June 30, 2005
	(Dollars in billions)
Cash and cash equivalents	$	20.0	$	15.2	$	12.4
Other marketable securities		0.1		1.4		3.6
Readily-available assets of VEBA trusts		2.8		3.8		4.2
Available Liquidity	$	22.9	$	20.4	$	20.2

In addition to the $2.8 billion of readily-available GM VEBA trust assets included in available liquidity, GM expects to have access to additional VEBA trust assets over time to fund its future OPEB plan costs. These additional VEBA trust assets, which are not currently available, totaled approximately $15.6 billion as of June 30, 2006, making the total VEBA trust assets $18.4 billion as of June 30, 2006. At December 31, 2005, the total VEBA trust assets were $19.1 billion, $3.8 billion of which was readily-available and $15.3 billion of which was not readily-available. GM did not withdraw any funds from its VEBA trusts during the second quarter of 2006. The decline in the VEBA balances since December 31, 2005 was primarily driven by a $2 billion withdrawal in the first quarter of 2006, partially offset by asset returns over the six month period. Since June 30, 2006, GM has withdrawn

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Automotive and Other Operations — (continued)

  Available Liquidity — (continued)

$2 billion of funds from the VEBA trusts to reimburse GM payments for hourly retiree health care and life insurance.

As an additional source of available liquidity, GM negotiated a $4.63 billion amended and restated credit agreement with a syndicate of banks restating and amending the $5.6 billion unsecured line of credit on July 20, 2006. This agreement provides additional available liquidity that GM anticipates to draw on from time to time to fund working capital and other needs. The facility is comprised of a $4.48 billion secured line of credit that terminates in July 2011 and a $0.15 billion unsecured line of credit that terminates in June 2008. Under the $4.48 billion secured facility, borrowings are limited to an amount based on the value of the underlying collateral, which consists of certain North American accounts receivable and inventory of General Motors Corporation, Saturn Corporation, and General Motors of Canada, Limited, certain plants, property and equipment of General Motors of Canada, Limited, and a pledge of 65% of the stock of the holding company for GM’s indirect subsidiary GM de Mexico. In addition to the $4.48 billion secured line of credit, the collateral also secures certain lines of credit, automatic clearinghouse and overdraft arrangements and letters of credit provided by the same secured lenders totaling approximately $1.5 billion. At GM’s current credit ratings, all-in cost of borrowings from the secured line of credit will be LIBOR (London InterBank Offered Rate) plus 225 basis points, while all-in costs of borrowings from the unsecured line of credit will be LIBOR plus 200 basis points. In addition, secured lenders received a consent fee of 40 basis points. In the event of certain work stoppages, the secured facility would be temporarily reduced to $3.5 billion. This amended and restated credit agreement removed the uncertainty previously reported as to whether the bank syndicate would be required to honor a borrowing request.

GM also has an additional $0.3 billion in undrawn committed facilities with various maturities and undrawn uncommitted lines of credit of $0.5 billion. In addition, GM’s consolidated affiliates with non-GM minority shareholders, primarily GM Daewoo, have a combined $1.5 billion in undrawn committed facilities.

GM had previously reported its belief that issues may arise from its restatement of its prior financial statements under various financing agreements, which consist principally of obligations in connection with sale/leaseback transactions and other lease obligations (but not GM’s public debt indentures) to which GM is party. In March 2006, GM evaluated the effect of its restatement under these agreements, including its legal rights (such as its ability to cure) with respect to any claims that could be asserted. While noting that the amounts that might be subject to possible claims of acceleration, termination or other remedies under some or all of these agreements were uncertain, GM stated in its 2005 Annual Report on Form 10-K that such amounts would likely not exceed approximately $3 billion. Based on further analysis of the underlying portfolio, GM subsequently reduced that amount to $2 billion based on further analysis of the underlying portfolio in its Quarterly Report on Form 10-Q for the first quarter of 2006. Following these disclosures, GM received a small number of inquiries from parties to some of these agreements, but has not received any claims under these agreements resulting from the restatements, and is not aware of any indication that any party plans to make a claim. GM believes that it has sufficient liquidity over the short and medium term, regardless of the resolution of these matters.

On April 3, 2006, GM announced that it had entered into a definitive agreement to sell a controlling interest in GMAC to a consortium of investors, FIM Holdings. The transaction is subject to a number of U.S., international and other approvals. The total value of cash proceeds and distributions to GM before it purchases preferred limited liability company interests of GMAC and repays any intercompany unsecured obligations will be approximately $14 billion in cash from this transaction over three years, comprised of the $7.4 billion purchase price, $4 billion of retained assets and a $2.7 billion cash dividend. From the proceeds GM will invest $1.4 billion of cash in new preferred limited liability company interests of GMAC.

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Automotive and Other Operations — (concluded)

  Available Liquidity — (concluded)

Cash Flow

The $2.5 billion increase in available liquidity to $22.9 billion at June 30, 2006 from $20.4 billion at December 31, 2005 was primarily the result of Auto & Other’s positive operating cash flow and cash proceeds from asset sales, partially offset by the significant capital expenditures required to support the business.

The charge of $3.7 billion (after tax) recognized in the second quarter as a result of the UAW Attrition Agreement includes $1.4 billion (after tax) for cash payments to employees, the majority expected to be paid in 2006, with the remainder spread over the next three years. These payments will be funded using cash flow from operations. The remaining $2.3 billion of the charge is “non-cash” and consequently will have no cash flow impact.

For the six months ending on June 30, 2006, Auto & Other’s operating cash flow was $5.5 billion compared with a negative $2.1 billion for the same period in the prior year.

Auto & Other’s investing cash flows for the six months ending on June 30, 2006 consisted primarily of capital expenditures (a use of investing cash flow) of $3.1 billion, compared with $2.8 billion in the same period in the prior year, and liquidation of marketable securities (a source of investing cash flow) of $1.7 billion, compared to $3.1 billion in the same period in the prior year and dividends received from GMAC (a source of investing cash flow) of $1.4 billion compared with $1.0 billion in the same period in the prior year. In April 2006, GM sold its interests in Suzuki and Isuzu common stock for approximately $2.3 billion in cash (of which $1.7 billion is included in the liquidation of marketable securities), positively impacting investing cash flow by the same amount. Capital expenditures were incurred primarily for real estate, plants, equipment, machinery and tooling to support new products and powertrain investments, as well as GM’s existing asset base.

Debt

GM Auto & Other’s total debt at June 30, 2006 was $32.5 billion, of which $1.2 billion was classified as short-term and $31.3 billion was classified as long-term. At December 31, 2005, total debt was $32.5 billion, of which $1.5 billion was short-term and $31.0 billion was long-term, and at June 30, 2005, total debt was $32.6 billion, of which $1.6 billion was short-term and $31.0 billion was long-term.

Separate from the $1.2 billion of short-term debt, near-term North American term debt maturities include up to approximately $1.2 billion in 2007, related to approximately $1.2 billion of convertible debentures that may be put to GM for cash settlement in March 2007, and approximately $1.3 billion of various term-debt maturities in 2008.

In order to provide financial flexibility to GM and its suppliers, GM maintains a trade payables program through GMAC Commercial Finance (GMACCF). Under the terms of the transaction to sell 51% of GMAC to FIM Holdings, GM will be permitted to continue administering the program through GMACCF so long as GM provides the funding of advance payments to suppliers under the program. As of May 1, 2006, GM commenced funding of the advance payments, and as a result, at June 30, 2006 there was no outstanding balance owed by GM to GMACCF under the program.

Net Liquidity

Net liquidity, calculated as cash, marketable securities, and $2.8 billion ($3.8 billion at December 31, 2005) of readily-available assets of the VEBA trust less the total of loans payable and long-term debt, was a negative $9.6 billion at June 30, 2006, compared with a negative $10.6 billion at March 31, 2006 and a negative $12.1 billion at December 31, 2005.

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Financing and Insurance Operations

At June 30, 2006, GMAC’s consolidated assets totaled $308.4 billion, compared with $320.5 billion at December 31, 2005 and $310.0 billion at June 30, 2005. The decrease from December 31, 2005 was primarily attributable to the sale of approximately 78% of GMAC’s equity in Capmark in the first quarter of 2006.

GMAC’s total debt decreased to $246.6 billion at June 30, 2006, compared with $253.2 billion at December 31, 2005 and $250.9 billion at June 30, 2005. GMAC’s ratio of total debt to total stockholder’s equity at June 30, 2006 was 11.2:1, compared with 11.9:1 at December 31, 2005, and 11.1:1 at June 30, 2005. GMAC’s liquidity, as well as its ability to profit from ongoing activity, is in large part dependent upon its timely access to capital and the costs associated with raising funds in different segments of the capital markets. Part of GMAC’s strategy in managing liquidity risk has been to develop diversified funding sources across a global investor base. As an important part of its overall funding and liquidity strategy, GMAC maintains substantial bank lines of credit. These bank lines of credit, which totaled $44.4 billion at June 30, 2006, provide “back-up” liquidity and represent additional funding sources, if required.

GMAC currently has a $3.2 billion syndicated line of credit committed through June 2007, $4.4 billion committed through June 2008, and committed and uncommitted lines of credit of $2.9 billion and $9.1 billion, respectively. In addition, at June 30, 2006, New Center Asset Trust (NCAT) and Mortgage Interest Networking Trust (MINT) had $18.3 billion and $3.0 billion in committed liquidity facilities, respectively. NCAT is a special purpose entity administered by GMAC for the purpose of funding assets as part of GMAC’s securitization funding programs. This entity funds the purchase of assets through the issuance of asset-backed commercial paper and represents an important source of liquidity to GMAC. At June 30, 2006, NCAT had commercial paper outstanding of $11.8 billion, which is not consolidated in the Corporation’s Consolidated Balance Sheet. In addition, GMAC has been able to diversify its unsecured funding through the formation of ResCap. ResCap, which was formed as the holding company of GMAC’s residential mortgage businesses, has a $3.5 billion syndicated line of credit consisting of a $1.75 billion syndicated term loan, a $0.9 billion syndicated line of credit committed through July 2008, and a $0.9 billion syndicated line of credit committed through July 2007. Finally, GMAC has $109.3 billion in committed secured funding facilities with third-parties, including commitments with third-party asset-backed commercial paper conduits, as well as forward flow sale agreements with third-parties and repurchase facilities. This includes five year commitments that GMAC entered into in 2005 with remaining capacity to sell up to $48 billion of retail automotive receivables to third party purchasers through 2010. The unused portion of these committed and uncommitted facilities totaled $67.5 billion at June 30, 2006.

Status of Debt Ratings

Standard & Poor’s, Moody’s, and Fitch currently rate GM’s and GMAC’s credit at non-investment grade. Dominion Bond Rating Services (DBRS) rates GM’s credit at non-investment grade and maintains an investment grade rating for GMAC. All major rating agencies rate ResCap at investment grade. The following table summarizes GM’s, GMAC’s and ResCap’s credit ratings as of July 31, 2006:

	Senior Unsecured Debt			Commercial Paper
Rating Agency	GM	GMAC	ResCap	GM	GMAC	ResCap
DBRS	B	BBB(Low)	BBB	R-3(Low)	R-2(Low)	R-2(Mid)
Fitch	B	BB	BBB-	Withdrawn	B	F3
Moody’s	Caa1	Ba1	Baa3	Not Prime	Not Prime	P3
S&P	B-	BB	BBB-	B-3	B-1	A-3

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Status of Debt Ratings — (continued)

	Outlook
Rating Agency	GM	GMAC	ResCap
DBRS	Negative	Developing	Developing
Fitch	Rating Watch	Positive	Positive
	Negative
Moody’s	Negative	Review for	Review for
		Possible	Possible
		Downgrade	Downgrade
S&P	Credit Watch	Developing	Developing
	Negative

While GM experienced limited access to the capital markets in the second quarter of 2006 as a result of deterioration in its credit ratings, GM was able to utilize available liquidity to meet its capital requirements. Similarly, due to the downgrade of GMAC’s unsecured debt to non-investment grade, GMAC’s access to the unsecured capital markets was limited. GMAC was able to meet its capital requirements by accessing alternative funding sources, with a focus on secured funding and automotive whole loan sales.

Each of Moody’s, Fitch, Standard & Poor’s and DBRS downgraded GM’s unsecured debt.

On February 21, 2006, Moody’s downgraded GM’s senior unsecured debt to B2 with a negative outlook from B1 under review for a possible downgrade. On March 16, 2006, Moody’s placed the senior unsecured ratings of GM, GMAC and ResCap under review for a possible downgrade. At the same time, Moody’s changed the review status of ResCap’s short-term P-3 ratings to review for possible downgrade from direction uncertain. On March 29, 2006 Moody’s downgraded GM’s senior unsecured debt to B3 with a negative outlook leaving the ratings of GMAC and ResCap on review for possible downgrade. On May 5, 2006, Moody’s placed GM’s senior unsecured debt rating under review for a possible downgrade. GM’s corporate rating and the ratings of GMAC and ResCap were unaffected. On June 20, 2006, Moody’s assigned a B2 rating to GM’s secured credit facility, affirmed the company’s B3 corporate rating and lowered its unsecured credit rating to Caa1. The rating outlook is negative. Credit ratings of GMAC and ResCap were unaffected.

On March 1, 2006, Fitch downgraded GM’s senior unsecured rating from B+ to B. Following GM’s April 2, 2006 entry into a definitive agreement to sell 51% of its stake in GMAC, Fitch changed GMAC’s and ResCap’s rating-watch outlook from evolving to positive. On June 20, 2006, Fitch assigned a BB rating to GM’s secured credit facility. GM’s issuer rating remained unchanged at B, on Rating Watch Negative. Credit ratings of GMAC and ResCap were unaffected.

On March 29, 2006, Standard and Poor’s placed both GM’s long term B and short term B-3 corporate credit ratings on CreditWatch with negative implications. The ratings for GMAC and ResCap were affirmed as BB and BBB minus, respectively. Both GMAC and ResCap’s ratings were left on CreditWatch with developing implications. On June 20, 2006, Standard and Poor’s assigned a B+ credit rating on the proposed GM senior bank loan facility with a recovery rating of “1” signifying that lenders can expect full recovery of principal in the event of a payment default. At the same time, Standard & Poor’s affirmed the company’s B corporate credit rating and lowered the senior unsecured debt rating on GM to B- as a result of the proposed secured bank transaction. All ratings remain on credit watch with negative implications. The credit ratings of GMAC and ResCap were unaffected by the ratings actions.

On July 24, 2006 DBRS downgraded GM’s senior unsecured rating to B from B (high) and commercial paper rating to R-3 (low) from R-3 (middle) following the completion of the aforementioned secured credit transaction. The trend remained negative. Credit ratings of GMAC, ResCap and their related subsidiaries were unaffected.

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Status of Debt Ratings — (concluded)

While the aforementioned ratings actions have increased borrowing costs and limited access to unsecured debt markets, these outcomes have been mitigated by actions taken by GM and GMAC over the past few years to focus on an increased use of liquidity sources other than institutional unsecured markets that are not directly affected by ratings on unsecured debt, including secured funding sources beyond traditional asset classes and geographical markets, automotive whole loan sales, and use of bank and conduit facilities. Further reductions of GM’s and/or GMAC’s credit ratings could increase the possibility of additional terms and conditions contained in any new or replacement financing arrangements. As a result of specific funding actions taken over the past few years, management believes that GM and GMAC will continue to have access to sufficient capital to meet the Corporation’s ongoing funding needs over the short and medium-term. Notwithstanding the foregoing, management believes that the current ratings situation and outlook increase the level of risk for achieving the Corporation’s funding strategy and GMAC’s ability to sustain current level of asset originations over the long-term. In addition, the ratings situation and outlook increase the importance of successfully executing the Corporation’s plans for improvement of operating results. On April 2, 2006, GM entered into a definitive agreement to sell 51% of its stake in GMAC. One of the goals of this transaction is to delink GMAC’s credit rating from GM’s credit rating and renew its access to low-cost financing.

Line of Credit Between GM and GMAC

GM has a $4 billion revolving line of credit from GMAC that expires in September 2006. This credit line is used for general operating and seasonal working capital purposes and to reduce external liquidity requirements, given the differences in the timing of GM’s and GMAC’s peak funding requirements. The line was not utilized in the second quarter of 2006 and at June 30, 2006, no amounts were outstanding on the revolving line of credit. In the second quarter of 2005, the maximum amount outstanding on this line was $1.4 billion. Interest is payable on amounts advanced under the arrangements based on market interest rates, adjusted to reflect the credit rating of GM or GMAC in its capacity as borrower.

Off-Balance Sheet Arrangements

GM and GMAC use off-balance sheet arrangements where economics and sound business principles warrant their use. GM’s principal use of off-balance sheet arrangements occurs in connection with the securitization and sale of financial assets generated or acquired in the ordinary course of business by GMAC and its subsidiaries and, to a lesser extent, by GM. The assets securitized and sold by GMAC and its subsidiaries consist principally of mortgages, and wholesale and retail loans secured by vehicles sold through GM’s dealer network. The assets sold by GM consist principally of trade receivables.

In addition, GM leases real estate and equipment from various off-balance sheet entities that have been established to facilitate the financing of those assets for GM by nationally prominent lessors that GM believes are creditworthy. These assets consist principally of office buildings, warehouses, and machinery and equipment. The use of such entities allows the parties providing the financing to isolate particular assets in a single entity and thereby syndicate the financing to multiple third parties. This is a conventional financing technique used to lower the cost of borrowing and, thus, the lease cost to a lessee such as GM.

There is a well-established market in which institutions participate in the financing of such property through their purchase of ownership interests in these entities and each is owned by institutions that are independent of, and not affiliated with, GM. GM believes that no officers, directors or employees of GM, GMAC, or their affiliates hold any direct or indirect equity interests in such entities.

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Off-Balance Sheet Arrangements — (concluded)

Assets in off-balance sheet entities were as follows (dollars in millions):

	June 30,		Dec. 31,		June 30,
	2006		2005		2005
Automotive and Other Operations
Assets leased under operating leases	$	2,298	$	2,430	$	2,455
Trade receivables sold(1)		713		708		1,090
Total	$	3,011	$	3,138	$	3,545
Financing and Insurance Operations
Receivables sold or securitized:
— Mortgage loans	$	95,687	$	99,084	$	90,309
— Retail finance receivables		7,151		6,014		7,675
— Wholesale finance receivables		21,624		21,421		21,396
Total	$	124,462	$	126,519	$	119,380

(1) In addition, trade receivables sold to GMAC were $590 million, $525 million and $590 million for the periods ended June 30, 2006, December 31, 2005, and June 30, 2005, respectively.

Book Value Per Share

Book value per share was determined based on the liquidation rights of the common stockholders. Book value per share of GM $12/3 par value common stock (Common Stock) was $20.58 at June 30, 2006, $25.81 at December 31, 2005, and $42.17 at June 30, 2005.

Book value per share is a meaningful financial measure for GM, as it provides investors an objective metric based on GAAP that can be compared to similar metrics for competitors and other industry participants. The book value per share can vary significantly from the trading price of common stock since the latter is driven by investor expectations about a variety of factors, including the present value of future cash flows, which may or may not warrant financial statement recognition under GAAP.

Dividends

Dividends may be paid on the Common Stock only when, as, and if declared by GM’s Board of Directors in its sole discretion out of amounts available for dividends under applicable law. At June 30, 2006, the amount of our capital surplus less accumulated deficit on a GAAP basis was approximately $14.4 billion. Under Delaware law, our board may declare dividends only to the extent of our statutory “surplus” (which is defined as total assets minus total liabilities, in each case at fair market value, minus statutory capital), or if there is no such surplus, out of our net profits for the then current and/or immediately preceding fiscal year.

GM’s policy is to distribute dividends on the Common Stock based on the outlook and indicated capital needs of the business. Cash dividends per share of the Common Stock were $2.00 in 2005, 2004, and 2003. At the February 6, 2006 meeting of the GM Board of Directors, the board approved the reduction of the quarterly dividend on the Common Stock from $0.50 per share to $0.25 per share, effective for the first quarter of 2006. On August 1, 2006, the GM Board declared a quarterly cash dividend of $0.25 per share on the Common Stock, payable September 9, 2006, to holders of record on August 11, 2006.

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Employment And Payrolls

Worldwide employment for GM and its consolidated subsidiaries at June 30, (in thousands)	2006		2005
GMNA		167		177
GME(1)		63		58
GMLAAM		32		32
GMAP(2)		34		14
GMAC		31		34
Other		2		4
Total employees		329		319

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
Worldwide payrolls — (in billions)	$	5.4	$	5.2	$	10.7	$	10.5

(1)	Approximately 7,000 employees were added in the fourth quarter of 2005 from a former powertrain joint venture with Fiat.
(2)	Approximately 13,000 employees were added as a result of the GM Daewoo consolidation in the third quarter of 2005.

Critical Accounting Estimates

The condensed consolidated financial statements of GM are prepared in conformity with GAAP, which requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. GM’s accounting policies and critical accounting estimates are consistent with those described in Note 1 to the 2005 Consolidated Financial Statements and the MD&A section in our 2005 Annual Report on Form 10-K. Management believes that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The Corporation has discussed the development, selection and disclosures of its critical accounting estimates with the Audit Committee of GM’s Board of Directors, and the Audit Committee has reviewed the Corporation’s disclosures relating to these estimates.

Pension and Other Postretirement Employee Benefits (OPEB)

Pension and OPEB costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, health care cost trend rates, expected return on plan assets, mortality rates, retirement rates, and rate of compensation increase, discussed below:

•  Discount rates.  Our discount rates are based on creating a hypothetical portfolio of high quality bonds (rated AA or higher by a recognized rating agency) for which the timing and amount of cash inflows approximates the estimated cash outflows of the defined benefit plan.

•  Health care cost trend rate.  Our health-care cost trend rate is based on historical retiree cost data, near term health care outlook, including appropriate cost control measures implemented by GM, and industry benchmarks and surveys.

•  Expected return on plan assets.  Our expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of

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Critical Accounting Estimates — (continued)

individual asset classes, risk and correlations for each of the asset classes that comprise the fund’s asset mix, and recent and long-term historical performance.

•  Mortality rates.  Mortality rates are based on actual and projected plan experience.

•  Retirement rates.  Retirement rates are based on actual and projected plan experience.

•  Rate of compensation increase.  The rate of compensation increase for final pay plans reflects our long-term actual experience and our outlook, including contractually agreed upon wage rate increases for represented hourly employees.

In accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect GM’s pension and other postretirement obligations and future expense.

GM remeasured its U.S. hourly pension plan as of April 30, 2006 as a result of the UAW Attrition Program and its U.S. salaried pension plan as of March 31, 2006 as a result of previously announced benefit modifications resulting in a reduction in the U.S. pension PBO by $3.9 billion. The weighted average discount rate used to determine the benefit obligation was 6.15%. This represents a 45 basis point increase from the 5.70% weighted average discount rate used at year-end 2005. The U.S. hourly plan remeasurement also included a change in retirement assumptions for the remaining active employees which resulted in an increase in the average remaining service life for the remaining active employees.

GM’s U.S. pre-tax SFAS No. 87 pension expense is estimated to decrease by approximately $1.2 billion from approximately $0.6 billion previously projected for 2006.

GM remeasured the U.S. salaried OPEB plans as of February 9, 2006 as a result of previously announced benefit modifications and its U.S. hourly OPEB plans as of March 31, 2006 as a result of the previously announced settlement agreement with the UAW related to reductions in hourly retiree health care. The remeasurements for U.S. salaried and hourly OPEB for health care benefit modifications reduced the U.S. OPEB accumulated postretirement benefit obligation (APBO) by $19.3 billion. The aggregate weighted average discount rate used to determine the benefit obligation was 5.95%.

GM also remeasured its U.S. hourly OPEB plans as of May 31, 2006 as a result of the UAW Attrition Program. This remeasurement will generate a change in the APBO beginning three months subsequent to the remeasurement date. As a result, the second quarter 2006 OPEB sensitivity below does not reflect any amount associated with this hourly plan remeasurement. The effect of the hourly retiree health care and UAW Attrition Program remeasurements will be reflected in U.S. OPEB expense in the third quarter of 2006.

The following information illustrates the sensitivity to a change in certain assumptions for U.S. pension plans. As of March 31, 2006 for the U.S. salaried plan, April 30, 2006 for the U.S. hourly plan, and December 31, 2005 for the other U.S. plans, the projected benefit obligation (PBO) for these pension plans was $85 billion and the minimum pension liability charged to equity with respect to these pension plans was $114 million, net of tax:

	Effect on 2006	Effect on
Change in Assumption	Pre-Tax Pension Expense	PBO
25 basis point decrease in discount rate	+$120 million	+$2.1 billion
25 basis point increase in discount rate	-$120 million	-$2.0 billion
25 basis point decrease in expected return on assets	+$230 million	—
25 basis point increase in expected return on assets	-$230 million	—

GM’s U.S. pension plans generally provide covered U.S. hourly employees with pension benefits of negotiated, flat dollar amounts for each year of credited service earned by an individual employee. Formulas providing for such stated amounts are contained in the prevailing labor contract. Consistent with GAAP, pre-tax

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Critical Accounting Estimates — (concluded)

pension expense and PBO do not comprehend any future benefit increases or decreases from one contract to the next. The current cycle for negotiating new labor contracts is every four years. There is no past practice of maintaining a consistent level of benefit increases or decreases from one contract to the next. However, the following data illustrates the sensitivity of pension expense and PBO to hypothetical assumed changes in future basic benefits. A 1% increase in the basic benefit for U.S. hourly employees would result in an $80 million increase in 2006 pre-tax pension expense and a $420 million increase in the April 30, 2006 U.S. hourly plan PBO. A 1% decrease in the same benefit would result in an $80 million decrease in 2006 pre-tax pension expense and a $390 million decrease in the same PBO.

The following table illustrates the sensitivity to a change in the discount rate assumption related to GM’s U.S. OPEB plans after the remeasurement for the U.S. salaried OPEB plans as of February 9, 2006 as well as the remeasurement for the U.S. hourly plans as of March 31, 2006:

	Effect on 2006	Effect on
Change in Assumption	Pre-Tax OPEB Expense	APBO
25 basis point decrease in discount rate	+$150 million	+$1.7 billion
25 basis point increase in discount rate	-$140 million	-$1.6 billion

GM assumes a 10% initial U.S. health-care cost trend rate for the 2006 calendar year and a 5.0% ultimate U.S. health-care cost trend rate projected for calendar year 2012 and beyond as of December 31, 2005. Considering the remeasurement for the U.S. salaried OPEB plans as of February 9, 2006 as well as the remeasurement for the U.S. hourly OPEB plans as of March 31, 2006, then a one percentage point increase in the assumed U.S. health care trend rates for all periods would have increased the U.S. APBO by $5.4 billion, and the aggregate service and interest cost components of non-pension postretirement benefit expense on an annualized basis by $412 million. A one-percentage point decrease would have decreased the U.S. APBO by $5.2 billion and the aggregate service and interest cost components of non-pension postretirement benefit expense on an annualized basis by $396 million.

The above sensitivities reflect the effect of changing one assumption at a time. It should be noted that economic factors and conditions often affect multiple assumptions simultaneously and the effects of changes in key assumptions are not necessarily linear.

New Accounting Standards

In December 2005, the Financial Accounting Standard Board (FASB) released FASB Staff Position (FSP) SFAS No. 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards,” which provides a practical transition election related to accounting for the tax effects of share-based payment awards to employees. The Corporation is currently reviewing the transition alternatives and will elect the appropriate alternative no later than January 1, 2007.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS No. 140). This statement amends SFAS No. 133 to permit fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also eliminates the interim guidance in SFAS No. 133 Implementation Issue D-1, which provides that beneficial interests in securitized financial assets are not subject to the provisions of SFAS No. 133. Finally, this statement amends SFAS No. 140 to eliminate the restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for all financial instruments acquired or issued in first fiscal years beginning after September 15, 2006. Management is assessing the potential impact on GM’s financial condition and results of operations.

In April 2006, the FASB issued FSP FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46R” which requires the variability of an entity to be analyzed based on the design of the

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New Accounting Standards — (concluded)

entity. The nature and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46R, “Consolidation of Variable Interest Entities.” The variability is used in applying FIN 46R to determine whether an entity is a variable interest entity, which interests are variable interests in the entity, and who is the primary beneficiary of the variable interest entity. This statement is effective for all reporting periods beginning after June 15, 2006. Management does not expect this statement to have a significant impact on GM’s financial condition and results of operations.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48) which supplements SFAS No. 109, “Accounting for Income Taxes,” by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on GM’s financial condition and results of operations.

In July 2006, the FASB issued FASB Staff Position No. 13-2 “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction, (Staff Position 13-2),” which amends SFAS No. 13, “Accounting for Leases,” by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leverage lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management is assessing the potential impact on GM’s financial condition and results of operations.

Forward-Looking Statements

In this report, in reports subsequently filed by GM with the SEC on Form 10-K and Form 10-Q and filed or furnished on Form 8-K, and in related comments by General Motors’ management, we will use words like “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,” “pursue,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” “designed,” or “impact” to identify forward-looking statements that represent our current judgments about possible future events. We believe these judgments are reasonable, but GM’s actual results may differ materially due to a variety of important factors.

Among other items, such factors might include:

•  Our ability to achieve reductions in costs as a result of the turnaround restructuring, health care cost reductions and the Attrition Program, to realize production efficiencies and to implement capital expenditures at levels and times planned by management;

•  The pace of product introductions and market acceptance of our new products;

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Forward-Looking Statements — (continued)

•  Changes in the competitive environment and the effect of competition in our markets, including on our pricing policies;

•  Our ability to maintain adequate liquidity and financing sources and an appropriate level of debt;

•  Restrictions on GMAC’s and ResCap’s ability to pay dividends and prepay subordinated debt obligations to us;

•  The final results of investigations and inquiries by the SEC and other government agencies;

•  Changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees;

•  Our ability to complete the timely sale of a 51-percent controlling interest in GMAC and the effect of that sale on the results of GM’s and GMAC’s operations and liquidity;

•  Labor strikes or work stoppages at GM or its key suppliers such as Delphi or financial difficulties at those key suppliers;

•  Negotiations and bankruptcy court actions with respect to our relationship with Delphi;

•  Additional credit rating downgrades and their effects;

•  Costs and risks associated with litigation;

•  Changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations;

•  Shortages of and price increases for fuel;

•  Changes in economic conditions, commodity prices, currency exchange rates or political stability in the markets in which we operate; and

•  Other factors affecting financing and insurance operating segments’ results of operations and financial condition such as credit ratings, adequate access to the market, changes in the residual value of off-lease vehicles, changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which its mortgage subsidiaries operate, and changes in its contractual servicing rights; and price increases or shortages of fuel.

In addition to these factors, GMAC’s actual results may differ materially due to a variety of other important factors that are described in GMAC’s most recent Annual Report on Form 10-K, which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following:

•  Changes in the competitive environment and the effect of competition in GMAC’s markets, including on GMAC’s pricing policies;

•  GMAC’s ability to maintain adequate financing sources and an appropriate level of debt;

•  The profitability and financial condition of GM, including changes in production or sales of GM vehicles and risks based on GM’s contingent benefit guarantees;

•  Changes in GMAC’s accounting assumptions that may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; and

•  The threat of natural calamities.

We caution investors not to place undue reliance on forward-looking statements, and do not undertake any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new

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Forward-Looking Statements — (concluded)

information, future events or other such factors that affect the subject of these statements, except where expressly required by law.

* * * * * *

Item 3.   Quantitative And Qualitative Disclosures About Market Risk

There have been no significant changes in the Corporation’s exposure to market risk since December 31, 2005. See Item 7A in GM’s Annual Report on Form 10-K for the year ended December 31, 2005.

* * * * * * *

Item 4.   Controls and Procedures

The Corporation maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the specified time periods.

GM’s management, with the participation of its chief executive officer and its chief financial officer, evaluated the effectiveness of GM’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of June 30, 2006. Based on that evaluation, GM’s chief executive officer and chief financial officer concluded that, as of that date, GM’s disclosure controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were not effective at the reasonable assurance level.

As discussed in GM’s Annual Report on Form 10-K for the year ended December 31, 2005, management’s assessment identified the following material weakness and significant deficiency:

(A)

A material weakness was identified related to our design and maintenance of adequate controls over the preparation, review, presentation and disclosure of amounts included in our previously-reported condensed consolidated statements of cash flows for certain prior periods, which resulted in misstatements therein and our previous restatements thereof. Cash outflows related to certain mortgage loan originations and purchases were not appropriately classified as either operating cash flows or investing cash flows consistent with our original description as loans held for sale or loans held for investment. In addition, proceeds from sales and repayments related to certain mortgage loans, which initially were classified as mortgage loans held for investment and subsequently transferred to mortgage loans held for sale, were reported as operating cash flows instead of investing cash flows in our condensed consolidated statements of cash flows, as required by Statement of Financial Accounting Standards No. 102 “Statement of Cash Flows — Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale.” Finally, certain non-cash proceeds and transfers were not appropriately presented in the condensed consolidated statements of cash flows.

GM management is continuing in the process of remediating this material weakness through the design and implementation of enhanced controls to aid in the correct preparation, review, presentation and disclosures of our condensed consolidated statements of cash flows. Management will continue to monitor, evaluate and test the operating effectiveness of these controls.

(B)  GM management also identified a significant deficiency in internal controls related to accounting for complex contracts. This deficiency was identified as a result of certain contracts being accounted for incorrectly and without appropriate consideration of the economic substance of the contracts. GM management is in the process of remediating this significant deficiency and has implemented a delegation of authority for approval of the accounting for complex contracts that requires formal review and approval by experienced accounting personnel. While procedures have been updated to prevent recurrence, management will continue to monitor the effectiveness of the remediation.

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Controls and Procedures — (concluded)

In June 2006 GM commenced the transition of some of its information technology support services between existing suppliers for its systems, including a portion of its financial systems. Management is closely monitoring the transition to ensure there is no adverse effect to its financial reporting and related internal controls.

Other than indicated above, there were no changes in the Corporation’s internal control over financial reporting that occurred during the quarter ended June 30, 2006, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within General Motors have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

* * * * * * *

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PART II

Legal Proceedings — (continued)

Stockholder and Bondholder Class Actions

In the previously reported ERISA class action In re General Motors ERISA Litigation, on July 17, 2006, plaintiffs filed in the United States District Court for the Eastern District of Michigan a First Amended Consolidated Class Action Complaint, which principally adds allegations about GM’s restated earnings and reclassification of cash flows, but which does not name any additional defendants or assert any new claims. No determination has been made that the case may be maintained as a class action. The GM defendants intend to defend this action vigorously.

In the previously reported ERISA class action In re Delphi Securities, Derivative, and ERISA Litigation on April 12, 2006, General Motors Investment Management Corporation (GMIMCo), a wholly owned subsidiary of GM, filed a motion to dismiss plaintiffs’ complaint against it in the United States District Court for the Eastern District of Michigan. No determination has been made that the case may be maintained as a class action. GMIMCo intends to defend this action vigorously.

In the previously reported shareholder derivative actions Bouth v. Barnevik, et al. and Salisbury v. Barnevik, et al., on July 21, 2006, the United States District Court for the Eastern District of Michigan entered an order staying the actions for 180 days pending the disposition of the defendants’ motion to dismiss in In re General Motors Securities Litigation.

In the previously reported bondholder class action Zielezienski, et al. v. General Motors, et al. on April 3, 2006, the court entered an order transferring the case to the United States District Court for the Eastern District of Michigan from the United States District Court for the Southern District of Florida, and by order entered on May 26, 2006 the case was consolidated with J&R Marketing et al. v. General Motors, et al., and Mager v. General Motors Corporation, et al., both of which have been previously reported under the caption J&R Marketing et al. v. General Motors, et al. Lead plaintiffs’ counsel have been appointed by the court. On July 28, 2006, plaintiffs filed a Consolidated Amended Complaint, which mainly differs from the initial complaint in that it asserts claims for GMAC debt securities purchased during a different time period (July 28, 2003 through November 9, 2005), and adds additional underwriter defendants. No determination has been made that the case may be maintained as a class action. The GM and GMAC defendants intend to defend this action vigorously.

Canadian Export Antitrust Class Actions

In the previously reported antitrust class actions In re New Market Vehicle Canadian Export Antitrust Litigation Cases, the United States District Court for the District of Maine ruled that it will certify a class action for damages for six exemplar states under federal rule 23(b) (3) after further discovery to determine the scope of the classes. GM intends to appeal the ruling certifying the damages classes to the United States Court of Appeals for the First Circuit and expects that appeal will be consolidated with its pending appeal from a prior order certifying a class for the six exemplar states for injunctive relief only.

Health Care Litigation

In the previously reported putative class action UAW, et al. v. General Motors Corporation, which challenged GM’s ability to modify the health care plan for certain hourly retirees and surviving spouses, the decision of the U.S. District Court for the Eastern District of Michigan on March 31, 2006 approving a settlement agreement has been appealed by the putative plaintiff class to the U.S. Court of Appeals for the Sixth Circuit.

Coolant System Product Litigation

Kenneth Stewart v. General Motors of Canada Limited and General Motors Corporation, a complaint filed in the Superior Court of Ontario dated April 24, 2006, alleges a class action covering Canadian residents, except residents of British Columbia and Quebec, who purchased 1995 to 2003 GM vehicles with 3.1, 3.4, 3.8 and 4.3 liter

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Legal Proceedings — (concluded)

engines. Plaintiffs allege that defects in the engine cooling systems allow coolant to leak into the engine and cause engine damage. The complaint alleges violation of the Business Practices and Competition Acts, failure to warn and negligence, and seeks compensatory damages, punitive damages, fees and costs. Similar complaints have been filed in 14 putative class actions against GM and General Motors of Canada Limited (GM Canada), in eight provinces; in all cases where the complaint has been served, GM Canada is conducting investigations and GM and GM Canada are preparing to file their defenses.

As previously reported, in Gutzler v. General Motors Corporation, initially filed on April 11, 2003, the Circuit Court of Jackson County, Missouri certified a class on January 9, 2006, comprised of “all consumers who purchased or leased a GM vehicle in Missouri that was factory-equipped with Dex-Cool,” coolant, included as original equipment in GM vehicles manufactured since 1995. The Court also certified two sub-classes comprised of (i) class members who purchased or leased a vehicle with a 4.3-liter engine, and (ii) class members who purchased or leased a vehicle with a 3.1, 3.4 or 3.8-liter engine. On March  6, 2006, the Missouri Court of Appeals for the Western District declined to hear GM’s appeal of the class certifications. GM’s petition to transfer the matter to the Missouri Supreme Court for further review was denied on May 30, 2006. GM has been named as the defendant in 20 similar putative class actions in various different federal and state courts in the U.S. alleging defects in the engine cooling systems in GM vehicles; 14 cases are still pending in U.S. courts including six cases that have been consolidated, either finally or conditionally, for pre-trial proceedings in a federal multi-district proceeding in the District Court for the Southern District of Illinois.

Environmental Matters

With respect to the previously reported matter in which the Environmental Protection Agency (EPA) had issued an Administrative complaint on October 17, 2003 against General Motors in connection with the Corporation’s assembly facilities in Moraine, Ohio, Pontiac, Michigan, and Orion, Michigan, the EPA Administrative Law Judge has issued a preliminary determination that GM is liable for multiple violations of the hazardous waste rules as applied to GM’s painting and purge operations. The Judge has ordered GM to pay $568,116 in penalties. GM believes that the case was wrongly decided because the purge material in question is not a “waste”, but instead is being used as intended in enclosed systems to clean, suspend paint solids, and transport fluids. The purge material is thereafter captured, reclaimed, and reused by GM in its processes. GM has appealed this decision to the Environmental Appeals Board on the grounds that the purge material in question is not a “waste.”

* * * * * * *

Item 1A.   Risk Factors

The risk factors immediately following, which were disclosed in our 2005 Annual Report on Form 10-K, have been modified to provide additional disclosure related to changes since we filed our 2005 Annual Report on Form 10-K. See our 2005 Annual Report on Form 10-K for an expanded description of other risks facing the Corporation listed below under “Other Risk Factors.”

Our ability to achieve structural and material cost reductions and to realize production efficiencies for our automotive operations is critical to our ability to achieve our turnaround plan and return to profitability.

We currently are in the process of implementing a number of structural (fixed) and material cost reduction and productivity improvement initiatives in our automotive operations, including substantial restructuring initiatives for our GMNA operations as more fully discussed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations section. Continued success in implementing these restructuring initiatives throughout our automotive operations, and in GMNA in particular, is critical to our future competitiveness. However, there can be no assurance that these initiatives will continue to be successful in this regard. In addition,

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Risk Factors — (continued)

while some of the elements of structural cost reduction are within our control, others such as interest rates or return on investments (which influence our pension and OPEB expense) are more dependent on outside factors, and there can be no assurance that such outside factors will not disrupt our plans for structural cost reductions.

Financial difficulties, labor stoppages or work slowdowns at key suppliers, including Delphi, could result in a disruption in our operations and have a material adverse effect on our business.

We rely on many suppliers to provide us with the systems, components and parts that we need to manufacture our automotive products and operate our business. In recent years, some of these suppliers have experienced severe financial difficulties and solvency problems. Financial difficulties or solvency problems at those suppliers could materially adversely affect their ability to supply us with the systems, components and parts that we need to operate our business, resulting in a disruption in our operations. Similarly, many of these suppliers utilize workforces with substantial union representation. Workforce disputes resulting in work stoppages or slowdowns at these suppliers could also have a material adverse effect on their ability to continue supplying us.

In particular, our largest supplier, Delphi, filed a Chapter 11 bankruptcy petition in October 2005. On March 31, 2006 Delphi filed motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned until August 11, 2006, to allow Delphi, its unions, and GM additional time to fully focus on reaching comprehensive consensual agreements. However, the Delphi employees represented by the UAW have given the UAW authorization to strike if Delphi voids its labor contracts pursuant to these motions While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business.

Delphi may seek to reject or compromise its obligations to us through its Chapter 11 bankruptcy proceedings.

In connection with its Chapter 11 bankruptcy restructuring, Delphi filed a motion under the U.S. Bankruptcy Code on March 31, 2006 seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned by the court until after the hearings related to Delphi’s U.S. labor agreements and retiree welfare benefits are completed or otherwise resolved. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, we could experience a material disruption in our supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities, which could materially adversely affect our business, including implementation of our GMNA turnaround initiatives. It is also difficult for us to quickly switch to a different supplier for some of the systems, components and parts we purchase from Delphi as a result of the extended validation and production lead times for these items.

Various financial obligations Delphi has to GM as of the date of Delphi’s Chapter 11 filing, including the $739 million payable for amounts that Delphi owed to GM relating to Delphi employees who were formerly GM employees and subsequently transferred back to GM as job openings became available to them under certain employee “flowback” arrangements, may be subject to compromise in the bankruptcy proceedings, which may result in GM receiving payment of only a portion of the face amount owed by Delphi. GM is seeking to minimize this risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the bankruptcy court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be

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Risk Factors — (continued)

able to fully or partially setoff such amounts. To date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. Although GM believes that it is probable that it will be able to collect all of the amounts due from Delphi, the financial impact of a substantial compromise of our right of setoff, however, could have a material adverse impact on our financial position. In addition, the basis, amounts and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

Continued failure to achieve profitability may cause some or all of our deferred tax assets to expire.

As of June 30, 2006, we had approximately $24.4 billion in U.S. net deferred tax assets. These deferred tax assets include net operating loss carryovers that can be used to offset taxable income in future periods and reduce our income taxes payable in those future periods. However, many of these deferred tax assets will expire if they are not utilized within certain time periods. At this time, we consider it more likely than not that we will have U.S. taxable income in the future that will allow us to realize these deferred tax assets. However, it is possible that some or all of these deferred tax assets could ultimately expire unused, especially if our GMNA restructuring initiatives are not successful or if GM’s share of GMAC’s income declines. On April 2, 2006, GM entered into a definitive agreement to sell a 51% controlling interest in GMAC to a consortium of investors. While this will not directly affect GM’s ability to realize our deferred tax assets, it will result in a significant portion of GMAC’s U.S. pre-tax income to no longer be available to GM. Therefore, unless we are able to generate sufficient U.S. taxable income from our automotive operations, a substantial valuation allowance may be required, which would materially increase our expenses in the period taken and adversely affect our business. If we were required to record a valuation allowance against all of our U.S. deferred tax assets as of June 30, 2006, our resulting total stockholders’ equity would have been negative.

Restrictions in our labor agreements, including the JOBS bank provisions in the UAW agreement, could limit our ability to pursue or achieve cost savings through restructuring initiatives, and labor strikes, work stoppages or similar difficulties could significantly disrupt our operations.

Substantially all of the hourly employees in our U.S., Canadian and European automotive operations are represented by labor unions and are covered by collective bargaining agreements, which usually have a multi-year duration. Many of these agreements include provisions that limit our ability to realize cost savings from restructuring initiatives such as plant closings and reductions in work force. Our current collective bargaining agreement with the UAW will expire in September 2007. Any UAW strikes, threats of strikes, or other resistance in connection with the negotiation of a new agreement could impair our ability to implement further measures to reduce structural costs and improve production efficiencies in furtherance of our GMNA initiatives.

We have reached an agreement to sell a controlling interest in GMAC. There is a risk that this transaction may not be completed. In addition, this transaction, if completed, would reduce our interest in GMAC’s earnings going forward.

On April 2, 2006, GM entered into a definitive agreement to sell a 51% controlling interest in GMAC to a consortium of investors. There can be no assurance that the sale transaction will be completed or if it is completed, that the terms of the sale will not be different from those set forth in the definitive agreement.

Failure to complete the sale transaction will place further pressure on both GM’s and GMAC’s credit profiles, potentially resulting in further downgrades with GMAC’s credit ratings explicitly re-linked to those of GM. Moreover, any reduction in the automotive finance capacity of GMAC could materially adversely affect GM’s business to the extent that third party financing is not available to fund GM’s automotive sales. In the absence of a transaction:

•  GMAC’s access to capital may be seriously constrained, as most unsecured funding sources may decline, including bank funding;

II-4

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risk Factors — (concluded)

•  The cost of funds related to borrowings that are secured by assets may increase, leading to a reduction in liquidity for certain asset classes;

•  It may be increasingly difficult to securitize assets, resulting in reduced capacity to support overall automotive loan originations;

•  Uncompetitive funding costs may result in a lower return on capital and significantly lower earnings and dividends; and

•  GMAC may need to consider divesting certain businesses in order to maintain adequate liquidity to fund new originations or otherwise preserve the value of its businesses.

In addition, the sale transaction, if completed, would reduce our interest in the earnings of GMAC and ResCap, although the financial effects would be reduced by the value of the consideration we would receive from the purchasers.

Our pension and OPEB expenses are affected by factors outside our control, including the performance of plan assets, interest rates, actuarial data and experience, and changes in laws and regulations.

Our future funding obligations for our IRS-qualified U.S. defined benefit pension plans and OPEB plans depend upon changes in the level of benefits provided for by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum ERISA funding levels, actuarial data and experience, and any changes in government laws and regulations. In addition, our employee benefit plans hold a significant amount of equity securities. If the market values of these securities decline to a point where our pension obligations are not fully funded, our pension and OPEB expenses would increase and, as a result, could materially adversely affect our business. Any decreases in interest rates, if and to the extent not offset by contributions and asset returns, could also increase our obligations under such plans. We may be legally required to make contributions to the pension plans in the future, and those contributions could be material.

In addition, on March 31, 2006, the FASB issued an exposure draft detailing proposed changes in the accounting rules for pensions and other postretirement benefits, which would require a company to include on its balance sheet an additional net asset or net liability to reflect the funded or unfunded status, as the case may be, of its retirement plans. FASB has indicated that its goal is to issue a final statement by September 2006. In light of the unrecognized losses associated with our pension and OPEB liabilities under existing accounting rules, if these expected proposed rules had been in effect as of December 31, 2005, the substantial additional liability that we would have had to include on our balance sheet would have caused our total stockholders’ equity to be negative.

Further, the U.S. Congress has passed legislation that, if adopted, would affect the manner in which GM administers its pensions. This proposed legislation is designed, among other things, to increase the amount by which companies fund their pension plans and to require companies that sponsor defined benefit plans to pay higher premiums to the PBGC. GM could become subject to additional material funding requirements if GM’s U.S. hourly and salaried pension plans become underfunded.

Exploratory discussions with Nissan and Renault regarding a possible alliance are preliminary and may not result in a transaction

On July 7, 2006, GM’s Board of Directors endorsed the recommendation of our senior management team that it engage in exploratory discussions with Renault S.A. and Nissan Motor Co. Ltd. regarding GM’s potential participation in an alliance among the three companies. The companies have agreed to cooperate in an expeditious, confidential review of the potential benefits of such an alliance and the feasibility of achieving them. This review, which is now underway, is expected to take approximately 90 days, and following it, the companies will consider whether further exploration of the alliance concept is warranted. There can be no assurance that these exploratory discussions will result in any transaction.

II-5

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Other Risk Factors

The following risk factors, which were disclosed in our 2005 Annual Report on Form 10-K, have not materially changed since we filed our 2005 Annual Report on Form 10-K. See our 2005 Annual Report on Form 10-K for a complete discussion of these risk factors.

Risks related to GM and its automotive business

•  Our ability to maintain or grow structural and material cost savings and to realize production efficiencies for our automotive operations is critical to our ability to achieve our turnaround plan and return to profitability.

•  We have guaranteed a significant amount of Delphi’s financial obligations to its unionized workers. If Delphi fails to satisfy these obligations, we would be obligated to pay some of these obligations.

•  Our health-care cost burden is one of our biggest competitive challenges, and if we do not make progress on structurally fixing this issue, it will continue to be a long-term threat to GM.

•  Our extensive pension and OPEB obligations to retirees are a competitive disadvantage for us.

•  We have recently experienced a series of credit rating actions that have downgraded our credit ratings to historically low levels. Further reduction of our credit ratings, or failure to restore our credit ratings to higher levels, could have a material adverse effect on our business.

•  Our liquidity position could be negatively affected by a variety of factors, which in turn could have a material adverse effect on our business.

•  The government is currently investigating certain of our accounting practices. The final outcome of these investigations could require us to restate prior financial results.

•  We operate in a highly competitive industry that has excess manufacturing capacity.

•  The bankruptcy or insolvency of a major competitor could result in further competitive disadvantages for us in relation to that competitor.

•  Shortages and increases in the price of fuel can result in diminished profitability due to shifts in consumer vehicle demand.

•  A decline in consumer demand for our higher margin vehicles could result in diminished profitability.

•  Our indebtedness and other obligations of our automotive operations are significant and could materially adversely affect our business.

•  The pace of introduction and market acceptance of new vehicles is important to our success.

•  Economic and industry conditions constantly change and could have a material adverse effect on our business and results of operations.

•  Changes in existing, or the adoption of new, laws, regulations or policies of governmental organizations may have a significant negative impact on how we do business.

•  Our businesses outside the United States expose us to additional risks that may cause our revenues and profitability to decline.

•  A failure of or interruption in the communications and information systems on which we rely to conduct our operations could adversely affect our business.

•  We could be materially adversely affected by changes in currency exchange rates, commodity prices, equity prices and interest rates.

•  We are subject to significant risks of litigation.

II-6

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risks related to GM’s finance, mortgage and insurance businesses

•  Our finance, mortgage and insurance businesses require substantial capital, and if we are unable to maintain adequate financing sources, our business, results of operations and financial condition will suffer and jeopardize our ability to continue operations.

•  We are exposed to credit risk which could affect the business, results of operations and financial condition of our finance, mortgage and insurance operations.

•  Our earnings may decrease because of increases or decreases in interest rates.

•  Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates.

•  ResCap’s ability to pay dividends and to prepay subordinated debt obligations to GMAC is restricted by contractual arrangements.

•  We use estimates and assumptions in determining the fair value of certain of our assets, in determining our allowance for credit losses, in determining lease residual values and in determining our reserves for insurance losses and loss adjustment expenses. If our estimates or assumptions prove to be incorrect, the business, results of operations and financial condition of our finance, mortgage and insurance operations could be materially adversely affected.

•  General business and economic conditions of the industries and geographic areas in which we operate affect the business, results of operations and financial condition of our finance, mortgage and insurance operations.

•  Our business, results of operations and financial condition may be materially adversely affected by decreases in the residual value of off-lease vehicles.

•  Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues.

•  Changes in existing U.S. government-sponsored mortgage programs, or disruptions in the secondary markets in the United States or in other countries in which our mortgage subsidiaries operate, could materially adversely affect the business, results of operations and financial condition of our mortgage business.

•  GMAC may be required to repurchase contracts and provide indemnification if GMAC breaches representations and warranties from its securitization and whole loan transactions, which could harm our business, results of operations and financial condition.

•  Significant indemnification payments or contract, lease or loan repurchase activity of retail contracts or leases or mortgage loans could harm our business, results of operations and financial condition.

•  A loss of contractual servicing rights could have a material adverse effect on our operations.

•  The regulatory environment in which GMAC operates could have a material adverse effect on its business.

The worldwide financial services industry is highly competitive. If we are unable to compete successfully or if there is increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, our margins could be materially adversely affected.

* * * * * * * *

Item 2(c).  Purchases of Equity Securities

GM made no purchases of GM $12/3 par value common stock during the three months ended June 30, 2006.

* * * * * * * *

II-7

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 4.   Submission of Matters to a Vote of Security Holders

The annual meeting of stockholders of the Registrant was held on June 6, 2006. At that meeting, the following matters were submitted to a vote of the stockholders of General Motors Corporation:

		Final Voting Results
		Votes		Percent
Item No. 1
Nomination and election of directors
The following nominees for directors received the number of votes set opposite their respective names and were elected to serve on the Board of Directors:
Percy N. Barnevik	For		456,857,908		96.9
	Withheld		14,592,254		3.1
Erskine B. Bowles	For		456,918,449		96.9
	Withheld		14,531,713		3.1
John H. Bryan	For		456,599,774		96.9
	Withheld		14,850,388		3.1
Armando M. Codina	For		456,934,490		96.9
	Withheld		14,515,672		3.1
George M.C. Fisher	For		456,914,451		96.9
	Withheld		14,535,711		3.1
Karen Katen	For		457,079,357		97.0
	Withheld		14,370,805		3.0
Kent Kresa	For		455,078,065		96.5
	Withheld		16,372,097		3.5
Ellen J. Kullman	For		457,357,397		97.0
	Withheld		14,092,765		3.0
Philip A. Laskawy	For		455,326,418		96.6
	Withheld		16,123,744		3.4
Eckhard Pfeiffer	For		455,230,673		96.6
	Withheld		16,219,489		3.4
G. Richard Wagoner, Jr.	For		456,642,694		96.9
	Withheld		14,807,468		3.1
Jerome B. York	For		456,800,093		96.9
	Withheld		14,650,069		3.1
In addition, 2,221 votes were cast for each of the following: James Dollinger, John Lauve, and Lucy Kessler; and 2,021 votes were cast for each of the following: John Chevedden, Dean Fitzpatrick, Louis Lauve III, Steve Mahac, Erik Nielsen, Larry Parks, Danny Taylor, William Walde, and William Woodward, M.D.					0.0
Item No. 2
Ratification of the selection of	For		456,464,395		96.8
Deloitte & Touche LLP as independent	Not in favor
public accountants for the year 2006	Against		6,707,225		1.4
	Abstain		8,278,542		1.8
	Total		14,985,767		3.2
	Broker Non-Vote		—		—

II-8

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Submission of Matters to a Vote of Security Holders — (concluded)

		Final Voting Results
		Votes		Percent
Item No. 3
Stockholder proposal regarding	For		23,749,450		6.3
prohibition on awarding, repricing, or	Not in favor
renewing stock options	Against		344,238,781		91.2
	Abstain		9,490,427		2.5
	Total		353,729,208		93.7
	Broker Non-Vote		93,971,504		—
Item No. 4
Stockholder proposal regarding	For		10,632,805		2.8
publication of a report on global	Not in favor
warming/cooling	Against		352,097,988		93.3
	Abstain		14,747,865		3.9
	Total		366,845,853		97.2
	Broker Non-Vote		93,971,504		—
Item No. 5
Stockholder proposal regarding	For		67,948,685		18.0
separation of roles of Chairman	Not in favor
and Chief Executive Officer	Against		299,778,495		79.4
	Abstain		9,751,478		2.6
	Total		309,529,973		82.0
	Broker Non-Vote		93,971,504		—
Item No. 6
Stockholder proposal regarding	For		158,230,828		41.9
recouping unearned incentive	Not in favor
bonuses	Against		209,854,694		55.6
	Abstain		9,393,136		2.5
	Total		219,247,830		58.1
	Broker Non-Vote		93,971,504		—
Item No. 7
Stockholder proposal regarding	For		203,042,562		53.8
cumulative voting	Not in favor
	Against		163,193,010		43.2
	Abstain		11,243,086		3.0
	Total		174,436,096		46.2
	Broker Non-Vote		93,971,504		—
Item No. 8
Stockholder proposal regarding	For		221,981,430		58.8
majority voting for election of	Not in favor
directors	Against		144,786,499		38.4
	Abstain		10,710,729		2.8
	Total		155,497,228		41.2
	Broker Non-Vote		93,971,504		—

* * * * * * * *

II-9

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 6.   Exhibits

Exhibit
Number			Exhibit Name
	4		Amended and Restated Credit Agreement, dated July 20, 2006, among General Motors Corporation, General Motors Canada Limited, Saturn Corporation, and a syndicate of lenders.
	13		General Motors Acceptance Corporation Quarterly Report on Form 10-Q, File No. 000-03754, for the quarterly period ended June 30, 2006
	31	.1	Section 302 Certification of the Chief Executive Officer
	31	.2	Section 302 Certification of the Chief Financial Officer
	32	.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* * * * * * * *

II-10

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GENERAL MOTORS CORPORATION

(Registrant)

Date: August 8, 2006

By:  /s/  PAUL W. SCHMIDT

(Paul W. Schmidt, Controller)

II-11

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit
Number			Exhibit Name
	4		Amended and Restated Credit Agreement, dated July 20, 2006, among General Motors Corporation, General Motors Canada Limited, Saturn Corporation, and a syndicate of lenders.
	13		General Motors Acceptance Corporation Quarterly Report on Form 10-Q, File No. 000-03754, for the quarterly period ended June 30, 2006
	31	.1	Section 302 Certification of the Chief Executive Officer
	31	.2	Section 302 Certification of the Chief Financial Officer
	32	.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

II-12

EX-4

                                                                       EXHIBIT 4

                                                               EXECUTION VERSION

          AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 20, 2006,
among GENERAL MOTORS CORPORATION, a Delaware corporation ("GM") and GENERAL
MOTORS OF CANADA LIMITED ("GM Canada"; each of GM and GM Canada, a "Borrower"
and, together, the "Borrowers"), SATURN CORPORATION, as a Guarantor, CITICORP
USA, INC., as administrative agent for the Lenders hereunder (in such capacity,
the "Agent"), JPMORGAN CHASE BANK, N.A., as syndication agent (in such capacity,
the "Syndication Agent") and the several banks and other financial institutions
from time to time parties to this Agreement (the "Lenders").

          WHEREAS, GM, certain of its affiliates, certain of the Lenders and the
Agent are parties to the Credit Agreement dated as of June 16, 2003 (as amended
prior to the Effective Date, the "Existing Credit Agreement");

          WHEREAS, pursuant to the Existing Credit Agreement, certain of the
Lenders have committed to make loans and other extensions of credit to GM and
certain of GM's affiliates;

          WHEREAS, the Tranche B Commitments and the Tranche C Commitments under
the Existing Credit Agreement have been terminated at the request of GM and its
affiliates party to the Existing Credit Agreement;

          WHEREAS, (a) this Agreement, on the terms and subject to the
conditions set forth herein, shall amend and restate the Existing Credit
Agreement in its entirety as of the Effective Date and (b) from and after the
Effective Date, the Existing Credit Agreement shall be of no further force or
effect;

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

                                   SECTION 1.
                                   DEFINITIONS

          1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:

          "ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. If for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, the ABR shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.



                                                                               2


          "ABR Loans": Revolving Credit Loans bearing interest at a rate
determined by reference to the ABR.

          "Acceptance": a Draft drawn by GM Canada on a Canadian/US Secured
     Lender conforming to the requirements of subsection 2.4 and accepted by
     such Canadian/US Secured Lender in accordance with subsection 2.4(c). As
     the context shall require, "Acceptance" shall also have the meaning
     ascribed to it in subsection 2.4(j).

          "Acceptance Equivalent Loan": an advance made under this Agreement by
     a Canadian/US Secured Lender evidenced by a Discount Note.

          "Acceptance Exposure": at any time, the Dollar Equivalent of the
aggregate face amount of the outstanding Acceptances and Acceptance Equivalent
Loans at such time. The Acceptance Exposure of any Canadian/US Secured Lender at
any time shall be its Canadian/US Secured Commitment Percentage of the aggregate
Acceptance Exposure at such time.

          "Acceptance Fee": has the meaning assigned to such term in subsection
2.4(m).

          "Acceptance Obligation": in respect of each Acceptance, the obligation
of GM Canada to pay to the Canadian/US Secured Lender that accepted such
Acceptance the face amount thereof as required by subsection 2.4(e).

          "ACH": Automated Clearing House.

          "Additional Lender": has the meaning assigned to such term in
subsection 2.1(f).

          "Affiliate": with respect to any Person, any other Person directly or
indirectly controlling or that is controlled by or is under common control with
such Person, each officer, director, general partner or joint-venturer of such
Person, and each Person that is the beneficial owner of 10% or more of any class
of voting stock of such Person. For the purposes of this definition, "control"
means the possession of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

          "Agent": as defined in the preamble.

          "Agreement": this Amended and Restated Credit Agreement, as amended,
supplemented or otherwise modified from time to time.

          "Alternative Currencies": as defined in subsection 2A.1.

          "Applicable Lending Office": for any Lender, with respect to each
Borrower, such Lender's office, branch or Affiliate designated for Acceptances,
Acceptance Equivalent Loans, Eurodollar Loans, ABR Loans, Canadian Base Rate
Loans and participations in Letters of Credit, as applicable, as notified to the
Agent and the Borrowers or as otherwise specified in the Assignment and
Acceptance, any of which offices may, subject to subsection 2.19, be changed by
such Lender upon 10 days' prior written notice to the Agent and the Borrowers.



                                                                               3


          "Applicable Margin": (a) with respect to the Non-Extended Loans, as
defined in subsection 2.12(e) and (b) with respect to the Extended Secured
Loans, as defined in subsection 2.12A(e).

          "Application": an application, in such form as the applicable Issuing
Bank may specify from time to time, requesting such Issuing Bank to issue a
Letter of Credit.

          "Assignee": as defined in subsection 10.6(b).

          "Assignment and Acceptance": as defined in subsection 10.6(b)(ii)(B).

          "Attributable Indebtedness": at the time of determination as to any
lease, the present value (discounted at the actual rate, if stated, or, if no
rate is stated, the implicit rate of interest of such lease transaction as
determined by a Financial Officer of GM), calculated using the interval of
scheduled rental payments under such lease, of the obligation of the lessee for
net rental payments during the remaining term of such lease (excluding any
subsequent renewal or other extension options held by the lessee). The term "net
rental payments" means, with respect to any lease for any period, the sum of the
rental and other payments required to be paid in such period by the lessee
thereunder, but not including, however, any amounts required to be paid by such
lessee (whether or not designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates, indemnities
or similar charges required to be paid by such lessee thereunder or any amounts
required to be paid by such lessee thereunder contingent upon the amount of
sales, earnings or profits or of maintenance and repairs, insurance, taxes,
assessments, water rates, indemnities or similar charges; provided that in the
case of any lease which is terminable by the lessee upon the payment of a
penalty in an amount which is less than the total discounted net rental payments
required to be paid from the later of the first date upon which such lease may
be so terminated and the date of the determination of net rental payments, "net
rental payments" shall include the then current amount of such penalty from the
later of such two dates and shall exclude the rental payments relating to the
remaining period of the lease commencing with the later of such two dates.

          "Available Canadian/US Secured Commitment": as to any Canadian/US
Secured Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Canadian/US Secured Commitment then in effect over (b) such Lender's
Canadian/US Secured Extensions of Credit then outstanding.

          "Available Non-Extended Commitment": as to any Non-Extending Lender at
any time, an amount equal to the excess, if any, of (a) such Lender's
Non-Extended Commitment over (b) the sum of the aggregate outstanding principal
amount at such time of all Non-Extended Loans plus Competitive Loans plus Money
Market Advances made by such Non-Extending Lender.

          "Available US Secured Commitment": as to any US Secured Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's US Secured
Commitment then in effect over (b) such Lender's US Secured Loans then
outstanding.



                                                                               4


          "Average Daily Production": as provided in the definition of Material
Production Event Period.

          "Borrowers": as defined in the preamble to this Agreement.

          "Borrowing": a group of Loans to a single Borrower of a single Type
made by the Lenders under the same Tranche (or, in the case of a Competitive
Borrowing, by the Lender or Lenders whose Competitive Bids have been accepted
pursuant to subsection 2.5) on a single date and as to which a single Interest
Period is in effect.

          "Business Day": any day that (i) is not a Saturday or Sunday and (ii)
(A) when used in connection with any ABR Loan denominated in Dollars, any day on
which banks are open for business in New York, (B) when used in connection with
any Eurodollar Loan denominated in Dollars, any day on which dealings in Dollars
can occur in the London interbank market and on which banks are open for
business in New York and (C) when used in connection with any Canadian/US
Secured Loan denominated in Canadian Dollars, any day on which banks are open
for business in Toronto.

          "CAM Date": the first date after the Effective Date on which there
shall occur (a) any event described in clauses (i) or (ii) of paragraph (e) of
Section 7 or (b) an acceleration of Extended Secured Loans pursuant to Section
7.

          "CAM Exchange": as defined in Section 10.7(b).

          "CAM Percentage": as to any Secured Lender, the percentage which the
sum of the US Secured Commitment and the Canadian/US Secured Commitment of such
Secured Lender as of the CAM Date (before any termination thereof on such date)
constitutes of the sum of the Total US Secured Commitments and the Total
Canadian/Secured Commitments of all Secured Lenders as of such date (before any
termination thereof on such date).

          "Canadian Base Rate": the higher of:

               (a) the rate of interest publicly announced by the Agent from
time to time as its reference rate then in effect for determining interest rates
on Canadian Dollar denominated commercial loans made in Canada; and

               (b) the average annual rate as determined by the Agent as being
the "BA 1 month" rates applicable to banker's acceptances in Canadian Dollars
displayed and identified as such on the "Reuters screen CDOR page" (the "CDOR
Rate") at approximately 10:00 A.M. on such day (provided that if such rates do
not appear on the Reuters screen CDOR page, then the CDOR Rate shall be the
average of the rate quotes for banker's acceptances denominated in Canadian
Dollars with a term of 30 days received by the Agent at approximately 10 A.M. on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) from two or more Schedule I Lenders) plus 0.5%.

          "Canadian Base Rate Loans": Revolving Credit Loans bearing interest at
a rate determined by reference to the Canadian Base Rate.



                                                                               5


          "Canadian Collateral": all property of GM Canada, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Canadian
Security Document.

          "Canadian Collateral Value": as of any date of determination, the sum
of (a) the Canadian PP&E Value and (b) 66 2/3% of the net book value (including
a gross up for LIFO reserves) of all other Canadian Collateral of GM Canada as
of the most recent fiscal quarter of GM Canada with respect to which a Financial
Officer of GM Canada has delivered a certificate pursuant to subsection 5.2(b).
For purposes of determining the Canadian Collateral Value, Canadian Collateral
shall be deemed to exclude any Canadian Collateral subject to third-party liens
or statutory deemed trusts securing Indebtedness (or securing other monetary
obligations, if all such third-party liens or statutory deemed trusts securing
other monetary obligations, in the aggregate, would materially reduce the value
of the Canadian Collateral taken as a whole).

          "Canadian Dollars" and "C$": the lawful currency of Canada.

          "Canadian General Security Agreement": a general security agreement to
be executed and delivered by GM Canada in favor of the Agent for and on behalf
of the Canadian Secured Parties, substantially in the form of Exhibit L, as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time.

          "Canadian Non-Loan Exposure Cap": an amount equal to $549,900,000 or
such other amount agreed to by GM, GM Canada and the Agent; provided that the
Canadian Total Secured Exposure shall not exceed the lesser of (x)
$6,000,000,000 less the US Total Secured Exposure and (y) the Effective Canadian
Collateral Value.

          "Canadian Pension Plans": collectively, the General Motors Canadian
Retirement Program for Salaried Employees (Financial Services Commission of
Ontario Registration No. 0340950), and the General Motors Canadian Hourly-Rate
Employees Pension Plan (Financial Services Commission of Ontario Registration
No. 0340968).

          "Canadian PP&E": the Canadian Collateral consisting of plant, property
and equipment (including, without limitation, machinery and special tools).

          "Canadian PP&E Value": at any time of determination, an amount equal
to $1,049,000,000 increased or decreased by 40% of the aggregate increase or
decrease, respectively, in the net book value of the Canadian PP&E from the
Effective Date to such time.

          "Canadian Secured Obligations": all obligations of GM Canada in
respect of any unpaid Canadian/US Secured Extensions of Credit made to GM Canada
and any interest thereon (including interest accruing after the maturity of any
Canadian/US Secured Extensions of Credit made to GM Canada and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to GM Canada, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) and all other obligations and liabilities of GM Canada to the Agent
or to any Lender or any Issuing Bank, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with this Agreement, any



                                                                               6


other Loan Document, the Letters of Credit, the Acceptance Equivalent Loans, the
Acceptances or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise; provided that
Hedging Obligations shall not be included in "Canadian Secured Obligations."

          "Canadian Secured Parties": the collective reference to the Agent and
any other holder of Canadian Total Secured Exposure.

          "Canadian Security Agreements": the collective reference to the
Canadian General Security Agreement and the Hypothecs.

          "Canadian Security Documents": the collective reference to the
Canadian General Security Agreement, the Debentures and the Hypothecs and all
other security documents hereinafter delivered to the Agent granting a Lien on
any property of any Person to secure the obligations of GM Canada under any Loan
Document, including financing statements or financing change statements under
the PPSA.

          "Canadian Subsidiaries": the collective reference to GM Canada and any
indirect Subsidiary of GM controlled by GM Canada.

          "Canadian Total Secured Exposure": as of any date of determination,
the sum of (i) (A) for purposes of calculating "Canadian Total Secured Exposure"
in connection with subsections 6.7 and 6.8 of this Agreement, the aggregate of
the Canadian/US Secured Extensions of Credit made to GM Canada and (B) for all
other purposes, the aggregate amount of the Canadian Secured Obligations, in
each case, as of such date, and (ii) the aggregate amount of any Non-Loan
Exposure of the Canadian Subsidiaries secured by the same Collateral which
secures the Canadian Secured Obligations of GM Canada as of such date.

          "Canadian/US Secured Commitment": as to any Lender, the obligation of
such Lender, if any, to make Canadian/US Secured Loans, including Acceptance
Equivalent Loans, to accept Acceptances hereunder and to participate in Letters
of Credit, in an aggregate principal amount not to exceed the amount set forth
opposite such Lender's name on Schedule I under the heading "Canadian/US Secured
Commitment," or in the Assignment and Acceptance pursuant to which such Lender
becomes a party hereto, as applicable, as such amount may be adjusted from time
to time in accordance with the provisions of this Agreement.

          "Canadian/US Secured Commitment Percentage": as to any Canadian/US
Secured Lender at any time, the percentage which such Lender's Canadian/US
Secured Commitment then constitutes of the Total Canadian/US Secured Commitments
or, at any time after the Canadian/US Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Canadian/US Secured Loans, Acceptances, Acceptance Equivalent Loans and L/C
Obligations then outstanding constitutes of the aggregate principal amount of
the Canadian/US Secured Loans, Acceptances, Acceptance Equivalent Loans and L/C
Obligations then outstanding.



                                                                               7


          "Canadian/US Secured Extensions of Credit": as to any Canadian/US
Secured Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Canadian/US Secured Loans denominated in Dollars held by
all Applicable Lending Offices of such Lender then outstanding, (b) the Dollar
Equivalent of the aggregate principal amount of all Canadian/US Secured Loans
denominated in Canadian Dollars held by all Applicable Lending Offices of such
Lender then outstanding, (c) an amount equal to such Lender's Canadian/US
Secured Commitment Percentage of the L/C Obligations denominated in Dollars then
outstanding, (d) an amount equal to the Dollar Equivalent of such Lender's
Canadian/US Secured Commitment Percentage of the L/C Obligations denominated in
Canadian Dollars or any Alternative Currency then outstanding and (e) such
Lender's Acceptance Exposure.

          "Canadian/US Secured Lender": as defined in subsection 2.1(c);
collectively, the "Canadian/US Secured Lenders".

          "Canadian/US Secured Loan": as defined in subsection 2.1(c);
collectively, the "Canadian/US Secured Loans".

          "Canadian/US Secured Tranche": the Canadian/US Secured Commitments and
the provisions herein related to the extensions of credit made thereunder.

          "Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.

          "Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in the Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.

          "CGM": Controladora General Motors, S.A. de C.V.

          "CGM Excluded Indebtedness": (a) any Indebtedness owed by CGM to any
of its Subsidiaries, (b) any Indebtedness owed by any Subsidiary of CGM to CGM
or to any of its other Subsidiaries, (c) Indebtedness incurred by CGM or any of
its Subsidiaries under overdraft facilities not exceeding an aggregate principal
amount of $50,000,000 outstanding at any time and (d) other Indebtedness of CGM
or any of its Subsidiaries not exceeding an aggregate principal amount of
$10,000,000 outstanding at any time.

          "Code": the Internal Revenue Code of 1986, as amended from time to
time.

          "Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.



                                                                               8


          "Commitment": as to any Lender, (a) the Non-Extended Commitment of
such Lender or (b) the US Secured Commitment and/or Canadian/US Secured
Commitment of such Lender, as the context may require.

          "Commitment Percentage": the reference to a Lender's Canadian/US
Secured Commitment Percentage, US Secured Commitment Percentage or Non-Extended
Commitment Percentage, as the context may require.

          "Commitment Period": (a) with respect to the Non-Extended Commitments,
the earlier of (i) the period from and including the Original Closing Date to
but not including the Non-Extended Termination Date and (ii) such earlier date
on which all Non-Extended Commitments are terminated pursuant to the terms
hereof and (b) with respect to the Extended Secured Commitments, the earlier of
(i) the period from and including the Effective Date to but not including the
Extended Termination Date and (ii) such earlier date on which all Extended
Secured Commitments are terminated pursuant to the terms hereof.

          "Competitive Bid": an offer by a Non-Extending Lender to make a
Competitive Loan pursuant to subsection 2.5.

          "Competitive Bid Accept/Reject Letter": a notification made by GM
pursuant to subsection 2.5(f) in the form of Exhibit D.

          "Competitive Bid Rate": as to any Competitive Bid made by a
Non-Extending Lender pursuant to subsection 2.5, (i) in the case of a Eurodollar
Competitive Loan, the Eurodollar Rate for Dollars plus (or minus) the Margin,
and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by
the Lender making such Competitive Bid.

          "Competitive Bid Request": a request made pursuant to subsection
2.5(b) in the form of Exhibit A.

          "Competitive Borrowing": a Borrowing consisting of a Competitive Loan
or concurrent Competitive Loans from the Non-Extending Lender or Non-Extending
Lenders whose Competitive Bids for such Borrowing have been accepted by GM under
the bidding procedure described in subsection 2.5.

          "Competitive Loan": a Loan (which shall be a Eurodollar Competitive
Loan or a Fixed Rate Loan) made by a Non-Extending Lender pursuant to the
bidding procedure described in subsection 2.5.

          "Conduit Lender": any special purpose funding vehicle that (i) is
organized under the laws of the United States or any state thereof and (ii) is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business.

          "Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.



                                                                               9


          "Debentures": any debenture to be executed and delivered by GM Canada
in favor of the Agent for and on behalf of the Canadian Secured Parties,
substantially in the form of Exhibit M, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

          "Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.

          "Discount Note": a non-interest bearing, non-negotiable promissory
note of GM Canada denominated in Canadian Dollars, issued by GM Canada to a
Canadian/US Secured Lender, substantially in the form of Exhibit N.

          "Discount Rate": with respect to any Acceptance, (a) for a Canadian/US
Secured Lender which is a Schedule I Lender, the average CDOR Rate (for the
applicable term) and (b) for other Canadian/US Secured Lenders, the rate
determined by the Agent as being the arithmetic average (rounded upwards to the
nearest multiple of 0.01%) of the discount rates, calculated on the basis of a
year of 365 days, of the Schedule II/III Reference Lenders established in
accordance with their normal practices at or about 10:00 A.M. (Toronto time) on
the issuance date of such Acceptance, provided that the Discount Rate of such
other Lenders shall not exceed for any issue the Discount Rate established
pursuant to (a) above plus 0.10% per annum.

          "Disposition": with respect to any property, any sale, lease, sale and
lease-back, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.

          "Dollar Equivalent": with respect to any amount of Canadian Dollars
or, if applicable, any Alternative Currency, at any date, the amount of Dollars
which could be purchased at such date for such amount of Canadian Dollars or
Alternative Currency, as the case may be, at the rate of exchange set forth on
the applicable page of the Telerate screen on or about 11:00 A.M., London time,
on such date.

          "Dollars" and "$": dollars in lawful currency of the United States of
America.

          "Draft": a depository bill issued in accordance with the Depository
Bills and Notes Act (Canada) or a bill of exchange in the form used from time to
time by each Canadian/US Secured Lender, respectively, in connection with the
creation of Acceptances in accordance with the provisions of subsection 2.4 and
payable in Canadian Dollars.

          "Drawing Notice": as defined in subsection 2.4(c).

          "Effective Canadian Collateral Value": as of any date of
determination, the Canadian Collateral Value, as adjusted to reflect (a) any
Disposition of Canadian PP&E made during the current fiscal quarter on or prior
to such date (except to the extent the book value of all such Dispositions does
not exceed $300,000,000 in the aggregate during such period) and (b) all
Permitted Collateral Dispositions of Canadian Collateral made during the current
fiscal



                                                                              10


quarter on or prior to such date (except to the extent the book value of all
such Permitted Collateral Dispositions does not exceed $100,000,000 in the
aggregate during such period).

          "Effective Date": the date on which each of the conditions precedent
set forth in subsection 4.1 shall have been satisfied, which date shall be July
20, 2006.

          "Effective US Collateral Value": as of any date of determination, the
US Collateral Value, as adjusted to reflect (a) any Permitted Collateral
Dispositions of US Collateral during the current fiscal quarter on or prior to
such date (except to the extent the book value of all such Permitted Collateral
Dispositions does not exceed $100,000,000 in the aggregate during such period)
and (b) the incurrence during the current fiscal quarter on or prior to such
date of any Indebtedness by CGM or any of its Subsidiaries (other than any CGM
Excluded Indebtedness).

          "Environmental Activity": any past, present or future activity, event
or circumstance in respect of a Hazardous Substance, including its presence,
storage, use, holding, collection, purchase, accumulation, assessment,
generation, manufacture, construction, processing, treatment, stabilization,
disposition, handling or transportation, or its spill, discharge, leak, release,
leaching, dispersal or migration into the natural environmental, including the
movement through or in the air, soil, surface, water or groundwater.

          "Environmental Laws": all applicable laws regulating, relating to or
imposing liability or standards of conduct concerning protection or quality of
the environment, human health, employee health and safety or transportation of
Hazardous Substances.

          "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

          "Eurodollar Borrowing": a Borrowing comprised of Eurodollar Loans.

          "Eurodollar Competitive Loan": any Competitive Loan bearing interest
at a rate determined by reference to the Eurodollar Rate for Dollars.

          "Eurodollar Loan": any Eurodollar Competitive Loan or Eurodollar
Revolving Credit Loan.

          "Eurodollar Rate": with respect to an Interest Period pertaining to
any Eurodollar Loan, the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to such Interest Period commencing on
the first day of such Interest Period appearing on Page 3750 of the Telerate
Screen as of 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period. In the event that such rate does not appear on such
page of the Telerate Screen (or otherwise on the Telerate Service), the
"Eurodollar Rate" shall instead be the interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the average of the rates at which
deposits in Dollars approximately equal in principal amount to (a) in the case
of a Eurodollar Sub-Tranche, the portion of such Eurodollar Sub-Tranche of the
Lender serving as Agent and (b) in the case of a Eurodollar Competitive Loan, a
principal amount that would have been the portion of such Loan of the Lender
serving as the Agent had



                                                                              11


such Loan been a Eurodollar Revolving Credit Loan, and for a maturity comparable
to such Interest Period, are offered by the principal London offices of the
Reference Lenders (or, if any Reference Lender does not at the time maintain a
London office, the principal London office of any Affiliate of such Reference
Lender) for immediately available funds in the London interbank market at
approximately 11:00 A.M., London time, two Business Days prior to the
commencement of such Interest Period.

          "Eurodollar Revolving Credit Loan": any Revolving Credit Loan bearing
interest at a rate determined by reference to the Eurodollar Rate.

          "Eurodollar Reserve Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):

                                 Eurodollar Rate
                     --------------------------------------
                     1.00 - Eurodollar Reserve Requirements

          "Eurodollar Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurodollar funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System.

          "Eurodollar Sub-Tranche": the collective reference to Eurodollar Loans
under a particular Tranche borrowed by the same Borrower, the then current
Interest Periods with respect to all of which begin on the same date and end on
the same later date (whether or not such Eurodollar Loans shall originally have
been made on the same day).

          "Event of Default": any of the events specified in Section 7; provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

          "Existing Credit Agreement": as defined in the first recital of this
Agreement.

          "Extended Secured Commitments": the US Secured Commitments and/or the
Canadian/US Secured Commitments, as the context may require.

          "Extended Secured Loans": the collective reference to the US Secured
Loans and Canadian/US Secured Loans.

          "Extended Termination Date": July 20, 2011.

          "Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by



                                                                              12


federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day of such
rates on such transactions received by the Agent from three federal funds
brokers of recognized standing selected by it.

          "Fee Letter": the fee letter dated as of July 14, 2006.

          "Fee Payment Date": (a) the third Business Day following the last day
of each March, June, September and December, (b) the Non-Extended Termination
Date with respect to the Non-Extending Lenders and (c) the Extended Termination
Date with respect to the Extending Lenders.

          "Financial Officer": with respect to any Person, the chief financial
officer, principal accounting officer, a financial vice president, treasurer,
assistant treasurer or controller of such Person.

          "Fitch": means Fitch Investors Service, L.P. and its successors.

          "Fixed Rate Borrowing": a Borrowing comprised of Fixed Rate Loans.

          "Fixed Rate Loan": any Competitive Loan bearing interest at a fixed
percentage rate per annum specified by the Lender making such Loan in its
Competitive Bid.

          "GAAP": generally accepted accounting principles in the United States
of America (or, in the case of financial statements of GM Canada, the generally
accepted accounting principles as defined from time to time by the Accounting
Standards Board of Chartered Accountants in the Handbook of the Canadian
Institute of Chartered Accountants) as in effect from time to time and as
applied by the applicable Borrower or GM Mexico in the preparation of GM's
public financial statements.

          "GM": as defined in the preamble.

          "GM Holiday": any date that is a general holiday of GM or any of its
Subsidiaries constituting its North American operations and any regularly
scheduled shut-downs of the offices or manufacturing facilities of GM or any of
its Subsidiaries constituting its North American operations.

          "GM Mexico": General Motors de Mexico, S. de R.L. de C.V.

          "Governmental Authority": any nation or government, any state,
province, municipality or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory, taxing or
administrative functions of government including, without limitation, the
European Central Bank.

          "Guarantee Obligations": as to any Person (the "guaranteeing person"),
if the primary purpose or intent thereof is to provide assurance that the
Indebtedness of another Person will be paid or discharged, any obligation of the
guaranteeing Person that guarantees or in effect



                                                                              13


guarantees, or which is given to induce the creation of a separate obligation by
another Person (including any bank under any letter of credit) that guarantees
or in effect guarantees, any Indebtedness (the "primary obligations") of any
other third Person (the "primary obligor") in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to advance or supply funds for the purchase or payment of any
such primary obligation, (ii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
or (iii) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing Person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing Person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing Person's maximum reasonably anticipated liability in
respect thereof as determined by GM in good faith.

          "Guarantors": the collective reference to GM (other than with respect
to the obligations of GM in it capacity as primary obligor) and Saturn.

          "Hazardous Substance": (a) all chemicals, materials, contaminants,
wastes and substances defined as or included in the definition of
"contaminants", "wastes", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", restricted hazardous waste", "toxic substances", "toxic
pollutants", or "pollutants" or words of similar import under any applicable
Environmental Laws and (b) (ii) all other chemicals, materials and substances,
exposure to which is prohibited, limited or regulated by any Governmental
Authority pursuant to any applicable Environmental Laws.

          "Hedging Obligations": the obligations of GM and each of GM's
Subsidiaries under any non-speculative hedging arrangements provided by any
Secured Lender or any Affiliate of a Secured Lender, involving one or more debt
instruments, interest rates, currencies or commodities and any extensions or
replacements thereof covering substantially the same risk with respect to
substantially the same debt instruments, interest rates, currencies or
commodities, as applicable.

          "Hedging Secured Party": any (a) Secured Lender with an Extended
Secured Commitment hereunder equal to at least the lesser of (i) $10,000,000 or
(ii) 0.223215 percent of the aggregate Extended Secured Commitments (or any
Affiliate thereof) holding any Hedging Obligations or, (b) if the Extended
Secured Commitments have terminated, any Secured Lender holding US Secured Loans
and Canadian/US Secured Extensions of Credit equal to at least the lesser of (i)
$10,000,000 or (ii) 0.223215 percent of the aggregate US Secured Loans and
Canadian/US Secured Extensions of Credit (or any Affiliate thereof).



                                                                              14


          "Hypothec": a moveable hypothec to be executed and delivered by GM
Canada in favor of the Agent for and on behalf of the Canadian Secured Parties,
substantially in the form of Exhibit O, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

          "Increasing Lender": has the meaning assigned to such term in
subsection 2.1(f).

          "Indebtedness": (a) for purposes of Sections 6.2 and 6.3 and Section
7(d), of any Person at any date, the amount outstanding on such date under
notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed (including, without limitation, indebtedness for borrowed money
evidenced by a loan account) and (b) for all other purposes, of any Person at
any date, without duplication, (i) all indebtedness of such Person for borrowed
money, (ii) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (iii) all Capital Lease Obligations of such
Person, (iv) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of credit
and similar arrangements, (v) all obligations of such Person in respect of
securitizations of receivables, (vi) all net obligations of such Person under
swap agreements, (vii) all purchase money indebtedness of such Person and (viii)
all Guarantee Obligations of such Person in respect of any of the foregoing.

          "Interest Payment Date": (a) as to any ABR Loan or Canadian Base Rate
Loan, the last day of each March, June, September and December to occur while
such Loan is outstanding and on the date such Loan is paid in full, (b) as to
any Eurodollar Loan or Fixed Rate Loan, the last day of the Interest Period
applicable thereto and (c) as to any Eurodollar Loan or Fixed Rate Loan, having
an Interest Period longer than three months or 90 days, as the case may be, each
day which is three months or 90 days, as the case may be, after the first day of
the Interest Period applicable thereto; provided that, in addition to the
foregoing, each of (i) the date upon which both the Commitments have been
terminated and the Loans have been paid in full and (ii) (A) the Non-Extended
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest which is then accrued hereunder with respect a Non-Extended Loan
and (B) the Extended Termination Date shall be deemed to be an "Interest Payment
Date" with respect to any interest which is then accrued hereunder with respect
to an Extended Secured Loan.

          "Interest Period": with respect to any Eurodollar Loan:

          (a) initially, the period commencing on the borrowing or conversion
     date, as the case may be, with respect to such Eurodollar Loan and ending
     one, two, three or six months thereafter, as selected by the applicable
     Borrower in its notice of borrowing or notice of conversion, as the case
     may be, given with respect thereto; and

          (b) thereafter, each period commencing on the last day of the next
     preceding Interest Period applicable to such Eurodollar Loan and ending
     one, two, three or six months thereafter, as selected by the applicable
     Borrower by irrevocable notice to the Agent not less than three Business
     Days prior to the last day of the then current Interest Period with respect
     thereto;



                                                                              15


          (c) with respect to any Fixed Rate Loan, the period commencing on the
     borrowing date with respect to such Fixed Rate Loan and ending such number
     of days thereafter (which shall be not less than fifteen days or more than
     180 days after the date of such borrowing) as selected by GM in its
     Competitive Bid Request given with respect thereto; and

          (d) with respect to any Money Market Advance, the period commencing on
     the borrowing date with respect to such Money Market Advance and ending
     such number of days thereafter (which shall not be more than 7 Business
     Days after the date of such borrowing) as agreed upon by the applicable
     Borrower and the Lender with respect thereto pursuant to subsection 2.6;

          provided that all of the foregoing provisions relating to Interest
     Periods are subject to the following:

          (A) if any Interest Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business Day unless, in the case of an Interest Period pertaining to a
     Eurodollar Loan, the result of such extension would be to carry such
     Interest Period into another calendar month in which event such Interest
     Period shall end on the immediately preceding Business Day; and

          (B) any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of a calendar month.

          Notwithstanding anything to the contrary contained in this Agreement,
     no Interest Period shall be selected by a Borrower which ends on a date
     after the Non-Extended Termination Date or Extended Termination Date, as
     applicable.

          "Invitation for Competitive Bids": an invitation made by GM pursuant
to subsection 2.5(c) in the form of Exhibit B.

          "Issuing Banks": the Applicable Lending Office of each of Citibank,
N.A. and one or more additional Canadian/US Secured Lenders or any Affiliate
thereof acceptable to the Agent and GM, in its capacity as issuer of any Letter
of Credit.

          "ITA": the Income Tax Act (Canada) as in effect on the Effective Date
or, in the case of (A) an Assignee, the date of Assignment and Acceptance, (B) a
successor Agent, the date of the appointment of such Agent, (C) a successor
Issuing Bank, the date such Issuing Bank becomes an Issuing Bank or (D) a Lender
that changes its Applicable Lending Office, the date of such change.

          "Judgment Currency": as defined in subsection 2.23.

          "Judgment Currency Conversion Date": as defined in subsection 2.23.

          "L/C Commitment": $500,000,000.



                                                                              16


          "L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 2A.5.

          "L/C Participants": the collective reference to the Canadian/US
Secured Lenders other than the Issuing Banks.

          "Lender": as defined in the preamble to this Agreement; collectively,
the "Lenders"; provided, that unless the context otherwise requires, each
reference herein to the Lenders shall be deemed to include any Conduit Lender,
and for the purposes of Section 2.19, the term "Lender" shall include any
Issuing Bank.

          "Letters of Credit": as defined in Section 2A.1(a).

          "Level I Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt outstanding, without third party credit
enhancement, which is rated A- or better by S&P, A3 or better by Moody's and A-
or better by Fitch and (b) with respect to the Extended Secured Commitments and
the Extended Secured Loans, GM has senior secured long-term debt outstanding,
without third party credit enhancement, which is rated BB+ or better by S&P, Ba1
or better by Moody's and BB+ or better by Fitch; provided that if any of S&P,
Moody's or Fitch shall cease to issue ratings of debt securities generally, then
the Agent and GM shall negotiate in good faith to agree upon a substitute rating
agency (and to correlate the system of ratings of such substitute rating agency
with that of the rating agency for which it is substituting) and (a) until such
substitute rating agency is agreed upon, the foregoing test may be satisfied on
the basis of the ratings assigned by the other two such rating agencies and (b)
after such substitute rating agency is agreed upon, the foregoing test may be
satisfied on the basis of the rating assigned by the other two rating agencies
and such substitute rating agency.

          "Level II Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt outstanding, without third party credit
enhancement, which is rated BBB+ by S&P, Baa1 by Moody's and BBB+ by Fitch and
(b) with respect to the Extended Secured Commitments and the Extended Secured
Loans, GM has senior secured long-term debt outstanding, without third party
credit enhancement, which is rated BB by S&P, Ba2 by Moody's and BB by Fitch;
provided that if any of S&P, Moody's or Fitch shall cease to issue ratings of
debt securities generally, then the Agent and GM shall negotiate in good faith
to agree upon a substitute rating agency (and to correlate the system of ratings
of such substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency is agreed upon, the
foregoing test may be satisfied on the basis of the ratings assigned by the
other two such rating agencies and (b) after such substitute rating agency is
agreed upon, the foregoing test may be satisfied on the basis of the rating
assigned by the other two rating agencies and such substitute rating agency.

          "Level III Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt



                                                                              17


outstanding, without third party credit enhancement, which is rated BBB by S&P,
Baa2 by Moody's and BBB by Fitch and (b) with respect to the Extended Secured
Commitments and the Extended Secured Loans, GM has senior secured long-term debt
outstanding, without third party credit enhancement, which is rated BB- by S&P,
Ba3 by Moody's and BB- by Fitch; provided that if any of S&P, Moody's or Fitch
shall cease to issue ratings of debt securities generally, then the Agent and GM
shall negotiate in good faith to agree upon a substitute rating agency (and to
correlate the system of ratings of such substitute rating agency with that of
the rating agency for which it is substituting) and (a) until such substitute
rating agency is agreed upon, the foregoing test may be satisfied on the basis
of the ratings assigned by the other two such rating agencies and (b) after such
substitute rating agency is agreed upon, the foregoing test may be satisfied on
the basis of the ratings assigned by the other two rating agencies and such
substitute rating agency.

          "Level IV Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt outstanding, without third party credit
enhancement, which is rated BBB- by S&P, Baa3 by Moody's and BBB- by Fitch and
(b) with respect to the Extended Secured Commitments and the Extended Secured
Loans, GM has senior secured long-term debt outstanding, without third party
credit enhancement, which is rated B+ by S&P, B1 by Moody's and B+ by Fitch;
provided that if any of S&P, Moody's or Fitch shall cease to issue ratings of
debt securities generally, then the Agent and GM shall negotiate in good faith
to agree upon a substitute rating agency (and to correlate the system of ratings
of such substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency is agreed upon, the
foregoing test may be satisfied on the basis of the ratings assigned by the
other two such rating agencies and (b) after such substitute rating agency is
agreed upon, the foregoing test may be satisfied on the basis of the ratings
assigned by the other two rating agencies and such substitute rating agency.

          "Level V Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt outstanding, without third party credit
enhancement, which is rated BB+ by S&P, Ba1 by Moody's and BB+ by Fitch and (b)
with respect to the Extended Secured Commitments and the Extended Secured Loans,
GM has senior secured long-term debt outstanding, without third party credit
enhancement, which is rated B by S&P, B2 by Moody's and B by Fitch; provided
that if any of S&P, Moody's or Fitch shall cease to issue ratings of debt
securities generally, then the Agent and GM shall negotiate in good faith to
agree upon a substitute rating agency (and to correlate the system of ratings of
such substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency is agreed upon, the
foregoing test may be satisfied on the basis of the ratings assigned by the
other two such rating agencies and (b) after such substitute rating agency is
agreed upon, the foregoing test may be satisfied on the basis of the ratings
assigned by the other two rating agencies and such substitute rating agency.

          "Level VI Status": exists at any date if, at such date, (a) with
respect to the Non-Extended Commitments and the Non-Extended Loans, GM has
senior unsecured long-term debt outstanding, without third party credit
enhancement, which is rated lower than BB+ by S&P, Ba1 by Moody's and BB+ by
Fitch and (b) with respect to the Extended Secured Commitments and



                                                                              18


the Extended Secured Loans, GM has senior secured long-term debt outstanding,
without third party credit enhancement, which is rated B- or lower by S&P, B3 or
lower by Moody's and B- or lower by Fitch; provided that if any of S&P, Moody's
or Fitch shall cease to issue ratings of debt securities generally, then the
Agent and GM shall negotiate in good faith to agree upon a substitute rating
agency (and to correlate the system of ratings of such substitute rating agency
with that of the rating agency for which it is substituting) and (a) until such
substitute rating agency is agreed upon, the foregoing test may be satisfied on
the basis of the ratings assigned by the other two such rating agencies and (b)
after such substitute rating agency is agreed upon, the foregoing test may be
satisfied on the basis of the ratings assigned by the other two rating agencies
and such substitute rating agency.

          "Lien": any mortgage, pledge, lien, security interest, charge,
statutory deemed trust, conditional sale or other title retention agreement or
other similar encumbrance.

          "Loan": a Competitive Loan or a Revolving Credit Loan, as the context
shall require; collectively, the "Loans." For purposes of the definitions of
"Majority Lenders," "Majority Tranche Lenders," "Majority Canadian/US Secured
Lenders" and "Majority Secured Lenders," and for purposes of clause (i) in the
second proviso of subsection 10.1, Loans shall include Acceptances, Acceptance
Equivalent Loans and outstanding L/C Obligations.

          "Loan Documents": this Agreement, the Security Documents, the Notes
and any amendment, waiver, supplement or other modification to any of the
foregoing.

          "Loan Parties": each of GM, GM Canada and Saturn.

          "Majority Canadian/US Secured Lenders": at any time, Lenders whose
Canadian/US Secured Commitments represent in excess of 50% of the Total
Canadian/US Secured Commitments or, if the Canadian/US Secured Commitments have
terminated or for purposes of acceleration pursuant to Section 7, Lenders
holding Canadian/US Secured Extensions of Credit representing in excess of 50%
of the aggregate Canadian/US Secured Extensions of Credit outstanding.

          "Majority Lenders": at any time, collectively, Lenders holding more
than 50% of the sum of (a) the aggregate outstanding amount of the Non-Extended
Commitments or, if the Non-Extended Commitments have terminated or for purposes
of acceleration pursuant to Section 7, the principal amount of all Non-Extended
Loans, Competitive Loans and Money Market Advances outstanding, (b) the
aggregate outstanding amount of the US Secured Commitments or, if the US Secured
Commitments have terminated or for purposes of acceleration pursuant to Section
7, the principal amount of all US Secured Loans outstanding, and (c) the
aggregate outstanding amount of the Canadian/US Secured Commitments or, if the
Canadian/US Secured Commitments have terminated or for purposes of acceleration
pursuant to Section 7, the principal amount of all Canadian/US Secured
Extensions of Credit outstanding.

          "Majority Non-Extending Lenders": at any time, Lenders whose
Non-Extended Commitments represent in excess of 50% of the Total Non-Extended
Commitments or, if the Non-Extended Commitments have terminated or for purposes
of acceleration pursuant to Section 7, Lenders holding Non-Extended Loans,
Competitive Loans and Money Market Advances



                                                                              19


outstanding representing in excess of 50% of the aggregate principal amount of
all Non-Extended Loans outstanding.

          "Majority Secured Lenders": at any time, Secured Lenders whose
Extended Secured Commitments represent in excess of 50% of the Total Extended
Secured Commitments or, if the Extended Secured Commitments have terminated or
for purposes of acceleration pursuant to Section 7, Secured Lenders holding US
Secured Loans and Canadian/US Secured Extensions of Credit representing in
excess of 50% of the aggregate principal amount of all US Secured Loans and
Canadian/US Secured Extensions of Credit outstanding.

          "Majority Tranche Lenders": the Majority Canadian/US Secured Lenders,
the Majority Non-Extending Lenders, the Majority Secured Lenders or the Majority
US Secured Lenders, as applicable.

          "Majority US Secured Lenders": at any time, Lenders whose US Secured
Commitments represent in excess of 50% of the Total US Secured Commitments or,
if the US Secured Commitments have terminated or for purposes of acceleration
pursuant to Section 7, Lenders holding US Secured Loans representing in excess
of 50% of the aggregate principal amount of all US Secured Loans outstanding.

          "Manufacturing Subsidiary": any Subsidiary of GM (i) substantially all
the property of which is located within the continental United States of
America, (ii) which owns a Principal Domestic Manufacturing Property and (iii)
in which GM's investment, direct or indirect and whether in the form of equity,
debt, advances or otherwise, is in excess of $2,500,000,000 as shown on the
books of GM as of the end of the fiscal year immediately preceding the date of
determination; provided that "Manufacturing Subsidiary" shall not include
General Motors Acceptance Corporation and its Subsidiaries (or any of its
corporate successors) or any other Subsidiary which is principally engaged in
leasing or in financing installment receivables or otherwise providing financial
or insurance services to GM or others or which is principally engaged in
financing GM's operations outside the continental United States of America.

          "Margin": as to any Eurodollar Competitive Loan, the margin to be
added to (or subtracted from) the Eurodollar Rate in order to determine the
interest rate applicable to such Loan, as specified in the Competitive Bid
relating to such Loan.

          "Material Adverse Effect": with respect to any Borrower, a material
adverse effect on (a) the financial condition of GM and its Subsidiaries taken
as a whole or (b) the validity or enforceability of this Agreement and any of
the other Loan Documents or the rights or remedies of the Agent and the Lenders
under the Loan Documents.

          "Material Production Event": a labor strike or a material labor
dispute related stoppage at GM, any of its Subsidiaries or any of their
respective suppliers.

          "Material Production Event Period": each period (i) commencing on the
day on which GM delivers to the Agent a Production Certificate showing that the
average daily production during the most recent five Business Days that are not
GM Holidays ending on the



                                                                              20


Production Period End Date covered by such Production Certificate (the "Average
Daily Production")) was less than 50% of the Average Daily Production during the
five Business Days that are not GM Holidays ending on the corresponding
Production Period End Date in the prior year and (ii) ending on the day on which
GM delivers to the Agent two consecutive Production Certificates, each showing
that the Average Daily Production in the five Business Day period covered by
such Production Certificate was 50% or more of the Average Daily Production
during the five Business Days that are not GM Holidays ending on the
corresponding Production Period End Date in the prior year.

          "Mexican Stock Pledge Agreement": the Pledge Agreement to be executed
and delivered by GM covering 65% of the Capital Stock of CGM, substantially in
the form of Exhibit P, as such agreement may be amended, restated, supplemented
or otherwise modified from time to time.

          "Money Market Advance": as to any Non-Extending Lender, a loan (other
than a Loan) made to GM by such Lender pursuant to subsection 2.6.

          "Moody's": Moody's Investors Service, Inc. and its successors.

          "Mortgaged Property": each of the real properties listed on Schedule
IV, as to which the Agent for the benefit of the Canadian Secured Parties shall
be granted a Lien pursuant to the Debentures and Hypothecs, as applicable.

          "Non-Acceptance Canadian Lender": as defined in subsection 2.4(i).

          "Non-Extended Commitment": as to any Lender, the obligation of such
Lender, if any, to make Non-Extended Loans to GM hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule I under the heading "Non-Extended
Commitment," or in the Assignment and Acceptance pursuant to which such Lender
becomes a party hereto, as applicable, and as such amount may be adjusted from
time to time in accordance with the provisions of this Agreement.

          "Non-Extended Commitment Percentage": as to any Non-Extending Lender
at any time, the percentage which such Lender's Non-Extended Commitment then
constitutes of the Total Non-Extended Commitments or, at any time after the
Non-Extended Commitments shall have expired or terminated, the percentage which
the sum of the aggregate outstanding principal amount of such Lender's
Non-Extended Loans, Competitive Loans and Money Market Advances to GM then
outstanding constitutes of the aggregate principal amount of the Non-Extended
Loans, Competitive Loans and Money Market Advances to GM of all Non-Extending
Lenders then outstanding.

          "Non-Extended Loan": as defined in subsection 2.1; collectively, the
"Non-Extended Loans".

          "Non-Extended Termination Date": June 16, 2008.



                                                                              21


          "Non-Extended Tranche": the Non-Extended Commitments and the
provisions herein related to the extensions of credit made thereunder.

          "Non-Extending Lender": each Lender that is not a Secured Lender;
collectively, the "Non-Extending Lenders".

          "Non-Loan Exposure": the obligations of GM and each of its
Subsidiaries under any (i) lines of credit, (ii) letters of credit (other than
any Letters of Credit) and (iii) ACH and overdraft arrangements, in each case,
provided by any Secured Lender (or any Affiliate thereof) and listed on the
Non-Loan Schedule solely to the extent such Lender remains a Secured Lender.

          "Non-Loan Schedule": Schedule III to this Agreement, setting forth, as
of the Effective Date, (i) the aggregate amount of the Non-Loan Exposure of each
Canadian/US Secured Lender (or any Affiliate thereof) to be secured by the same
Collateral which secures the Canadian Secured Obligations and (ii) the aggregate
amount of the Non-Loan Exposure of each Secured Lender (or any Affiliate
thereof) to be secured by the same Collateral which secures the US Secured
Obligations, as such schedule may from time to time be amended or replaced by
the Borrowers (in their sole discretion) upon a two Business Days' prior written
notice to the Agent; provided that each such amendment or replacement with
respect to any committed Non-Loan Exposure or drawn and outstanding Non-Loan
Exposure (excluding any ACH or overdraft obligations) shall require the prior
written consent of each Secured Lender affected thereby; provided further that
(a) the aggregate amount of all Non-Loan Exposure secured by the same Collateral
which secures the US Secured Obligations shall not exceed the US Non-Loan
Exposure Cap and (b) the aggregate amount of all Non-Loan Exposure secured by
the same Collateral which secures the Canadian Secured Obligations of GM Canada
shall not exceed the Canadian Non-Loan Exposure Cap.

          "Non-US Lender": as defined in subsection 2.19(b).

          "Note": a promissory note, executed and delivered by the relevant
Borrower with respect to its Revolving Credit Loans, substantially in the form
of Exhibit G.

          "Obligation Currency": as defined in subsection 2.23.

          "Obligations": the collective reference to the Secured Obligations,
the Non-Loan Exposure and the Hedging Obligations.

          "Original Closing Date": June 16, 2003.

          "Participant": as defined in subsection 10.6(c).

          "Permitted Collateral Dispositions": any Dispositions permitted under
clause (f) of subsection 6.4.

          "Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.



                                                                              22


          "PPSA": Personal Property Security Act (Ontario) or similar personal
property security legislation in the other provinces or territories of Canada
other than Quebec, and, in Quebec, the personal property security provisions of
the Civil Code (Quebec) as the same may be in effect on the date of
determination of the applicable jurisdiction.

          "Prime Rate": the rate of interest per annum equal to the prime rate
publicly announced by the majority of the eleven largest commercial banks
chartered under United States Federal or State banking laws as its prime rate
(or similar base rate) in effect at its principal office. The determination of
such eleven largest commercial banks shall be based upon deposits as of the
prior year-end, as reported in the American Banker or such other source as may
be mutually agreed upon by the Agent and GM.

          "Principal Domestic Manufacturing Property": any manufacturing plant
or facility owned by GM or any Manufacturing Subsidiary of GM which is located
within the continental United States of America and, in the opinion of GM's
Board of Directors, is of material importance to the total business conducted by
GM and its consolidated affiliates as an entity.

          "Production Certificate": as defined in subsection 5.2(d).

          "Production Period End Date": as defined in subsection 5.2(d).

          "Qualifying Canadian/US Lender": a Person or such Person's Applicable
Lending Office that is (a) either (i) not a non-resident of Canada for purposes
of the ITA, or (ii) an authorized foreign bank deemed to be resident in Canada
for purposes of Part XIII of the ITA in respect of all amounts paid or credited
to such person with respect to the Canadian/US Secured Extensions of Credit to
GM Canada, and which has provided to GM Canada a certificate certifying such
status in (i) or (ii), or (b) approved in writing by the Agent and by GM Canada;
provided that, in each case, such Person or its Applicable Lending Office for GM
shall have the capacity to lend to GM in Dollars, such that all payments from GM
to such Person or its Applicable Lending Office for GM shall be made free and
clear of withholding taxes.

          "Qualifying Plan Regulation": as defined in Section 6.9.

          "Receivables Financing Agreement": the Sale and Purchase Agreement
dated as of July 22, 2004 between GM, as seller, and General Motors Trade
Receivables LLC, as purchaser, as amended, supplemented, restated or otherwise
modified or replaced from time to time.

          "Reference Lenders": Bank of America, N.A., JPMorgan Chase Bank, N.A.
and Citibank, N.A.

          "Register": as defined in subsection 10.6(b).



                                                                              23


          "Reimbursement Obligation": the obligation of the Borrowers to
reimburse any of the Issuing Banks pursuant to subsection 2A.5 for amounts drawn
under Letters of Credit issued by such Issuing Bank.

          "Requirement of Law": as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

          "Revolving Credit Loans": the US Secured Loans, the Canadian/US
Secured Loans or the Non-Extended Loans, as the context shall require.

          "Saturn": Saturn Corporation, a Delaware corporation and a
wholly-owned Subsidiary of GM.

          "Schedule I Lender": Canadian/US Secured Lenders that are banks named
in Schedule I to the Bank Act (Canada), and to be agreed between GM Canada and
the Agent.

          "Schedules II/III Reference Lenders": Canadian/US Secured Lenders that
are banks named in Schedule II or Schedule III to the Bank Act (Canada), and to
be agreed between GM Canada and the Agent.

          "Second Priority Security Agreements": the collective reference to the
US Security Documents granting a Lien on any property of any Person to secure
the Hedging Obligations.

          "Secured Commitment Increase": as defined in subsection 2.1(f).

          "Secured Lender": any Canadian/US Secured Lender or US Secured Lender;
collectively, the "Secured Lenders".

          "Secured Obligations": the collective reference to the US Secured
Obligations and the Canadian Secured Obligations.

          "Secured Parties": the collective reference to the Canadian Secured
Parties and the US Secured Parties and, in the case of Section 9 and subsection
10.14, any Hedging Secured Parties.

          "Security Documents": the collective reference to the Canadian
Security Documents, the US Security Documents and the Mexican Stock Pledge
Agreement.

          "S&P": Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc., and its successors.

          "Significant Subsidiary": at any time, any Subsidiary of GM which has
at least 10% of the consolidated assets of GM and its Subsidiaries at such time
as reflected in the most recent annual audited consolidated financial statements
of GM.



                                                                              24


          "Status": as to GM, the existence of Level I Status, Level II Status,
Level III Status, Level IV Status, Level V Status or Level VI Status, as the
case may be.

          "Stock Pledge Value": on any date of determination, the greater of (a)
$0 and (b) the lesser of (i) $1,500,000,000 and (ii) 65% of (A) the product of
(1) 4.5 and (2) the consolidated net income of GM Mexico (calculated in
accordance with GAAP), for its most recently completed fiscal year, plus,
without duplication and to the extent deducted in determining such consolidated
net income for such period, consolidated interest expense, consolidated income
tax expense and all amounts attributable to depreciation and amortization, in
each case for such period, less (B) the aggregate principal amount of
Indebtedness of CGM and its subsidiaries (other than the CGM Excluded
Indebtedness) on such date.

          "Subsidiary": as to any Person, any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person, or by one or
more Subsidiaries, or by such Person and one or more Subsidiaries. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrowers. For
the purposes of this Agreement and the other Loan Documents, neither General
Motors Acceptance Corporation nor any of its Subsidiaries ("GMAC") and neither
Cami Automotive Inc. nor any of its Subsidiaries ("Cami") shall be deemed to be
a Subsidiary or an Affiliate of GM, and any references herein or therein to the
subsidiaries or affiliates of GM shall be to GM's Subsidiaries or Affiliates, as
applicable, other than GMAC and Cami.

          "Syndication Agent": as defined in the preamble.

          "Total Canadian/US Secured Commitments": at any time, the aggregate
amount of the Canadian/US Secured Commitments then in effect. The Total
Canadian/US Secured Commitments on the Effective Date is $1,864,800,000.

          "Total Extended Secured Commitments" at any time, the aggregate amount
of the Total Canadian/US Secured Commitments and the Total US Secured
Commitments.

          "Total Extensions of Credit": on any date of determination, the sum of
(a) the Total Secured Extensions of Credit on such date and (b) the aggregate
principal amount of the Non-Extended Loans, Competitive Loans and Money Market
Advances outstanding on such date.

          "Total Non-Extended Commitments": at any time, the aggregate amount of
the Non-Extended Commitments then in effect. The Total Non-Extended Commitments
on the Effective Date is $152,000,000.



                                                                              25


          "Total US Secured Commitments": at any time, the aggregate amount of
the US Secured Commitments then in effect. The Total US Secured Commitments on
the Effective Date is $2,463,200,000.

          "Total Secured Exposure": the collective reference to the US Total
Secured Exposure and the Canadian Total Secured Exposure.

          "Total Secured Extensions of Credit": on any date of determination,
the sum of (a) the Canadian/US Secured Extensions of Credit on such date and (b)
the aggregate principal amount of the US Secured Loans outstanding on such date.

          "Tranche": any of, as the context may require, (a) the US Secured
Tranche, (b) the Canadian/US Secured Tranche or (c) the Non-Extended Tranche;
collectively, the "Tranches".

          "Transferee": as defined in subsection 10.6(h).

          "Type": (a) as to any Revolving Credit Loan, its nature as an ABR
Loan, a Eurodollar Loan, a Canadian Base Rate Loan, Acceptance or Acceptance
Equivalent Loan or (b) as to any Competitive Loan, its nature as a Eurodollar
Competitive Loan or a Fixed Rate Loan.

          "US Collateral": all property of GM and Saturn, now owned or hereafter
acquired, upon which a Lien is purported to be created by any US Security
Document.

          "US Collateral Value": as of any date of determination, the sum of (a)
the Stock Pledge Value and (b) 66 2/3% of the net book value (including a gross
up for LIFO reserves) of the US Collateral as of the most recent fiscal quarter
of GM with respect to which a Financial Officer of GM has delivered a
certificate pursuant to subsection 5.2(b). For purposes of determining the US
Collateral Value, US Collateral shall be deemed to exclude any US Collateral
subject to third-party liens securing Indebtedness (or securing other monetary
obligations, if all such third-party liens securing other monetary obligations,
in the aggregate, would materially reduce the value of the US Collateral taken
as a whole).

          "US Non-Loan Exposure Cap": an amount equal to $983,700,000 or such
other amount agreed to by GM and the Agent; provided that the US Total Secured
Exposure shall not exceed the lesser of (x) $6,000,000,000 less the US Dollar
Equivalent of the Canadian Total Secured Exposure and (y) the Effective US
Collateral Value.

          "US Secured Commitment": the obligation of any Lender, if any, to make
US Secured Loans to GM in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule I under the heading "US Secured Commitment," or in the Assignment and
Acceptance pursuant to which such Lender becomes a party hereto, as applicable,
and as such amount may be adjusted from time to time in accordance with the
provisions of this Agreement.

          "US Secured Commitment Percentage": as to any US Secured Lender at any
time, the percentage which such Lender's US Secured Commitment then constitutes
of the Total



                                                                              26


US Secured Commitments or, at any time after the US Secured Commitments shall
have expired or terminated, the percentage which the aggregate principal amount
of such Lender's US Secured Loans then outstanding constitutes of the aggregate
principal amount of the US Secured Loans then outstanding.

          "US Secured Lender": as defined in subsection 2.1(b); collectively,
the "US Secured Lenders".

          "US Secured Loan": as defined in subsection 2.1(b); collectively, the
"US Secured Loans".

          "US Secured Obligations": all obligations of GM and Saturn in respect
of any unpaid Canadian/US Secured Extensions of Credit and any US Secured Loans,
in each case, made to GM and any interest thereon (including interest accruing
after the maturity of any Canadian/US Secured Extensions of Credit and any US
Secured Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to GM or Saturn, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other obligations
and liabilities of GM and Saturn to the Agent or to any Lender or any Issuing
Bank, whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with this Agreement, any other Loan Document, the Letters of Credit
or any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise; provided that Hedging
Obligations shall not be included in "US Secured Obligations."

          "US Secured Parties": the collective reference to the Agent and any
other holder of US Total Secured Exposure.

          "US Secured Tranche": the US Secured Commitments and the provisions
herein related to the extensions of credit made thereunder.

          "US Security Agreement": the Security Agreement to be executed and
delivered by Saturn and GM, substantially in the form of Exhibit Q, as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time.

          "US Security Documents": the collective reference to the US Security
Agreement and all other security documents (including any Second Priority
Security Agreements) hereinafter delivered to the Agent granting a Lien on any
property of any Person to secure the obligations of GM and Saturn under any
other Loan Document, including financing statements or financing change
statements under the applicable Uniform Commercial Code.

          "US Total Secured Exposure": as of any date of determination, the sum
of (i) (A) for purposes of calculating "US Total Secured Exposure" in connection
with subsections 6.6 and 6.8 of this Agreement, the aggregate of the Canadian/US
Extensions of Credit and US Secured Loans, in each case, made to GM and (B) for
all other purposes, the aggregate of the US Secured Obligations, in each case,
as of such date and (ii) the aggregate amount of any Non-Loan



                                                                              27


Exposure which is secured by the same Collateral that secures the US Secured
Obligations as of such date.

          "Utilization": as of the last day of any fiscal quarter of GM, the
percentage equivalent of a fraction (i) the numerator of which is the average
daily principal amount of Non-Extended Loans outstanding (after giving effect to
any borrowing or payment on such date) during such quarter and (ii) the
denominator of which is the average daily amount of the aggregate Non-Extended
Commitments of all Non-Extending Lenders during such quarter, after giving
effect to any reduction of the Non-Extended Commitments on such day. For
purposes of subsection 2.12(f), if for any reason any Non-Extended Loans or
Competitive Loans remain outstanding after termination of the Non-Extended
Commitments, the Utilization for each day on or after the date of such
termination shall be deemed to be greater than 66%.

          1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto.

          (b) As used herein, and any certificate or other document made or
delivered pursuant hereto, accounting terms relating to the Borrowers and their
Subsidiaries not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.

          (c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

          (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

          (e) Certain capitalized terms used in subsection 10.1 of this
Agreement are not defined herein as a result of the termination of the Tranche B
Commitments and the Tranche C Commitments under the Existing Credit Agreement.
The relevant terms are: Eisenach, GMCC, Majority Tranche A Lenders, Majority
Tranche B Lenders, Majority Tranche C Lenders, Opel, Tranche A Lenders, Tranche
B Lenders and Tranche C Lenders; references in subsection 10.1 to the Majority
Tranche A Lenders and the Tranche A Lenders shall be deemed to make reference to
the Majority Non-Extending Lenders and the Non-Extending Lenders, respectively.

                                   SECTION 2.
                         AMOUNT AND TERMS OF COMMITMENTS

          2.1 Commitments. (a) Subject to the terms and conditions hereof, each
Non-Extending Lender severally agrees to make revolving credit loans in Dollars
to GM (each a "Non-Extended Loan") from time to time during the applicable
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the amount of such Lender's Non-Extended Commitment. During the
Commitment Period, GM may use the Non-Extended Commitments by borrowing,
prepaying the Non-Extended Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof; provided that, after



                                                                              28


giving effect to the making of such Borrowing (and after giving effect to the
use of proceeds thereof) (i) the Available Non-Extended Commitment of any
Non-Extending Lender shall not be less than zero, (ii) the sum of the
Non-Extended Loans plus the Competitive Loans and Money Market Advances shall
not exceed the aggregate Non-Extended Commitments then in effect of all
Non-Extending Lenders and (iii) the Total Extensions of Credit shall not exceed
the aggregate Commitments then in effect of all Lenders.

          (b) Subject to the terms and conditions hereof, each Lender having a
US Secured Commitment (a "US Secured Lender") severally agrees to make revolving
credit loans in Dollars to GM (each a "US Secured Loan") from time to time
during the applicable Commitment Period in an aggregate principal amount at any
one time outstanding not to exceed the amount of such Lender's US Secured
Commitment. During the applicable Commitment Period, GM may use the US Secured
Commitments by borrowing, prepaying the US Secured Loans in whole or in part,
and reborrowing, all in accordance with the terms and conditions hereof;
provided that, after giving effect to the making of such Borrowing (and after
giving effect to the use of proceeds thereof) (i) the Available US Secured
Commitment of any US Secured Lender shall not be less than zero, (ii) the
aggregate amount of the US Secured Loans at any one time outstanding shall not
exceed the aggregate US Secured Commitments then in effect of all US Secured
Lenders and (iii) the Total Extensions of Credit shall not exceed the aggregate
Commitments then in effect of all Lenders.

          (c) Subject to the terms and conditions hereof, each Lender having a
Canadian/US Secured Commitment (a "Canadian/US Secured Lender") severally agrees
to make revolving credit loans in Dollars or Canadian Dollars to GM Canada and
in Dollars to GM through its Applicable Lending Office (each a "Canadian/US
Secured Loan") from time to time during the applicable Commitment Period in an
aggregate principal amount at any one time outstanding which, when added to such
Lender's Commitment Percentage of the L/C Obligations, does not exceed the
Dollar Equivalent of such Lender's Canadian/US Secured Commitment, provided that
any Applicable Lending Office making Revolving Credit Loans to GM Canada shall
be a Qualifying Canadian/US Lender. During the applicable Commitment Period, the
Borrowers may use the Canadian/US Secured Commitments by borrowing, prepaying
the Canadian/US Secured Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof; provided that, after giving
effect to the making of such Borrowing (and after giving effect to the use of
proceeds thereof) (i) the Available Canadian/US Secured Commitment of any
Canadian/US Secured Lender shall not be less than zero, (ii) the Canadian/US
Secured Extensions of Credit at any one time outstanding shall not exceed the
aggregate Canadian/US Secured Commitments then in effect of all Canadian/US
Secured Lenders and (iii) the Total Extensions of Credit shall not exceed the
aggregate Commitments then in effect of all Lenders.

          (d) The Non-Extended Loans, together with all accrued and unpaid
interest thereon, shall mature and be due and payable in Dollars on the
Non-Extended Termination Date. The Extended Secured Loans, together with all
accrued and unpaid interest thereon, shall mature and be due and payable in
Dollars or Canadian Dollars, as the case may be, on the Extended Termination
Date.

          (e) Subject to subsections 2.15 and 2.17:



                                                                              29


               (i) the Non-Extended Loans may from time to time be (A)
          Eurodollar Loans denominated in Dollars, (B) ABR Loans denominated in
          Dollars or (C) any combination thereof, as determined by GM and
          notified to the Agent in accordance with subsections 2.2 and 2.9;

               (ii) the US Secured Loans may from time to time be (A) Eurodollar
          Revolving Credit Loans denominated in Dollars, (B) ABR Loans
          denominated in Dollars or (C) any combination thereof, as determined
          by GM and notified to the Agent in accordance with subsections 2.3 and
          2.9; and

               (iii) the Canadian/US Secured Loans may from time to time be (A)
          Eurodollar Revolving Credit Loans denominated in Dollars, (B) ABR
          Loans denominated in Dollars, (C) Canadian Base Rate Loans denominated
          in Canadian Dollars or (D) any combination thereof, as determined by
          GM or GM Canada, as the case may be, and notified to the Agent in
          accordance with subsections 2.3 and 2.9;

          Notwithstanding the foregoing, (a) no Non-Extended Loan shall be made
as a Eurodollar Loan after the day that is one month prior to the Non-Extended
Termination Date and (b) no Extended Secured Loan shall be made as a Eurodollar
Loan after the day that is one month prior to the Extended Termination Date.
Each Lender may make or maintain its applicable Loans for the account of the
relevant Borrower and each Canadian/US Secured Lender may participate in Letters
of Credit to or for the account of the applicable Borrower by or through such
Lender's Applicable Lending Office.

          (f) GM, on behalf of the Borrowers, may from time to time elect to
increase any of the Extended Secured Commitments by one or more increases (each
a "Secured Commitment Increase"), each in a minimum amount of $25,000,000;
provided that the Extended Secured Commitments shall not be increased by more
than an amount equal to (i) $4,480,000,000 less (ii) an amount equal to the
aggregate amount of the Extended Secured Commitments hereunder on the Effective
Date. The Borrowers may arrange for any such increase to be provided by one or
more Secured Lenders (each Secured Lender that commits to participate in such
increase, an "Increasing Lender"), or by one or more banks, financial
institutions or other entities (each such bank, financial institution or other
entity, an "Additional Lender"), provided that (i) each Additional Lender, shall
be subject to the approval of GM, the Agent (such approval not to be
unreasonably withheld or delayed) and the Issuing Banks (such approval not to be
unreasonably withheld or delayed), and (ii) to the extent any Additional Lender
commits to extend Canadian/US Secured Loans to GM Canada, such Additional Lender
(or its Applicable Lending Office) shall be a Qualifying Canadian/US Lender (x)
in the case of an Increasing Lender, the Borrowers and such Increasing Lender
shall execute an agreement substantially in the form of Exhibit J hereto, and
(y) in the case of an Additional Lender, the Borrowers and such Additional
Lender execute an agreement substantially in the form of Exhibit K hereto. Each
Secured Commitment Increase shall become effective on a date agreed to by GM,
the Agent, the Increasing Lenders and the Additional Lenders under such Secured
Commitment Increase, and the Agent shall notify each Secured Lender thereof.
Notwithstanding the foregoing, no Secured Commitment Increase shall become
effective under this paragraph unless, on the proposed date of the effectiveness
of such Secured Commitment Increase, the conditions set forth in paragraphs



                                                                              30


(b) and (c) of subsection 4.2 and paragraphs (a) and (b) of subsection 4.3 shall
be satisfied or waived by the Majority Secured Lenders and the Agent shall have
received a certificate to that effect dated such date and executed by a
Financial Officer of GM. On the effective date of any Secured Commitment
Increase, (i) each relevant Increasing Lender and each Additional Lender shall
make available to the Agent such amounts in immediately available funds as the
Agent shall determine, for the benefit of the Secured Lenders, as shall be
required in order to cause, after giving effect to such Secured Commitment
Increase and the use of such amounts to make payments to such other Secured
Lenders, each Secured Lender's pro rata portion of the aggregate outstanding US
Secured Loans or aggregate Canadian/US Secured Extensions of Credit, as
applicable, to equal such Secured Lender's Commitment Percentage of the
aggregate US Secured Loans outstanding or aggregate Canadian/US Secured
Extensions of Credit, as applicable, and (ii) the Borrowers shall be deemed to
have repaid and reborrowed all outstanding Extended Secured Loans as of the date
of any increase in the Extended Secured Commitments (with such reborrowing to
consist of the Types of Loans, with related Interest Periods if applicable,
specified in a notice delivered by the Borrower in accordance with the
requirements hereunder). The deemed payments made pursuant to clause (ii) of the
immediately preceding sentence in respect of each Eurodollar Loan shall be
subject to indemnification by the Borrowers pursuant to the provisions of
Section 2.20 if such deemed payment occurs other than on the last day of the
related Interest Periods. No Secured Lender shall be obligated to increase its
Commitment, unless it so agrees.

          2.2 Procedure for Borrowing Non-Extended Loans. GM may borrow
Non-Extended Loans under the Non-Extended Commitments during the relevant
Commitment Period on any Business Day; provided that GM shall give the Agent an
irrevocable notice (which notice must be received by the Agent prior to 1:00
P.M., New York City time, (a) three Business Days prior to the requested
borrowing date, if all or any part of the requested Non-Extended Loans are to be
Eurodollar Loans, or (b) one Business Day prior to the requested borrowing date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
borrowing date, (iii) whether the Borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the Borrowing is to be entirely or
partly of Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods therefor. Each Borrowing
under the Non-Extended Commitments shall be in an amount equal to $10,000,000 or
a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such
notice from GM, the Agent shall promptly notify each Non-Extending Lender
thereof. Each Non-Extending Lender will make the amount of its Non-Extended
Commitment Percentage of each Borrowing available to the Agent for the account
of GM at the office of the Agent specified in subsection 10.2 prior to 12:00
Noon, New York City time, on the borrowing date requested by GM in funds
immediately available to the Agent. Such Borrowing will then immediately be made
available to GM by the Agent crediting the account of GM on the books of such
office with the aggregate of the amounts made available to the Agent by the
Non-Extending Lenders and in like funds as received by the Agent.

          2.3 Procedure for Borrowing Extended Secured Loans. (a) GM may borrow
Extended Secured Loans under the Extended Secured Commitments during the
relevant Commitment Period on any Business Day; provided that GM shall give the
Agent an irrevocable notice (which notice must be received by the Agent prior to
1:00 P.M., New York City time, (i) three Business Days prior to the requested
borrowing date, if all or any part of the requested



                                                                              31


Extended Secured Loans are to be Eurodollar Revolving Credit Loans, or (ii) one
Business Day prior to the requested borrowing date, otherwise), specifying (A)
the amount to be borrowed, (B) the requested borrowing date, (C) whether the
Borrowing is to be of Eurodollar Revolving Credit Loans, ABR Loans or a
combination thereof, (D) if the Borrowing is to be entirely or partly of
Eurodollar Revolving Credit Loans, the respective amounts of each such Type of
Loan and the respective lengths of the initial Interest Periods therefor and (E)
whether the requested Borrowing is under the US Secured Commitments or the
Canadian/US Secured Commitments. Each Borrowing by GM under the US Secured
Commitments or the Canadian/US Secured Commitments shall be in an amount equal
to $50,000,000 or a whole multiple of $5,000,000 in excess thereof. Upon receipt
of any such notice from GM, the Agent shall promptly notify each US Secured
Lender or each Canadian/US Secured Lender, as applicable, thereof. Each
applicable Secured Lender will make the amount of its US Secured Commitment
Percentage or Canadian/US Secured Commitment Percentage, as the case may be, of
each Borrowing available to the Agent for the account of GM at the office of the
Agent specified in subsection 10.2 prior to 12:00 Noon, New York City time, on
the borrowing date requested by GM in funds immediately available to the Agent.
Such Borrowing will then immediately be made available to GM by the Agent
crediting the account of GM on the books of such office with the aggregate of
the amounts made available to the Agent by the Secured Lenders and in like funds
as received by the Agent.

          (b) GM Canada may borrow Canadian/US Secured Loans under the
Canadian/US Secured Commitments during the relevant Commitment Period on any
Business Day; provided that GM Canada shall give the Agent irrevocable notice
(which notice must be received by the Agent prior to 1:00 P.M., New York City
time, (i) three Business Days prior to the requested borrowing date, if all or
any part of the requested Canadian/US Secured Loans are to be Eurodollar
Revolving Credit Loans, or (ii) one Business Day prior to the requested
borrowing date, otherwise), specifying (A) the amount to be borrowed, (B) the
requested borrowing date, (C) whether the Borrowing is to be of Eurodollar
Revolving Loans denominated in Dollars, ABR Loans denominated in Dollars or
Canadian Base Rate Loans denominated in Canadian Dollars or a combination
thereof and (D) if the Borrowing is to be entirely or partly Eurodollar
Revolving Credit Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Each Borrowing in
Canadian Dollars under the Canadian/US Secured Commitments shall be in an amount
equal to C$50,000,000 or a whole multiple of C$5,000,000 in excess thereof. Each
Borrowing in Dollars under the Canadian/US Secured Commitments shall be in an
amount equal to $50,000,000 or a whole multiple of $5,000,000 in excess thereof.
Upon receipt of any such notice from GM Canada the Agent shall promptly notify
each Canadian/US Secured Lender thereof. Each Canadian/US Secured Lender will
make or will cause its Applicable Lending Office to make the amount of its
Canadian/US Secured Commitment Percentage of each Borrowing available to the
Agent for the account of GM Canada at the office of the Agent specified in
subsection 10.2 prior to 11:00 A.M., New York City time, on the borrowing date
requested by GM Canada in funds immediately available to the Agent. Such
Borrowing will then immediately be made available to GM Canada by the Agent
crediting the account of GM Canada on the books of such office in Dollars or
Canadian Dollars, as the case may be, with the aggregate of the amounts made
available to the Agent by the Canadian/US Secured Lenders through their
Applicable Lending Offices and in like funds as received by the Agent.



                                                                              32


          2.4 Acceptances. (a) Acceptance Commitment. Subject to the terms and
conditions hereof, each Canadian/US Secured Lender severally agrees that GM
Canada may issue Acceptances denominated in Canadian Dollars, in minimum
denominations of C$5,000,000 or a whole multiple thereof and in minimum
aggregate amounts of C$1,000,000 or any greater whole multiple of C$1,000,000,
each in accordance with the provisions of this subsection 2.4 from time to time
until the Extended Termination Date with respect to such Canadian/US Secured
Lender; provided, that after giving effect to the issuance of such Acceptance,
(i) the Available Canadian/US Secured Commitment of any Canadian/US Secured
Lender shall not be less than zero, (ii) the Canadian/US Secured Extensions of
Credit shall not exceed the aggregate Canadian/US Secured Commitments then in
effect of all Canadian/US Secured Lenders and (iii) the Total Extensions of
Credit shall not exceed the aggregate Commitments then in effect of all Lenders;
provided, further, that at all times the outstanding aggregate face amount of
all Acceptances made by the Applicable Lending Offices of a Canadian/US Secured
Lender shall equal its Canadian/US Secured Commitment Percentage of the
outstanding face amount of all Acceptances made by the Applicable Lending
Offices of all Canadian/US Secured Lenders and, provided, further, that any
Applicable Lending Office of a Canadian/US Secured Lender to which GM Canada
issues Acceptances shall be a Qualifying Canadian/US Lender. For purposes of
this Agreement, the full face value of an Acceptance, without discount, shall be
used when calculations are made to determine the outstanding amount of a
Canadian/US Secured Lender's Acceptances; provided that in computing the face
amount of Acceptances outstanding, the face amount of an Acceptance in respect
of which the Acceptance Obligation has been prepaid by GM Canada and received by
the Canadian/US Secured Lender that created the same in accordance with the
terms of this Agreement shall not be included.

          (b) Terms of Acceptance. Each Draft shall be accepted by the
Applicable Lending Office of a Canadian/US Secured Lender, upon the written
request of GM Canada given in accordance with paragraph (c) of this subsection
2.4, by the completion and acceptance by such Applicable Lending Office of a
Draft (i) payable in Canadian Dollars, drawn by GM Canada on the Applicable
Lending Office in accordance with this Agreement, to the order of the Applicable
Lending Office and (ii) maturing prior to the Extended Termination Date with
respect to such Applicable Lending Office on a Business Day not less than 30
days nor more than 180 days after the date of such Draft (and in integral
maturities of 30 days, 60 days, 90 days or 180 days (if available), as selected
by GM Canada), excluding days of grace, all as specified in a Drawing Notice to
be delivered under paragraph (c) of this subsection 2.4.

          (c) Drawing Notice and Discount of Acceptances. (i) With respect to
each requested acceptance of Drafts, GM Canada shall give the Agent a notice of
drawing (each, a "Drawing Notice"), substantially in the form of Exhibit R
(which shall be irrevocable and may be by telephone confirmed in writing within
one Business Day) to be received prior to 10:00 A.M., Toronto time, at least two
Business Days prior to the date of the requested acceptance, specifying:

               (A) the date on which such Drafts are to be accepted;

               (B) the aggregate face amount of such Drafts;

               (C) the maturity date of such Acceptances;



                                                                              33


               (D) whether the Canadian/US Secured Lenders must purchase or
          arrange for the purchase of the Acceptances; and

               (E) such additional information as the Agent or any Applicable
          Lending Office of a Canadian/US Secured Lender may reasonably from
          time to time request to be included in such notices.

               (ii) Upon receipt of a Drawing Notice, the Agent shall promptly
          notify each Applicable Lending Office of a Canadian/US Secured Lender
          of the contents thereof and of such Canadian/US Secured Lender's
          ratable share of the Acceptances requested thereunder. The aggregate
          face amount of the Drafts to be accepted by Applicable Lending Office
          of a Canadian/US Secured Lender shall be determined by the Agent by
          reference to the respective Canadian/US Secured Commitments of the
          Canadian/US Secured Lenders; provided that, if the face amount of an
          Acceptance which would otherwise be accepted by Applicable Lending
          Office of a Canadian/US Secured Lender is not C$5,000,000, or a whole
          multiple thereof, the face amount shall be increased or reduced by the
          Agent, in its sole discretion, to C$5,000,000, or the nearest integral
          multiple thereof, as appropriate.

               (iii) On each date upon which Acceptances are to be accepted, the
          Agent shall advise GM Canada of the applicable Discount Rate for the
          Applicable Lending Office of each of the Canadian/US Secured Lenders.
          Not later than 10:00 A.M., Toronto time, on such date each Applicable
          Lending Office of a Canadian/US Secured Lender shall, subject to the
          fulfillment of the conditions precedent specified in subsection 4.2,
          and subject to the Applicable Lending Office of each Non-Acceptance
          Canadian Lender making Acceptance Equivalent Loans pursuant to
          paragraph (i) of this subsection 2.4, (A) on the basis of the
          information supplied by the Agent, as aforesaid, complete a Draft or
          Drafts of GM Canada by filling in the amount, date and maturity date
          thereof in accordance with the applicable Drawing Notice, (B) duly
          accept such Draft or Drafts, (C) discount such Acceptance or
          Acceptances, (D) give the Agent telegraphic or telex notice of such
          Applicable Lending Office's acceptance of such Draft or Drafts and
          confirming the discount rate at which it discounted the Acceptance or
          Acceptances and the amount paid to the Agent for the account of GM
          Canada and (E) remit to the Agent in Canadian Dollars in immediately
          available funds an amount equal to the proceeds of such discount less
          the Acceptance Fee. Upon receipt by the Agent of such sums from the
          Applicable Lending Offices of the Canadian/US Secured Lenders, the
          Agent shall make the aggregate amount thereof available to GM Canada.

               (iv) Each extension of credit hereunder through the acceptance of
          Drafts shall be made simultaneously and pro rata by the Applicable
          Lending Office of each of the Canadian/US Secured Lenders in
          accordance with their respective Canadian/US Secured Commitments.

          (d) Sale of Acceptances. GM Canada shall have the right to sell any
Acceptance; provided that, if so specified in the Drawing Notice, the Applicable
Lending Offices of the Canadian/US Secured Lenders shall purchase or arrange for
the purchase of all of the



                                                                              34


Acceptances in the market and each Applicable Lending Office of a Canadian/US
Secured Lender shall provide to the Agent the discount proceeds for the account
of GM Canada. The Acceptance Fee in respect of such Acceptances may, at the
option of the Applicable Lending Office of a Canadian/US Secured Lender, be set
off against the discount proceeds payable by such Applicable Lending Office of a
Canadian/US Secured Lender hereunder.

          (e) Acceptance Obligation. GM Canada is obligated, and hereby
unconditionally agrees, to pay to the Agent for the benefit of each Applicable
Lending Office of each Canadian/US Secured Lender the face amount of each
Acceptance created by such Applicable Lending Office in accordance with a
Drawing Notice on the maturity date thereof, or on such earlier date as may be
required pursuant to provisions of this Agreement. With respect to each
Acceptance which is outstanding hereunder, GM Canada shall notify the Agent
prior to 11:00 A.M., Toronto time, two Business Days prior to the maturity date
of such Acceptance (which notice shall be irrevocable) of its intention to
either (x) issue Acceptances on such maturity date to provide for the payment of
such maturing Acceptance and shall deliver to the Agent a Drawing Notice with
respect thereto or (y) repay the maturing Acceptances on the maturity date. Any
repayment of an Acceptance must be made at or before 2:00 p.m. (Toronto time) on
the maturity date of such Acceptance. If GM Canada fails to provide such notice
to the Agent or fails to repay the maturing Acceptances, or if a Default or an
Event of Default has occurred and is continuing on such maturity date, GM
Canada's obligations in respect of the maturing Acceptances shall be deemed to
have been converted on the maturity date thereof into a Canadian Base Rate Loan
in an amount equal to the face amount of the maturing Acceptances. GM Canada
waives presentment for payment and any other defense to payment of any amounts
due to the Applicable Lending Office of a Canadian/US Secured Lender in respect
of any Acceptances accepted by such Applicable Lending Office under this
Agreement which might exist solely by reason of those Acceptances being held, at
the maturity thereof, by that Applicable Lending Office in its own right and GM
Canada agrees not to claim any days of grace if that Applicable Lending Office,
as holder, sues GM Canada on those Acceptances for payment of the amounts
payable by GM Canada thereunder.

          (f) Supply of Drafts and Power of Attorney. To enable the Applicable
Lending Office of the Canadian/US Secured Lenders to accept Drafts in the manner
specified in this subsection 2.4, GM Canada hereby appoints each Applicable
Lending Office of the Canadian/US Secured Lender as its attorney to sign and
endorse on its behalf, in handwriting or by facsimile or mechanical signature as
and when deemed necessary by such Applicable Lending Office, blank forms of
Acceptances. In this respect, it is each Canadian/US Secured Lender's
responsibility to maintain an adequate supply of blank forms of Acceptances for
acceptance under this Agreement. GM Canada recognizes and agrees that all
Acceptances signed and/or endorsed on its behalf by the Applicable Lending
Office of a Canadian/US Secured Lender shall bind GM Canada as fully and
effectually as if signed in the handwriting of and duly issued by the proper
signing officers of GM Canada; provided, that such acts in each case are to be
undertaken in accordance with such Canadian/US Secured Lender's obligations
under this Agreement. Each Applicable Lending Office of a Canadian/US Secured
Lender is hereby authorized



                                                                              35


to issue such Acceptances endorsed in blank in such face amounts as may be
determined by such Applicable Lending Office; provided that the aggregate amount
thereof is equal to the aggregate amount of Acceptances required to be accepted
by such Applicable Lending Office. Drafts drawn by GM Canada to be accepted as
Acceptances shall be signed by a duly authorized officer or officers of GM
Canada or by its attorney-in-fact including any attorney-in-fact appointed
pursuant to this subsection 2.4(f). GM Canada hereby authorizes and requests
each Applicable Lending Office of a Canadian/US Secured Lender in accordance
with each Drawing Notice received from GM Canada to take the measures with
respect to a Draft or Drafts of GM Canada then in possession of such Applicable
Lending Office specified in paragraph (c)(iii) of this subsection 2.4. In case
any authorized signatory of GM Canada whose signature shall appear on any Draft
shall cease to have such authority before the acceptance of a Draft with respect
to such Draft, the obligations of GM Canada hereunder and under such Acceptance
shall nevertheless be valid for all purposes as if such authority had remained
in force until such creation. The Agent and each Canadian/US Secured Lender
shall be fully protected in relying upon any instructions received from GM
Canada (orally or otherwise) without any duty to make inquiry as to the
genuineness of such instructions. The Agent and each Canadian/US Secured Lender
shall be entitled to rely on instructions received from any Person identifying
himself (orally or otherwise) as a duly authorized officer of GM Canada and
shall not be liable for any errors, omissions, delays or interruptions in the
transmission of such instructions.

          (g) Exculpation. No Applicable Lending Office of a Canadian/US Secured
Lender shall be responsible or liable for its failure to accept a Draft if the
cause of such failure is, in whole or in part, due to the failure of GM Canada
to provide the Drafts or the power of attorney described in paragraph (f) of
this subsection 2.4 to such Applicable Lending Office on a timely basis nor
shall any Applicable Lending Office of a Canadian/US Secured Lender be liable
for any damage, loss or other claim arising by reason of any loss or improper
use of any such Draft except loss or improper use arising by reason of the gross
negligence or willful misconduct of such Applicable Lending Office.

          (h) Rights of Canadian/US Secured Lender as to Acceptances. Neither
the Agent nor any Applicable Lending Office of a Canadian/US Secured Lender
shall have any responsibility as to the application of the proceeds by GM Canada
of any discount of any Acceptances. For greater certainty, each Applicable
Lending Office of a Canadian/US Secured Lender may, at any time, purchase
Acceptances issued by GM Canada and may at any time and from time to time hold,
sell, rediscount or otherwise dispose of any or all Acceptances accepted and/or
purchased by it.

          (i) Acceptance Equivalent Loans. Whenever GM Canada delivers a Drawing
Notice to the Agent under this Agreement requesting the Canadian/US Secured
Lenders to accept Drafts, an Applicable Lending Office of a Canadian/US Secured
Lender which cannot or does not as a matter of policy accept Drafts (a
"Non-Acceptance Canadian Lender") shall, in lieu of accepting Drafts, make an
Acceptance Equivalent Loan. On each date on which Drafts are to be accepted,
subject to the same terms and conditions applicable to the acceptance of Drafts,
any Non-Acceptance Canadian Lender that makes



                                                                              36


an Acceptance Equivalent Loan, upon delivery by GM Canada of an executed
Discount Note payable to the order of such Non-Acceptance Canadian Lender, will
remit to the Agent in immediately available funds for the account of GM Canada
the Acceptance equivalent discount proceeds in respect of the Discount Notes
issued by GM Canada to the Non-Acceptance Canadian Lender. Each Non-Acceptance
Canadian Lender may agree, in lieu of receiving any Discount Notes, that such
Discount Notes may be uncertificated and the applicable Acceptance Equivalent
Loan shall be evidenced by a loan account which such Non-Acceptance Canadian
Lender shall maintain in its name, and reference to such uncertificated Discount
Notes elsewhere in this Agreement shall be deemed to include reference to the
relevant Acceptance Equivalent Loan or loan account, as applicable.

          (j) Terms Applicable to Discount Notes. The term "Acceptance" when
used in this Agreement shall be construed to include Discount Notes and all
terms of this Agreement applicable to Acceptances shall apply equally to
Discount Notes evidencing Acceptance Equivalent Loans with such changes as may
in the context be necessary (except that no Discount Note may be sold,
rediscounted or otherwise disposed of by the Non-Acceptance Canadian Lender
making Acceptance Equivalent Loans). For greater certainty:

               (A) a Discount Note shall mature and be due and payable on the
          same date as the maturity date for Acceptances specified in the
          applicable Drawing Notice;

               (B) an Acceptance Fee will be payable in respect of a Discount
          Note and shall be calculated at the same rate and in the same manner
          as the Acceptance Fee in respect of an Acceptance;

               (C) a discount applicable to a Discount Note shall be calculated
          in the same manner and at the Discount Rate that would be applicable
          to Acceptances accepted by a Schedule II/ III Reference Lender
          pursuant to the applicable Drawing Notice;

               (D) an Acceptance Equivalent Loan made by a Non-Acceptance
          Canadian Lender will be considered to be part of a Non-Acceptance
          Canadian Lender's outstanding Acceptances for all purposes of this
          Agreement; and

               (E) GM Canada shall deliver Discount Notes to each Non-Acceptance
          Canadian Lender and grants to each Non-Acceptance Canadian Lender a
          power of attorney in respect of the completion and execution of
          Discount Notes, each in accordance with subsection 2.4(f).

          (k) Prepayment of Acceptances and Discount Notes. No Acceptance or
Discount Note may be repaid or prepaid prior to the maturity date of such
Acceptance or Discount Note, except in accordance with the provisions of Section
7.

          (l) Depository Bills and Notes Act. At the option of GM Canada and any
Applicable Lending Office of a Canadian/US Secured Lender, Acceptances and
Discount



                                                                              37


Notes under this Agreement to be accepted by such Applicable Lending Office may
be issued in the form of depository bills and depository notes, respectively,
for deposit with The Canadian Depository for Securities Limited pursuant to the
Depository Bills and Notes Act (Canada). All depository bills and depository
notes so issued shall be governed by the Depository Bills and Notes Act (Canada)
and the provisions of this subsection 2.4.

          (m) Acceptance Fee. GM Canada agrees to pay to each Applicable Lending
Office of a Canadian/US Secured Lender a fee (the "Acceptance Fee") in advance
and in Canadian Dollars, at a rate per annum equal to the Applicable Margin for
Eurodollar Loans of Secured Lenders, on the date of acceptance of each
Acceptance. All Acceptance Fees shall be calculated on the face amount of the
Acceptance issued and computed on the basis of the actual number of days in the
term thereof and a year of 365 days. The Acceptance Fee shall be in addition to
any other fees payable to each Applicable Lending Office of a Canadian/US
Secured Lender in connection with the issuance or discounting of such
Acceptance. The discount rate for Acceptance Fees shall be calculated under
terms customary to the practice of the Applicable Lending Offices of Canadian/US
Secured Lenders and shall be based upon a year of 365 days and the term of such
Acceptance.

          2.5 Competitive Borrowings.

          (a) The Competitive Bid Option. In addition to the Non-Extended Loans
which may be made available by the Non-Extending Lenders pursuant to subsection
2.1, GM may, as set forth in this subsection 2.5, request the Non-Extending
Lenders to make offers to make Competitive Loans to GM during the relevant
Commitment Period. The Non-Extending Lenders may, but shall have no obligation
to, make such offers, and GM may, but shall have no obligation to, accept any
such offers in the manner set forth in this subsection 2.5. Competitive Loans
shall be denominated in Dollars.

          (b) Competitive Bid Request. When GM wishes to request offers to make
Competitive Loans under this subsection 2.5, GM shall transmit to the Agent a
Competitive Bid Request to be received no later than 12:00 Noon, New York City
time, on (x) the fourth Business Day prior to the date of Borrowing proposed
therein, in the case of a Borrowing of Eurodollar Competitive Loans or (y) the
Business Day immediately preceding the date of Borrowing proposed therein, in
the case of a Fixed Rate Borrowing, specifying:

               (i) the proposed date of Borrowing, which shall be a Business
          Day,

               (ii) the aggregate principal amount of such Borrowing, which
          shall be $50,000,000 or a multiple of $5,000,000 in excess thereof,

               (iii) the duration of the Interest Period applicable thereto,
          subject to the provisions of the definition of Interest Period
          contained in subsection 1.1, and

               (iv) whether the Borrowing then being requested is to be of
          Eurodollar Competitive Loans or Fixed Rate Loans.



                                                                              38


A Competitive Bid Request that does not conform substantially to the format of
Exhibit A may be rejected by the Agent in its sole discretion, and the Agent
shall promptly notify GM of such rejection. GM may request offers to make
Competitive Loans for more than one Interest Period in a single Competitive Bid
Request. No Competitive Bid Request shall be given within three Business Days of
any other Competitive Bid Request pursuant to which GM has made a Competitive
Borrowing.

          (c) Invitation for Competitive Bids. Promptly after its receipt of a
Competitive Bid Request (but, in any event, no later than 3:00 P.M., New York
City time, on the date of such receipt) conforming to the requirements of
paragraph (b) above, the Agent shall send to each of the Non-Extending Lenders
an Invitation for Competitive Bids which shall constitute an invitation by GM to
each such Non-Extending Lender to bid, on the terms and conditions of this
Agreement, to make Competitive Loans pursuant to such Competitive Bid Request.

          (d) Submission and Contents of Competitive Bids. (i) Each
Non-Extending Lender may submit a Competitive Bid containing an offer or offers
to make Competitive Loans in response to such Invitation for Competitive Bids.
Each Competitive Bid must comply with the requirements of this paragraph (d) and
must be submitted to the Agent at its offices specified in subsection 10.2 not
later than (x) 9:30 A.M., New York City time, on the third Business Day prior to
the proposed date of Borrowing, in the case of a Borrowing of Eurodollar
Competitive Loans or (y) 9:30 A.M., New York City time, on the date of the
proposed Borrowing, in the case of a Fixed Rate Borrowing; provided that any
Competitive Bids submitted by the Agent in the capacity of a Non-Extending
Lender may only be submitted if the Agent notifies GM of the terms of the offer
or offers contained therein not later than fifteen minutes prior to the deadline
for the other Non-Extending Lenders. A Competitive Bid submitted by a
Non-Extending Lender pursuant to this paragraph (d) shall be irrevocable.

               (ii) Each Competitive Bid shall be in substantially the form of
          Exhibit C and shall specify:

               (1) the date of the proposed Borrowing,

               (2) the principal amount of the Competitive Loan for which each
          such offer is being made, which principal amount (w) may be greater
          than, equal to or less than the Non-Extended Commitment of the quoting
          Non-Extending Lender, (x) must be in a minimum principal amount of
          $5,000,000 or a multiple of $1,000,000 in excess thereof, (y) may not
          exceed the principal amount of Competitive Loans for which offers were
          requested and (z) may be subject to a limitation as to the maximum
          aggregate principal amount of Competitive Loans for which offers being
          made by such quoting Non-Extending Lender may be accepted,

               (3) in the case of a Borrowing of Eurodollar Competitive Loans,
          the Margin offered for each such Competitive Loan, expressed as a
          percentage (specified in increments of 1/10,000th of 1%) to be added
          to or subtracted from such base rate,



                                                                              39


               (4) in the case of a Fixed Rate Borrowing, the rate of interest
          per annum (specified in increments of 1/10,000th of 1%) offered for
          each such Competitive Loan, and

               (5) the identity of the quoting Non-Extending Lender.

A Competitive Bid may set forth up to five separate offers by the quoting
Non-Extending Lender with respect to each Interest Period specified in the
related Invitation for Competitive Bids. Any Competitive Bid shall be
disregarded by the Agent if the Agent determines that it: (A) is not
substantially in the form of Exhibit C or does not specify all of the
information required by subsection 2.5(d)(ii); (B) contains qualifying,
conditional or similar language (except for a limitation on the maximum
principal amount which may be accepted); (C) proposes terms other than or in
addition to those set forth in the applicable Invitation for Competitive Bids;
or (D) arrives after the time set forth in subsection 2.5(d)(i).

          (e) Notice to GM. The Agent shall promptly (and, in any event, by
10:00 A.M., New York City time) notify GM, by telecopy, of all the Competitive
Bids made (including all disregarded bids), the Competitive Bid Rate and the
principal amount of each Competitive Loan in respect of which a Competitive Bid
was made and the identity of the Non-Extending Lender that made each bid. The
Agent shall send a copy of all Competitive Bids (including all disregarded bids)
to GM for its records as soon as practicable after completion of the bidding
process set forth in this subsection 2.5.

          (f) Acceptance and Notice by GM. GM may in its sole discretion,
subject only to the provisions of this paragraph (f), accept or reject any
Competitive Bid (other than any disregarded bid) referred to in paragraph (e)
above. GM shall notify the Agent by telephone, confirmed immediately thereafter
by telecopy in a Competitive Bid Accept/Reject Letter (substantially in the form
of Exhibit D), whether and to what extent GM wishes to accept any or all of the
bids referred to in paragraph (e) above not later than (x) 10:30 A.M. (New York
City time) on the third Business Day prior to the proposed date of Borrowing, in
the case of a Competitive Eurodollar Borrowing or (y) 10:30 A.M. (New York City
time) on the proposed date of Borrowing, in the case of a Fixed Rate Borrowing;
provided that:

               (i) the failure by GM to give such notice shall be deemed to be a
          rejection of all the bids referred to in paragraph (e) above;

               (ii) the aggregate principal amount of the Competitive Bids
          accepted by GM may not exceed the lesser of (A) the principal amount
          set forth in the related Competitive Bid Request and (B) the excess,
          if any, of the aggregate Non-Extended Commitments of all Non-Extending
          Lenders then in effect over the aggregate principal amount of all
          Non-Extended Loans and Money Market Advances outstanding immediately
          prior to the making of such Competitive Loans (and after giving effect
          to the use of proceeds thereof),

               (iii) the principal amount of each Competitive Borrowing must be
          $5,000,000 or a multiple of $1,000,000 in excess thereof,



                                                                              40


               (iv) unless there are any limitations contained in a quoting
          Non-Extending Lender's Competitive Bid, GM may not accept a
          Competitive Bid made at a particular Competitive Bid Rate if GM has
          decided to reject any portion of a bid made at a lower Competitive Bid
          Rate for the same Interest Period, and

               (v) GM may not accept any Competitive Bid that is disregarded by
          the Agent pursuant to subsection 2.5(d)(ii) or that otherwise fails to
          comply with the requirements of this Agreement.

A notice given by GM pursuant to this paragraph (f) shall be irrevocable.

          (g) Allocation by Agent. If offers are made by two or more
Non-Extending Lenders with the same Competitive Bid Rates for a greater
aggregate principal amount than the amount in respect of which such offers are
accepted for the related Interest Period, the principal amount of Competitive
Loans in respect of which such offers are accepted shall be allocated by the
Agent among such Non-Extending Lenders as nearly as possible (in integral
multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers.

          (h) Notification of Acceptance. The Agent shall promptly (and, in any
event, by 11:00 A.M., New York City time) notify each bidding Non-Extending
Lender whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate), and each successful bidder will
thereupon become bound, subject to the other applicable conditions hereof, to
make the Competitive Loan in respect of which its bid has been accepted.

          2.6 Money Market Advances. (a) GM may at any time and from time to
time request any one or more of the Non-Extending Lenders to make offers to make
Money Market Advances to GM on any Business Day during the relevant Commitment
Period; provided that in no event may GM request a borrowing of Money Market
Advances if, after giving effect to such borrowing and the use of proceeds
thereof, (i) there would be more than $1,000,000,000 of Money Market Advances
outstanding, (ii) the aggregate amount of all Non-Extended Loans, Competitive
Loans and Money Market Advances then outstanding shall exceed the aggregate
Non-Extended Commitments then in effect of all Non-Extending Lenders and (iii)
the Total Extensions of Credit shall not exceed the aggregate Commitments then
in effect of all Lenders. Each such Non-Extending Lender may, but shall have no
obligation to, make such offer, and such Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this subsection
2.6. Money Market Advances to GM may bear interest at a rate determined by
reference to any interest rate basis applicable to Non-Extended Loans to GM
hereunder. A Money Market Advance shall have a stated maturity no later than the
seventh Business Day after the date on which such Money Market Advance is made.

          (b) In the event that GM desires to borrow a Money Market Advance from
a Non-Extending Lender, GM shall request that such Non-Extending Lender provide
a quotation to GM of the terms under which such Non-Extending Lender would be
willing to provide such Money Market Advance.

          (c) In the event that GM elects to accept a Non-Extending Lender's
offer for a Money Market Advance, GM shall provide telephonic notice to such
Non-Extending Lender of


                                                                              41


its election by no later than 30 minutes after the time that such offer was
received by it. The failure of GM to provide such notice of acceptance in a
timely manner shall be deemed to constitute a rejection of the offer of such
Non-Extending Lender. Any Money Market Advance to be made by a Non-Extending
Lender pursuant to this subsection 2.6 shall be made by the Non-Extending Lender
crediting an account specified by GM with the amount of such advance in
immediately available funds promptly upon receipt of GM's timely acceptance of
the offer of such Non-Extending Lender with respect to such Money Market
Advance. GM's acceptance of an offer of a Money Market Advance shall be deemed
to constitute a representation and warranty by GM that the conditions to
borrowing set forth in clauses (b) and (c) of subsection 4.2 have been satisfied
as of the date of such Money Market Advance.

          (d) GM agrees to forward to the Non-Extending Lender with respect to a
Money Market Advance written evidence of such Money Market Advance by mailing on
the date upon which such Money Market Advance was made a letter, substantially
in the form of Exhibit H, executed and delivered by a duly authorized officer of
GM, confirming the amount so borrowed, the currency in which such Money Market
Advance was denominated, the rate of interest applicable thereto and the
maturity thereof (with such Money Market Advance being due and payable on such
date of maturity); provided that the failure of such Borrower to provide such
letter shall not impair the obligation of GM to repay any Money Market Advance
borrowed by it. All borrowings pursuant to this subsection 2.6 shall bear
interest at the rate quoted to GM by the relevant Lender in its quotation
described in clause (b) above, regardless of any change in the Federal Funds
Effective Rate or any other interest rate between the time of quoting and the
time of borrowing.

          (e) Upon the occurrence and during the continuance of an Event of
Default hereunder, each Non-Extending Lender which has Money Market Advances
outstanding may declare its Money Market Advances (with any applicable interest
thereon) to be immediately due and payable without the consent of, or notice to,
any other Non-Extending Lender; provided that if such event is an Event of
Default specified in clause (i) or (ii) of paragraph (e) of Section 7 with
respect to GM, such Non-Extending Lender's Money Market Advances to GM (and any
applicable interest thereon) shall automatically become immediately due and
payable.

          (f) GM shall promptly notify the Agent of the amount and term of each
Money Market Advance made to it and the identity of the Non-Extending Lender
with respect thereto.

          (g) GM and any Non-Extending Lender may at any time and from time to
time enter into written agreements which provide for procedures for soliciting
and extending Money Market Advances to GM which differ from those specified in
paragraphs (b) and (c) of this subsection 2.6. As between GM and such
Non-Extending Lender such agreements shall supersede the provisions of such
paragraphs to the extent specified therein.

          2.7 Termination or Reduction of Commitments. (a)Effective on and as of
the Effective Date (i) the "Tranche B Commitment" under and as defined in the
Existing Credit Agreement, is terminated and shall be of no further force and
effect and (ii) the "Commitments" under and as defined in the Existing Credit
Agreement of each Lender are reduced to the amount of the Commitments of such
Lender set forth in Schedule I, in each case without the need for any further
notice or other actions with respect to such termination or reduction.



                                                                              42


          (b) Upon not less than five Business Days' notice to the Agent, GM
shall have the right to terminate each of the Non-Extended Commitments, the US
Secured Commitments and the Canadian/US Secured Commitments, in each case when
no Loans are then outstanding under the Commitments to be terminated or, from
time to time, to reduce the unutilized portion of the Non-Extended Commitments,
the US Secured Commitments and the Canadian/US Secured Commitments, as the case
may be. Any such reduction shall be in an amount equal to $10,000,000 or a whole
multiple of $5,000,000 in excess thereof and shall reduce permanently the
relevant Commitments then in effect.

          2.8 Prepayments. (a) Each Borrower may, at any time and from time to
time, prepay the Revolving Credit Loans under any Tranche owing by it, in whole
or in part, without premium or penalty (but subject to the provisions of
subsection 2.20), upon at least one Business Day's irrevocable notice to the
Agent (which notice must be received by the Agent prior to 12:00 Noon, New York
City time, on the date upon which such notice is due), specifying (i) the date
and amount of prepayment, (ii) the Tranche or Tranches being prepaid and, if
more than one Tranche, the amount allocated to each, (iii) the currency in which
the Loans to be prepaid are denominated and (iv) whether the prepayment is of
Eurodollar Loans, ABR Loans or Canadian Base Rate Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice, the Agent shall promptly notify each affected Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with any amounts
payable pursuant to subsection 2.20. Partial prepayments of the Non-Extended
Loans and the US Secured Loans shall be in an aggregate principal amount of
$10,000,000 or a multiple of $5,000,000 in excess thereof. Partial prepayments
of the Canadian/US Secured Loans shall be in an aggregate principal amount of
(x) to the extent denominated in Dollars, $10,000,000 or a multiple of
$5,000,000 in excess thereof and (y) to the extent denominated in Canadian
Dollars, C$10,000,000 or a multiple of C$5,000,000 in excess thereof.
Notwithstanding anything to the contrary contained herein, GM shall not prepay
the Competitive Loans except pursuant to Section 7.

          (b) If, on any date of determination, GM shall not be in compliance
with the covenant set forth in subsection 6.6, GM shall promptly, and in any
event within 5 Business Days, of such date prepay the US Secured Loans and/or
Canadian/US Secured Loans made to GM, and/or cash collateralize any L/C
Obligations with respect to Letters of Credit issued in favor of GM, as
applicable by an amount necessary to cause GM to be in compliance with such
covenant.

          (c) If, on any date of determination, the Borrowers shall not be in
compliance with the covenant set forth in subsection 6.7, the Borrowers shall
promptly, and in any event within 5 Business Days of such date, prepay the
Canadian/US Secured Loans made to GM Canada and/or cash collateralize any L/C
Obligations issued in favor of GM Canada by an amount necessary to cause the
Borrowers to be in compliance with such covenant.

          (d) If, on any date of determination during a Material Production
Event Period, GM shall not be in compliance with subsection 6.8, GM shall
promptly, and in any event within 5 Business Days of such date, prepay, or cause
GM Canada to prepay, such US Secured Loans and/or Canadian/US Secured Loans made
to GM or GM Canada, as applicable, and/or cash



                                                                              43


collateralize any L/C Obligations issued on behalf of GM or GM Canada, as
applicable, so as to cause it to be in compliance with such subsection.

          (e) If GM shall receive notice from the Agent or if GM otherwise has
knowledge that the Total Secured Extensions of Credit exceeds the Extended
Secured Commitments at any time, each Borrower shall promptly, and in any event
within five Business Days of such notice or knowledge, prepay the Extended
Secured Loans made to such Borrower and cash collateralize any L/C Obligations
issued for the account of such Borrower such that, after giving effect thereto,
the Total Secured Extensions of Credit does not exceed the Extended Secured
Commitments.

          2.9 Conversion and Continuation Options. (a) Each Borrower may elect
from time to time to convert any Eurodollar Revolving Credit Loans under any
Tranche to ABR Loans, by giving the Agent at least one Business Day's prior
irrevocable notice of such election; provided that any such conversion of
Eurodollar Revolving Credit Loans may only be made on the last day of an
Interest Period with respect thereto. Each Borrower may elect from time to time
to convert ABR Loans under any Tranche to Eurodollar Revolving Credit Loans
denominated in Dollars by giving the Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to Eurodollar
Revolving Credit Loans shall specify the length of the initial Interest Period
or Interest Periods therefor. Upon receipt of any such notice the Agent shall
promptly notify each affected Lender thereof. Notwithstanding the foregoing, (i)
no ABR Loan under any Tranche may be converted into a Eurodollar Revolving
Credit Loan when any Event of Default has occurred and is continuing and the
Agent has or the applicable Majority Tranche Lenders have determined that such
conversion is not appropriate and (ii) no ABR Loan may be converted into a
Eurodollar Revolving Credit Loan after the date that is one month prior to (x)
the Non-Extended Termination Date with respect to a conversion of Non-Extended
Loans or (y) the Extended Termination Date with respect to a conversion of any
Extended Secured Loans.

          (b) Any Eurodollar Revolving Credit Loan may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
relevant Borrower giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans; provided that
no Eurodollar Revolving Credit Loan may be continued as such (i) when any Event
of Default has occurred and is continuing and the Agent has or the applicable
Majority Tranche Lenders have determined that such continuation is not
appropriate or (ii) after the date that is one month prior to (A) the
Non-Extended Termination Date with respect to a continuation of Non-Extended
Loans or (B) the Extended Termination Date with respect to a continuation of
Extended Secured Loans; provided, further, that if a relevant Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso, such Eurodollar
Revolving Credit Loans shall be automatically converted to ABR Loans on the last
day of such then expiring Interest Period.

          2.10 Minimum Amounts of Eurodollar Borrowings. All Borrowings,
conversions and continuations of Eurodollar Revolving Credit Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of each Eurodollar Sub-Tranche shall be



                                                                              44


equal to $50,000,000 or a whole multiple of $5,000,000 in excess thereof. In no
event shall there be more than 30 Eurodollar Sub-Tranches outstanding at any
time.

          2.11 Repayment of Loans; Evidence of Debt. (a) GM hereby
unconditionally promises to pay to each Non-Extending Lender on the Non-Extended
Termination Date (or such earlier date as the Non-Extended Loans become due and
payable pursuant to this Agreement), the unpaid principal amount of each
Non-Extended Loan made by such Non-Extending Lender to GM. GM hereby
unconditionally promises to pay to each Non-Extending Lender on the last day of
the applicable Interest Period, the unpaid principal amount of each Competitive
Loan made by such Non-Extending Lender to GM.

          (b) GM hereby unconditionally promises to pay to the Applicable
Lending Office of each Secured Lender on the Extended Termination Date (or such
earlier date as the Extended Secured Loans become due and payable pursuant to
this Agreement), the unpaid principal amount of each Extended Secured Loan made
by such Secured Lender to GM.

          (c) GM Canada hereby unconditionally promises to pay to the Applicable
Lending Office of each Canadian/US Secured Lender on the Extended Termination
Date (or such earlier date as the Canadian/US Secured Loans become due and
payable pursuant to this Agreement), the unpaid principal amount of each
Canadian/US Secured Loan made by such Canadian/US Secured Lender to GM Canada.

          (d) Each Borrower hereby further agrees to pay interest in immediately
available funds at the office of the Agent on the unpaid principal amount of the
Loans owing by such Borrower from time to time from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
subsection 2.12 or 2.12A, as applicable. Amounts owing hereunder on account of
principal and interest on Loans shall be paid in the currency in which such Loan
was borrowed and amounts owing hereunder on account of fees shall be paid in
Dollars.

          (e) Each Lender shall maintain an account or accounts evidencing the
indebtedness of each Borrower to the Applicable Lending Office of such Lender
resulting from each Loan made by such lending office of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
lending office of such Lender from time to time under this Agreement.

          (f) The Agent shall maintain the Register pursuant to subsection
10.6(b), and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount of each Loan made hereunder,
the applicable Borrower, the nature of each such Loan as a Non-Extending Loan, a
US Secured Loan or a Canadian/US Secured Loan, the Type of each Loan, the
currency in which each such Loan is denominated and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from each Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Agent hereunder from each Borrower
and each Lender's share thereof.

          (g) The entries made in the Register and accounts maintained pursuant
to paragraphs (e) and (f) of this subsection 2.11 shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein



                                                                              45


recorded; provided, however, that the failure of any Lender or the Agent to
maintain such account, such Register or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of each Borrower to
repay (with applicable interest) the Loans made to such Borrower in accordance
with the terms of this Agreement.

          2.12 Interest Rates and Payment Dates for Non-Extended Loans. (a) Each
Non-Extended Loan which is an ABR Loan shall bear interest at a rate per annum
equal to the ABR.

          (b) The Non-Extended Loans comprising each Eurodollar Borrowing shall
bear interest at a rate per annum equal to (i) in the case of each Eurodollar
Revolving Credit Loan, the Eurodollar Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin set forth in clause (e) below, and
(ii) in the case of each Eurodollar Competitive Loan, the Eurodollar Rate for
the Interest Period in effect for such Borrowing plus (or minus, as the case may
be) the Margin offered by the Non-Extending Lender making such Eurodollar
Competitive Loan and accepted by GM pursuant to subsection 2.5.

          (c) Each Fixed Rate Loan shall bear interest at a rate per annum equal
to the fixed rate of interest offered by the Non-Extending Lender making such
Loan and accepted by GM pursuant to subsection 2.5.

          (d) Subject to the provisions of the following sentence, interest
shall be payable in arrears on each Interest Payment Date; provided that
interest accruing pursuant to paragraph (f) of this subsection 2.12 shall be
payable from time to time on demand. The amount of interest on Non-Extended
Loans to be paid on any Interest Payment Date shall be the amount which would be
due and payable if the Utilization for the period for which such interest is
paid was less than 33%. On the Non-Extended Termination Date (or, if earlier, on
the date upon which both the Non-Extended Commitments are terminated and the
Non-Extended Loans are paid in full) and on the first Business Day following the
last day of each fiscal quarter of GM so long as any Non-Extended Loans are
outstanding, GM shall pay to the Agent, for the ratable benefit of the
Non-Extending Lenders, an additional amount of interest equal to the difference
(if any) between (i) the amount of interest which would have been payable during
such fiscal quarter (or, in the case of the payment due on the Non-Extended
Termination Date, the portion thereof ending on such date) after giving effect
to the actual Utilization during such period and (ii) the amount of interest
which actually was paid during such period.



                                                                              46


          (e) The "Applicable Margin" with respect to Non-Extended Loans at any
date shall be the applicable percentage amount set forth in the table below
based upon the Type of such Loan and the Utilization and Status on such date:



                      Level I   Level II   Level III   Level IV   Level V   Level VI
                       Status    Status      Status     Status     Status    Status
                      -------   --------   ---------   --------   -------   --------
                                                          
If Utilization is less than 33%:

   Eurodollar Loans    0.250%    0.450%      0.550%     1.000%     1.200%    1.350%
   ABR Loans               0%        0%          0%         0%         0%        0%

If Utilization is equal to or greater than 33% and less than 66%:

   Eurodollar Loans    0.375%    0.575%      0.675%     1.125%     1.325%    1.475%
   ABR Loans               0%        0%          0%         0%         0%        0%

If Utilization is equal to or greater than 66%:

   Eurodollar Loans    0.500%    0.700%      0.800%     1.250%     1.450%    1.600%
   ABR Loans               0%        0%          0%         0%         0%        0%


          Changes in the Applicable Margin shall become effective on the date on
which S&P, Moody's and/or Fitch changes the rating it has issued with respect to
GM's senior unsecured long-term debt. In the event of split ratings, the Level
that is next higher than the Level in which the lowest of such ratings resides
shall apply. The Agent shall as soon as practicable notify GM and the
Non-Extending Lenders of the effective date and the amount of each such change
in interest rate.

          (f) If all or a portion of (i) the principal amount of any
Non-Extended Loan or Competitive Loan (ii) any interest payable thereon or (iii)
any facility fee or other amount payable hereunder with respect to the
Non-Extended Commitments or Non-Extended Loans shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is (x) in the case of
overdue principal, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this subsection 2.12 plus 1% or (y) in the case
of overdue interest, facility fee or other amount, the rate described in
paragraph (a) of this subsection 2.12 plus 1%, in each case from the date of
such non-payment until such amount is paid in full (as well after as before
judgment). For purposes of this Agreement, principal shall be "overdue" only if
not paid in accordance with the provisions of subsection 2.11.

          2.12A Interest Rates and Payment Dates for Extended Secured Loans. (a)
Each Extended Secured Loan which is an ABR Loan shall bear interest at a rate
per annum equal to the ABR plus the Applicable Margin set forth in clause (e)
below.

          (b) The Extended Secured Loans comprising each Eurodollar Borrowing
shall bear interest at a rate per annum equal to the Eurodollar Rate for the
Interest Period in effect for such Borrowing plus the Applicable Margin set
forth in clause (e) below.



                                                                              47


          (c) Each Extended Secured Loan which is a Canadian Base Rate Loan
shall bear interest at a rate per annum equal to the Canadian Base Rate plus the
Applicable Margin set forth in clause (e) below.

          (d) Interest on the Extended Secured Loans shall be payable in arrears
on each Interest Payment Date; provided that interest accruing pursuant to
paragraph (f) of this subsection 2.12A shall be payable from time to time on
demand.

          (e) The "Applicable Margin" with respect to Extended Secured Loans at
any date shall be the applicable percentage amount set forth in the table below
based upon the Type of such Loan and Status on such date:



                      Level I   Level II   Level III   Level IV   Level V   Level VI
                       Status    Status      Status     Status     Status    Status
                      -------   --------   ---------   --------   -------   --------
                                                          
Eurodollar Loans      1.1250%    1.350%      1.500%     1.750%     2.000%    2.250%
ABR Loans and
   Canadian Base
   Rate Loans         0.1250%    0.350%      0.500%     0.750%     1.000%    1.250%


          Changes in the Applicable Margin shall become effective on the date on
which S&P, Moody's and/or Fitch changes the rating it has issued with respect to
GM's senior secured long-term debt. In the event of split ratings, the Level
that is next higher than the Level in which the lowest of such ratings resides
shall apply. The Agent shall as soon as practicable notify each Borrower and the
Secured Lenders of the effective date and the amount of each such change in
interest rate.

          (f) If all or a portion of (i) the principal amount of any Extended
Secured Loan or Reimbursement Obligation, (ii) any interest payable thereon or
(iii) any facility fee or other amount payable hereunder with respect to the
Extended Secured Commitments or the Extended Secured Loans shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum which is (x) in the case
of overdue principal, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this subsection 2.12A plus 2% or (y) in
the case of overdue interest, facility fee or other amount, the rate described
in paragraph (a) of this subsection 2.12A plus 2%, in each case from the date of
such non-payment until such amount is paid in full (after as well as before
judgment). For purposes of this Agreement, principal shall be "overdue" only if
not paid in accordance with the provisions of subsection 2.11.

          2.13 Facility Fee. (a) Non-Extended Commitments. With respect to the
Non-Extended Commitments, GM shall pay a facility fee to the Agent, for the
ratable account of the Non-Extending Lenders, at the rate per annum equal to (a)
for each day that GM has Level I Status, 0.125% of the aggregate amount of the
Non-Extended Commitments on such day, (b) for each day that GM has Level II
Status, 0.175% of the aggregate amount of the Non-Extended Commitments on such
day, (c) for each day that GM has Level III Status, 0.200% of the aggregate
amount of the Non-Extended Commitments on such day, (d) for each day that GM has
Level IV Status, 0.250% of the aggregate amount of the Non-Extended Commitments
on such



                                                                              48


day, (e) for each day that GM has Level V Status, 0.300% of the aggregate amount
of the Non-Extended Commitments on such day and (f) for each day that GM has
Level VI Status, 0.400% of the aggregate amount of the Non-Extended Commitments
on such day. In the event of split ratings, the Level that is next higher than
the Level in which the lowest of such ratings resides shall apply. On the first
Business Day following the last day of each fiscal quarter of GM and on the
Non-Extended Termination Date (or, if earlier, on the date upon which both the
Non-Extended Commitments are terminated and the Loans under the Non-Extended
Tranche are paid in full), GM shall pay to the Agent, for the ratable benefit of
the Non-Extending Lenders, the portion of such facility fee payable by it which
accrued during the fiscal quarter most recently ended (or, in the case of the
payment due on the Non-Extended Termination Date, the portion thereof ending on
such date). Such facility fee shall be based upon the aggregate amount of the
relevant Non-Extended Commitments of the Non-Extending Lenders from time to
time, regardless of the Utilization from time to time thereunder; provided that
if the Non-Extended Commitments have been terminated, such facility fee shall be
based upon the aggregate outstanding principal amount of the Non-Extended Loans.

          (b) Extended Secured Commitments. With respect to the Extended Secured
Commitments, GM shall pay to the US Secured Lenders and GM, on behalf of the
Borrowers, shall pay to the Canadian/US Secured Lenders a facility fee to the
Agent, for the ratable account of the US Secured Lenders or the Canadian/US
Secured Lenders, as applicable, at the rate per annum equal to (a) for each day
that GM has Level I Status, 0.375% of the aggregate amount of the Extended
Secured Commitments on such day, (b) for each day that GM has Level II Status,
0.400% of the aggregate amount of the Extended Secured Commitments on such day
and (c) for each day that GM has Level III Status, Level IV Status, Level V
Status or Level VI Status, 0.500% of the aggregate amount of the Extended
Secured Commitments on such day. In the event of split ratings, the Level that
is next higher than the Level in which the lowest of such ratings resides shall
apply. On the first Business Day following the last day of each fiscal quarter
of GM and on the Extended Termination Date (or, if earlier, on the date upon
which both the Extended Secured Commitments are terminated and the Loans
thereunder are paid in full), GM shall pay to the Agent, for the ratable benefit
of the Secured Lenders, the portion of such facility fee payable by it which
accrued during the fiscal quarter most recently ended (or, in the case of the
payment due on the Extended Termination Date, the portion thereof ending on such
date). Such facility fee shall be based upon the aggregate amount of the
relevant Extended Secured Commitments of the Secured Lenders from time to time;
provided that if the Extended Secured Commitments have been terminated, such
facility fee shall be based upon the aggregate Canadian/US Secured Extensions of
Credit or the aggregate outstanding principal amount of the US Secured Loans, as
applicable.

          2.14 Computation of Interest and Fees. (a)Interest on all Loans shall
be computed on the basis of the actual number of days elapsed over a year of 360
days or, on any date when (x) the ABR is determined by reference to the Prime
Rate or (y) the Canadian Base Rate is determined by reference to the CDOR Rate,
a year of 365 or 366 days as appropriate (in each case including the first day
but excluding the last day). For purposes of disclosure pursuant to the Interest
Act (Canada), the annual rates of interest or fees to which the rates of
interest or fees provided in this Agreement and the other Loan Documents (and
stated herein or therein, as applicable, to be computed on the basis of a 360
day year in respect of Loans denominated in Dollars and a 365 day year in
respect of Loans denominated in Canadian Dollars or any other



                                                                              49


period of time less than a calendar year) are equivalent to the rates so
determined multiplied by the actual number of days in the applicable calendar
year and divided by 360 or 365, as applicable, or such other period of time,
respectively. Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the relevant
Borrower and the Lenders in the absence of manifest error. All fees shall be
computed on the basis of the actual number of days elapsed over a year of 360
days as appropriate (including the first day but excluding the last day). The
Agent shall, at any time and from time to time upon the request of any Borrower,
deliver to such Borrower a statement showing the quotations used by the Agent in
determining any interest rate applicable to any Tranche of Revolving Credit
Loans pursuant to this Agreement.

          (b) Any change in the interest rate on a Loan resulting from a change
in the ABR, Canadian Base Rate or the Eurodollar Reserve Requirements shall
become effective as of the opening of business on the day on which such change
in the ABR or Canadian Base Rate is announced or such change in the Eurodollar
Reserve Requirements becomes effective, as the case may be. The Agent shall as
soon as practicable notify the relevant Borrower and such Lenders of the
effective date and the amount of each such change in interest rate. Each change
in the Applicable Margin applicable to Loans or the facility fee as a result of
a change in GM's Status shall become effective on the date upon which such
change in Status occurs.

          (c) If any Reference Lender shall for any reason no longer have a
Commitment, such Reference Lender shall thereupon cease to be a Reference
Lender, and if, as a result thereof, there shall only be one Reference Lender
remaining, the Borrowers and the Agent (after consultation with the Lenders)
shall, by notice to the Lenders, designate another Lender as a Reference Lender
so that there shall at all times be at least two Reference Lenders.

          (d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the Reference
Lenders shall be unable or shall otherwise fail to supply such rates to the
Agent upon its request, the rate of interest shall, subject to the provisions of
subsection 2.15, be determined on the basis of the quotations of the remaining
Reference Lenders.

          2.15 Inability to Determine Interest Rate. If the Eurodollar Rate
cannot be determined by the Agent in the manner specified in the definition of
the term "Eurodollar Rate" contained in subsection 1.1 of this Agreement, the
Agent shall give telecopy or telephonic notice thereof to the affected
Borrower(s) and the affected Lenders as soon as practicable thereafter. Until
such time as the Eurodollar Rate for such currency can be determined by the
Agent in the manner specified in the definition of such term contained in said
subsection 1.1 (the "Restoration Date"), no further Eurodollar Loans shall be
continued as such at the end of the then current Interest Period or (other than
any Eurodollar Loans previously requested and with respect to which the
Eurodollar Rate previously was determined) shall be made, nor shall any Borrower
have the right to convert ABR Loans to Eurodollar Revolving Credit Loans. In the
event that the affected Eurodollar Rate applies to Revolving Credit Loans, such
Revolving Credit Loans shall be converted on the last day of the then current
Interest Period to ABR Loans in accordance with subsection 2.9.

          2.16 Pro Rata Treatment and Payments. (a) Borrowings. Each Borrowing
of Revolving Credit Loans hereunder shall not be required to be made pro rata
among the Tranches;



                                                                              50


provided that each Borrowing of Revolving Credit Loans in any Tranche shall be
made pro rata among the Lenders in such Tranche.

          (b) Each payment (including each prepayment) by any Borrower on
account of principal of and interest on the Revolving Credit Loans may be made
on a non-pro rata basis among the Tranches; provided that (i) each payment
(including each prepayment) of Revolving Credit Loans within any Tranche shall
be made pro rata according to the respective outstanding principal amounts of
the Revolving Credit Loans of the Lenders under such Tranche and (ii) any
payments from proceeds of the Collateral shall be distributed solely to the
Secured Parties and Hedging Secured Parties secured by the Collateral in
accordance with subsection 2.16(c). Notwithstanding the foregoing, to the extent
payments are made by either Borrower to comply with the covenants set forth in
subsections 6.6, 6.7 or 6.8, such payments shall be applied by such Borrower to
prepay the applicable Extended Secured Loans and/or cash collateralize the
Letters of Credit or Acceptances, as applicable. Each payment by GM on account
of principal of and interest on any Borrowing of Competitive Loans shall be made
pro rata among the Non-Extending Lenders participating in such Borrowing
according to the respective principal amounts of their outstanding Competitive
Loans comprising such Borrowing. Each payment by the Borrowers on account of any
facility fee hereunder in respect of Non-Extended Commitments (with respect to
GM only) or Extended Secured Commitments, as the case may be, shall be made pro
rata according to the relevant Commitment Percentages of the Lenders having such
Commitments.

          (c) Any payments from proceeds of the Collateral during the
continuance of an Event of Default shall be applied in the following order:

          (i) first, to pay incurred and unpaid fees and expenses of the Agent
under the Loan Documents;

          (ii) second, to the Agent, for application by it towards payment of
interest and fees then due and owing and remaining unpaid in respect of the
Secured Obligations and Non-Loan Exposure, pro rata among the relevant Secured
Parties according to the interest and fees of the Secured Obligations and the
Non-Loan Exposure secured by such Collateral then due and owing and remaining
unpaid to such Secured Parties;

          (iii) third, to the Agent, for application by it towards payment of
all other amounts then due and owing and remaining unpaid in respect of the
Secured Obligations and Non-Loan Exposure secured by such Collateral, pro rata
among the relevant Secured Parties according to the amounts of the Secured
Obligations and Non-Loan Exposure secured by such Collateral then due and owing
and remaining unpaid to such Secured Parties;

          (iv) fourth, to the Agent, for application by it towards prepayment of
the Secured Obligations and Non-Loan Exposure, and, in the case of L/C
Obligations, to provide for cash collateral in the manner described in Section
7, pro rata among the relevant Secured Parties according to the amounts of the
Secured Obligations and Non-Loan Exposure secured by such Collateral then held
by such Secured Parties;



                                                                              51


          (v) fifth, to the Agent for application by it towards payments of
amounts then due and owing and remaining unpaid in respect of the Hedging
Obligations, pro rata among the Hedging Secured Parties according to the amounts
of the Hedging Obligations then due and owing and remaining unpaid to the
Hedging Secured Parties; and

          (vi) sixth, any balance remaining after the Obligations shall have
been paid in full, no Letters of Credit shall be outstanding and the Commitments
shall have terminated shall be paid over to GM or to whomsoever may be lawfully
entitled to receive the same;

          provided that, if sufficient funds are not available to fund all
payments to be made in respect of any Secured Obligation, Non-Loan Exposure or
Hedging Obligations, as applicable, described in any of clauses (i), (ii), (iii)
and (iv) above, the available funds being applied with respect to any such
Secured Obligation, Non-Loan Exposure or Hedging Obligations, as applicable
(unless otherwise specified in such clause), shall be allocated to the payment
of such Secured Obligation, Non-Loan Exposure or Hedging Obligations, as
applicable, ratably, based on the proportion of the Agent's and each Secured
Lender's or Issuing Bank's interest in the aggregate outstanding Secured
Obligation, Non-Loan Exposure or Hedging Obligations, as applicable, described
in such clauses; provided, further, that proceeds of any Collateral shall be
applied solely against the Secured Obligation, Non-Loan Exposure or Hedging
Obligations, as applicable, secured thereby.

          (d) Any reduction of the Non-Extended Commitments shall be made pro
rata according to the Non-Extended Commitment Percentages of the Non-Extending
Lenders. Any reduction of the US Secured Commitments shall be made pro rata
according to the US Secured Commitment Percentages of the US Secured Lenders.
Any reduction of the Canadian/US Secured Commitments shall be made pro rata
according to the Canadian/US Secured Commitment Percentages of the Canadian/US
Secured Lenders.

          (e) All payments (including prepayments) to be made by either Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set-off or counterclaim and shall be made prior to 1:00 P.M.,
New York City time, on the due date thereof to the Agent, for the account of the
relevant Lenders, at the Agent's office specified in subsection 10.2. Payments
of principal and interest on any Loan shall be made in the currency in which the
relevant Loans are denominated; fees and other amounts shall be made in Dollars;
and all payments hereunder shall be made in immediately available funds. The
Agent shall distribute such payments to the relevant Lenders promptly upon
receipt in like funds as received. If any payment hereunder (other than payments
on the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.

          (f) Unless the Agent shall have been notified in writing by any Lender
prior to the deadline for funding a Borrowing that such Lender will not make the
amount that would



                                                                              52


constitute its relevant Commitment Percentage of such Borrowing available to the
Agent, the Agent may assume that such Lender is making such amount available to
the Agent, and the Agent may, in reliance upon such assumption, make available
to the relevant Borrower a corresponding amount. If such amount is not made
available to the Agent by the required time on the borrowing date therefor, such
Lender shall pay to the Agent, on demand, such amount with interest thereon at a
rate equal to (i) in the case of Borrowings denominated in Dollars, the daily
average Federal Funds Effective Rate and (ii) in the case of Borrowings
denominated in Canadian Dollars, the interest rate reasonably determined by the
Agent to reflect its cost of funds for the amount advanced by the Agent on
behalf of such Lender, in each case for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts owing under this subsection 2.16 shall
be conclusive in the absence of manifest error. If such Lender's relevant
Commitment Percentage of such Borrowing is not made available to the Agent by
such Lender within three Business Days of such borrowing date, the Agent shall
be entitled to recover such amount with interest thereon at the rate described
above, on demand, from the relevant Borrower.

          (g) The Agent agrees to provide each Borrower with a written invoice
of the amount of (x) any interest payable on any Interest Payment Date, (y) any
fee payable to the Agent, for the ratable account of the applicable Lenders, on
any Fee Payment Date and (z) any expense payable by either Borrower under this
Agreement or any other Loan Document. Such invoice shall be provided (i) three
Business Days in advance of any Interest Payment Date in the case of Loans
bearing interest based on the Eurodollar Rate, (ii) on the Interest Payment Date
in the case of Loans based on the ABR or the Canadian Base Rate, (iii) on the
applicable Fee Payment Date in the case of any fees and (iv) three Business Days
in advance of any date any expense is due. Failure to deliver any such invoice
shall not affect a Borrower's payment obligations hereunder; provided that, with
respect to any interest payable on any Interest Payment Date, any fee payable on
any Fee Payment Date or any expense payable by either Borrower on any date as
provided in any Loan Document, in the event that (A) any invoice is later
determined to have understated the amount of interest, fee or expense, as
applicable, due on such date or (B) a Borrower makes a good faith payment of the
interest, fee or expense, as applicable, due on such date prior to receipt of an
invoice as provided above, and, in each case, the amount paid is later
determined to have been less that the amount or interest, fee or expense, as the
case may be, actually due on such date pursuant to this Agreement or any other
Loan Document, the failure by such Borrower to have paid the full amount of
interest, fee or expense, as the case may be, on such date shall not constitute
a Default or an Event of Default unless the relevant Borrower fails to pay the
amount of such shortfall within five Business Days after written notice from the
Agent of the amount thereof.

          2.17 Illegality. (a)Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, such Lender shall give
notice thereof to the Agent and the affected Borrower(s) describing the relevant
provisions of such Requirement of Law (and, if the affected Borrower(s) shall so
request, provide the affected Borrower(s) with a memorandum or opinion of
counsel of recognized standing (as selected by such Lender) as to such
illegality), following which (a) the commitment of such Lender hereunder to make
Eurodollar Loans, continue such Eurodollar Loans as such and convert ABR Loans
to Eurodollar Revolving Credit Loans shall forthwith be



                                                                              53


cancelled and (b) such Lender's outstanding Eurodollar Loans shall be converted
automatically on the respective last days of the then current Interest Periods
with respect to such Loans (or within such earlier period as shall be required
by law) to ABR Loans.

          If any such conversion or prepayment of a Eurodollar Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, the Borrower whose Loan is converted or prepaid shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.20.

          (b) If any provision of this Agreement or any of the other Loan
Documents would obligate GM Canada to make any payment of interest with respect
to any of the Canadian Secured Obligations or other amount payable to the Agent
or any Canadian/US Secured Lender in an amount or calculated at a rate which
would be prohibited by any applicable law or would result in a receipt by the
Agent or such Canadian/US Secured Lender of interest with respect to the
Canadian Secured Obligations at a criminal rate (as such terms are construed
under any applicable law, including the Criminal Code (Canada)) then,
notwithstanding such provision, such amount or rates shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by any applicable law or so
result in a receipt by Agent or such Canadian/US Secured Lender of interest with
respect to the Canadian Secured Obligations at a criminal rate, such adjustment
to be effected, to the extent necessary, as follows:

               (i) first, by reducing the amount or rates of interest required
          to be paid to the Agent or the affected Canadian/US Secured Lender
          under this subsection 2.17(b); and

               (ii) thereafter, by reducing any fees, commissions, premiums and
          other amounts required to be paid to the Agent or the affected
          Canadian/US Secured Lender which would constitute interest with
          respect to the Canadian Secured Obligations for purposes of any
          applicable law, including Section 347 of the Criminal Code (Canada).

Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if the Agent or any Canadian/US Secured Lender shall have
received an amount in excess of the maximum permitted by any applicable law,
including section 347 of the Criminal Code (Canada) and the Interest Act
(Canada), then GM Canada shall be entitled, by notice in writing to the Agent or
the affected Canadian/US Secured Lender, to obtain reimbursement from the Agent
or such Canadian/US Secured Lender in an amount equal to such excess, and
pending such reimbursement, such amount shall be deemed to be an amount payable
by the Agent or such Canadian/US Secured Lender to GM Canada. Any amount or rate
of interest under the Canadian Secured Obligations referred to in this
subsection 2.17(b) shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over
the term that any Canadian/US Secured Commitment remains outstanding on the
assumption that any charges, fees or expenses that fall within the meaning of
"interest" (as defined in or construed by any applicable law, including the
Criminal Code (Canada)) shall, if they relate to a specific period of time, be
pro-rated over that period of time and otherwise be pro-rated over the period
from the Effective Date to the Extended Termination Date and for the purpose of
the Criminal Code (Canada), in the event of a dispute, a certificate of a Fellow
of the Canadian



                                                                              54


Institute of Actuaries appointed by the Agent shall be conclusive for the
purposes of such determination.

          2.18 Increased Costs. (a) If (i) there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Loans, issuing or participating in letters of credit, accepting Acceptances,
holding Acceptance Obligations or making, funding or maintaining Acceptance
Equivalent Loans hereunder or (ii) any reduction in any amount receivable in
respect thereof, and such increased cost or reduced amount receivable is due to
either:

          (x) the introduction of or any change in or in the interpretation of
     any law or regulation after the date hereof; or

          (y) the compliance with any guideline or request made after the date
     hereof from any central bank or other Governmental Authority (whether or
     not having the force of law),

then (subject to the provisions of subsection 2.21) the Borrower(s) under the
relevant Tranche shall from time to time, upon demand by such Lender pay such
Lender additional amounts sufficient to compensate such Lender for such
increased cost or reduced amount receivable; provided that no such additional
amounts shall be payable by the Borrowers with respect to, and this subsection
2.18(a) shall not apply to, any increased cost or reduced amount due to the
imposition or change in the rate of any tax, which shall be governed exclusively
by subsection 2.19.

          (b) If any Lender shall have reasonably determined that (i) the
applicability of any law, rule, regulation or guideline adopted after the date
hereof pursuant to or arising out of the July 1988 paper of the Basle Committee
on Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or (ii) the adoption
after the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy affecting such Lender, or (iii) any change arising after the
date hereof in the foregoing or in the interpretation or administration of any
of the foregoing by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or (iv)
compliance by such Lender (or any lending office of such Lender), or any holding
company for such Lender which is subject to any of the capital requirements
described above, with any request or directive of general application issued
after the date hereof regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital or
on the capital of any such holding company as a direct consequence of such
Lender's obligations hereunder or under or in respect of any Letter of Credit or
attributable to or based upon accepting Acceptances or holding Acceptance
Obligations hereunder to a level below that which such Lender or any such
holding company could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies and the policies of such
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then (subject to the provisions of subsection 2.21) from
time to time such Lender may request the relevant Borrower to pay to such Lender
such additional amounts as will compensate such Lender or any such holding
company for any such reduction suffered, net of the savings (if any)



                                                                              55


which may be reasonably projected to be associated with such increased capital
requirement; provided that no such additional amounts shall be payable by the
Borrowers with respect to, and this subsection 2.18(b) shall not apply to, any
increased cost or reduced amount due to the imposition or change in the rate of
any tax, which shall be governed exclusively by subsection 2.19. Any certificate
as to such amounts which is delivered pursuant to subsection 2.21(a) shall, in
addition to any items required by subsection 2.21(a), include the calculation of
the savings (if any) which may be reasonably projected to be associated with
such increased capital requirement; provided that in no event shall any Lender
be obligated to pay or refund any amounts to the relevant Borrower on account of
such savings.

          (c) In the event that any Governmental Authority shall impose any
Eurodollar Reserve Requirements which increase the cost to any Lender of making
or maintaining Eurodollar Loans or issuing or participating in Letters of
Credit, then (subject to the provisions of subsection 2.21) the relevant
Borrower(s) shall thereafter pay in respect of the Eurodollar Loans of such
Lender a rate of interest based upon the Eurodollar Reserve Rate (rather than
upon the Eurodollar Rate). From and after the delivery to the relevant
Borrower(s) of the certificate required by subsection 2.21(a), all references
contained in this Agreement to the Eurodollar Rate shall be deemed to be
references to the Eurodollar Reserve Rate with respect to each such affected
Lender.

          2.19 Taxes. (a) All payments made by each Loan Party under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding, in the case of each Lender, Affiliate and the Agent (each
a "Tax Indemnified Party") (i) income taxes (other than withholding taxes) and
franchise taxes, branch profits taxes or any other tax based upon net income
imposed on such Tax Indemnified Party as a result of a present or former
connection between such Tax Indemnified Party and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Tax Indemnified Party having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document); and (ii) any withholding taxes imposed by the United
States on payments made by GM or Saturn to any Tax Indemnified Party or by
Canada on payments made by GM Canada to any Tax Indemnified Party, in each case,
under laws (including, without limitation, for all purposes of this subsection
2.19, any statute, treaty or regulation), in effect on the Effective Date (or,
in the case of (A) an Assignee, the date of the Assignment and Acceptance, (B) a
successor Agent, the date of the appointment of such Agent, (C) a successor
Issuing Bank, the date such Issuing Bank becomes an Issuing Bank or (D) a Lender
that changes its Applicable Lending Office, the date of such change) applicable
to such Tax Indemnified Party (taxes other than those excluded under clauses
(a)(i) or (ii) being referred to herein as "Non-Excluded Taxes"); provided that
clause (a)(ii) shall not apply to the extent that (x) the indemnity payments or
additional amounts any Tax Indemnified Party would be entitled to receive
(without regard to clause (a)(ii)) do not exceed the indemnity payment or
additional amounts that the Person making the assignment, transfer, appointment
or change in Applicable Lending Office would have been entitled to receive in
the absence of such assignment, transfer, appointment or change in Applicable
Lending Office or (y) any Non-Excluded Tax is imposed on a Tax Indemnified Party
in connection with an interest in any Loan or other obligation that



                                                                              56


such Tax Indemnified Party acquired pursuant to subsection 2.24. If any
Non-Excluded Taxes are required to be withheld from any amounts payable to, or
for the account of, the Tax Indemnified Party hereunder, then such Loan Party
shall make all such deductions and pay the full amount so deducted to the
relevant Governmental Authority in accordance with applicable law, the amounts
so payable to, or for the account of, the Tax Indemnified Party shall be
increased to the extent necessary to yield to the Tax Indemnified Party (after
payment of all Non-Excluded Taxes) a net amount equal to the amount it would
have received had no such deduction or withholding been made. Notwithstanding
the foregoing, GM shall not be required to increase any such amounts payable to
any Tax Indemnified Party if such Tax Indemnified Party fails to comply with the
requirements of paragraph (b) of this subsection 2.19. Whenever any Non-Excluded
Taxes are payable by any Loan Party, as promptly as possible thereafter such
Loan Party shall send to the Agent for its own account or for the account of the
relevant Tax Indemnified Party, as the case may be, a certified copy of an
original official receipt, if any, received by such Loan Party showing payment
thereof. If any Loan Party fails to pay any Non-Excluded Taxes when due to the
appropriate Governmental Authority or fails to remit to the Agent or the
relevant Tax Indemnified Party the required receipts or other required
documentary evidence, such Loan Party shall indemnify the Agent and the Tax
Indemnified Parties for any incremental taxes, interest or penalties that may
become payable by the Agent or any Tax Indemnified Party as a result of any such
failure. The agreements in this subsection 2.19 shall survive the termination of
this Agreement and the payment of all other amounts payable hereunder.

          (b) Each Lender to GM that is not incorporated under the laws of the
United States of America or a state thereof (a "Non-US Lender") shall:

          (X)(i) on or before the date such Non-US Lender becomes a Lender under
          this Agreement, deliver to GM and the Agent two duly completed
          originals of United States Internal Revenue Service Form W-8BEN or
          Form W-8ECI, or successor applicable form, as the case may be,
          certifying that such Lender is entitled to a complete exemption from
          deduction or withholding of United States federal income taxes with
          respect to payments under this Agreement and the other Loan Documents;
          and

               (ii) thereafter, (A) deliver to GM and the Agent two further duly
          completed originals of any such form or certification (I) on or before
          the date that any such form or certification previously provided
          expires or becomes obsolete and (II) if and to the extent such Non-US
          Lender is then legally able to provide such form or certification,
          after the occurrence of any event requiring a change in the most
          recent form previously delivered by it to GM; and (B) if and to the
          extent such Non-US Lender is then legally able to do so, obtain such
          extensions of time for filing and completing such forms or
          certifications as may reasonably be requested by GM or the Agent; and

(Y) in the case of any such Non-US Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that cannot comply with the
requirements of subsection 2.19(b)(X) above, on or before the date such Non-US
Lender becomes a Lender under this Agreement, (i) represent to GM (for the
benefit of GM and the Agent) that it is not a bank within the meaning of



                                                                              57


Section 871(h) or Section 881(c)(3)(A) of the Code, (ii) agree to furnish to GM
on or before the date of any payment by GM, with a copy to the Agent, (A) a
certificate substantially in the form of Exhibit I (any such certificate a "US
Tax Compliance Certificate"), (B) two accurate and complete original signed
copies of Internal Revenue Service Form W-8BEN, or successor applicable form,
certifying to such Lender's legal entitlement at the date of such certificate to
a complete exemption from US withholding tax under the provisions of Section
881(c) of the Code with respect to payments to be made under this Agreement and
any Notes, (C) two further copies of such form and certification (I) on or
before the date it expires or becomes obsolete and (II) if and to the extent
such Non-US Lender is then legally able to provide such form or certification,
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to GM, and, (D) if and to the extent such Non-US
Lender is then legally able to do so, if necessary, obtain any extensions of
time reasonably requested by GM or the Agent for filing and completing such
forms, and (iii) agree, if and to the extent such Non-US Lender is then legally
entitled to do so, upon reasonable request by GM, to provide to GM (for the
benefit of GM and the Agent) such other forms as may be reasonably required in
order to establish the legal entitlement of such Lender to a complete exemption
from withholding with respect to payments under this Agreement and any Notes;

unless a change in any applicable treaty, law or regulation or any change in the
interpretation, administration or application relating thereto has occurred
prior to the date on which any such delivery would otherwise be required (i)
with respect to any prospective Lender and with respect to any Lender already a
party hereto, which renders all such forms inapplicable or (ii) with respect to
any Lender already a party hereto, which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises GM and the Agent. Each Assignee, Participant or Conduit Lender hereunder
pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection 2.19; provided that in the case of a Participant
such Participant shall furnish all such required forms and statements,
documentation or certifications to the Lender from which the related
participation shall have been purchased, and such Lender shall in turn furnish
all such required forms (including, without limitation, Internal Revenue Service
Form W-8IMY), documentation and certifications to GM and the Agent. Any Lender
to GM that is a "United States person" (within the meaning of Code section
7701(a)(30)) shall furnish GM and the Agent with a Form W-9 or successor form
thereto, certifying an exemption from backup withholding in respect of payments
hereunder, if it is legally entitled to do so.

          (c) If and to the extent that a Tax Indemnified Party, in its sole
discretion (exercised in good faith), determines that it has received or been
granted a credit against, a relief from, a refund or remission of, or a
repayment of, any Non-Excluded Tax in respect of which it has received
additional payments under subsection 2.19(a) of this Agreement, then such Tax
Indemnified Party shall pay to the relevant Borrower the amount of such credit,
relief, refund, remission or repayment so determined by such Tax Indemnified
Party (in its sole discretion, exercised in good faith) to be attributable to
such deduction or withholding of Non-Excluded Tax; provided that such Tax
Indemnified Party shall not be obligated to make any payment under this
paragraph in respect of any such credit, relief, refund, remission or repayment
until such Tax Indemnified Party, in its sole judgment (exercised in good faith)
is satisfied that its tax affairs for



                                                                              58


the tax year in respect of which such credit, relief, remission or repayment was
obtained have been finally settled.

          (d) If any Lender to GM fails to provide the Borrowers or the Agent
with the appropriate form, certificate or other document described in clause (b)
above (other than if such failure is due to a change in law, treaty or
regulation or in the interpretation, administration, or application thereof,
occurring after the date on which a form, certificate or other document
originally was required to be provided), such Lender shall not be entitled to
indemnification under clause (a) of this subsection 2.19.

          2.20 Indemnity. Subject to the provisions of subsection 2.21(a), each
Borrower agrees to indemnify each Lender and to hold each Lender harmless from
any loss or reasonable expense which such Lender may sustain or incur as a
consequence of (a) default by such Borrower in making a borrowing of, conversion
into or continuation of any Loan or Money Market Advance hereunder after such
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by such Borrower in making any
prepayment after such Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making by such Borrower of a prepayment
of Eurodollar Loans, Acceptance Equivalent Loans, Acceptance Obligations or
Fixed Rate Loans or Money Market Advances on a day which is not the last day of
an Interest Period with respect thereto. Such indemnification shall be in an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding the Applicable Margin
included therein) over (ii) the amount of interest (as determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. This covenant shall survive the termination of this Agreement
and the payment of all other amounts payable hereunder.

          2.21 Notice of Amounts Payable; Relocation of Lending Office;
Mandatory Assignment. (a)In the event that any Lender becomes aware that any
amounts are or will be owed to it pursuant to subsection 2.17, 2.18, 2.19(a) or
2.20, then it shall promptly notify the relevant Borrower(s) thereof and, as
soon as possible thereafter, such Lender shall submit to the relevant
Borrower(s) a certificate describing in reasonable detail the events or
circumstances causing such amounts to be owed to such Lender, indicating the
amount owing to it and the calculation thereof. The amounts set forth in such
certificate shall be prima facie evidence of the obligations of such Borrower
hereunder; provided, however, that the failure of such Borrower to pay any
amount owing to any Lender pursuant to subsection 2.17, 2.18, 2.19(a) or 2.20
shall not be deemed to constitute a Default or an Event of Default hereunder to
the extent that such Borrower is contesting in good faith its obligation to pay
such amount by ongoing discussions diligently pursued with such Lender or by
appropriate proceedings.

          (b) If a Lender claims any additional amounts payable pursuant to
subsection 2.17, 2.18 or 2.19(a), it shall use its reasonable efforts
(consistent with legal and regulatory



                                                                              59


restrictions) to avoid the need for paying such additional amounts, including
changing the jurisdiction of its Applicable Lending Office, provided that the
taking of any such action would not, in the reasonable judgment of the Lender,
be disadvantageous to such Lender.

          (c) In the event that any Lender delivers to a Borrower a certificate
in accordance with subsection 2.21(a) (other than a certificate as to amounts
payable pursuant to subsection 2.20), or a Borrower is required to pay any
additional amounts or other payments in accordance with subsection 2.17, 2.18 or
2.19(a), such Borrower may, at its own expense and in its sole discretion, (i)
require such Lender to transfer or assign, in whole or in part, without recourse
(in accordance with subsection 10.6), all or part of its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
and Money Market Advances) to another Person (provided that such Borrower, with
the full cooperation of such Lender, can identify a Person who is ready, willing
and able to be an Assignee with respect to thereto) which shall assume such
assigned obligations (which Assignee may be another Lender, if such Assignee
Lender accepts such assignment) or (ii) during such time as no Default or Event
of Default has occurred and is continuing, terminate the Commitment of such
Lender and prepay all outstanding Loans, Acceptances, Acceptance Equivalent
Loans, Discount Notes, Reimbursement Obligations and Money Market Advances of
such Lender; provided that (x) such Borrower or the Assignee, as the case may
be, shall have paid to such Lender in immediately available funds the principal
of and interest accrued to the date of such payment on the Loans (other than
Competitive Loans) made by it hereunder and (subject to subsection 2.20) all
other amounts owed to it hereunder and (y) such assignment or termination of the
Commitment of such Lender and prepayment of Loans is not prohibited by any law,
rule or regulation or order of any court or Governmental Authority.

          2.22 Controls; Currency Exchange Rate Fluctuations. (a)GM and GM
Canada will implement and maintain internal controls to monitor the Borrowings
and repayments of its Canadian/US Secured Extensions of Credit denominated in
Canadian Dollars, with the object of preventing any request for a Canadian/US
Secured Loan or the issuance of a Letter of Credit that would cause the
aggregate amount of Canadian/US Secured Extensions of Credit to exceed the
Canadian/US Secured Commitments. In the event that the Agent, GM, GM Canada or
any Lender shall at any time reasonably determine that (as a result of currency
exchange fluctuations or otherwise) the aggregate amount of Canadian/US Secured
Extensions of Credit exceeds 105% of the Canadian/US Secured Commitments, (i)
the relevant Person will promptly notify the Agent, GM and GM Canada (as
applicable) and (ii) in the event that such 105% limit is exceeded for five
consecutive Business Days, each Borrower shall promptly (and, in any event,
within one Business Day) repay the Canadian/US Secured Loans made to such
Borrower by the amount necessary to cause the Canadian/US Secured Extensions of
Credit to be not more than 100% of the Canadian/US Secured Commitments. Any
prepayment of Eurodollar Loans pursuant to this subsection 2.22 on a date which
is not the last day of the Interest Period applicable thereto shall be subject
to the provisions of subsection 2.20.

          (b) For purposes of determining the outstanding amount of the
Canadian/US Secured Extensions of Credit at any date, those extensions of credit
which are denominated in Canadian Dollars shall be deemed to be equal to the
Dollar Equivalent thereof.



                                                                              60


          (c) The Agent shall be obligated to calculate whether any prepayment
is due under this subsection 2.22 only on each date on which a Borrowing or
Letter of Credit issuance is requested or an extension of credit is converted or
continued hereunder and on any other date in its sole discretion.

          2.23 Judgment Currency. (a)Each Borrower's obligations hereunder to
make payments in Dollars or Canadian Dollars, as the case may be (the
"Obligation Currency") shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than the Obligation Currency, except to the extent to which such tender or
recovery shall result in the effective receipt by the Agent and the Lenders of
the full amount of the Obligation Currency expressed to be payable under this
Agreement. If for the purpose of obtaining or enforcing judgment against any
Borrower in any court or in any jurisdiction, it becomes necessary to convert
into any currency other than the Obligation Currency (such other currency being
hereinafter referred to as the "Judgment Currency") an amount due in the
Obligation Currency, the conversion shall be made, at the option of the Agent or
the relevant Lender, at the rate of exchange (as hereinafter defined) prevailing
on the Business Day immediately preceding the day on which the judgment is given
(such Business Day being hereinafter referred to herein as the "Judgment
Currency Conversion Date").

          (b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the relevant Borrower covenants and agrees to pay such additional
amounts (if any, but in any event not a lesser amount) required to be paid by it
hereunder as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment (as quoted by the Agent or the relevant Lender, as the case may be),
will produce the amount of the Obligation Currency which could have been
purchased with the amount of Judgment Currency stipulated in the judgment or
judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date.

          (c) Any amount due from any Borrower under the foregoing subparagraph
will be due as a separate Obligation and shall not be affected by judgment being
obtained for any other sums due under or in respect of the guarantee contained
in Section 9 or otherwise in respect of this Agreement or any Note.

          (d) The term "rate of exchange" in this subsection 2.23 means the rate
of exchange set forth on page 260 of the Telerate screen on or about 11:00 A.M.,
London time, for the purchase of the Obligation Currency with the Judgment
Currency quoted to the Agent or the relevant Lender, as the case may be, in the
relevant foreign exchange market or markets selected by the Agent or such
Lender, on the date applicable to such purchase and includes any premium and
costs of exchange payable in connection with such purchase.

          2.24 Replacement of Lenders. The Borrowers shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
subsections 2.17, 2.18 or 2.19(a), (b) defaults in its obligation to make Loans
hereunder or (c) fails to consent to any amendment to this Agreement requested
by either of the Borrowers which requires the consent of all of the Lenders (or
all of the Lenders affected thereby) and which is consented to by the Majority
Lenders or the Majority Tranche Lenders, as applicable; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) the replacement
financial


                                                                              61


institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (iii) if the replacement
is being made pursuant to clause (c), the replacement financial institution
shall consent to the requested amendment, (iv) the applicable Borrower shall be
liable to such replaced Lender under Section 2.20 if any Eurodollar Loan owing
to such replaced Lender shall be purchased other than on the last day of the
Interest Period relating thereto, (v) the replacement financial institution
shall be reasonably satisfactory to the Agent, (vi) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
10.6, (vii) until such time as such replacement shall be consummated, the
applicable Borrower shall pay all additional amounts (if any) required pursuant
to subsections 2.17, 2.18 or 2.19(a), as the case may be and (viii) upon the
execution of the assignment agreement and the payment of the amounts referred to
in clause (ii) above, the replacement financial institution shall become a
Lender hereunder and the replaced Lender shall cease to constitute a Lender
hereunder and be released of all its obligations as a Lender, except with
respect to indemnification provisions applicable to such replaced Lender under
this Agreement during the period in which such replaced Lender was a Lender
hereunder, which shall survive as to such replaced Lender.

                                   SECTION 2A.
                                LETTERS OF CREDIT

          2A.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
each Issuing Bank, in reliance on the agreements of the other Canadian/US
Secured Lenders set forth in Section 2A.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of GM or GM Canada on any Business Day
during the relevant Commitment Period in such form as may be approved from time
to time by such Issuing Bank; provided that no Issuing Bank shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment, (ii) the
aggregate amount of the Available Canadian/US Secured Commitments would be less
than zero or (iii) the Total Extensions of Credit would exceed the aggregate
Commitments then in effect of all Lenders and, provided, further, that any
Issuing Bank that issues Letters of Credit to GM Canada shall be a Qualifying
Canadian/US Lender. Each Letter of Credit shall (i) be denominated in Dollars or
in any other currency freely transferable into Dollars (each such other currency
an, "Alternative Currency") requested by GM or GM Canada, as the case may be,
and acceptable to the applicable Issuing Bank and (ii) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
that is five Business Days prior to the Extended Termination Date, provided that
any Letter of Credit with a one-year term may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).

          (b) No Issuing Bank shall at any time be obligated to issue any Letter
of Credit if such issuance would conflict with, or cause such Issuing Bank or
any L/C Participant to exceed any limits imposed by, any applicable Requirement
of Law.

          2A.2 Procedure for Issuance of Letter of Credit. Either Borrower may
from time to time request that an Issuing Bank issue a Letter of Credit by
delivering to such Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Bank, and
such other customary documents and information as such Issuing Bank



                                                                              62


may reasonably request. Upon receipt of any Application, such Issuing Bank will
process such Application and other customary documents and information delivered
to it in connection therewith in accordance with its customary procedures and
shall promptly issue the Letter of Credit requested thereby (but in no event
shall such Issuing Bank be required to issue any Letter of Credit earlier than
three Business Days after its receipt of the Application therefor and all such
documents and information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by
such Issuing Bank and the relevant Borrower. Such Issuing Bank shall furnish a
copy of such Letter of Credit to the relevant Borrower promptly following the
issuance thereof. Such Issuing Bank shall promptly furnish to the Agent, which
shall in turn promptly furnish to the Canadian/US Secured Lenders, notice of the
issuance of each Letter of Credit (including the amount thereof).

          2A.3 Fees and Other Charges. (a) Each Borrower will pay to the Agent,
for the ratable benefit of the Canadian/US Secured Lenders, a fee on all
outstanding Letters of Credit issued on its behalf at a per annum rate equal to
the Applicable Margin then in effect with respect to Eurodollar Loans under the
Extended Secured Commitments, shared ratably among the Canadian/US Secured
Lenders and payable quarterly in arrears on each Fee Payment Date after the
issuance date. In addition, the Borrower shall pay to the Issuing Bank for its
own account a fronting fee of 0.125% per annum (or such lower rate as agreed to
between GM and GM Canada, as the case may be, and such Issuing Bank) on the
undrawn and unexpired amount of each Letter of Credit, payable quarterly in
arrears on each Fee Payment Date after the issuance date.

          (b) In addition to the foregoing fees, each Borrower shall pay or
reimburse each Issuing Bank for such normal and customary costs and expenses as
are incurred or charged by such Issuing Bank in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit issued
by such Issuing Bank on behalf of such Borrower.

          2A.4 L/C Participations. (a) Each Issuing Bank irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce each Issuing
Bank to issue Letters of Credit, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from each Issuing Bank, on
the terms and conditions set forth below, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Canadian/US
Secured Commitment Percentage in such Issuing Bank's obligations and rights
under and in respect of each Letter of Credit and the amount of each draft paid
by such Issuing Bank thereunder. Each L/C Participant agrees with each Issuing
Bank that, if a draft is paid under any Letter of Credit for which such Issuing
Bank is not reimbursed in full by the Borrowers in accordance with the terms of
this Agreement, such L/C Participant shall pay to such Issuing Bank upon demand
at such Issuing Bank's address for notices specified herein an amount equal to
such L/C Participant's Canadian/US Secured Commitment Percentage of the amount
of such draft, or any part thereof, that is not so reimbursed; provided that
with respect to participations in any Letter of Credit denominated in an
Alternative Currency, such participation shall be made in Dollars, in an amount
equal to the Dollar Equivalent of the amount of such participation, if the
Borrower's reimbursement obligation with respect to such Letter of Credit has
been converted to Dollars in accordance with subsection 2A.5. Each L/C
Participant's obligation to pay such amount shall be absolute and unconditional
and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such L/C Participant may
have against such Issuing Bank, the Borrowers or any other Person for



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any reason whatsoever, (ii) the occurrence or continuance of a Default or an
Event of Default or the failure to satisfy any of the other conditions specified
in Section 4, (iii) any adverse change in the condition (financial or otherwise)
of the Borrowers, (iv) any breach of this Agreement or any other Loan Document
by the Borrowers, any other Loan Party or any other L/C Participant or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.

          (b) If any amount required to be paid by any L/C Participant to any
Issuing Bank pursuant to subsection 2A.4(a) in respect of any unreimbursed
portion of any payment made by such Issuing Bank under any Letter of Credit is
paid to such Issuing Bank within three Business Days after the date such payment
is due, such L/C Participant shall pay to such Issuing Bank on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to such
Issuing Bank, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to subsection
2A.4(a) is not made available to such Issuing Bank by such L/C Participant
within three Business Days after the date such payment is due, such Issuing Bank
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans under the Extended Secured Commitments. A certificate of
any Issuing Bank submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.

          (c) Whenever, at any time after any Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 2A.4(a), such Issuing
Bank receives any payment related to such Letter of Credit (whether directly
from a Borrower or otherwise, including proceeds of collateral applied thereto
by such Issuing Bank), or any payment of interest on account thereof, such
Issuing Bank will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by such
Issuing Bank shall be required to be returned by such Issuing Bank, such L/C
Participant shall return to such Issuing Bank the portion thereof previously
distributed by such Issuing Bank to it.

          2A.5 Reimbursement Obligation of the Borrowers. If any draft is paid
under any Letter of Credit, the Borrower for whose account such Letter of Credit
was issued shall reimburse the applicable Issuing Bank for the amount of (a) the
draft so paid and (b) subject to subsection 2.19, any taxes, fees, charges or
other costs or expenses incurred by such Issuing Bank in connection with such
payment, not later than 1:00 P.M., New York City time, subject to subsection
2.19 on (i) the Business Day that such Borrower receives notice of such draft,
if such notice is received on such day prior to 10:00 A.M., New York City time,
or (ii) if clause (i) above does not apply, the Business Day immediately
following the day that such Borrower receives such notice. Each such payment
shall be made to any Issuing Bank at its address for notices referred to herein
in the currency in which such Letter of Credit is denominated (except that, in
the case of any Letter of Credit denominated in an Alternative Currency, in the
event that such payment is not made to the Issuing Bank in such Alternative
Currency within three Business Days of the date of receipt by the applicable
Borrower of such notice, such payment



                                                                              64


shall be made in Dollars, in an amount equal to the Dollar Equivalent of the
amount of such payment converted on the date of such notice into Dollars at the
spot rate of exchange on such date) and in immediately available funds. Any
conversion by any Issuing Bank of any payment to be made by a Borrower in
respect of any Letter of Credit denominated in Canadian Dollars into Dollars in
accordance with this subsection 2A.5 shall be conclusive and binding upon such
Borrower and the Lenders in the absence of manifest error; provided that upon
the request of any Lender, any Issuing Bank shall provide to such Lender a
certificate including reasonably detailed information as to the calculation of
such conversion. Interest shall be payable on any such amounts from the date on
which the relevant draft is paid until payment in full at the rate set forth in
(x) until the Business Day next succeeding the date of the relevant notice,
subsection 2.12A(a) and (y) thereafter, subsection 2.12A(f).

          2A.6 Obligations Absolute. Each Borrower's obligations under this
subsection 2A shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that either Borrower may have or have had against any Issuing Bank, any
beneficiary of a Letter of Credit or any other Person. Each Borrower also agrees
with each Issuing Bank that such Issuing Bank (in the absence of gross
negligence and willful misconduct) shall not be responsible for, and the
Borrowers' Reimbursement Obligations under subsection 2A.5 shall not be affected
by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among either Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of either Borrower
against any beneficiary of such Letter of Credit or any such transferee. No
Issuing Bank shall be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions resulting from the gross negligence or willful misconduct of such
Issuing Bank. Each Borrower agrees that any action taken or omitted by any
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct, shall be binding on each Borrower and shall not result in any
liability of such Issuing Bank to each Borrower.

          2A.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the applicable Issuing Bank shall promptly
notify the Borrower for whose account such Letter of Credit was issued of the
date and amount thereof. The responsibility of each Issuing Bank to each
Borrower in connection with any draft presented for payment under any Letter of
Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are substantially in conformity with such Letter of Credit.

          2A.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 2A, the provisions of this Section 2A shall apply.



                                                                              65


                                   SECTION 3.
                         REPRESENTATIONS AND WARRANTIES

          To induce the Agent and the Lenders to enter into this Agreement, to
make Loans and other extensions of credit hereunder, each Loan Party (other than
GM Canada with respect to subsections 3.1 and 3.8 (it being understood that with
respect to all other subsections in this Section 3, GM Canada is making such
representations and warranties only as to itself and, if applicable, its
Subsidiaries)) hereby represents and warrants to the Agent and each Lender that:

          3.1 Financial Condition. GM has heretofore furnished to each Lender a
copy of its consolidated financial statements for its fiscal year ended December
31, 2005 and GM has heretofore furnished to the Agent for each Lender a copy of
its consolidated financial statements for its fiscal quarter ended March 31,
2006, which were included in the Form 10-K or the Form 10-Q, as the case may be,
of GM filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. Such financial statements present fairly in
all material respects the financial condition and results of operations of GM
and its Subsidiaries as of such date in accordance with GAAP. Between March 31,
2006 and the Effective Date, there has been no development or event which has
had a Material Adverse Effect.

          3.2 Corporate Existence. Such Loan Party (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged and (c) is duly qualified
as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that all
failures to be duly qualified and in good standing could not, in the aggregate,
have a Material Adverse Effect.

          3.3 Corporate Power; Authorization; Enforceable Obligations. Such Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of such Loan Party, to borrow hereunder and has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of this Agreement
and to authorize the execution, delivery and performance of the Loan Documents.
No consent or authorization of any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement or any of
the other Loan Documents, except filing required to perfect the Liens created
thereunder. Each Loan Document has been duly executed and delivered on behalf of
each Loan Party party thereto. This Agreement constitutes, and each other Loan
Document upon execution will constitute, a legal, valid and binding obligation
of each Loan Party party thereto enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

          3.4 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual



                                                                              66


Obligation of such Loan Party and will not result in, or require, the creation
or imposition of any Lien on any of its properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation (other than the Liens created
by the Security Documents), except to the extent that all such violations and
creation or imposition of Liens could not, in the aggregate, have a Material
Adverse Effect.

          3.5 No Material Litigation. Except as set forth in the Form 10-K of GM
for its fiscal year ended December 31, 2005 or the Form 10-Q of GM for the
fiscal quarter ended March 31, 2006 and in the Forms 10-K/A, 10-Q-A and 8-K of
GM filed with Securities and Exchange Commission immediately prior thereto, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of such Borrower,
threatened by or against such Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues as of the Effective Date (a)
with respect to this Agreement or any other Loan Document or any of the actions
contemplated hereby or thereby, or (b) which involves a probable risk of an
adverse decision which (i) with respect to GM Canada, would materially restrict
its ability to comply with its obligations under this Agreement or any other
Loan Document or (ii) with respect to GM and Saturn, would materially restrict
such Loan Party's ability to comply with its obligations under this Agreement or
any other Loan Document.

          3.6 Federal Regulations. No part of the proceeds of any Loans will be
used for "buying," "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors.

          3.7 Investment Company Act. Such Loan Party is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.

          3.8 ERISA. GM is in compliance with all material provisions of ERISA,
except to the extent that all failures to be in compliance could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

          3.9 No Material Misstatements. No report, financial statement or other
written information furnished by or on behalf of GM Canada (with respect to
itself) or GM (with respect to itself, GM Canada and Saturn) to the Agent or any
Lender pursuant to subsection 3.1 or subsection 5.1(a) of this Agreement or
pursuant to any other Loan Document contains or will contain any material
misstatement of fact or omits or will omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were, are or will be made, not misleading, except to the extent that such facts
(whether misstated or omitted) do not result in a Material Adverse Effect.

          3.10 Purpose of Loans. The proceeds of the Loans shall be used by such
Borrower for its general corporate purposes.

          3.11 Pari Passu. The claims of the Agent and the Lenders against each
Borrower under this Agreement rank at least pari passu with the claims of all
its other unsecured creditors,



                                                                              67


save those whose claims are preferred solely by any laws of general application
having effect in relation to bankruptcy, insolvency, liquidation or other
similar events.

          3.12 Security Documents. (a) (i) Each of the US Security Agreement and
the Mexican Stock Pledge Agreement is effective to create in favor of the Agent,
for the benefit of the Secured Parties a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof, (ii) the
Canadian Security Agreements are effective to create in favor of the Agent, for
the benefit of the Canadian Secured Parties a legal, valid and enforceable
security interest in the Collateral described therein and proceeds thereof and
(iii) the Second Priority Security Agreements are effective to create in favor
of the Agent, for the benefit of the Hedging Secured Parties, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof.

          (b) In the case of the Pledged Stock described in the US Security
Agreement and the Mexican Stock Pledge Agreement, when stock certificate(s)
representing such Pledged Stock are delivered to the Agent, and in the case of
the other Collateral described in the US Security Agreement, the Canadian
Security Agreements and the Second Priority Security Agreements, when financing
statements and other filings specified on Schedule 3.12(b), as applicable, in
appropriate form are filed in the offices specified on Schedule 3.12(b), the US
Security Agreement, the Canadian Security Agreements and the Second Priority
Security Agreements shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for (x) in the case of the
Canadian Security Agreements, the Canadian Total Secured Exposure, (y) in the
case of the US Security Agreement, the Total Secured Exposure and (z) in the
case of the Second Priority Security Agreements, the Hedging Obligations, in
each case with the priority specified in such Security Documents or Second
Priority Security Agreements, as applicable, and subject to the Liens permitted
by subsection 6.2.

          (c) Each of the Debentures is effective to create in favor of the
Agent, for the benefit of the Canadian Secured Parties, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Debentures are filed in the offices specified on Schedule
4.19(b), each such Debenture shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of GM Canada in the
Mortgaged Properties and the proceeds thereof, as security for the Canadian
Total Secured Exposure to any Canadian Secured Party, in each case with the
priority specified therein, subject to the Liens permitted by subsection 6.2.

          3.13 Canadian Collateral. (a) Schedule IV lists each Canadian
jurisdiction in which personal property of GM Canada that has an aggregate
value, in the reasonable opinion of GM Canada, in excess of $50,000,000 is
located as of the Effective Date. Other than those listed in Schedule IV, there
is no jurisdiction through which personal property of GM Canada that has an
aggregate value, in the reasonable opinion of GM Canada, in excess of
$50,000,000 is from time to time in transit. Schedule IV also lists all Canadian
jurisdictions in which books and records are maintained with respect to Canadian
Collateral. To the extent GM Canada maintains records with respect to Canadian
Collateral in the Province of Quebec, a duplicate copy thereof is maintained at
a location outside the Province of Quebec as indicated in Schedule IV.



                                                                              68


          (b) GM Canada has good and marketable fee simple title to all of the
Mortgaged Properties other than Liens permitted by subsection 6.2. GM Canada
also has good and marketable title to, or valid leasehold interests in, all of
its personal property and assets except to the extent that failure to have good
and marketable title to, or valid leasehold interests in, such property or
assets could not reasonably be expected to have a Material Adverse Effect.

          3.14 Environmental Matters. (a) GM Canada and each of the Mortgaged
Properties and the operations thereon comply in all respects with all applicable
Environmental Laws and GM Canada does not have any liability (whether contingent
or otherwise) in connection with any Environmental Activity, except in each case
to the extent it would not reasonably be expected to have a Material Adverse
Effect.

          (b) GM Canada (i) has not received any written notice of any claim
against or affecting it, or any of the Mortgaged Properties or the operations
thereon relating to Environmental Laws; (ii) has not received any written notice
of and is not aware of any judicial or administrative proceeding pending or, to
the knowledge of GM Canada, threatened against or affecting it, or any of the
Mortgaged Properties or the operations thereon alleging any material violation
of any Environmental Laws; (iii) to the best of its knowledge, is not the
subject of any investigation, evaluation, audit or review by any Governmental
Authority to determine whether any violation of any Environmental Laws has
occurred or is occurring or whether any remediation action is needed in
connection with an Environmental Activity; in the case of clauses (i), (ii) and
(iii), except to the extent such claim, notice, investigation, remediation or
monitoring costs as referenced in such clauses would not reasonably be expected
to have a Material Adverse Effect.

          (c) GM Canada does not store any Hazardous Substance on any of the
Mortgaged Properties nor has it disposed of any Hazardous Substance on any of
the Mortgaged Properties, in each case, except (i) in compliance with all
applicable Environmental Laws or (ii) where such storage or disposal would not
reasonably be expected to have a Material Adverse Effect.

          3.15 Canadian Pension Plans. GM Canada is in compliance with all
material provisions of all Canadian Pension Plans and applicable law that
governs or applies to the Canadian Pension Plans, except to the extent that all
failures to be in compliance could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

                                   SECTION 4.
                              CONDITIONS PRECEDENT

          4.1 Conditions to Initial Loans. The effectiveness of this Agreement
and the agreement of each Lender to make the Loans requested to be made by it or
issue Letters of Credit hereunder are subject to the satisfaction on the
Effective Date of the following conditions precedent:

          (a) Credit Agreement; Security Documents. The Agent shall have
     received (i) this Agreement, executed and delivered (including, without
     limitation, by way of a



                                                                              69


     telecopied signature page) by a duly authorized officer of each Borrower,
     the Majority Lenders under and as defined in the Existing Credit Agreement
     and each Secured Lender, (ii) the US Security Agreement, executed and
     delivered by GM and Saturn, (iii) the Mexican Stock Pledge Agreement,
     executed and delivered by GM, (iv) each of the Canadian Security Documents,
     executed and delivered by GM Canada, (v) each of the Second Priority
     Security Agreements, executed and delivered by GM and Saturn and (vi) an
     Acknowledgement and Consent in the form attached to the Mexican Stock
     Pledge Agreement, executed and delivered by CGM.

          (b) Lien Searches. The Agent shall have received the results of a
     recent lien search in each Loan Party's jurisdiction of organization and,
     in the case of GM Canada, in each of the jurisdictions where Collateral is
     located, and such search shall reveal no Liens on any of the Collateral
     except for Liens permitted by subsection 6.2 or discharged on or prior to
     the Effective Date pursuant to documentation reasonably satisfactory to the
     Agent.

          (c) Environmental Audit. The Agent shall have received the most
     recently existing copies of environmental management systems audits (ISO
     14001), governmental agency inspection reports, spill and emergency
     response plans and a listing of environmental compliance audits with
     respect to certain material real property owned by GM Canada, excluding, in
     each case privileged and confidential information.

          (d) Secretary's Certificate of Loan Parties. The Agent shall have
     received a certificate of the Secretary or Assistant Secretary of each of
     the Loan Parties, in form and substance satisfactory to the Agent, which
     certificate shall (i) certify as to the incumbency and signature of the
     officers of such Loan Party executing this Agreement (with the President or
     a Vice President of such Loan Party attesting to the incumbency and
     signature of the Secretary or Assistant Secretary providing such
     certificate), (ii) have attached to it a true, complete and correct copy of
     each of the certificate of incorporation and by-laws or equivalent
     constitutional documents of such Loan Party, (iii) have attached to it a
     true and correct copy of appropriate resolutions of such Loan Party, which
     resolutions shall authorize the execution, delivery and performance of this
     Agreement and the other Loan Documents and the borrowings by the applicable
     Borrower hereunder and (iv) certify that, as of the date of such
     certificate (which shall not be earlier than the date hereof), none of such
     certificate of incorporation or by-laws (or equivalent constitutional
     documents) or resolutions shall have been amended, supplemented, modified,
     revoked or rescinded.

          (e) Fees. The Secured Lenders and the Agent shall have received all
     fees required to be paid in accordance with the Fee Letter.

          (f) Legal Opinions. The Agent shall have received, (i) the executed
     legal opinion of Weil, Gotshal & Manges LLP, US counsel to each of the Loan
     Parties, substantially in the form of Exhibit F-1, (ii) the executed legal
     opinions of Osler Hoskin & Harcourt LLP, Canadian counsel to each of the
     Loan Parties, substantially in the form of Exhibit F-2, (iii) the executed
     legal opinion of Martin I. Darvick, Esq., substantially in the form of
     Exhibit F-3, (iv) the executed legal opinion of Santamarina y Steta S.C.,
     Mexican counsel to each of the Loan Parties, substantially in the form of
     Exhibit F-4 and (v) the executed



                                                                              70


     legal opinion of Neil Macdonald, Esq., substantially in the form of Exhibit
     F-5. Each Borrower hereby instructs the counsel referenced in clauses (i),
     (ii), (iii), (iv) and (v) as applicable, to deliver its opinion for the
     benefit of the Agent and each of the Secured Lenders.

          (g) Financial Statements. The Secured Lenders shall have received (i)
     the audited non-consolidated financial statements of GM Canada and (ii) the
     unaudited income statement of GM Mexico, in each case prepared in
     accordance with GAAP for the fiscal year ending December 31, 2005.

          (h) Pledged Stock; Stock Powers. The Agent shall have received the
     certificates representing the shares of capital stock pledged pursuant to
     the US Security Agreement and the Mexican Stock Pledge Agreement, together
     with an undated stock power for each such certificate executed in blank by
     a duly authorized officer of the pledgor thereof.

          (i) Filings, Registrations and Recordings. Each document (including
     any Uniform Commercial Code and PPSA financing statement) required by the
     Security Documents or under law or reasonably requested by the Agent to be
     filed, registered or recorded in order to create in favor of the Agent, for
     the benefit of the applicable Secured Lenders, a perfected Lien on the
     Collateral described therein, prior and superior in right to any other
     Person (other than with respect to Liens expressly permitted by subsection
     6.2), shall be in proper form for filing, registration or recordation.

          (j) Debentures. The Agent shall have received a duly registered
     Debenture with respect to each Mortgaged Property, executed and delivered
     by a duly authorized officer of each party thereto, together with
     satisfactory title insurance policies issued by an insurer determined by GM
     Canada and reasonably acceptable to the Agent.

          (k) Insurance. The Agent shall have received evidence of satisfactory
     insurance coverage or self-insurance for the Canadian Collateral and an
     insurance certificate reflecting the Agent as an additional loss payee
     thereunder.

          (l) The Agent shall notify each Borrower and each Lender promptly
     after the satisfaction of the foregoing conditions.

          4.2 Conditions to Each Loan. The agreement of each Lender to make any
extension of credit to be made by it on any date (including, without limitation,
its initial extension of credit), is subject to the satisfaction of the
following conditions:

          (a) Notice of Borrowing. The Agent shall have received a notice of
     borrowing executed by such Borrower, as required by subsection 2.2, 2.3,
     2.4 or 2.5, as the case may be.

          (b) Representations and Warranties. Each of the representations and
     warranties made by any Loan Party in or pursuant to the Loan Documents
     shall be true and correct in all material respects on and as of such date
     as if made on and as of such date except to the extent such representation
     and warranties expressly relate to an earlier date, in which



                                                                              71


     case such representations and warranties shall have been true and correct
     in all material respects as of such earlier date.

          (c) No Default. No Default or Event of Default shall have occurred and
     be continuing on such date or after giving effect to the extensions of
     credit requested to be made on such date.

          4.3 Additional Conditions to each Secured Loan. The agreement of each
Secured Lender to make any extension of credit to be made by it on any date
(including, without limitation, its initial extension of credit), is subject to
the satisfaction of the additional following conditions:

          (a) US Total Secured Exposure. In the case of the US Secured
     Commitments or the Canadian/US Secured Commitments, after giving effect to
     any extension of credit thereunder to GM, the US Total Secured Exposure
     shall not exceed the lesser of (i) $6,000,000,000 minus the Canadian Total
     Secured Exposure and (ii) the Effective US Collateral Value.

          (b) Canadian Total Secured Exposure. In the case of the Canadian/US
     Secured Commitments, after giving effect to any extension of credit
     thereunder to GM Canada, the Canadian Total Secured Exposure shall not
     exceed the lesser of (i) $6,000,000,000 minus the US Total Secured Exposure
     and (ii) the Effective Canadian Collateral Value.

Each borrowing by, and issuance of, an Acceptance or a Letter of Credit on
behalf of a Borrower hereunder shall constitute a representation and warranty by
such Borrower as of the date of such Loan that the conditions contained in
subsection 4.2 and, if applicable, subsection 4.3 have been satisfied.

                                   SECTION 5.
                              AFFIRMATIVE COVENANTS

          Each Borrower as to itself hereby agrees that, so long as any
Commitments available to such Borrower remain in effect, any Letter of Credit
remains outstanding or any amount is owing to any Lender or the Agent hereunder,
such Borrower shall:

          5.1 Financial Statements.

          (a) GM. Furnish to the Agent for delivery to each Lender:

               (i) as soon as available, but in any event within 110 days after
          the end of GM's fiscal year, a copy of the consolidated balance sheet
          of GM and its consolidated Subsidiaries as at the end of such year and
          the related consolidated statements of income and retained earnings
          and of cash flows for such year, setting forth in each case in
          comparative form the figures for the previous year, and reported on by
          Deloitte & Touche LLP or other independent public accountants of
          nationally recognized standing (without a "going concern" or like
          qualification or exception and without any qualification as to the
          scope of such audit) to the effect that such consolidated financial
          statements present fairly in all material respects the financial
          condition and results of operations of GM and its consolidated



                                                                              72


          Subsidiaries on a consolidated basis in accordance with GAAP
          consistently applied; and

               (ii) as soon as available, but in any event not later than 60
          days after the end of each of the first three quarterly periods of
          each fiscal year of GM, the unaudited consolidated balance sheet of GM
          and its consolidated Subsidiaries as at the end of such quarter and
          the related unaudited consolidated statements of income and retained
          earnings and of cash flows of GM and its consolidated Subsidiaries for
          such quarter and the portion of the fiscal year through the end of
          such quarter, setting forth in each case in comparative form the
          figures for the previous year, in each case prepared in accordance
          with GAAP applied consistently throughout the periods reflected
          therein and with prior periods (except as disclosed therein).

          (b) GM Canada and GM Mexico. Furnish to the Agent for each Secured
     Lender:

               (i) as soon as available, but in any event within 180 days after
          the end of GM Canada's fiscal year, a copy of the annual audited
          non-consolidated financial statements of GM Canada, prepared in
          accordance with GAAP applied consistently throughout the periods
          reflected therein and with prior periods, in the same form as the
          financial statements delivered to the Secured Lenders under subsection
          4.1(g); and

               (ii) as soon as available, but in any event within 150 days after
          the end of GM Mexico's fiscal year, a copy of the unaudited income
          statement of GM Mexico for such fiscal year, prepared in accordance
          with GAAP applied consistently throughout the periods reflected
          therein and with prior periods.

          5.2 Certificates; Other Information. Furnish to:

          (a) the Agent, for delivery to each Lender, concurrently with the
     delivery of the financial statements referred to in subsections 5.1(a) and
     5.1(b), a certificate of a Financial Officer of GM or GM Canada, as the
     case may be, stating that, to the best of such Officer's knowledge, (x)
     such financial statements present fairly in all material respects the
     financial condition and results of operations of GM or GM Canada and their
     respective Subsidiaries for the period referred to therein (subject, in the
     case of interim statements, to normal year-end audit adjustments) and (y)
     during such period each Loan Party has performed in all material respects
     all of its covenants and other agreements contained in this Agreement and
     the other Loan Documents to be performed by it, and that no Default or
     Event of Default has occurred and is continuing, except as specified in
     such certificate;

          (b) the Agent, for delivery to each Secured Lender, within 15 Business
     Days after the date on which GM is required to file Form 10-Q or 10-K with
     the Securities Exchange Commission (after giving effect to any grace
     periods or extensions available under applicable Securities and Exchange
     Commission regulations, but in any event within 110 days after the end of
     GM's fiscal year or fiscal quarter, as applicable), a



                                                                              73


     certificate of a Financial Officer of GM setting forth the US Collateral
     Value and a certificate of a Financial Officer of GM Canada setting forth
     the Canadian Collateral Value;

          (c) the Agent, for delivery to each Secured Lender, promptly after the
     incurrence of any Indebtedness by CGM or any of its Subsidiaries (excluding
     any CGM Excluded Indebtedness), a certificate of a Financial Officer of GM
     setting forth (i) the Stock Pledge Value and (ii) the Effective US
     Collateral Value, in each case after giving effect to the incurrence of
     such Indebtedness; provided that, no certificate shall be required to be
     delivered under this clause (c) unless the aggregate amount of all such
     Indebtedness incurred after the date of the most recent certificate setting
     forth the Effective US Collateral Value shall be more than $2,000,000;

          (d) the Agent for delivery to each Secured Lender, upon the Agent's
     written request upon the occurrence of a Material Production Event as
     reasonably determined by the Agent, within two Business Days after the end
     of each of the first, second, third and fourth seven-day periods of each
     month (the last day of each such period, a "Production Period End Date")
     (commencing with the first such period ended after the receipt of such
     request), a certificate (each a "Production Certificate") from a Financial
     Officer of GM setting forth the Average Daily Production during the most
     recent five Business Days that are not GM Holidays ending on such
     Production Period End Date and the Average Daily Production during the five
     Business Days that are not GM Holidays ending on the corresponding
     Production Period End Date in the prior year; provided that no Production
     Certificate shall be required to be delivered (i) if the Agent does not
     provide GM with a written request on a monthly basis to continue to be
     provided with Production Certificates, (ii) on any day occurring on a GM
     Holiday (it being understood that such Production Certificate shall be
     provided on the date immediately following such GM Holiday) or (iii) after
     the termination of any Material Production Event Period unless the Agent
     shall again so request after the occurrence of a new Material Production
     Event; and

          (e) the Agent, for delivery to each Secured Lender, promptly after the
     consummation of (i) any Permitted Collateral Dispositions of Canadian
     Collateral (other than (x) any Disposition of Canadian PP&E and (y) such
     Permitted Collateral Dispositions with a book value not exceeding
     $100,000,000 in the aggregate during the current fiscal quarter), (ii) any
     Disposition of Canadian PP&E with a book value in excess of $300,000,000 in
     the aggregate during the current fiscal quarter and (iii) any Permitted
     Collateral Dispositions of US Collateral (other than such Permitted
     Collateral Dispositions of US Collateral with a book value not exceeding
     $100,000,000 in the aggregate during the current fiscal quarter), a
     certificate of a Financial Officer of GM Canada or GM, as applicable,
     setting forth (A) in the case of clauses (i) and (ii) above, the Effective
     Canadian Collateral Value and (B) in the case of clause (iii) above, the
     Effective US Collateral Value, in each case after giving effect to such
     Dispositions.

Notwithstanding the foregoing, GM shall not be required to furnish or deliver to
the Agent any financial statements or reports that GM filed with the Securities
and Exchange Commission or any successor or analogous Governmental Authority,
and any such financial statements or reports so filed shall be deemed to have
been furnished or delivered to the Agent in accordance



                                                                              74


with the terms of this Section 5 if such financial statements or reports are
filed within the time periods for delivery required by this Section 5.

          5.3 Notices. Promptly give notice to the Agent for delivery to each
Lender of the occurrence of any Default or Event of Default, accompanied by a
statement of a Financial Officer setting forth details of the occurrence
referred to therein and stating what action such Borrower proposes to take with
respect thereto.

          5.4 Conduct of Business and Maintenance of Existence. Continue to
engage in its principal line of business as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its principal line of business except as
otherwise permitted pursuant to subsection 6.1 or to the extent that failure to
do so would not have a Material Adverse Effect.

          5.5 Additional Collateral, etc. (a) Except as set forth in clause (b)
below, with respect to any property of the types included in the description of
the Collateral under any Security Document executed by such Loan Party which is
acquired after the Effective Date by such Loan Party, promptly (i) execute and
deliver to the Agent such amendments to the applicable Security Document or such
other documents as the Agent reasonably deems necessary to grant to the Agent,
for the benefit of the applicable Secured Parties, a security interest in such
property and (ii) take all actions necessary to grant to the Agent, for the
benefit of the applicable Secured Parties, a perfected security interest in such
property with the priority specified in such Security Document (subject to the
Liens permitted by Section 6.2), including the filing of Uniform Commercial
Code, PPSA and other financing statements in such jurisdictions as may be
required by the US Security Documents or the Canadian Security Documents,
respectively, or by applicable law or as may be reasonably requested by the
Agent.

          (b) With respect to any interest in the fee simple of any real
property having a value (together with improvements thereof) of at least
$50,000,000 acquired after the Effective Date by GM Canada, promptly (i) execute
and deliver a first priority Debenture, in favor of the Agent, for the benefit
of the Canadian/US Secured Lenders, covering such real property, (ii) if
requested by the Agent, provide the Canadian/US Secured Lenders with any title
insurance, consents or estoppels, legal opinions and other supporting
documentation as reasonably deemed necessary or advisable by the Agent in
connection with such Debenture, each of the foregoing in form and substance
reasonably satisfactory to the Agent.

          (c) Notwithstanding anything to the contrary in this subsection 5.5,
there shall be excluded from the property referred to in clauses (a) and (b) of
this subsection such assets as to which the Agent shall reasonably determine
that the cost of obtaining a security interest therein is excessive in relation
to the value of the security to be afforded thereby.

          5.6 Environmental Matters. (a) Promptly notify the Agent of any
environmental matter, occurrence or other event relating to the Mortgaged
Properties arising after the Effective Date of which it is aware, or any breach
or violation of an Environmental Law applicable to the Mortgaged Properties,
which would reasonably be expected to have a Material Adverse Effect, and take
all necessary action required by any applicable Environmental Law to rectify
such



                                                                              75


environmental matter, occurrence or event or cure the breach or violation of
such Environmental Law, in each case, if failure to take such action would
reasonably be expected to have a Material Adverse Effect.

          (b) Promptly provide the Agent with a copy of: (i) any written notice
it receives that a violation of any Environmental Law has been committed with
respect to the Mortgaged Properties or there is the reasonable likelihood of
liability arising from the condition of any of the Mortgaged Properties, (ii)
any written notice it receives that a demand, claim, administrative or judicial
complaint has been filed against such Borrower alleging a violation of any
Environmental Law or liability related to the condition of any of the Mortgaged
Properties or requiring such Borrower to take any action in connection with any
Environmental Activity in respect of any of the Mortgaged Properties, (iii) any
written notice it receives from a third party or Governmental Authority alleging
that such Borrower is or may be liable or responsible for matters associated
with any Environmental Activity in respect of any of the Mortgaged Properties,
including all matters associated with a response to or a cleanup of the presence
or discharge of a Hazardous Substance in, at, through or into the environment;
and (iv) any environmental site assessment or audit report required to be
submitted by such Borrower to any Governmental Body, in the case of each of
clauses (i) through (iv), to the extent the investigation, remediation or
monitoring costs for which would reasonably be expected to have a Material
Adverse Effect.

                                   SECTION 6.
                               NEGATIVE COVENANTS

          Each Loan Party (other than GM Canada with respect to subsections
6.2(a), 6.3, 6.5, 6.6 or 6.8 (it being understood that with respect to all other
subsections in this Section 6, GM Canada is making such covenants only as to
itself and, if applicable, its Subsidiaries)), hereby agrees that so long as any
Commitments remain in effect, any Letter of Credit remains outstanding or any
amount is owing to any Lender or the Agent hereunder:

          6.1 Merger, Consolidation, etc. Such Loan Party agrees not to merge or
consolidate with any other Person or sell or convey all or substantially all of
its assets to any Person unless, in the case of mergers and consolidations,
(a)(i) such Loan Party shall be the continuing corporation and (ii) with respect
to a merger between GM and GM Canada, GM shall be the continuing corporation,
(b) immediately before and immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall have occurred and be
continuing and (c) the guarantee provided in Section 9 shall be in full force
and effect immediately after giving effect to such merger or consolidation
except in the case of a merger of a Loan Party into a Person guaranteeing such
Loan Party's Obligations pursuant to Section 9 to the extent such merger is
otherwise permitted hereunder.

          6.2 Limitations on Liens. (a) GM shall not permit any Manufacturing
Subsidiary to issue or assume any Indebtedness secured by a Lien upon any
Principal Domestic Manufacturing Property of GM or any Manufacturing Subsidiary
or upon any shares of stock or obligations of any Manufacturing Subsidiary
(whether such Principal Domestic Manufacturing Property, shares of stock or
obligations are now owned or hereafter acquired) without in any such case
effectively providing concurrently with the issuance or assumption of any such



                                                                              76


Indebtedness that all principal, interest, fees and other obligations owing
hereunder (together with, if GM shall so determine, any other obligations of GM
or such Manufacturing Subsidiary ranking equally with the amounts owing
hereunder and then existing or thereafter created) shall be secured equally and
ratably with such Indebtedness, unless the aggregate amount of Indebtedness
issued or assumed and so secured by Liens, together with all other secured
Indebtedness of GM and its Manufacturing Subsidiaries which (if originally
issued or assumed at such time) would otherwise be subject to the foregoing
restrictions, but not including Indebtedness permitted to be secured under
clauses (i) through (vi) of the immediately following paragraph, does not at the
time exceed 20% of the stockholders' equity of GM and its consolidated
subsidiaries, as determined in accordance with GAAP and shown on the audited
consolidated balance sheet contained in the latest published annual report to
the stockholders of GM.

          The above restrictions shall not apply to Indebtedness secured by:

               (i) Liens on property, shares of stock or Indebtedness of any
          corporation existing at the time such corporation becomes a
          Manufacturing Subsidiary;

               (ii) Liens on property existing at the time of acquisition of
          such property by GM or a Manufacturing Subsidiary, or Liens to secure
          the payment of all or any part of the purchase price of such property
          upon the acquisition of such property by GM or a Manufacturing
          Subsidiary or to secure any Indebtedness incurred prior to, at the
          time of, or within 180 days after, the later of the date of
          acquisition of such property and the date such property is placed in
          service, for the purpose of financing all or any part of the purchase
          price thereof, or Liens to secure any Indebtedness incurred for the
          purpose of financing the cost to GM or a Manufacturing Subsidiary of
          improvements to such acquired property;

               (iii) Liens securing Indebtedness of a Manufacturing Subsidiary
          owing to GM or any of its Subsidiaries;

               (iv) Liens on property of a corporation existing at the time such
          corporation is merged or consolidated with GM or a Manufacturing
          Subsidiary or at the time of a sale, lease or other disposition of the
          properties of a corporation as an entirety or substantially as an
          entirety to GM or a Manufacturing Subsidiary;

               (v) Liens on property of GM or a Manufacturing Subsidiary in
          favor of the United States of America or any state thereof, or any
          department, agency or instrumentality or political subdivision of the
          United States of America or any state thereof, or in favor of any
          other country, or any political subdivision thereof, to secure
          partial, progress, advance or other payments pursuant to any contract
          or statute or to secure any obligations incurred for the purpose of
          financing all or any part of the purchase price or the cost of
          construction of the property subject to such Liens; or

               (vi) any extension, renewal or replacement (or successive
          extensions, renewals or replacements) in whole or in part of any Lien
          securing Indebtedness permitted to be secured by the first sentence of
          this subsection 6.2(a) or any Lien



                                                                              77


          referred to in the foregoing clauses (i) to (v); provided, however,
          that the principal amount of Indebtedness secured thereby shall not
          exceed by more than 115% the principal amount of Indebtedness so
          secured at the time of such extension, renewal or replacement and that
          such extension, renewal or replacement shall be limited to all or a
          part of the property which secured the Lien so extended, renewed or
          replaced (plus improvements on such property).

          (b) Notwithstanding the foregoing, each Loan Party agrees not to,
directly or indirectly, create, incur, assume or suffer to exist any Lien upon
any of the Collateral except:

               (i) Liens for taxes, assessments, governmental charges and
          utility charges, in each case that are not yet due or that are being
          contested in good faith by appropriate proceedings, provided that
          adequate reserves with respect thereto are maintained on the books of
          such Borrower or its Subsidiaries, as the case may be, in conformity
          with GAAP;

               (ii) carriers', warehousemen's, mechanics', materialmen's,
          repairmen's or other like Liens arising in the ordinary course of
          business that are not overdue for a period of more than 30 days or
          that are being contested in good faith by appropriate proceedings;

               (iii) permits, licenses, easements, rights-of-way, restrictions
          and other similar encumbrances incurred in the ordinary course of
          business that, in the aggregate, are not substantial in amount and
          that do not in any case materially detract from the value of the
          property subject thereto or materially interfere with the ordinary
          conduct of the business of either Borrower or any of their respective
          Subsidiaries;

               (iv) encumbrances arising under leases or subleases of real
          property that do not, in the aggregate, materially detract from the
          value of such real property or interfere with the ordinary conduct of
          business conducted or proposed to be conducted with respect to such
          real property;

               (v) deposits made in the ordinary course of business in
          connection with worker's compensation, unemployment insurance or other
          types of social security benefits or to secure the performance of
          bids, tenders, sales, contracts (other than for the repayment of
          borrowed money) and surety, appeal, customs or performance bonds);

               (vi) Liens arising from precautionary Uniform Commercial Code or
          PPSA financing statement filings (or similar filings) regarding leases
          entered into by either Borrower or any of their respective
          Subsidiaries in the ordinary course of business;

               (vii) purchase money Liens granted by either of the Borrowers or
          any of their respective Subsidiaries (including the interest of a
          lessor under any Capital Lease Obligation and purchase money Liens to
          which any property is subject at the time, on or after the date
          hereof, of such Borrower's or such Subsidiary's



                                                                              78


          acquisition thereof) limited, in each case, to the property purchased
          with the proceeds of such purchase money indebtedness or subject to
          such Capital Lease Obligations;

               (viii) Liens in existence on the date hereof listed on Schedule
          6.1(b)(viii), provided that no such Lien is spread to cover any
          additional property after the Effective Date and that the amount of
          indebtedness secured thereby is not increased;

               (ix) any Lien securing the renewal, extension, refinancing or
          refunding of any indebtedness secured by any Lien permitted by clause
          (vii) or (viii) above or this clause (ix) without any change in the
          assets subject to such Lien;

               (x) any Lien arising out of claims under a judgment rendered or
          claim filed so long as (A) such judgments or claims do not constitute
          a Default or Event of Default under this Agreement and (B) such
          judgments or claims are being contested in good faith and in respect
          of which there shall have been adequate reserves with respect thereto
          maintained on the books of such Loan Party in conformity with GAAP;

               (xi) any Lien consisting of rights reserved to or vested in any
          Governmental Authority by any statutory provision;

               (xii) Liens created pursuant to (and Liens permitted by) the
          Security Documents and the Second Priority Security Agreements;

               (xiii) Liens incurred in connection with the Receivables
          Financing Agreement;

               (xiv) Liens securing the Hedging Obligations (it being understood
          that such Liens shall be secured by the Collateral and junior in
          priority to the Liens securing the Total Secured Exposure);

               (xv) Liens in favor of lessors pursuant to sale and leaseback
          transactions to the extent the Disposition of the assets subject to
          any such sale and leaseback transaction is permitted under subsection
          6.3; and

               (xvi) Liens not otherwise permitted by the foregoing clauses of
          this subsection 6.2 securing obligations or other liabilities (other
          than indebtedness) of any Loan Party; provided that the Dollar or
          Dollar Equivalent of the aggregate outstanding amount of all such
          obligations and liabilities shall not exceed $50,000,000 at any time.

          6.3 Limitation on Sale and Lease-Back. GM will not, nor will it permit
any Manufacturing Subsidiary to, enter into any arrangement with any Person
providing for the leasing by GM or any Manufacturing Subsidiary of any Principal
Domestic Manufacturing Property owned by GM or any Manufacturing Subsidiary on
the Effective Date (except for temporary leases for a term of not more than five
years and except for leases between GM and a



                                                                              79


Manufacturing Subsidiary or between Manufacturing Subsidiaries), which property
has been or is to be sold or transferred by GM or such Manufacturing Subsidiary
to such Person, unless either:

               (i) GM or such Manufacturing Subsidiary would be entitled,
          pursuant to the provisions of subsection 6.1, to issue, assume,
          extend, renew or replace Indebtedness secured by a Lien upon such
          property equal in amount to the Attributable Indebtedness in respect
          of such arrangement without equally and ratably securing the amount
          owing hereunder; provided, however, that from and after the date on
          which such arrangement becomes effective the Attributable Indebtedness
          in respect of such arrangement shall be deemed for all purposes under
          subsection 6.2(a) and this subsection to be Indebtedness subject to
          the provisions of subsection 6.2(a) (which provisions include the
          exceptions set forth in clauses (i) through (vi) thereof), or

               (ii) GM shall apply an amount in cash equal to the Attributable
          Indebtedness in respect of such arrangement to the retirement (other
          than any mandatory retirement or by way of payment at maturity),
          within 180 days of the effective date of any such arrangement, of
          Indebtedness of GM or any Manufacturing Subsidiary (other than
          Indebtedness owned by GM or any Manufacturing Subsidiary) which by its
          terms matures at or is extendible or renewable at the option of the
          obligor to a date more than twelve months after the date of the
          creation of such Indebtedness.

          6.4 Limitation on Dispositions of Collateral. Each Borrower, as to
itself (and in the case of GM, each other Loan Party), agrees not to Dispose of
any Collateral except:

          (a) any Disposition of Collateral in the ordinary course of business;

          (b) any Disposition of Collateral pursuant to the Receivables
     Financing Agreement;

          (c) any Disposition of any property or asset (or group of property or
     assets) constituting part of the Collateral having, individually, a book
     value not in excess of $5,000,000;

          (d) any Disposition of an interest in real property constituting
     Canadian Collateral and associated fixtures and personal property;

          (e) any Disposition to any Loan Party; provided that (i) any
     Collateral Disposed of pursuant to this subsection 6.4(e) shall continue to
     be subject to the perfected security interests granted to the Agent, for
     the benefit of the applicable Secured Parties or Hedging Secured Parties,
     as the case may be, with the priority specified in the applicable Security
     Documents or Second Priority Security Documents, as the case may be; (ii)
     any Dispositions to GM Canada shall only be permitted to the extent such
     Dispositions are made in the ordinary course of business; and (iii) in no
     event shall GM be permitted to transfer the Pledged Stock (as defined in
     the US Security Agreement); and



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          (f) any Disposition of Collateral in any fiscal quarter not otherwise
     permitted under this subsection 6.4 which, together with all other
     Collateral Disposed of under this clause (f) in such fiscal quarter has an
     aggregate book value not exceeding $300,000,000; provided that the
     aggregate book value of all Dispositions of Collateral pursuant to this
     clause (f) shall not exceed $2,500,000,000.

          6.5 Change of Control. GM shall not cease to own, directly or
indirectly, at least a majority of the outstanding stock having by the terms
thereof the ordinary voting power to elect a majority of the board of directors
of GM Canada.

          6.6 Effective US Collateral Value. GM shall not permit the Effective
US Collateral Value at any time to be less than the US Total Secured Exposure at
such time.

          6.7 Effective Canadian Collateral Value. Neither Borrower shall permit
the Effective Canadian Collateral Value at any time to be less than the Canadian
Total Secured Exposure at such time.

          6.8 Material Production Event Period. At any time during a Material
Production Event Period, GM shall not permit (a) the Total Secured Exposure to
exceed $4,500,000,000 and (b) the aggregate amount of US Secured Loans and
Canadian/US Secured Extensions of Credit to exceed $3,500,000,000.

          6.9 Canadian Pension Plans. GM Canada will not, nor will it permit any
Canadian Subsidiary (i) to withdraw the election made under Section 5.1(1) of
Ontario Regulation 909, as amended, made under the Pension Benefits Act
(Ontario) ("Qualifying Plan Regulation"), to cease to apply in respect of any
Canadian Pension Plan to the extent such cessation would reasonably be expected
to have a Material Adverse Effect or (ii) to fail to make or remit full payment
when due of all amounts that, under the provisions of the relevant Canadian
Pension Plan, any applicable collective agreement and all applicable law, are
required to be paid or remitted as contributions thereto, in each case, to the
extent such failure would reasonably be expected to have a Material Adverse
Effect.

                                   SECTION 7.
                                EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

          (a) Any Borrower shall (i) fail to pay any principal of any Loan,
Acceptance Obligation, Acceptance Equivalent Loan or Reimbursement Obligation
when due in accordance with the terms hereof or (ii) fail to pay any interest on
any Loan, Acceptance Obligation, Acceptance Equivalent Loan or Reimbursement
Obligation or any other amount which is payable hereunder or under any other
Loan Document and (in the case of this clause (ii) only) such failure shall
continue unremedied for more than five Business Days after written notice
thereof has been given to such Borrower by the Agent or the Majority Lenders; or

          (b) Any representation or warranty made or deemed made by any Loan
Party in Section 3 or in any other Loan Document or any certified statement
furnished pursuant to subsection 5.2(b) shall prove to have been incorrect on or
as of the date made or deemed made or


                                                                              81


certified if the facts or circumstances incorrectly represented or certified
result in a Material Adverse Effect with respect to such Loan Party; or

          (c) Any Borrower or Guarantor shall default in the observance or
performance of any other agreement contained in this Agreement or any Security
Document (other than as provided in paragraphs (a) or (b) of this Section 7) and
(i) in the case of any default in the observance or performance of the covenants
in subsections 6.6, 6.7 or 6.8 of this Agreement, such default shall continue
unremedied for a period of 5 Business Days, and (ii) in the case of any default
in the observance or performance of any other agreement contained in this
Agreement or any Security Document, such default shall continue unremedied for a
period of 30 days after written notice thereof shall have been given to such
Borrower or Guarantor, as applicable, by the Agent or the Majority Lenders; or

          (d) Any Borrower or Saturn shall default in any payment of $50,000,000
(or the foreign currency equivalent thereof) or more of principal of or interest
on any Indebtedness or on account of any guarantee in respect of Indebtedness,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness or guarantee was created; or

          (e) (i) Any Borrower or any Significant Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
such Borrower or any of its Significant Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against such Borrower or any of its Significant Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
90 days; or (iii) there shall be commenced against such Borrower or any of its
Significant Subsidiaries any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 90 days from the entry thereof; or

          (f) One or more judgments or decrees shall (i) be entered against
either Borrower or Saturn, (ii) not have been vacated, discharged, satisfied,
stayed or bonded pending appeal within 60 days from the entry thereof and (iii)
involve a liability (not paid or fully covered by insurance) of either
$100,000,000 (or the foreign currency equivalent thereof) or more, in the case
of any single judgment or decree or (2) $200,000,000 (or the foreign currency
equivalent thereof) or more in the aggregate; or

          (g) Any of the Security Documents shall cease, for any reason, to be
in full force and effect with respect to Collateral with a book value in excess
of $25,000,000 in the aggregate, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien



                                                                              82


created by any of the Security Documents shall cease to be enforceable and of
the same effect and priority purported to be created thereby; or

          (h) the guarantee contained in Section 9 hereof shall cease, for any
reason, to be in full force and effect (other than as a result of a transaction
permitted by subsection 6.1) or any Loan Party or any Subsidiary of any Loan
Party shall so assert;

(1) then, if such event is an Event of Default specified in clause (i) or (ii)
of paragraph (e) above, automatically all Commitments hereunder shall
immediately terminate and the Loans and Acceptances hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable without
presentment, protest, demand or other notice of any kind, each of which is
expressly waived by the Borrowers; and

(2) if such event is any Event of Default which is not described in clause (1)
above, any or all of the following actions may be taken: (w) with the consent of
the Majority Non-Extending Lenders or the Majority Secured Lenders, as the case
may be, the Agent may, or upon the request of the Majority Non-Extending Lenders
or the Majority Secured Lenders, as the case may be, the Agent shall, by notice
to the Borrowers declare the Non-Extended Commitments or the Extended Secured
Commitments, respectively, to be terminated forthwith, whereupon the
Non-Extended Commitments to make Non-Extended Loans or the Extended Secured
Commitments to make Extended Secured Loans, accept Acceptances and issue Letters
of Credit, as applicable shall immediately terminate, (x) with the consent of
the Majority Non-Extending Lenders or the Majority Secured Lenders, as the case
may be, the Agent may, or upon the request of the Majority Non-Extending Lenders
or the Majority Secured Lenders, the Agent shall, by notice to the Borrowers
declare the Non-Extended Loans or the Extended Secured Loans and Acceptance
Obligations, respectively, in each case, with accrued interest thereon and all
other amounts owing under this Agreement (including, in the case of an
acceleration of the Secured Obligations, all amounts of L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable, (y) with the
consent of the Majority Lenders, the Agent may, or upon the request of the
Majority Lenders, the Agent shall, by notice to the Borrowers declare all
Commitments hereunder to be terminated forthwith, whereupon all Commitments to
make Loans, accept Acceptances and issue Letters of Credit shall immediately
terminate; and (z) with the consent of the Majority Lenders, the Agent may, or
upon the request of the Majority Lenders, the Agent shall, by notice to the
Borrowers, declare the Loans and Acceptance Obligations hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including
all amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided in this clause
(2) and in paragraphs (a) and (c) of this Section 7, presentment, protest,
demand and all other notices of any kind are hereby expressly waived by the
Borrowers.

(3) With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
foregoing clause (1) or (2), GM or



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GM Canada, as applicable, shall at such time deposit in a cash collateral
account opened by the Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit issued on its behalf. Amounts held in
such cash collateral account shall be applied by the Agent to the payment of
drafts drawn under such Letters of Credit, and the unused portion thereof after
all such Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other Secured Obligations of GM (in the case of funds
in a cash collateral account opened with respect to Letters of Credit issued on
GM's behalf) or GM Canada (in the case of funds in a cash collateral account
opened with respect to Letters of Credit issued on GM Canada's behalf) hereunder
and under the other Loan Documents to the Secured Lenders. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the
applicable Borrower hereunder and under the other Loan Documents shall have been
paid in full, the balance, if any, in such cash collateral account shall be
returned to such Borrower (or such other Person as may be lawfully entitled
thereto).

                                   SECTION 8.
                                    THE AGENT

          8.1 Appointment. Each Lender hereby irrevocably designates and
appoints Citicorp USA, Inc. as the Agent of such Lender and any Affiliate of
such Lender holding any Non-Loan Exposure or Hedging Obligations under this
Agreement and each other Loan Document, and each such Lender irrevocably
authorizes Citicorp USA, Inc., as the Agent for such Lender and any such
Affiliate, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or in
any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender or any Affiliate of such Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Agent.

          8.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and any other Loan Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

          8.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders or any Affiliates of such Lenders, for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness,



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genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party to perform its obligations
hereunder. The Agent shall not be under any obligation to any Lender or any
Affiliate of such Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

          8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, any counsel to any Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the Lender specified
in the Register with respect to any amount owing hereunder as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Lenders or Majority Tranche Lenders as it deems appropriate or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request of the Majority Lenders (or to
the extent that this Agreement expressly requires a higher percentage of
Lenders, such higher percentage) or Majority Tranche Lenders, as appropriate,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the obligations owing
by any Borrower hereunder.

          8.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder (other
than a Default or Event of Default under subsection 7(a)) unless the Agent has
received written notice from a Lender or a Borrower referring to this Agreement
or any other Loan Document, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly notify the Borrowers (other
than the Borrower that shall have delivered such notice to the Agent) and then
give notice thereof to the Lenders (provided that, except in the case of any
notice required to be provided under Section 7 prior to the occurrence of an
Event of Default) the failure to notify any Borrower shall not impair any of the
rights of the Agent and the Lenders with respect to the events and circumstances
specified in such notice). The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Majority
Lenders or Majority Tranche Lenders, as appropriate; provided that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders or the Lenders in a specific Tranche, as
appropriate.

          8.6 Non-Reliance on Agent and Other Lenders. Each Lender on behalf of
itself and any Affiliate of such Lender holding any Non-Loan Exposure or Hedging
Obligations



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expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of any Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender or any such
Affiliate. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of each Borrower and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement or any other
Loan Document, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of each Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender or any Affiliate of such Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.

          8.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably according to their
respective relevant Commitment Percentages in effect on the date on which
indemnification is sought under this subsection 8.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their relevant
Commitment Percentages immediately prior to such date of payment in full, but
giving effect to any subsequent assignments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the amounts
owing hereunder) be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of this Agreement, any other Loan Document or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection 8.7 shall survive the payment of the Loans and all
other amounts payable hereunder.

          8.8 Agent in Its Individual Capacity. The Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Borrower as though the Agent were not the Agent hereunder. With respect
to its Loans made or renewed by it, Acceptances accepted by it and any Letter of
Credit issued or participated in by it, the Agent shall have the same rights and
powers under this Agreement as any Lender and may exercise the



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same as though it were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.

          8.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders and the Borrowers and following the appointment of a
successor Agent in accordance with the provisions of this subsection 8.9. If the
Agent shall resign as Agent under this Agreement, then the Majority Lenders
shall appoint from among the Lenders willing to serve as Agent a successor agent
for the Lenders, which successor agent shall be approved by the Borrowers (which
approval shall not be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the obligations
owing hereunder. After any retiring Agent's resignation as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and the other Loan
Documents.

          8.10 Syndication Agents. No Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.

          8.11 Irrevocable Power Of Attorney (fonde de pouvoir). Without
limiting any of the foregoing provisions in favor of Agent, for the purposes of
holding any security granted by any Loan Party pursuant to the laws of the
Province of Quebec, including any deed of hypothec, debenture, bond or other
title of indebtedness and debenture or bond pledge agreements, the Agent is
hereby appointed to act as the Person holding an irrevocable power of attorney
(fonde de pouvoir) pursuant to Article 2692 of the Civil Code of Quebec to act
on behalf of each present and future Secured Lender. By executing an Assignment
and Acceptance, each future Secured Lender shall be deemed to ratify the power
of attorney (fonde de pouvoir) granted hereby. The Agent agrees to act in such
capacity. Each party hereto agrees that, notwithstanding Section 32 of an Act
Respecting the Special Powers of Legal Persons (Quebec), the Agent may, as the
Person holding the power of attorney of Secured Lenders, acquire and or be the
pledgee of any debentures, bonds or other titles of indebtedness secured by any
hypothec granted by any Loan Party to the Agent pursuant to the laws of the
Province of Quebec. Each Secured Lender hereby expressly ratifies all documents
previously executed and delivered and all things previously done by the Agent as
such power of attorney (fonde de pouvoir) including, without limitation, the
Agent's execution and delivery of such power of attorney (fonde de pouvoir), of
any deed of hypothec, debenture, bond or other title of indebtedness, debenture
or bond pledge agreements or any other security granted by any Loan Party
pursuant to the laws of the Province of Quebec.

                                   SECTION 9.
                                  THE GUARANTEE

          9.1 Guarantee. In order to induce the Agent and the Secured Lenders to
execute and deliver this Agreement, to make or maintain the loans and other
extensions of credit hereunder constituting Secured Obligations and under any
agreements with respect to the Non-Loan Exposure and any Hedging Obligations and
in consideration thereof:



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          (a) Each of the Guarantors hereby unconditionally and irrevocably
     guarantees to the Secured Parties, as a primary obligation the prompt and
     complete payment and performance by each of the Loan Parties (or, if
     applicable, such Loan Party's Subsidiaries) when due (whether at the stated
     maturity, by acceleration or otherwise) of the Obligations (other than, in
     the case of GM, with respect to the obligations of GM in its capacity as a
     primary obligor). Each of the Guarantors further agrees to pay any and all
     reasonable expenses (including, without limitation, all reasonable fees and
     disbursements of counsel) which may be paid or incurred by the Agent or by
     the Secured Parties in enforcing any of their rights under the guarantee
     contained in this Section 9. With respect to the Obligations, the guarantee
     contained in this Section 9 shall remain in full force and effect until the
     Secured Obligations have been indefeasibly paid in full and the Extended
     Secured Commitments are terminated.

          (b) Each of the Guarantors agrees that whenever, at any time, or from
     time to time, it shall make any payment to the Agent or any Secured Party
     on account of its liability under this Section 9, it will notify the Agent
     or such Secured Party, as the case may be, in writing that such payment is
     made under the guarantee contained in this Section 9 for such purpose. No
     payment or payments made by any Guarantor or any other Person or received
     or collected by the Agent or any Secured Party from any Guarantor or any
     other Person by virtue of any action or proceeding or any set-off or
     appropriation or application, at any time or from time to time, in
     reduction of or in payment of the Total Secured Exposure shall be deemed to
     modify, reduce, release or otherwise affect the liability of the Guarantors
     under this Section 9 each of which shall, notwithstanding any such payment
     or payments, remain liable for the amount of the Obligations until the
     Secured Obligations have been indefeasibly paid in full and the Extended
     Secured Commitments are terminated.

          (c) Notwithstanding anything to the contrary herein or in any other
     Loan Document, to the extent the guarantee contained in this Section 9 also
     guarantees any committed or drawn and outstanding Non-Loan Exposure
     (excluding any ACH and overdraft arrangements) and is being released in
     connection with a secured refinancing of the applicable Extended Secured
     Commitments and the Secured Obligations, such release shall require the
     prior written consent of each Secured Lender affected thereby.

          (d) Anything herein or in any other Loan Document to the contrary
     notwithstanding, the maximum liability of Saturn and GM (other than, in the
     case of GM, with respect to GM's obligations in its capacity as a primary
     obligor) hereunder and under the other Loan Documents shall in no event
     exceed the amount which can be guaranteed by such Guarantor under
     applicable federal and state laws relating to the insolvency of debtors.

          9.2 No Subrogation. Notwithstanding any payment or payments made by
any Guarantor hereunder, or any set-off or application of funds of any Guarantor
by the Agent or any Secured Party, no Guarantor shall be entitled to be
subrogated to any of the rights of the Agent or any Secured Party against such
Guarantor or against any collateral security or guarantee or right of offset
held by the Agent or any Secured Party for the payment of the Total Secured
Exposure, nor shall any Guarantor seek or be entitled to seek any contribution
or reimbursement from either



                                                                              88


Borrower in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Agent and the Secured Lenders by each Borrower and its
Affiliates on account of the Secured Obligations are indefeasibly paid in full
and the Extended Secured Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights in violation of the
foregoing sentence, such amount shall be held by such Guarantor in trust for the
Agent and the Secured Parties, segregated from other funds of such Guarantor,
and shall, forthwith upon receipt by such Guarantor, be turned over to the Agent
in the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Agent, if required), to be applied against the Obligations, whether matured
or unmatured, in such order as the Agent may determine.

          9.3 Amendments, etc. with respect to the Total Secured Exposure. Each
Guarantor shall remain obligated under this Section 9 notwithstanding that,
without any reservation of rights against each Guarantor, and without notice to
or further assent by such Guarantor, any demand for payment of any of the
Obligations made by the Agent or any Secured Party may be rescinded by the Agent
or such Secured Parties, and any of such Obligations continued, and any such
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Agent or the Secured Parties, and this Agreement may be amended, modified,
supplemented or terminated, in whole or in part, as the Agent or the Secured
Parties may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Agent or the Secured
Parties for the payment of any of the Obligations may be sold, exchanged,
waived, surrendered or released. Subject to any applicable law, neither the
Agent nor any Secured Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for any of the
Obligations or for the guarantee contained in this Section 9 or any property
subject thereto.

          9.4 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Secured Party
upon the guarantee contained in this Section 9 or acceptance of the guarantee
contained in this Section 9; the Obligations, and any part thereof, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon the guarantee contained in this Section 9; and all dealings between the
Borrowers and any Guarantor, on the one hand, and the Agent and the Secured
Parties, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon the guarantee contained in this Section 9. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon each Borrower or Guarantor with respect to
the Obligations, it being understood that no Guarantor shall be required to make
any payment under this Section 9 until demand therefor shall have been made by
the Agent in accordance with subsection 10.2 hereof. The guarantee contained in
this Section 9 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of any
other provision of this Agreement, any of the Obligations or any collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Agent or any Secured Party, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by either
Borrower against the Agent or any Secured Party, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of such Borrower or any



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Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of such Borrower for the Obligations, or of the Guarantors
under this Section 9, in bankruptcy or in any other instance. When the Agent or
any Secured Party is pursuing its rights and remedies under this Section 9
against any Guarantor, the Agent or any Secured Party may, but shall be under no
obligation to, pursue such rights and remedies as it may have against either
Borrower or any other Person or against any collateral security or guarantee for
the Obligations or any right of offset with respect thereto, and any failure by
the Agent or any Secured Party to pursue such other rights or remedies or to
collect any payments from either Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of either Borrower or any such other Person or of any
such collateral security, guarantee or right of offset, shall not relieve the
Guarantors of any liability under this Section 9, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Agent and the Secured Parties against the Guarantors.

          9.5 Reinstatement. The guarantee contained in this Section 9 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Secured Party upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either
Borrower or Saturn or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, either Borrower
or Saturn or any substantial part of its property, or otherwise, all as though
such payments had not been made.

                                   SECTION 10.
                                  MISCELLANEOUS

          10.1 Amendments and Waivers. Neither this Agreement, nor any terms
hereof may be amended, supplemented or modified except in accordance with the
provisions of this subsection 10.1. The Majority Lenders may, or, with the
written consent of the Majority Lenders, the Agent may, from time to time, (a)
enter into with each affected Borrower written amendments, supplements or
modifications hereto for the purpose of adding any provisions to this Agreement
or changing in any manner the rights of the Lenders or of the Borrowers
hereunder or (b) waive, on such terms and conditions as the Majority Lenders or
the Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or any Default or Event of Default and its
consequences; provided, that, except as provided below, with respect to written
amendments, supplements or modifications hereto for the purpose of adding any
provision to this Agreement which only affect a particular Tranche or changing
in any manner the rights of only those Lenders participating in a particular
Tranche or of only certain of the Borrower(s) hereunder, such amendment,
supplement or modification shall only require the written consent of the
Majority Tranche A Lenders, the Majority Tranche B Lenders or the Majority
Tranche C Lenders, as appropriate depending on the affected Tranche, the
affected Borrower(s) and the Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrowers, the Lenders, the Agent and all future holders of
the obligations owing hereunder; provided, however, that no such waiver and no
such amendment, supplement or modification shall (i) reduce the principal amount
of any Loan, or reduce the stated rate of any interest or fee payable hereunder,
or extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Commitment, in each case without the
consent of



                                                                              90


each Lender directly affected thereby, or (ii) amend, modify or waive any
provision of this subsection 10.1 or reduce the percentage specified in the
definition of Majority Lenders, Majority Tranche A Lenders, the Majority Tranche
B Lenders or the Majority Tranche C Lenders, without the written consent of,
respectively, all of the Lenders, all the Tranche A Lenders, all the Tranche B
Lenders or all the Tranche C Lenders, or (iii) consent to the assignment or
transfer by any of the Borrowers of any of its rights and obligations under this
Agreement, without the written consent of (A) with respect to an assignment or
transfer by GM, all the Tranche A Lenders, (B) with respect to an assignment or
transfer by Opel or Eisenach (other than an assignment or transfer from Eisenach
to Opel), all the Tranche B Lenders, and (C) with respect to an assignment or
transfer by GMCC, all the Tranche C Lenders, or (iv) amend, modify or waive any
provision applicable to a Competitive Bid Loan without the prior written consent
of the Lender of such Competitive Bid Loan, or (v) amend, modify or waive any
provision of Section 8 or any other provision of this Agreement governing the
rights or obligations of the Agent without the written consent of the then
Agent, or (vi) release Opel from its obligations under Section 9 hereof without
the written consent of each Tranche B Lender. In the case of any waiver, the
Borrowers, the Lenders and the Agent shall be restored to their former position
and rights hereunder, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.

          10.1A Additional Amendment Provisions. Except as provided below, with
respect to written amendments, supplements or modifications hereto for the
purpose of adding any provision to this Agreement which only affect a particular
Tranche or changing in any manner the rights of only those Lenders participating
in a particular Tranche or of only certain of the Borrower(s) hereunder, such
amendment, supplement or modification shall only require the written consent of
the applicable Majority Tranche Lenders, as appropriate depending on the
affected Tranche, the affected Borrower(s) and the Agent. Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon the Borrowers, the Lenders, the Agent and
all future holders of the obligations owing hereunder. Notwithstanding anything
to the contrary in subsection 10.1, no waiver, amendment, supplement or
modification of this Agreement shall (a) reduce the percentage specified in the
definition of Majority Tranche Lenders with respect to any Tranche without the
written consent of all Lenders under such Tranche, (b) (i) release all or
substantially all of the Collateral or release any Guarantor from their
obligations hereunder or under any other Loan Document (except for any release
permitted under subsection 10.13) or (ii) amend, modify or waive subsection 10.7
or (iii) amend, modify or waive any provision of this subsection 10.1A or (iv)
consent to the assignment or transfer by either GM or GM Canada of any of its
rights and obligations under this Agreement or the other Loan Documents, in each
case without the consent of 100% of the Secured Lenders, (c) amend, modify or
waive any provision of this Agreement or any other Loan Document that adversely
affects either of the US Secured Lenders or the Canadian/US Secured Lenders,
without the consent of the Majority US Secured Lenders or the Majority
Canadian/US Secured Lenders, respectively, (d) amend, modify or waive any of the
provisions of paragraphs (a), (b), (c) or (d) of subsection 2.16 relating to the
Secured Lenders, in each case, without the consent of each Secured Lender
adversely affected thereby or (e) amend, modify or waive any provision of
subsection 2A without the written consent of the Issuing Bank. Notwithstanding
anything to the contrary in subsection 10.1, the consent of the Majority Lenders
shall not be required for the waivers, amendments or modifications set forth in
clauses (a)



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through (e) of this subsection 10.1A. Notwithstanding anything to the contrary
herein, the Agent may, with the consent of the Borrowers, amend, modify or
supplement any provision of this Agreement relating to the Secured Obligations,
the US Secured Tranche or the Canadian/US Secured Tranche to cure any ambiguity,
omission, defect or inconsistency, so long as such amendment, modification, or
supplement does not adversely affect the rights of any Lender or any Issuing
Bank.

          10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of
overnight courier, facsimile or telecopy notice, when received, or (other than
in the case of GM Canada) four days after being deposited in the mail, postage
prepaid addressed as follows in the case of each Borrower and the Agent, and as
set forth in Schedule II in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the obligations owing hereunder:

          The Borrowers:

               General Motors Corporation
               767 Fifth Avenue
               New York, New York 10153
               Attention: Treasurer
               Telecopy: (212) 418-3632

               with a copy to:

               Office of the Secretary
               General Motors Corporation
               300 Renaissance Center
               Detroit, Michigan 48265-3000

               and with a copy to:

               Weil Gotshal & Manges, LLP
               767 Fifth Avenue
               New York, New York 10153-0119
               Attention: Soo-Jin Shim
               Telecopy: 212-310-8007

               General Motors of Canada Limited
               1908 Colonel Sam Drive
               Oshawa, Ontario, Canada
               L1H 8P7
               Attention: Treasurer, with a copy to,
               Vice President, Finance
               Telecopy: 905-644-7772

The Agent:



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               Citicorp USA, Inc.
               Global Loans Support Services
               Two Penns Way, Suite 200
               New Castle, Delaware 19720
               Attention: Carin Seals
               Telecopy: 212-994-0961;


provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 2.3, 2.4, 2.5, 2.7, 2.8 or 2.9 shall not be
effective until received.

          10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

          10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Loans hereunder.

          10.5 Payment of Expenses and Taxes. Each Borrower agrees, on a pro
rata basis as determined by GM, (a) to pay or reimburse the Agent for all its
reasonable out-of-pocket costs and expenses reasonably incurred in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and any other documents prepared
in connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Agent (which fees and
disbursements of counsel shall be paid on the date which is, (i) in the case of
the amendment and restatement dated as of July 20, 2006, the later of (A) thirty
days following the Effective Date and (B) ten Business Days after the delivery
of any invoice related thereto and (ii) in all other cases, the date which is
ten Business Days after the delivery of any invoice related thereto), (b) to pay
or reimburse each Lender and the Agent for all its reasonable costs and expenses
reasonably incurred in connection with the enforcement of any rights under this
Agreement, including, without limitation, the reasonable fees and disbursements
of counsel to the Agent and to the several Lenders (other than those incurred in
connection with the compliance by the relevant Lender with the provisions of
subsection 2.21(a)), and (c) to pay, indemnify, and hold each Lender and the
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay by any Borrower in
paying, stamp, excise and other similar taxes (other than any Non-Excluded
Taxes), if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, and (d) to
pay, indemnify, and hold each Lender and the Agent harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses or disbursements of any kind or



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nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement (all the foregoing in this
clause (d), collectively, the "indemnified liabilities"); provided that no
Borrower shall have any obligation hereunder to the Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Agent or any such Lender. The agreements in this subsection
10.5 shall survive repayment of the Loans, Acceptance Obligations and
Reimbursement Obligations and all other amounts payable hereunder.

          10.6 Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of an Issuing Bank that issues Letters of Credit),
except that (i) no Borrower may assign or otherwise transfer any of its rights
or obligations hereunder except as provided in subsection 6.1 or clause (iii) of
the proviso of Subsection 10.1 and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
subsection.

          (b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an "Assignee") all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitments and the Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld) of:

               (A) the relevant Borrower, provided that no consent of such
          Borrower shall be required for an assignment to a Lender, an Affiliate
          of a Lender, an Approved Fund (as defined below) or, if an Event of
          Default under Section 7(a) or (e) has occurred and is continuing, any
          other Person;

               (B) the Agent, provided that no consent of the Agent shall be
          required for an assignment to an Assignee that is a Lender immediately
          prior to giving effect to such assignment; and

               (C) with respect to the Canadian/US Secured Tranche, the Issuing
          Banks (not to be unreasonably withheld), provided that no consent of
          any Issuing Bank shall be required for an assignment to an Assignee
          that is a Lender or an Affiliate of a Lender.

               (ii) Assignments shall be subject to the following additional
          conditions:

               (A) except in the case of an assignment to a Lender, an Affiliate
          of a Lender or an Approved Fund or an assignment of the entire
          remaining amount of the assigning Lender's Commitments or Loans, the
          amount of the Commitments or Loans of the assigning Lender subject to
          each such assignment (determined as of the date the Assignment and
          Acceptance with respect to such assignment is delivered to the Agent)
          shall not be less than $5,000,000 unless each of the relevant Borrower
          and the Agent otherwise consent, provided that (1) no such consent of
          such Borrower shall be required if an Event of Default under Section
          7(a) or (e) has occurred and is continuing and (2) such amounts shall
          be aggregated in respect of each Lender and its affiliates or Approved
          Funds, if any;



                                                                              94


               (B) the parties to each assignment shall execute and deliver to
          the Agent an Assignment and Acceptance substantially in the form of
          Exhibit E (an "Assignment and Acceptance"), together with a processing
          and recordation fee of $3,500;

               (C) the Assignee, if it shall not be a Lender, shall deliver to
          the Agent an administrative questionnaire;

               (D) in the case of an assignment by a Canadian/US Secured Lender,
          the Assignee or its Applicable Lending Office for GM Canada shall be a
          Qualifying Canadian/US Lender; and

               (E) in the case of an assignment to a CLO (as defined below), the
          assigning Lender shall retain the sole right to approve any amendment,
          modification or waiver of any provision of this Agreement, provided
          that the Assignment and Acceptance between such Lender and such CLO
          may provide that such Lender will not, without the consent of such
          CLO, agree to any amendment, modification or waiver that (1) requires
          the consent of each Lender directly affected thereby pursuant to the
          proviso to the second sentence of subsection 10.1 and (2) directly
          affects such CLO.

          For the purposes of this subsection 10.6, the terms "Approved Fund"
and "CLO" have the following meanings:

          "Approved Fund" means (a) a CLO and (b) with respect to any Lender
     that is a fund which invests in bank loans and similar extensions of
     credit, any other fund that invests in bank loans and similar extensions of
     credit and is managed by the same investment advisor as such Lender or by
     an Affiliate of such investment advisor.

          "CLO" means any entity (whether a corporation, partnership, trust or
     otherwise) that is engaged in making, purchasing, holding or otherwise
     investing in bank loans and similar extensions of credit in the ordinary
     course of its business and is administered or managed by a Lender or an
     Affiliate of such Lender.

               (iii) Subject to acceptance and recording thereof pursuant to
     paragraph (b)(iv) below, from and after the effective date specified in
     each Assignment and Acceptance, the Assignee thereunder shall be a party
     hereto and, to the extent of the interest assigned by such Assignment and
     Acceptance, have the rights and obligations of a Lender under this
     Agreement, and the assigning Lender thereunder shall, to the extent of the
     interest assigned by such Assignment and Acceptance, be released from its
     obligations under this Agreement (and, in the case of an Assignment and
     Acceptance covering all of the assigning Lender's rights and obligations
     under this Agreement, such Lender shall cease to be a party hereto but
     shall continue to be entitled to the benefits of subsections 2.18, 2.19,
     2.20 and 10.5); provided that no Assignee shall then be entitled to receive
     any greater amount pursuant to subsections 2.17, 2.18, 2.19 or 2.20 than
     the assigning Lender would have been entitled to receive thereunder in
     respect of the rights and obligations assigned by such assigning Lender to
     such Assignee had no such assignment occurred. Any assignment or transfer
     by a Lender of rights or obligations



                                                                              95


     under this Agreement that does not comply with this subsection 10.6 shall
     be treated for purposes of this Agreement as a sale by such Lender of a
     participation in such rights and obligations in accordance with paragraph
     (c) of this subsection.

               (iv) The Agent, acting for this purpose as an agent of the
     Borrowers, shall maintain at one of its offices a copy of each Assignment
     and Acceptance delivered to it and a register for the recordation of the
     names and addresses of the Lenders, and the Commitments of, and principal
     amount of the Loans, Acceptances, Acceptance Equivalent Loans and L/C
     Obligations owing to, each Lender pursuant to the terms hereof from time to
     time (the "Register"). The entries in the Register shall be prima facie
     evidence of the existence and amounts of the obligations of each Borrower
     therein recorded, and each Borrower, the Agent, the Issuing Banks and the
     Lenders may treat each Person whose name is recorded in the Register
     pursuant to the terms hereof as a Lender hereunder for all purposes of this
     Agreement, notwithstanding notice to the contrary. The Register shall be
     available for inspection by any Borrower and any Lender, at any reasonable
     time and from time to time upon reasonable prior notice. The Agent shall
     provide a copy of the Register to each Borrower on a monthly basis.

               (v) Upon its receipt of a duly completed Assignment and
     Acceptance executed by an assigning Lender and an Assignee, the Assignee's
     completed administrative questionnaire (unless the Assignee shall already
     be a Lender hereunder), the processing and recordation fee referred to in
     paragraph (b) of this subsection and any written consent to such assignment
     required by paragraph (b) of this subsection, the Agent shall accept such
     Assignment and Acceptance and record the information contained therein in
     the Register.

          (c) (i) Any Lender may, without the consent of the relevant Borrower
or the Agent, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans and
the Acceptance Obligations owing to it or any Letter of Credit participated in
by such Lender); provided that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(C) the relevant Borrower, the Agent, the Issuing Banks and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and (D) such Lender
shall have given prior written notice to the relevant Borrower of the identity
of such Participant. Any agreement pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that (1) requires the consent of each Lender
or each Lender in a particular Tranche directly affected thereby pursuant to the
proviso to the second sentence of subsection 10.1 or subsection 10.1A and (2)
directly affects such Participant. Subject to paragraph (c)(ii) of this
subsection, each Borrower agrees that each Participant shall be entitled to the
benefits of subsections 2.17, 2.18, 2.19, 2.20 and 10.5 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this subsection.



                                                                              96


               (ii) A Participant shall not be entitled to receive any greater
     payment under subsection 2.17, 2.18, 2.19, 2.20 and 10.5 than the
     applicable Lender would have been entitled to receive with respect to the
     participation sold to such Participant, unless the sale of the
     participation to such Participant is made with GM's prior written consent,
     and GM Canada's prior written consent in the case of participations under
     the Canadian/US Secured Tranche. Any Participant that is a Non-US Lender
     shall not be entitled to the benefits of subsection 2.19 unless such
     Participant complies with subsection 2.19(b).

          (d) Each Lender shall maintain at its office a copy of each
participation agreement to which it is a party and a register for the
recordation of the names and addresses of the Participants under such
participation agreement and the Commitments of, the principal amount of, and any
interest on, the Loans, Acceptances, Acceptance Equivalent Loans and L/C
Obligations owing to and paid to each Participant pursuant to the terms hereof
from time to time.

          (e) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Loans or, if applicable, its participation
in any Letter of Credit, to any Federal Reserve Bank in accordance with
applicable law. In order to facilitate such pledge or assignment, each Borrower
hereby agrees that, upon request of any Lender at any time and from time to time
after such Borrower has made its initial Borrowing hereunder, such Borrower
shall provide to such Lender, at such Borrower's own expense, a promissory note,
substantially in the form of Exhibit G, evidencing the Revolving Credit Loans
owing to such Lender.

          (f) On or prior to the effective date of an assignment, the assigning
Lender shall surrender any outstanding Notes held by it all or a portion of
which are being assigned, and the relevant Borrower shall, upon the request to
the Agent made at the time of such assignment by the assigning Lender or the
Assignee, as applicable, execute and deliver to the Agent (in exchange for the
outstanding Notes of the assigning Lender) a new Note to the order of such
Assignee in an amount equal to the amount of such Assignee's Loan owing to it.
Any such new Notes shall be dated the Effective Date and shall otherwise be in
the form of the Note replaced thereby. Any Notes surrendered by the assigning
Lender shall be returned by the Agent to the relevant Borrower marked
"cancelled".

          (g) Notwithstanding the foregoing, any Conduit Lender may assign any
or all of the Loans it may have funded hereunder to its designating Lender
without the consent of the relevant Borrower or the Agent and without regard to
the limitations set forth in subsection 10.6(b) (other than subsection
10.6(b)(ii)(D)); provided, that no Conduit Lender shall be entitled to receive
any greater amount pursuant to subsections 2.17, 2.18, 2.19, 2.20 or 10.5 than
the designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender. In addition, any Conduit
Lender may disclose, on a confidential basis, the existence and terms of the
Loans it has funded to any rating agency, commercial paper dealer or provider of
any surety, guarantee or credit or liquidity enhancements to such Conduit
Lender; provided that no such Person shall receive any confidential financial
information with respect to any Borrower unless such Person has complied with
subsection 10.6(h) as if such Person were a Transferee. Each Borrower, each
Lender and the Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation



                                                                              97


proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; provided, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense (including legal expenses) arising
out of its designation of a Conduit Lender, including but without limitations
to, inability to institute such a proceeding against such Conduit Lender during
such period of forbearance.

          (h) Notwithstanding anything to the contrary contained herein, any
Lender may sell, transfer, assign or grant participations in all or any part of
the Competitive Loans made by it.

          (i) Each Borrower authorizes each Lender to disclose to any
prospective Participant, any Participant or any prospective Assignee (each, a
"Transferee") any and all financial information in such Lender's possession
concerning such Borrower and its Affiliates which has been delivered to such
Lender by or on behalf of such Borrower pursuant to this Agreement or which has
been delivered to all Lenders by or on behalf of such Borrower in connection
with their respective credit evaluations of such Borrower and its Affiliates
prior to becoming a party to this Agreement; provided that (i) such Transferee
has executed and delivered to such Borrower a written confidentiality agreement
substantially in the form of that which has been executed and delivered by each
Lender prior to the date hereof and (ii) in the case of any information other
than that contained in the Confidential Information Memorandum, dated June 2006,
such Borrower has been informed of the identity of such Transferee and has
consented (such consent not to be unreasonably withheld) to the disclosure of
such information thereto. Nothing contained in this subsection 10.6(i) shall be
deemed to prohibit the delivery to any Transferee of any financial information
which is otherwise publicly available.

          (j) Notwithstanding anything herein to the contrary, any Person
subject to confidentiality obligations hereunder or under any other related
document (and any employee, representative or other agent of such Person) may
disclose to any and all Persons, without limitation of any kind, such Person's
US federal income tax treatment and the US federal income tax structure of the
transactions contemplated by this Agreement relating to such Person and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure. However, no
such Person shall disclose any information relating to such tax treatment or tax
structure to the extent nondisclosure is reasonably necessary in order to comply
with applicable securities laws.

          10.7 Adjustments; Collection Allocation Mechanism. (a) (i) in the case
of the Non-Extending Lenders, at any time and (ii) in the case of the Secured
Lenders, at any time prior to the CAM Date, if any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
Acceptances, its participations in Letters of Credit, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off or otherwise), such that it has received aggregate payments or
collateral on account of its extensions of credit in any Tranche in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender's extensions of credit in such Tranche
which are then due and payable, or interest thereon, such benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such



                                                                              98


other Lender's extensions of credit in such Tranche, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders
participating in such Tranche; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest, unless the
Lender from which such payment is recovered is required to pay interest thereon,
in which case each Lender returning funds to such Lender shall pay its pro rata
share of such interest.

          (b) In the case of the Secured Lenders, at any time on or after the
CAM Date, notwithstanding anything to the contrary contained in subsection
2.16(b) or (c), each payment received by the Agent pursuant to any Loan Document
in respect of the Secured Obligations of each Loan Party and each Letter of
Credit, and each distribution made by the Agent pursuant to any Security
Document in respect of such Secured Obligations, shall be distributed to the
Secured Lenders pro rata in accordance with their respective CAM Percentages.
Any direct payment received by a Secured Lender on or after the CAM Date,
including by way of set-off, in respect of the Secured Obligations shall be paid
over to the Agent for distribution to the Secured Lenders in accordance with the
provisions of the next preceding sentence. In furtherance of the forgoing and in
order to effect the allocation of payments and distributions provided for in
this paragraph (b), on the date of each such payment or distribution, each
Secured Lender shall be deemed to have sold and purchased participations in the
Secured Obligations, the unfunded US Secured Commitments and the Canadian/US
Secured Commitments held by it such that, following such deemed exchange, each
Secured Lender holds, directly or through its Applicable Lending Office, an
interest in each one of the Extended Secured Loans, L/C Obligations and other
extensions of credit, and in the unfunded US Secured Commitments and Canadian/US
Secured Commitments, equal to such Secured Lender's CAM Percentage (the "CAM
Exchange"). For purposes of calculating the appropriate amount to be exchanged
in connection with the deemed exchange of interests pursuant to this paragraph,
the interest in the Extended Secured Loans, L/C Obligations and other extensions
of credit denominated in Canadian Dollars shall be converted into the Dollar
Equivalent thereof. Each Secured Lender consents and agrees to the CAM Exchange,
and each Secured Lender agrees that the CAM Exchange shall be binding upon its
successors and assigns and any Person that acquires a participation in its
interests in any Extended Secured Loan, L/C Obligations and other extensions of
credit, or in any US Secured Commitment or Canadian/US Secured Commitment,
hereunder; provided that none of the provisions for the sharing and allocation
of payments and distributions provided for in this subsection 10.7 shall alter
or affect the provisions of subsection 10.17 hereof.

          10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrowers and the Agent.

          10.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any



                                                                              99


such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          10.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          10.11 Jurisdiction; Consent to Service of Process. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. GM
Canada designates and directs GM at its offices at 767 Fifth Avenue, New York,
New York 10153, as its agent to receive service of any and all process and
documents on its behalf in any legal action or proceeding referred to in this
subsection 10.11 in the State of New York and agrees that service upon such
agent shall constitute valid and effective service upon GM Canada and that
failure of GM to give any notice of such service to GM Canada shall not affect
or impair in any way the validity of such service or of any judgment rendered in
any action or proceeding based thereon. GM hereby accepts such designation and
direction by GM Canada to serve as agent to receive service for each as per the
immediately preceding sentence. Each Borrower agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Agent or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against any Borrower or its properties in the courts of any jurisdiction.

          (b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

          (c) Each Borrower to this Agreement irrevocably consents to service of
process in the manner provided for notices in subsection 10.2. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

          10.12 Waiver of Defaults and Events of Default. On and as of the
Effective Date, all Defaults and Events of Default, if any, existing under the
Existing Credit Agreement on or prior to such date are hereby waived.



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          10.13 Releases of Guarantees and Liens. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, the Agent is
hereby irrevocably authorized by each Lender (without requirement of notice to
or consent of any Lender except as expressly required by Section 10.1A) to take
any action requested by the Borrowers having the effect of releasing any
Collateral or guarantee obligations (i) to the extent necessary to permit
consummation of any transaction not prohibited by any Loan Document or that has
been consented to in accordance with Section 10.1A or (ii) under the
circumstances described in paragraphs (b) and (c) below.

          (b) At such time as the Extended Secured Loans, the Acceptance
Obligations, the Reimbursement Obligations and the other obligations under the
Loan Documents relating to the US Secured Tranche and the Canadian/US Secured
Tranche shall have been paid in full, the Extended Secured Commitments have been
terminated and no Letters of Credit shall be outstanding, the Guarantors shall
be released from the guarantee obligations created pursuant to Section 9 hereof,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Agent and each Loan Party
under the Security Documents shall terminate, all without delivery of any
instrument or performance of any act by any Person.

          (c) At such time as the Canadian Secured Obligations shall have been
paid in full, the Commitments to GM Canada have been terminated and no Letters
of Credit issued on behalf of GM Canada shall be outstanding, upon notice from
GM and GM Canada, GM Canada shall cease to be a Borrower hereunder, the Canadian
Collateral shall be released from the Liens created by the Canadian Security
Documents and all obligations (other than those expressly stated to survive such
termination) of the Agent and GM Canada under the Canadian Security Documents
shall terminate, all without delivery of any instrument or performance of any
act by any Person.

          (d) Upon the request of GM, all Collateral shall be released from the
Liens created by the Security Documents, and the Security Documents and all
obligations (other than those expressly stated to survive such termination) of
the Agent and each Loan Party under the Security Documents shall terminate if,
at any date (a "Release Date"), GM has senior unsecured long-term debt
outstanding, without third party credit enhancement, and receives at least two
of the following ratings with respect to such senior secured long-term debt: (i)
BBB- or better by S&P, (ii) Baa3 or better by Moody's and (iii) BBB- or better
by Fitch, in each case, with a stable outlook or better. If, at any date
following a Release Date, the rating of GM's senior unsecured long term debt
outstanding, without third party credit enhancement, shall be rated by two or
more of S&P, Moody's or Fitch at a rate lower than the rate set forth in the
preceding sentence, the Borrowers shall promptly, and in any event within 30
days of such date, enter into documentation reasonably requested by the Agent so
as to cause the Extended Secured Loans, the Non-Loan Exposure to be secured on
the same basis as such obligations were secured prior to the Release Date.

          (e) Notwithstanding anything to the contrary above, to the extent any
Collateral released pursuant to this subsection also secures any committed or
drawn and outstanding Non-Loan Exposure (excluding any ACH and overdraft
arrangements) and is being released in connection with a secured refinancing of
the applicable Extended Secured Commitments and the



                                                                             101


Secured Obligations, such release shall require the prior written consent of
each Secured Lender affected thereby.

          10.14 Collateral Matters Relating to Related Obligations. The benefit
of the Loan Documents and of the provisions of this Agreement relating to the
Collateral shall extend to and be available in respect of any Obligation arising
under any Non-Loan Exposure or Hedging Obligations (collectively, "Related
Obligations") solely on the condition and understanding, as among the Agent and
all Secured Parties, that (a) the Related Obligations shall be entitled to the
benefit of the Loan Documents and the Collateral to the extent expressly set
forth in this Agreement and the other Loan Documents and to such extent the
Agent shall hold, and have the right and power to act with respect to, the
guarantee contained in Section 9 and the Collateral on behalf of and as agent
for the holders of the Related Obligations, but the Agent is otherwise acting
solely as agent for the Lenders and the Issuing Banks and shall have no
fiduciary duty, duty of loyalty, duty of care, duty of disclosure or other
obligation whatsoever to any holder of Related Obligations, (b) all matters,
acts and omissions relating in any manner to the guarantee contained in Section
9, the Collateral, or the omission, creation, perfection, priority, abandonment
or release of any Lien, shall be governed solely by the provisions of this
Agreement and the other Loan Documents and no separate Lien, right, power or
remedy shall arise or exist in favor of any Secured Party under any separate
instrument or agreement or in respect of any Related Obligation, (c) each
Secured Party shall be bound by all actions taken or omitted, in accordance with
the provisions of this Agreement and the other Loan Documents, by the Agent and
the Secured Lenders required to vote with respect thereto, each of whom shall be
entitled to act at its sole discretion and exclusively in its own interest given
its own Commitments and its own interest in the Loans, L/C Obligations and other
Obligations to it arising under this Agreement or the other Loan Documents,
without any duty or liability to any other Secured Party or as to any Related
Obligation and without regard to whether any Related Obligation remains
outstanding or is deprived of the benefit of the Collateral or becomes unsecured
or is otherwise affected or put in jeopardy thereby and (d) no holder of Related
Obligations and no other Secured Party (except the Agent, the Secured Lenders
and the Issuing Banks, to the extent set forth in this Agreement) shall have any
right to be notified of, or to direct, require or be heard with respect to, any
action taken or omitted in respect of the Collateral or under this Agreement or
the Loan Documents.

          10.15 Effect of Amendment and Restatement of Existing Credit
Agreement. On the Effective Date, the Existing Credit Agreement shall be
amended, restated and superseded in its entirety. The parties hereto acknowledge
and agree that (a) this Agreement and the other Loan Documents, whether executed
and delivered in connection herewith or otherwise, do not constitute a novation,
payment and reborrowing, or termination of the obligations under the Existing
Credit Agreement as in effect prior to the Effective Date and (b) such
obligations are in all respects continuing (as amended and restated hereby) with
only the terms thereof being modified as provided in this Agreement.

          10.16 Joint and Several Obligations. Notwithstanding any other
provision contained in this Agreement or any other Loan Document, if a "secured
creditor" (as such term is defined under the Bankruptcy and Insolvency Act
(Canada)) is determined by a court of competent jurisdiction not to include a
Person to whom obligations are owed on a joint or joint



                                                                             102


and several basis, then the Canadian Secured Obligations only shall be several
obligations and not joint or joint and several obligations.

          10.17 Limitations on GM Canada. Notwithstanding anything to the
contrary set forth in any Loan Document, the Loan Documents shall be limited so
that (i) no Canadian Collateral or any other asset of GM Canada shall be pledged
or shall otherwise serve as security for any Obligation other than the Canadian
Total Secured Exposure, (ii) GM Canada shall in no event guaranty any Obligation
(other than any Non-Loan Exposure with respect to its Subsidiaries exceeding the
Canadian Non-Loan Exposure Cap) and (iii) all payments by GM Canada hereunder
and under the other Loan Documents shall be credited solely to the payment of
the Canadian Secured Obligations.

          10.18 USA Patriot Act. Each Lender hereby notifies the Borrowers that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the name and address of the Borrowers and other information that will
allow such Lender to identify the Borrowers in accordance with the Act.

          10.19 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM.

      Remainder of page left blank intentionally; signature pages to follow




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

                                        GENERAL MOTORS CORPORATION,
                                        as a Borrower and as a Guarantor


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

           [Signature Page to Amended and Restated Credit Agreement]



                                        GENERAL MOTORS OF CANADA LIMITED,
                                        as a Borrower


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

           [Signature Page to Amended and Restated Credit Agreement]



                                        SATURN CORPORATION,
                                        as Guarantor


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

            [Signature Page to Amended and Restated Credit Agreement]



                                        CITICORP USA, INC.,
                                        as Agent and as a Lender


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

            [Signature Page to Amended and Restated Credit Agreement]


                                                               EXECUTION VERSION

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                      among

                           GENERAL MOTORS CORPORATION,
                        GENERAL MOTORS OF CANADA LIMITED,
                               each as a Borrower

               GENERAL MOTORS CORPORATION AND SATURN CORPORATION,
                               each as a Guarantor

                               The Several Lenders
                        from Time to Time Parties Hereto

                               CITICORP USA, INC.,
                             as Administrative Agent

                                       and

                           JPMORGAN CHASE BANK, N.A.,
                              as Syndication Agent

                            Dated as of July 20, 2006

================================================================================

                        CITIGROUP GLOBAL MARKETS INC. and
                          J.P. MORGAN SECURITIES INC.,
                   as Co-Lead Arrangers and Joint Bookrunners

                        DEUTSCHE BANK SECURITIES INC. and
                         BANC OF AMERICA SECURITIES LLC,
                              as Co-Lead Arrangers



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
SECTION 1. DEFINITIONS...................................................      1

   1.1   Defined Terms...................................................      1
   1.2   Other Definitional Provisions...................................     27

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...............................     27

   2.1   Commitments.....................................................     27
   2.2   Procedure for Borrowing Non-Extended Loans......................     30
   2.3   Procedure for Borrowing Extended Secured Loans..................     30
   2.4   Acceptances.....................................................     32
   2.5   Competitive Borrowings..........................................     37
   2.6   Money Market Advances...........................................     40
   2.7   Termination or Reduction of Commitments.........................     41
   2.8   Prepayments.....................................................     42
   2.9   Conversion and Continuation Options.............................     43
   2.10  Minimum Amounts of Eurodollar Borrowings........................     43
   2.11  Repayment of Loans; Evidence of Debt............................     44
   2.12  Interest Rates and Payment Dates for Non-Extended Loans.........     45
   2.13  Facility Fee....................................................     47
   2.14  Computation of Interest and Fees................................     48
   2.15  Inability to Determine Interest Rate............................     49
   2.16  Pro Rata Treatment and Payments.................................     49
   2.17  Illegality......................................................     52
   2.18  Increased Costs.................................................     54
   2.19  Taxes...........................................................     55
   2.20  Indemnity.......................................................     58



                                       i





                                                                            Page
                                                                            ----
                                                                         
   2.21  Notice of Amounts Payable; Relocation of Lending Office;
            Mandatory Assignment.........................................     58
   2.22  Controls; Currency Exchange Rate Fluctuations...................     59
   2.23  Judgment Currency...............................................     60
   2.24  Replacement of Lenders..........................................     60

SECTION 2A. LETTERS OF CREDIT............................................     61

   2A.1  L/C Commitment..................................................     61
   2A.2  Procedure for Issuance of Letter of Credit......................     61
   2A.3  Fees and Other Charges..........................................     62
   2A.4  L/C Participations..............................................     62
   2A.5  Reimbursement Obligation of the Borrowers.......................     63
   2A.6  Obligations Absolute............................................     64
   2A.7  Letter of Credit Payments.......................................     64

SECTION 3. REPRESENTATIONS AND WARRANTIES................................     65

   3.1   Financial Condition.............................................     65
   3.2   Corporate Existence.............................................     65
   3.3   Corporate Power; Authorization; Enforceable Obligations.........     65
   3.4   No Legal Bar....................................................     65
   3.5   No Material Litigation..........................................     66
   3.6   Federal Regulations.............................................     66
   3.7   Investment Company Act..........................................     66
   3.8   ERISA...........................................................     66
   3.9   No Material Misstatements.......................................     66
   3.10  Purpose of Loans................................................     66
   3.11  Pari Passu......................................................     66
   3.12  Security Documents..............................................     67



                                       ii





                                                                            Page
                                                                            ----
                                                                         
   3.13  Canadian Collateral.............................................     67
   3.14  Environmental Matters...........................................     68
   3.15  Canadian Pension Plans..........................................     68

SECTION 4. CONDITIONS PRECEDENT..........................................     68

   4.1   Conditions to Initial Loans.....................................     68
   4.2   Conditions to Each Loan.........................................     70
   4.3   Additional Conditions to each Secured Loan......................     71

SECTION 5. AFFIRMATIVE COVENANTS.........................................     71

   5.1   Financial Statements............................................     71
   5.2   Certificates; Other Information.................................     72
   5.3   Notices.........................................................     74
   5.4   Conduct of Business and Maintenance of Existence................     74
   5.5   Additional Collateral, etc......................................     74
   5.6   Environmental Matters...........................................     74

SECTION 6. NEGATIVE COVENANTS............................................     75

   6.1   Merger, Consolidation, etc......................................     75
   6.2   Limitations on Liens............................................     75
   6.3   Limitation on Sale and Lease-Back...............................     78
   6.4   Limitation on Dispositions of Collateral........................     79
   6.5   Change of Control...............................................     80
   6.6   Effective US Collateral Value...................................     80
   6.7   Effective Canadian Collateral Value.............................     80
   6.8   Material Production Event Period................................     80
   6.9   Canadian Pension Plans..........................................     80

SECTION 7. EVENTS OF DEFAULT.............................................     80

SECTION 8. THE AGENT.....................................................     83



                                       iii





                                                                            Page
                                                                            ----
                                                                         
   8.1   Appointment.....................................................     83
   8.2   Delegation of Duties............................................     83
   8.3   Exculpatory Provisions..........................................     83
   8.4   Reliance by Agent...............................................     84
   8.5   Notice of Default...............................................     84
   8.6   Non-Reliance on Agent and Other Lenders.........................     84
   8.7   Indemnification.................................................     85
   8.8   Agent in Its Individual Capacity................................     85
   8.9   Successor Agent.................................................     86
   8.10  Syndication Agents..............................................     86
   8.11  Irrevocable Power Of Attorney (fonde de pouvoir)................     86

SECTION 9. THE GUARANTEE.................................................     86

   9.1   Guarantee.......................................................     86
   9.2   No Subrogation..................................................     87
   9.3   Amendments, etc. with respect to the Total Secured Exposure.....     88
   9.4   Guarantee Absolute and Unconditional............................     88
   9.5   Reinstatement...................................................     89

SECTION 10. MISCELLANEOUS................................................     89

   10.1  Amendments and Waivers..........................................     89
   10.1A Additional Amendment Provisions.................................     90
   10.2  Notices.........................................................     91
   10.3  No Waiver; Cumulative Remedies..................................     92
   10.4  Survival of Representations and Warranties......................     92
   10.5  Payment of Expenses and Taxes...................................     92
   10.6  Successors and Assigns; Participations and Assignments..........     93
   10.7  Adjustments; Collection Allocation Mechanism....................     97



                                       iv





                                                                            Page
                                                                            ----
                                                                         
   10.8  Counterparts....................................................     98
   10.9  Severability....................................................     98
   10.10 GOVERNING LAW...................................................     99
   10.11 Jurisdiction; Consent to Service of Process.....................     99
   10.12 Waiver of Defaults and Events of Default........................     99
   10.13 Releases of Guarantees and Liens................................    100
   10.14 Collateral Matters Relating to Related Obligations..............    101
   10.15 Effect of Amendment and Restatement of Existing Credit
            Agreement....................................................    101
   10.16 Joint and Several Obligations...................................    101
   10.17 Limitations on GM Canada........................................    102
   10.18 USA Patriot Act.................................................    102
   10.19 WAIVER OF JURY TRIAL............................................    102



                                        v



SCHEDULES

I              Commitments
II             Addresses for Notices
III            Non-Loan Schedule
IV             Canadian Collateral and Locations
3.12(b)        Filings
4.19(b)        Debenture Filing Offices
6.1(b)(viii)   Liens

EXHIBITS

A     Competitive Bid Request
B     Invitation for Competitive Bids
C     Competitive Bid
D     Competitive Bid Accept/Reject Letter
E     Assignment and Acceptance
F-1   Opinion of Weil, Gotshal & Manges LLP, special counsel for GM
F-2   Opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel for GM Canada
F-3   Opinion of Martin I. Darvick, counsel for GM
F-4   Opinion of Santamarina y Steta S.C., Mexican counsel for GM
F-5   Opinion of Neil Macdonald, counsel for GM Canada
G     Promissory Note
H     Money Market Advance Confirmation
I     Compliance Certificate
J     Increasing Lender Addendum
K     Additional Lender Addendum
L     Canadian General Security Agreement
M     Debenture
N     Discount Note
O     Hypothec
P     Mexican Stock Pledge Agreement
Q     US Security Agreement
R     Notice of Drawing


                                       vi

EX-13

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2006, or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                      to                     .

Commission file number: 1-3754

GMAC LLC

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 38-0572512
(I.R.S. Employer
Identification No.)

200 Renaissance Center

P.O. Box 200 Detroit, Michigan

48265-2000

(Address of principal executive offices)

(Zip Code)

(313) 556-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as these terms are defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer [ ]     Accelerated filer [ ]     Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]  No [X]

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

INDEX

GMAC LLC

		Page
Part I — Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statement of Income for the Second Quarter and Six Months Ended June 30, 2006 and 2005		3
	Condensed Consolidated Balance Sheet as of June 30, 2006, and December 31, 2005		4
	Condensed Consolidated Statement of Changes in Stockholder’s Equity for the   Six Months Ended June 30, 2006 and 2005		5
	Condensed Consolidated Statement of Cash Flows for the Six Months   Ended June 30, 2006 and 2005		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		*
Item 4.	Controls and Procedures		41
Part II — Other Information
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		*
Item 3.	Defaults Upon Senior Securities		*
Item 4.	Submission of Matters to a Vote of Security Holders		*
Item 5.	Other Information		43
Item 6.	Exhibits		43
Signatures			44
Index of Exhibits			45

*  Item is omitted pursuant to the Reduced Disclosure Format, as set forth on the cover page of this filing.

Condensed Consolidated Statement of Income (unaudited)

GMAC LLC

		Second Quarter						Six Months
Period ended June 30, ($ in millions)		2006			2005			2006			2005
Revenue
Consumer			$2,548			$2,471			$5,114			$4,990
Commercial			782			748			1,508			1,371
Loans held for sale			371			347			851			728
Operating leases			2,026			1,751			3,954			3,416
	Total financing revenue		5,727			5,317			11,427			10,505
Interest and discount expense			3,819			3,050			7,380			6,051
	Net financing revenue before provision for credit losses		1,908			2,267			4,047			4,454
Provision for credit losses			285			201			420			530
	Net financing revenue		1,623			2,066			3,627			3,924
Insurance premiums and service revenue earned			1,052			927			2,062			1,847
Gain on sale of mortgage and automotive loans, net			504			237			869			746
Servicing fees			446			423			918			843
Amortization and impairment of servicing rights			—			(335	)		(23	)		(500	)
Servicing asset valuation and hedge activities, net			(171	)		117			(356	)		94
Investment income			297			403			555			653
Gain on sale of equity method investments, net			411			—			411			—
Other income			1,003			1,012			2,018			1,942
	Total net revenue		5,165			4,850			10,081			9,549
Expense
Depreciation expense on operating lease assets			1,346			1,290			2,786			2,560
Compensation and benefits expense			665			772			1,383			1,583
Insurance losses and loss adjustment expenses			653			597			1,250			1,185
Other operating expenses			1,171			979			2,344			1,906
	Total noninterest expense		3,835			3,638			7,763			7,234
Income before income tax expense			1,330			1,212			2,318			2,315
Income tax expense			430			396			746			771
Net income			$900			$816			$1,572			$1,544

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

3

Condensed Consolidated Balance Sheet (unaudited)

GMAC LLC

		June 30,			December 31,
($ in millions)		2006			2005
Assets
Cash and cash equivalents			$17,186			$15,424
Investment securities			18,808			18,207
Loans held for sale			20,455			21,865
Assets held for sale			—			19,030
Finance receivables and loans, net of unearned income
	Consumer		134,736			140,411
	Commercial		47,568			44,574
Allowance for credit losses			(2,883	)		(3,116	)
	Total finance receivables and loans, net		179,421			181,869
Investment in operating leases, net			34,495			31,211
Notes receivable from General Motors			5,140			4,565
Mortgage servicing rights			5,093			4,015
Premiums and other insurance receivables			2,147			1,873
Other assets			25,637			22,457
Total assets			$308,382			$320,516
Liabilities
Debt
	Unsecured		$122,833			$133,269
	Secured		124,945			121,138
	Total debt		247,778			254,407
Interest payable			3,200			3,057
Liabilities related to assets held for sale			—			10,941
Unearned insurance premiums and service revenue			5,183			5,054
Reserves for insurance losses and loss adjustment expenses			2,642			2,534
Accrued expenses and other liabilities			23,041			18,381
Deferred income taxes			4,463			4,364
Total liabilities			286,307			298,738
Stockholder’s equity
Common stock, $.10 par value (10,000 shares authorized, 10 shares issued and outstanding) and paid-in capital			5,760			5,760
Retained earnings			15,338			15,190
Accumulated other comprehensive income			977			828
Total stockholder’s equity			22,075			21,778
Total liabilities and stockholder’s equity			$308,382			$320,516

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

4

Condensed Consolidated Statement of Changes in

Stockholder’s Equity (unaudited)

GMAC LLC

Six months ended June 30, ($ in millions)		2006			2005
Common stock and paid-in capital
Balance at beginning of year and at June 30,			$5,760			$5,760
Retained earnings
Balance at beginning of year			15,190			15,491
Net income			1,572			1,544
Cumulative effect of a change in accounting principle, net of income taxes
	Transfer of unrealized loss for certain available for sale securities to trading securities		(17	)		—
	Recognize mortgage servicing rights at fair value		4			—
Dividends paid			(1,411	)		(1,000	)
Balance at June 30,			15,338			16,035
Accumulated other comprehensive income (loss)
Balance at beginning of year			828			1,166
Other comprehensive income (loss)			132			(354	)
Transfer of unrealized loss for certain available for sale securities to trading securities			17			—
Balance at June 30,			977			812
Total stockholder’s equity
Balance at beginning of year			21,778			22,417
Net income			1,572			1,544
Recognize mortgage servicing rights at fair value			4			—
Dividends paid			(1,411	)		(1,000	)
Other comprehensive income (loss)			132			(354	)
Total stockholder’s equity at June 30,			$22,075			$22,607
Comprehensive income
Net income			$1,572			$1,544
Other comprehensive income (loss)			132			(354	)
Recognize mortgage servicing rights at fair value			4			—
Comprehensive income			$1,708			$1,190

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

5

Condensed Consolidated Statement of Cash Flows (unaudited)

GMAC LLC

Six months ended June 30, ($ in millions)	2006			2005
Operating activities
Net cash used in operating activities		($4,471	)		($4,226	)
Investing activities
Purchases of available for sale securities		(11,416	)		(10,514	)
Proceeds from sales of available for sale securities		2,323			2,614
Proceeds from maturities of available for sale securities		7,912			4,509
Net increase in finance receivables and loans		(51,739	)		(43,950	)
Proceeds from sales of finance receivables and loans		63,595			63,205
Purchases of operating lease assets		(9,070	)		(8,378	)
Disposals of operating lease assets		3,411			3,156
Change in notes receivable from General Motors		(512	)		549
Purchases of mortgage servicing rights, net		(55	)		(185	)
Acquisitions of subsidiaries, net of cash acquired		(324	)		—
Proceeds from sale of business units, net (a)		8,550			—
Settlement of residual support and risk sharing obligations with GM (b)		1,074			—
Other, net (c)		(585	)		(1,534	)
Net cash provided by investing activities		13,164			9,472
Financing activities
Net change in short-term debt		(6,927	)		(9,022	)
Proceeds from issuance of long-term debt		42,226			30,415
Repayments of long-term debt		(43,205	)		(32,124	)
Other financing activities		1,918			3,619
Dividends paid		(1,411	)		(1,000	)
Net cash used in financing activities		(7,399	)		(8,112	)
Effect of exchange rate changes on cash and cash equivalents		97			(129	)
Net increase (decrease) in cash and cash equivalents		1,391			(2,995	)
Cash and cash equivalents at beginning of year (d)		15,795			22,718
Cash and cash equivalents at June 30,		$17,186			$19,723

(a)	Includes proceeds from sale of GMAC Commercial Mortgage of approximately $1.5 billion, proceeds from repayment of intercompany loans with GMAC Commercial Mortgage of approximately $7.3 billion, $250 of which was received in preferred equity and net of cash transferred to buyer of approximately $650.
(b)	Refer to Note 9 to the Condensed Consolidated Financial Statements for a more detailed description.
(c)	Includes $491 and $778 for the six months ended June 30, 2006 and 2005, respectively, related to securities lending transactions where cash collateral is received and a corresponding liability is recorded, both of which are presented in investing activities.
(d)	Includes $371 of cash and cash equivalents in GMAC Commercial Mortgage classified as assets held for sale as of December 31, 2005.

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

6

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

1 Basis of Presentation

Effective July 20, 2006, General Motors Acceptance Corporation converted its form of organization from a Delaware corporation to a Delaware limited liability company and changed its name to “GMAC LLC” as contemplated by the previously announced April 2, 2006 Purchase and Sale Agreement among General Motors Corporation, GM Finance Co. Holdings, Inc., FIM Holdings LLC, and General Motors Acceptance Corporation. GMAC LLC (referred to herein as GMAC, we, our or us) is a wholly owned subsidiary of General Motors Corporation (General Motors or GM). The Condensed Consolidated Financial Statements include our accounts and those of our majority-owned subsidiaries, after eliminating intercompany balances and transactions, as well as all variable interest entities in which we are the primary beneficiary.

The Condensed Consolidated Financial Statements as of June 30, 2006, and for the second quarter and six months ended June 30, 2006 and 2005, are unaudited but, in management’s opinion, include all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the results for the interim periods. Certain prior period amounts have been reclassified to conform to the current period presentation.

The interim period consolidated financial statements, including the related notes, are condensed and are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim reporting. These interim period Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2005, filed with the United States Securities and Exchange Commission (SEC) on March 28, 2006, and revised through a Current Report on Form 8-K filing on June 2, 2006, to reflect changes to our reporting segments (collectively referred to herein as the 2005 Annual Report on 10-K).

On March 23, 2006, we sold approximately 78% of our equity in GMAC Commercial Mortgage for approximately $1.5 billion in cash. At the closing, GMAC Commercial Mortgage also repaid to us approximately $7.3 billion of intercompany loans, bringing our total cash proceeds to $8.8 billion. Prior to March 23, 2006, GMAC Commercial Mortgage’s activity and balances were fully consolidated in the Consolidated Financial Statements. Subsequent to the sale on March 23, 2006, our remaining interest in GMAC Commercial Mortgage is accounted for as an equity method investment. Effective with the date of the sale, GMAC Commercial Mortgage changed its name to Capmark Financial Group Inc. (Capmark).

As a result of the sale of Capmark, results of this entity are now included in Note 10 to the Condensed Consolidated Financial Statements (Segment Information) in Other. Prior to the sale, GMAC Commercial Mortgage was identified as a reportable operating segment under Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131). In addition, beginning January 1, 2006, based on changes in the organizational structure and management for the mortgage operations, Residential Capital Corporation (ResCap) is presented as a reportable operating segment. As a result, prior year financial data has been changed to reflect the current period presentation.

Change in Accounting Principle

On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (SFAS 156), which provides the following: (1) revised guidance on when a servicing asset and servicing liability should be recognized, (2) requires all separately recognized servicing assets and liabilities to be initially measured at fair value, if practicable, (3) permits an entity to elect to measure servicing assets and liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur, (4) upon initial adoption, permits a one time reclassification of available-for-sale securities to trading securities for securities which are identified as offsetting an entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects to subsequently measure at fair value and (5) requires separate presentation of servicing assets and liabilities subsequently measured at fair value in the balance sheet and additional disclosures. We elected to subsequently measure servicing assets and liabilities at fair value and report changes in fair value in earnings in the period in which the changes occur. In addition, we made a one-time reclassification of $927 million of available for sale securities to trading securities for those securities identified as offsetting our exposure to changes in the fair value of servicing assets or liabilities. The adoption of SFAS No. 156 resulted in a $13 million reduction in the beginning of the year retained earnings, net of tax, as a cumulative effect of change in accounting principle. However, the impact to total stockholder’s equity was a $4 million increase, net of tax.

We define our classes of servicing rights based on both the availability of market inputs and the manner in which we manage the risks of our servicing assets and liabilities. We manage our servicing rights at the reportable operating segment level. For all servicing assets and liabilities recorded on our balance sheet at January 1, 2006, the date of adoption, we identified three classes of servicing rights: those

7

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

pertaining to residential mortgage in our ResCap reporting segment, auto finance in our North American Operations reporting segment and commercial mortgages. We have elected to measure our residential mortgage servicing rights at fair value for each reporting date and report changes in fair value in earnings during the period in which the changes occur. At June 30, 2006, these assets were valued at $5.1 billion and recorded separately on our Condensed Consolidated Balance Sheet. Refer to Note 6 for further information.

For our servicing assets and liabilities related to our auto finance and commercial mortgage classes of assets, we have elected to continue to use the amortization method of accounting. As a result of the sale of Capmark on March 23, 2006, the commercial mortgage servicing rights are no longer recorded on our balance sheet at June 30, 2006. Our auto finance servicing assets and liabilities at June 30, 2006, totaled $18 million and $24 million, respectively, and are recorded in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheet.

Recently Issued Accounting Standards

Statement of Position 05-1 — In September 2005 the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting for deferred acquisition costs on internal replacements of insurance contracts. SOP 05-1 defines an internal replacement and specifies the conditions that determine whether the replacement contract is substantially or unsubstantially changed from the replaced contract. An internal replacement determined to result in a substantially changed contract should be accounted for as an extinguishment of the replaced contract and unamortized deferred acquisition costs and unearned revenue liabilities of the replaced contract should no longer be deferred. An internal replacement determined to result in an unsubstantially changed contract should be accounted for as a continuation of the replaced asset. SOP 05-01 introduces the terms integrated and non-integrated contract features and specifies that non-integrated features do not change the base contract and are to be accounted for in a manner similar to a separately issued contract. Integrated features are evaluated in conjunction with the base contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

Statement of Financial Accounting Standards No. 155 — In February 2006 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140 (SFAS 155). This standard permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS 155 allows an entity to make an irrevocable election to measure such a hybrid financial instrument at fair value on an instrument-by-instrument basis. The standard eliminates the prohibition on a QSPE from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 also clarifies which interest-only and principal-only strips are not subject to the requirements of SFAS 133, as well as determines that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the fiscal year that begins after September 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Staff Position — FIN 46(R)-6 — In April 2006 the FASB issued FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R) which requires the variability of an entity to be analyzed based on the design of the entity. The nature of and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46(R). The variability is used in applying FIN 46(R) to determine whether an entity is a variable interest entity, which interests are variable interests in the entity and who is the primary beneficiary of the variable interest entity. This statement is applied prospectively and is effective for all reporting periods after June 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Interpretation No. 48 — In June 2006 the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) which supplements Statement of Financial Accounting Standard No. 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

8

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

2 Sale of a Controlling Interest in GMAC

On April 2, 2006, GM and its wholly owned subsidiaries, GMAC and GM Finance Co. Holdings Inc., entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of approximately $7.4 billion to FIM Holdings LLC, a consortium of investors led by Cerberus Capital Management, L.P., a private investment firm, which also includes Citigroup Inc., Aozora Bank Ltd. and a subsidiary of The PNC Financial Services Group, Inc. as consortium members (FIM Holdings). GM will retain a 49% equity investment interest in GMAC. In addition, GM and the consortium will invest $1.9 billion of cash in new GMAC preferred equity, with $1.4 billion to be invested by GM and $500 million to be invested by FIM Holdings. The transaction is subject to a number of closing conditions including U.S. and international regulatory and other approvals. GM and GMAC expect to close the transaction in the fourth quarter of 2006, but it is possible that delays in obtaining such approvals or in satisfying other required conditions could defer the closing until 2007.

Prior to consummation of the agreement, (i) certain assets with respect to automotive leases and retail installment sales contracts owned by us and our affiliates having a net book value of approximately $4 billion will be dividended to GM, (ii) GM will assume certain of our post-employment benefit obligations, (iii) we will transfer to GM certain entities which hold a fee interest in certain real properties, (iv) we will pay dividends to GM in an amount up to the amount of our net income prior to the acquisition, (v) GM will repay certain indebtedness owing to us and specified intercompany unsecured obligations owing to us shall be no greater than $1.5 billion and (vi) we will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in our equity value resulting from the transfer of a portion of our net deferred tax liabilities arising from our conversion and certain of our subsidiaries’ conversion to limited liability company form. The total value of the cash proceeds and distributions to GM before its purchase of the preferred limited liability company interests will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price, the $4 billion of retained assets and the $2.7 billion cash dividend.

As part of the transaction, GM and GMAC will enter into a number of agreements that will require that we continue to allocate capital to automotive financing consistent with historical practices, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While we will retain the right to make individual credit decisions, we will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdiction. Subject to our fulfillment of certain conditions, GM will grant us exclusivity for 10 years for U.S., Canadian, and international GM-sponsored retail and wholesale marketing incentives around the world, with the exception of Saturn branded products.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase certain assets from us related to the Automotive Finance operations of the North American Operations and International Operations of GMAC, subject to certain conditions, including that GM’s credit ratings are investment grade or are higher than our credit ratings. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of our automotive finance operations in either the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things, (i) reasonable satisfaction by the members of the purchaser, pursuant to an agreement with, or writing from, the Pension Benefit Guaranty Corporation that, following the closing, GMAC and its subsidiaries will not have any liability with respect to the ERISA plans of GM, which writing was received by FIM Holdings in July 2006, (ii) receipt of ratings for our senior unsecured long-term indebtedness and the ratings of ResCap, our wholly owned subsidiary, after giving effect to the transactions contemplated by the agreement, of at least BB and BBB- (or their respective equivalents), respectively, and an A.M. Best rating for our significant insurance subsidiaries of at least B++, (iii) that no material adverse effect will have occurred with respect to our business, financial condition or results of operations, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent, (iv) receipt of required regulatory approvals and licenses and (v) receipt of certain legal opinions at closing. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 31, 2007.

There can be no assurance that the sale transaction will be completed or if it is completed, that the terms of the sale will not be different from those set forth in the definitive agreement.

9

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

3 Other Income

The following table presents the components of other income, which includes Capmark activity through March 23, 2006, the date of sale:

	Second Quarter					Six Months
Period ended June 30, ($ in millions)	2006			2005		2006			2005
Interest on cash equivalents		178			69		297			168
Interest on restricted cash deposits		31			25		59			49
Real estate services		187			194		331			325
Interest and service fees on transactions with GM (a)		147			123		294			233
Other interest revenue		128			101		249			195
Mortgage processing fees		37			106		106			198
Full service leasing fees		71			43		135			86
Late charges and other administrative fees		41			39		82			81
Insurance service fees		28			38		57			76
Factoring commissions		15			18		30			36
Specialty lending fees		15			14		30			29
Fair value adjustment on certain derivatives (b)		(14	)		5		(22	)		(3	)
Other		139			237		370			469
Total other income		$1,003			$1,012		$2,018			$1,942

(a)	Refer to Note 9 to the Condensed Consolidated Financial Statements for a description of transactions with GM.
(b)	Refer to Note 8 to our Condensed Consolidated Financial Statements for a description of derivative instruments and hedging activities.

4 Other Operating Expenses

The following table presents the components of other operating expenses, which includes Capmark activity through March 23, 2006, the date of sale:

	Second Quarter					Six Months
Period ended June 30, ($ in millions)	2006		2005			2006			2005
Insurance commissions		$211		$233			$454			$468
Technology and communications expense		134		143			265			282
Professional services		111		100			216			205
Advertising and marketing		92		108			176			211
Premises and equipment depreciation		62		67			126			140
Full service leasing vehicle maintenance costs		63		58			123			119
Auto remarketing and repossession		75		51			122			80
Rent and storage		54		65			121			132
Lease and loan administration		53		50			107			93
Amortization of intangible assets		5		3			12			6
Operating lease disposal loss (gain)		21		(118	)		(28	)		(214	)
Other		290		219			650			384
Total other operating expenses		$1,171		$979			$2,344			$1,906

10

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

5 Finance Receivables and Loans

The composition of finance receivables and loans outstanding, which excludes Capmark, was as follows:

			June 30, 2006						December 31, 2005
($ in millions)			Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer
	Retail automotive			$43,749		$18,553		$62,302		$53,789		$17,663		$71,452
	Residential mortgages			68,640		3,794		72,434		65,040		3,919		68,959
Total consumer				112,389		22,347		134,736		118,829		21,582		140,411
Commercial
	Automotive:
		Wholesale		15,122		8,303		23,425		13,202		7,372		20,574
		Leasing and lease financing		396		765		1,161		461		767		1,228
		Term loans to dealers and other		2,091		735		2,826		2,397		719		3,116
	Commercial and industrial			14,961		2,148		17,109		14,908		2,028		16,936
	Real estate construction and other			2,907		140		3,047		2,601		119		2,720
Total commercial				35,477		12,091		47,568		33,569		11,005		44,574
Total finance receivables and loans (a)				$147,866		$34,438		$182,304		$152,398		$32,587		$184,985

(a)  Net of unearned income of $5,236 and $5,868 as of June 30, 2006, and December 31, 2005, respectively.

The following table, which excludes Capmark activity, presents an analysis of the activity as of June 30 in the allowance for credit losses on finance receivables and loans.

			2006									2005
Second quarter ended June 30, ($ in millions)			Consumer			Commercial			Total			Consumer			Commercial			Total
Allowance at beginning of period				$2,542			$368			$2,910			$2,909			$463			$3,372
	Provision for credit losses (a)			258			30			288			174			21			195
	Charge-offs
		Domestic		(320	)		(24	)		(344	)		(323	)		(16	)		(339	)
		Foreign		(39	)		(3	)		(42	)		(52	)		(8	)		(60	)
	Total charge-offs			(359	)		(27	)		(386	)		(375	)		(24	)		(399	)
	Recoveries
		Domestic		50			2			52			32			2			34
		Foreign		11			—			11			14			1			15
	Total recoveries			61			2			63			46			3			49
	Net charge-offs			(298	)		(25	)		(323	)		(329	)		(21	)		(350	)
	Impacts of foreign currency translation			6			1			7			(1	)		(13	)		(14	)
	Securitization activity			1			—			1			(1	)		(2	)		(3	)
Allowance at June 30				$2,509			$374			$2,883			$2,752			$448			$3,200

(a)  Capmark activity excluded in the commercial column of $0 and $6 at June 30, 2006 and 2005, respectively. Refer to Note 1 to the Condensed Consolidated Financial Statements for further details.

11

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

			2006									2005
Six months ended June 30, ($ in millions)			Consumer			Commercial			Total			Consumer			Commercial			Total
Allowance at beginning of period				$2,683			$433			$3,116			$2,951			$464			$3,415
	Provision for credit losses (a)			415			5			420			479			31			510
	Charge-offs
		Domestic		(641	)		(70	)		(711	)		(669	)		(23	)		(692	)
		Foreign		(85	)		(4	)		(89	)		(102	)		(9	)		(111	)
	Total charge-offs			(726	)		(74	)		(800	)		(771	)		(32	)		(803	)
	Recoveries
		Domestic		103			6			109			79			4			83
		Foreign		24			3			27			28			1			29
	Total recoveries			127			9			136			107			5			112
	Net charge-offs			(599	)		(65	)		(664	)		(664	)		(27	)		(691	)
	Impacts of foreign currency translation			8			1			9			(12	)		(16	)		(28	)
	Securitization activity			2			—			2			(2	)		(4	)		(6	)
Allowance at June 30				$2,509			$374			$2,883			$2,752			$448			$3,200

(a)  Capmark activity excluded in the commercial column of $3 and $20 at June 30, 2006 and 2005, respectively. Refer to Note 1 to the Condensed Consolidated Financial Statements for further details.

6 Mortgage Servicing Rights

The following table summarizes 2006 activity related to mortgage servicing rights (MSRs) carried at fair value.

($ in millions)		Total
Estimated fair value at January 1, 2006		$	4,021
Additions obtained from sales of financial assets			770
Additions from purchases of servicing rights			5
Changes in fair value:
	Due to changes in valuation inputs or assumptions used in the valuation model		654
	Other changes in fair value		(357	)
Estimated fair value at June 30, 2006		$	5,093

Changes in fair value due to changes in valuation inputs or assumptions used in the valuation models include all changes due to a revaluation by a model or by a benchmarking exercise. This line item also includes changes in fair value due to a change in valuation assumptions and/or model calculations. Other changes in fair value primarily include the accretion of the present value of the discount related to forecasted cash flows and the economic run-off of the portfolio. Other changes that affect the balance primarily include foreign currency adjustments and the extinguishment of mortgage servicing rights related to clean-up calls of securitization transactions.

The following are key assumptions used by us in valuing our MSRs:

June 30, 2006	Total
Range of prepayment speeds		7.0 - 38.5%
Range of discount rates		8.0 - 14.0%

Our servicing rights’ primary risk is interest rate risk and the resulting impact on prepayments. A significant decline in interest rates could lead to higher than expected prepayments, which could reduce the value of the mortgage servicing rights. We economically hedge the income statement impact of these risks with both derivative and non-derivative financial instruments. These instruments include interest rate swaps, caps and floors, options to purchase these items, futures and forward contracts and/or purchasing or selling U.S. Treasury and principal-only securities. At June 30, 2006, the fair value of derivative financial instruments and non-derivative financial instruments used to mitigate these risks amounted to a liability of $32 million and an asset of $1.9 billion, respectively. The change in the fair value of the derivative financial instruments amounted to a loss of $656 million for the six months ended June 30, 2006, and is included in net servicing asset valuation and hedge activities in the Condensed Consolidated Statement of Income.

12

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

The components of servicing fees were as follows for the six months ended June 30, 2006:

($ in millions)	Total
Contractual servicing fees (net of guarantee fees and including subservicing)		$640
Late fees		62
Ancillary fees		59
Total		$761

At June 30, 2006, we pledged MSRs of $2.5 billion as collateral for borrowings.

The following table, which includes Capmark activity, summarizes activity and related amortization of MSRs which prior to January 1, 2006 were carried at lower of cost or fair value.

($ in millions)	2005
Balance at January 1, 2005		$4,819
Originations and purchases, net of sales		784
Amortization		(541	)
SFAS 133 hedge valuation adjustments		(338	)
Other than temporary impairment		(21	)
Balance at June 30, 2005		4,703
Valuation allowance		(867	)
Carrying value at June 30, 2005		$3,836
Estimated fair value at June 30, 2005		$3,925

The following table summarizes the change in the valuation allowance for mortgage servicing rights.

($ in millions)	2005
Valuation allowance at January 1, 2005		$929
Deductions (a)		(41	)
Other than temporary impairment		(21	)
Valuation allowance at June 30, 2005		$867

(a)  Changes to the valuation allowance are reflected as a component of amortization and impairment of servicing rights.

For a description of MSRs and the related hedging strategy, refer to Notes 1 and 10 to our 2005 Annual Report on Form 10-K.

13

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

7 Debt

The presentation of debt in the following table, which excludes Capmark balances, is classified between domestic and foreign based on the location of the office recording the transaction.

			June 30, 2006									December 31, 2005
($ in millions)			Domestic			Foreign			Total			Domestic		Foreign		Total
Short-term debt
	Commercial paper			$283			$567			$850			$227		$297		$524
	Demand notes			5,325			120			5,445			5,928		119		6,047
	Bank loans and overdrafts			1,023			4,379			5,402			1,165		5,487		6,652
	Repurchase agreements and other (a)			19,727			4,552			24,279			22,330		5,954		28,284
Total short-term debt				26,358			9,618			35,976			29,650		11,857		41,507
Long-term debt
	Senior indebtedness:
		Due within one year		29,409			12,722			42,131			31,286		10,443		41,729
		Due after one year		145,369			25,499			170,868			147,307		23,862		171,169
Total long-term debt				174,778			38,221			212,999			178,593		34,305		212,898
Fair value adjustment (b)				(1,176	)		(21	)		(1,197	)		—		2		2
Total debt				$199,960			$47,818			$247,778			$208,243		$46,164		$254,407

(a)	Repurchase agreements consist of secured financing arrangements with third parties at our mortgage operations. Other primarily includes non-bank secured borrowings, as well as Notes payable to GM. Refer to Note 9 to the Condensed Consolidated Financial Statements for further details.
(b)	To adjust designated fixed rate debt to fair value in accordance with SFAS 133.

The following summarizes assets that are restricted as collateral for the payment of the related debt obligation primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements.

		June 30, 2006				December 31, 2005
				Related				Related
				secured				secured
($ in millions)		Assets		debt (a)		Assets		debt (a)
Loans held for sale			$15,701		$13,187		$16,147		$12,647
Mortgage assets held for investment and lending receivables			83,544		71,256		78,820		71,083
Retail automotive finance receivables			18,837		17,138		20,427		18,888
Wholesale automotive finance receivables			472		337		—		—
Investment securities			3,002		3,955		3,631		4,205
Investment in operating leases, net			18,204		15,839		13,136		11,707
Real estate investments and other assets			5,824		3,233		4,771		2,608
	Total		$145,584		$124,945		$136,932		$121,138

(a)  Included as part of secured debt are repurchase agreements of $9,647 and $9,897 where we have pledged assets, reflected as investment securities as collateral for approximately the same amount of debt at June 30, 2006, and December 31, 2005, respectively.

14

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

Liquidity Facilities

Liquidity facilities represent additional funding sources, if required. The financial institutions providing the uncommitted facilities are not legally obligated to fund such amounts. The following table summarizes the liquidity facilities maintained by us, excluding Capmark.

		Committed				Uncommitted				Total liquidity				Unused liquidity
		facilities				facilities				facilities				facilities
		Jun 30,		Dec 31,		Jun 30,		Dec 31,		Jun 30,		Dec 31,		Jun 30,		Dec 31,
($ in billions)		2006		2005		2006		2005		2006		2005		2006		2005
Automotive operations:
	Syndicated multi-currency global credit facility (a)		$7.6		$7.4		$—		$—		$7.6		$7.4		$7.6		$7.4
Mortgage operations (b)			3.9		3.9		0.9		0.9		4.8		4.8		2.5		2.2
Other:
	U.S. asset-backed commercial paper liquidity and receivables facilities (c)		21.3		21.5		—		—		21.3		21.5		21.3		21.5
	Other foreign facilities (d)		2.5		2.9		8.2		7.5		10.7		10.4		2.1		1.7
Total bank liquidity facilities			35.3		35.7		9.1		8.4		44.4		44.1		33.5		32.8
Secured funding facilities (e)			109.3		114.9		—		—		109.3		114.9		67.5		79.1
Total			$144.6		$150.6		$9.1		$8.4		$153.7		$159.0		$101.0		$111.9

(a)	The entire $7.6 is available for use in the U.S., $0.8 is available for use by GMAC (UK) plc and $0.8 is available for use by GMAC International Finance B.V. in Europe.
(b)	In July 2005 ResCap closed a $3.5 syndication of its bank facilities, consisting of a $1.75 syndication term loan, a $0.9 syndication line of credit committed through July 2008 and a $0.9 syndicated line of credit committed through July 2007.
(c)	Relates to New Center Asset Trust (NCAT) and Mortgage Interest Networking Trust (MINT), which are special purpose entities administered by us for the purpose of funding assets as part of our securitization and mortgage warehouse funding programs. These entities fund assets primarily through the issuance of asset-backed commercial paper and represent an important source of liquidity to us. At June 30, 2006, NCAT had commercial paper outstanding of $11.8, which is not consolidated in the Condensed Consolidated Balance Sheet. At June 30, 2006, MINT had commercial paper outstanding of $1.9, which is reflected as secured debt in the Condensed Consolidated Balance Sheet.
(d)	Consists primarily of credit facilities supporting operations in Canada, Europe, Latin America and Asia-Pacific.
(e)	Consists of committed and uncommitted secured funding facilities with third parties, including commitments with third-party asset-backed commercial paper conduits, as well as forward flow sale agreements with third parties and repurchase facilities. Amounts include five year commitments that we entered into in 2005 with remaining capacity to sell up to $48 of retail automotive receivables to a third-party purchaser through June 2010.

The syndicated multi-currency global credit facility includes a $4.35 billion five-year facility (expires June 2008) and a $3.25 billion 364-day facility (expires June 2007). In the event that a public announcement is made by GMAC or GM that the acquisition as defined in the current report on Form 8-K filed by GMAC on April 3, 2006, will not be consummated or that such transaction has otherwise been terminated, $1.51 billion of the 364-day facility may be terminated by the lenders, and the remaining $1.74 billion will be transferred to the NCAT secured committed facility. Provided that such announcement has not been made, the facility also includes a term out option, which if exercised by us prior to expiration, carries a one-year term. Additionally, a leverage covenant in the liquidity facilities and certain other funding facilities restricts the ratio of consolidated unsecured debt to total stockholder’s equity to no greater than 11.0:1, under certain conditions. More specifically, the covenant is only applicable on the last day of any fiscal quarter (other than the fiscal quarter during which a change in rating occurs) during such times that we have senior unsecured long-term debt outstanding, without third-party enhancement, which is rated BBB+ or less (by Standard & Poor’s), or Baa1 or less (by Moody’s). Our leverage ratio covenant was 6.8:1 at June 30, 2006, and we are, therefore, in compliance with this covenant. The leverage covenant calculation excludes from debt those securitization transactions accounted for as on-balance sheet secured financings.

15

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

8 Derivative Instruments and Hedging Activities

We enter into interest rate and foreign currency futures, forwards, options and swaps in connection with our market risk management activities. In accordance with SFAS 133, as amended, we record derivative financial instruments on the balance sheet as assets or liabilities at fair value. Changes in fair value are accounted for depending on the use of the derivative financial instrument and whether it qualifies for hedge accounting treatment. Refer to our 2005 Annual Report on Form 10-K for a more detailed description of our use of and accounting for derivative financial instruments.

The following table, which includes Capmark activity through March 23, 2006, the date of sale, summarizes the pre-tax earnings effect for each type of accounting hedge classification, segregated by the asset or liability being hedged.

			Second Quarter						Six Months
Period ended June 30,
($ in millions)			2006			2005			2006			2005			Income Statement Classification
Fair value hedge ineffectiveness gain (loss):
	Debt obligations			($19	)		$39			($44	)		$34		Interest and discount expense
	Mortgage servicing rights			—			36			—			9		Servicing asset valuation and hedge activities, net
	Loans held for sale			1			(14	)		1			(15	)	Gain on sale of mortgage and automotive loans, net
Cash flow hedge ineffectiveness gain (loss):
	Debt obligations			—			(5	)		1			(2	)	Interest and discount expense
Economic hedge change in fair value:
	Off-balance sheet securitization activities:
		Automotive Finance operations		(13	)		5			(21	)		(3	)	Other income
		Mortgage operations		—			—			—			1		Other Income
	Foreign currency debt (a)			6			(71	)		58			(161	)	Interest and discount expense
	Loans held for sale or investment			48			(94	)		158			(40	)	Gain on sale of mortgage and automotive loans, net
	Mortgage servicing rights			(275	)		75			(656	)		39		Servicing asset valuation and hedge activities, net
	Mortgage related securities			(23	)		9			(30	)		(34	)	Investment income
	Other			10			(30	)		27			(18	)	Other income
Total loss				($265	)		($50	)		($506	)		($190	)

(a)  Amount represents the difference between the changes in the fair values of the currency swap, net of the revaluation of the related foreign denominated debt.

In addition, net gains on fair value hedges excluded from assessment of effectiveness totaled $0 million and $6 million for the second quarter of 2006 and 2005, respectively, and $0 million and $46 million for the six months ended 2006 and 2005, respectively.

9 Transactions with Affiliates

As a wholly owned subsidiary, we enter into various operating and financing arrangements with our parent GM. A master intercompany operating agreement governs the nature of these transactions to ensure that they are done on an arm’s-length basis, in accordance with commercially reasonable standards and in our best interest as a diversified financial services company. In addition, GM and we agree that our total stockholder’s equity, as reflected in our consolidated financial statements at the end of any quarter, will be maintained at a commercially reasonable level appropriate to support the amount, quality and mix of our assets.

16

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

Balance Sheet

A summary of the balance sheet effect of transactions with GM and affiliated companies is as follows:

		June 30,			December 31,
($ in millions)		2006			2005
Assets:
Finance receivables and loans, net of unearned income (a)
	Wholesale auto financing		$995			$1,159
	Term loans to dealers		185			207
Investment in operating leases, net (b)			305			286
Notes receivable from GM (c)			5,140			4,565
Other assets
	Real estate synthetic lease (d)		1,028			1,005
	Receivable related to taxes (due from GM) (e)		708			690
Liabilities:
Unsecured debt
	Notes payable to GM		1,129			1,190
Accrued expenses and liabilities (f)
	Wholesale payable		703			802
	Subvention receivables (rate and residual support)		(428	)		(133	)
	Insurance premium and contract receivable, net		(61	)		(81	)
	Lease pull ahead receivable		(106	)		(189	)
	Other payable (receivable)		39			(246	)
Stockholder’s equity:
	Dividends paid (g)		1,411			2,500

(a)	Represents wholesale financing and term loans to certain dealerships wholly owned by GM or in which GM has a controlling interest. All of these amounts are included in finance receivables and loans.
(b)	Includes net balance of buildings and other equipment classified as operating lease assets that are leased to GM affiliated entities.
(c)	Includes borrowing arrangements with GM Opel and GM of Canada and arrangements related to our funding of GM company-owned vehicles, rental car vehicles awaiting sale at auction, our funding of the sale of GM vehicles through the use of overseas distributors and amounts related to a GM trade supplier finance program. In addition, we provide wholesale financing to GM for vehicles in which GM retains title while the vehicles are consigned to us or dealers in the UK. The financing to GM remains outstanding until the title is transferred to the dealers. The amount of financing provided to GM under this arrangement varies based on inventory levels. In May 2006 GMAC recorded a note receivable from GM in the amount of $1.35 billion related to the settlement between GM and GMAC of residual support and risk sharing liabilities as of April 30, 2006, as well as to fund estimated residual support at lease inception pursuant to new up-front payment terms for residual support which began on May 1, 2006. This note is expected to be paid immediately prior to the closing of the GMAC majority sale transaction.
(d)	During 2000 we entered into a 16-year lease arrangement with GM, under which we agreed to fund and capitalize improvements to three Michigan properties leased by GM totaling $1.2 billion. In 2004 the lease arrangement was increased to $1.3 billion. The total construction advances as of June 30, 2006, and December 31, 2005, were $997 and $971, respectively. It is anticipated that prior to the closing of the GMAC majority sale transaction, GMAC will dividend the properties back to GM at the then current net book value. The lease arrangement will then be terminated and no further lease payments or advances will be made.
(e)	At June 30, 2006 we carried an intercompany tax receivable from GM of $708 million. This receivable is expected to be paid immediately prior to the closing of the GMAC majority sale transaction. The receivable is comprised of federal net operating loss carryforwards of $629, charitable contributions carryforwards of $12 and foreign tax credit carryforwards of $67. We believe that the intercompany tax receivable is realizable as GM has determined that it is more likely than not that the tax attributes will be utilized in the remaining carryforward period.
(f)	Includes (receivables) payables from GM as follows: wholesale settlements payable to GM, subvention receivables due from GM and notes payable due from GM, which are included in accrued expenses, and other liabilities and debt, respectively.
(g)	The 2005 amount represents dividends of $500 million in each of the first three quarters and $1.0 billion in the fourth quarter. The 2006 amount represents dividends of $1.4 billion in the second quarter.

17

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

Retail and lease contracts acquired by us that included rate and residual subvention from GM, payable directly or indirectly to GM dealers as a percent of total new retail and lease contracts acquired, were as follows:

Six months ended June 30,		2006			2005
GM and affiliates subvented contracts acquired:
	North American operations		89	%		76	%
	International operations		57	%		59	%

GM also provides payment guarantees on certain commercial assets we have outstanding with certain third-party customers. As of June 30, 2006, and December 31, 2005, commercial obligations guaranteed by GM were $175 million and $934 million, respectively. In addition, we have a consignment arrangement with GM for commercial inventories in Europe. As of June 30, 2006, and December 31, 2005, commercial inventories related to this arrangement were $338 million and $303 million, respectively, and are reflected in Other assets in the Condensed Consolidated Balance Sheet.

Income Statement

A summary of the income statement effect of transactions with GM and affiliated companies is as follows:

		Second Quarter						Six Months
Period ended June 30, ($ in millions)		2006			2005			2006			2005
Net financing revenue:
	GM and affiliates lease residual value support (a)		$208			$130			$375			$233
	Wholesale subvention and service fees from GM		45			58			88			111
	Interest paid on loans from GM		(10	)		(10	)		(27	)		(19	)
	Consumer lease payments from GM (b)		21			78			61			112
	Insurance premiums earned from GM		77			99			157			203
Other income:
	Interest on notes receivable from GM and affiliates		67			55			136			106
	Interest on wholesale settlements (c)		49			36			93			63
	Revenues from GM leased properties		28			21			54			42
Service fee income:
	GMAC of Canada operating lease administration (d)		—			5			—			12
	Rental car repurchases held for resale (e)		4			6			11			9
Expense:
	Employee retirement plan costs allocated by GM		30			32			64			78
	Off-lease vehicle selling expense reimbursement (f)		8			(8	)		14			(3	)
	Payments to GM for services, rent and marketing expenses		24			38			47			91

(a)	Represents total amount of residual support paid (or invoiced) for the second quarter 2006 and 2005 under the residual support and risk sharing programs. However, the table does not include a payment of $1.1 billion made during the second quarter in connection with the settlement of residual support and risk sharing obligations for a portion of the lease portfolio, as described below.
(b)	GM sponsors lease pull-ahead programs whereby consumers are encouraged to terminate lease contracts early in conjunction with the acquisition of a new GM vehicle, with the customer’s remaining payment obligation waived. For certain programs, GM compensates us for the waived payments, adjusted based on the remarketing results associated with the underlying vehicle.
(c)	The settlement terms related to the wholesale financing of certain GM products are at shipment date. To the extent that wholesale settlements with GM are made prior to the expiration of transit, we receive interest from GM.
(d)	GMAC of Canada, Limited administered operating lease receivables on behalf of GM of Canada, Limited (GMCL) and received a servicing fee, which was included in other income. As of October 2005 GMAC of Canada, Limited no longer administers these operating lease receivables.
(e)	We receive a transaction fee from GM related to the resale of rental car repurchases.

(f)  An agreement with GM provides for the reimbursement of certain selling expenses incurred by us on off-lease vehicles sold by GM at auction.

Operating Lease Residuals

As a marketing incentive GM may sponsor residual support programs as a way to lower customer monthly payments. Under residual support programs, the customer’s contractual residual value is adjusted above our standard residual rates. GM reimburses us if remarketing sales proceeds are less than the customer’s contract residual value limited to our standard residual value. In addition to

18

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

residual support programs, GM also participates in a risk sharing arrangement whereby GM shares equally in residual losses to the extent that remarketing proceeds are below our standard residual rates (limited to a floor).

In connection with the agreement to sell a 51 percent ownership interest in GMAC, GM settled its estimated liabilities with respect to residual support and risk sharing on a portion of our operating lease portfolio (approximately 19% of the North American Automotive Finance operating lease portfolio) and on the entire U.S. balloon retail receivable portfolio in a lump-sum payment. As of April 30, 2006, the maximum amount that would have been paid under the residual support and risk sharing arrangements with GM on this portion of the portfolio totaled approximately $2.0 billion. A negotiated amount totaling approximately $1.1 billion was agreed to between GM and GMAC to settle the expected amount (based on expected remarketing performance of the vehicles) to be paid by GM under these leases and was paid to us on May 15, 2006. The payment of $1.1 billion was recorded as a deferred amount in accrued expenses and other liabilities in our Condensed Consolidated Balance Sheet and will be treated as sales proceeds on the underlying assets, as the contracts terminate and the vehicles are sold at auction, in recognizing the gain or loss on sale.

For the remainder of the operating lease portfolio, not subject to this payout arrangement, based on June 30, 2006 outstandings, the current amount that we would expect to be paid by GM under residual support programs would be $1.5 billion. These projections would be paid over the remaining life of the lease portfolio at the time of sale of the related vehicle (on average approximately 2 years) and are based on the expected remarketing performance of the vehicles. The maximum that could be paid under the residual support programs on this portion of the lease portfolio is approximately $2.6 billion and would be paid only in the unlikely event that the proceeds from this portion of the operating lease portfolio are lower than both the contractual residual value and our standard residual rates. The maximum amount that could be paid under the risk sharing arrangements on the remaining lease portfolio is approximately $1.4 billion and would only be paid in the unlikely event that the proceeds from the outstanding lease vehicles would be lower than our standard residual rates. As disclosed in Note 2, certain assets with respect to automotive leases will be dividended to GM prior to consummation of the agreement.

In addition, as it relates to a portion of lease originations (approximately 19% of North American Automotive Finance lease originations) and all U.S. balloon retail contract originations occurring after April 30, 2006, GM agreed to begin payment of the expected residual support owed to us at the time of contract origination as opposed to after contract termination at the time of sale of the related vehicle. The amount paid is based on the historical remarketing experience of the vehicles. Upon sale of the related vehicle after contract termination, GM and GMAC will settle the amount of actual residual support payment owed based on the actual sales proceeds received and GM will pay to us amounts owed related to the risk sharing arrangements, if any. After the sale of a 51 percent ownership interest in GMAC is completed, all new operating lease originations will be subject to this revised residual support arrangement with GM. For the affected contracts originated in the second quarter of 2006, GM paid or agreed to pay us a total of $65 million for contracts originated in May and June. The remaining maximum exposure after consideration of these payments that could be paid under these contracts for residual support is approximately $43 million and would be paid only in the unlikely event that the proceeds from this portion of the operating lease portfolio are lower than both the contractual residual value and our standard residual rates. The remaining maximum amount that could be paid under the risk sharing arrangements on these contracts is approximately $174 million and would only be paid in the unlikely event that the proceeds from the outstanding lease vehicles would be lower than our standard residual rates.

In addition to the financing arrangements summarized in the foregoing table, GM has a $4 billion revolving line of credit from us that expires in September 2006. This credit line is used for general operating and seasonal working capital purposes and to reduce external liquidity requirements. As of June 30, 2006, and December 31, 2005, there were no amounts outstanding on this line.

19

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

10 Segment Information

Financial results for our reporting segments are summarized below.

	Automotive Finance operations
	North
Second Quarter ended June 30,	American			International						Insurance
($ in millions)	Operations (a)			Operations (a)			ResCap (b)			Operations		Other (c)			Consolidated
2006
Net revenue before provision for credit losses		$1,156			$333			$263			$—		$156			$1,908
Provision for credit losses		(130	)		(22	)		(123	)		—		(10	)		(285	)
Other revenue		826			200			1,434			1,157		(75	)		3,542
Total net revenue		1,852			511			1,574			1,157		71			5,165
Noninterest expense		1,642			410			695			1,040		48			3,835
Income before income tax expense		210			101			879			117		23			1,330
Income tax expense		32			27			331			37		3			430
Net income		$178			$74			$548			$80		$20			$900
Total assets		$157,039			$29,738			$124,552			$13,475		($16,422	)		$308,382
2005
Net revenue before provision for credit losses		$1,250			$385			$375			$—		$257			$2,267
Provision for credit losses		(18	)		(32	)		(145	)		—		(6	)		(201	)
Other revenue		633			197			866			1,049		39			2,784
Total net revenue		1,865			550			1,096			1,049		290			4,850
Noninterest expense		1,466			405			637			904		226			3,638
Income before income tax expense		399			145			459			145		64			1,212
Income tax expense		134			44			159			45		14			396
Net income		$265			$101			$300			$100		$50			$816
Total assets		$179,098			$29,524			$98,571			$12,173		($9,375	)		$309,991

(a)	North American Operations consist of automotive financing in the U.S., Canada and certain corporate activities. International Operations consists of automotive financing and full service leasing in all other countries and Puerto Rico through March 31, 2006. Beginning April 1, 2006, Puerto Rico is included in North American Operations.
(b)	Refer to Note 1 to the Condensed Consolidated Financial Statements for a discussion on changes to the reportable operating segments.
(c)	Represents our Commercial Finance Group, Capmark, certain corporate activities related to the Mortgage Group, and reclassifications and eliminations between the reporting segments. The financial results for 2006 reflect our 22% equity interest in Capmark commencing March 23, 2006, while the 2005 financial results represent Capmark as wholly-owned.

20

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

	Automotive Finance operations
	North
Six Months ended June 30,	American			International						Insurance
($ in millions)	Operations (a)			Operations (a)			ResCap (b)			Operations		Other (c)			Consolidated
2006
Net revenue before provision for credit losses		$2,374			$686			$527			$—		$460			$4,047
Provision for credit losses		(144	)		(15	)		(245	)		—		(16	)		(420	)
Other revenue		1,570			417			2,234			2,298		(65	)		6,454
Total net revenue		3,800			1,088			2,516			2,298		379			10,081
Noninterest expense		3,316			802			1,297			1,995		353			7,763
Income before income tax expense		484			286			1,219			303		26			2,318
Income tax expense (benefit)		133			83			469			94		(33	)		746
Net income		$351			$203			$750			$209		$59			$1,572
2005
Net revenue before provision for credit losses		$2,384			$762			$794			$—		$514			$4,454
Provision for credit losses		(166	)		(63	)		(278	)		—		(23	)		(530	)
Other revenue		1,251			393			1,705			2,082		194			5,625
Total net revenue		3,469			1,092			2,221			2,082		685			9,549
Noninterest expense		2,901			798			1,233			1,794		508			7,234
Income before income tax expense		568			294			988			288		177			2,315
Income tax expense		176			86			366			93		50			771
Net income		$392			$208			$622			$195		$127			$1,544

(a)	North American Operations consist of automotive financing in the U.S., Canada and certain corporate activities. International Operations consists of automotive financing and full service leasing in all other countries and Puerto Rico through March 31, 2006. Beginning April 1, 2006, Puerto Rico is included in North American Operations.
(b)	Refer to Note 1 to the Condensed Consolidated Financial Statements for a discussion on changes to the reportable operating segments.
(c)	Represents our Commercial Finance Group, Capmark, certain corporate activities related to the Mortgage Group, and reclassifications and eliminations between the reporting segments. The financial results for 2006 reflect our 22% equity interest in Capmark commencing March 23, 2006 while the 2005 financial results represent Capmark as wholly-owned.

11 Subsequent Events

Effective July 20, 2006, General Motors Acceptance Corporation converted its form of organization from a Delaware corporation to a Delaware limited liability company and changed its name to “GMAC LLC” as contemplated by the previously announced April 2, 2006 Purchase and Sale Agreement among General Motors Corporation, GM Finance Co. Holdings, Inc., FIM Holdings LLC, and General Motors Acceptance Corporation. At present GMAC has elected to be treated as a corporation for federal income tax purposes and continues to be part of GM’s consolidated federal income tax return. Upon conversion to a multi-member LLC which is planned for two business days prior to closing of the sale transaction, then existing deferred tax assets and liabilities for converting subsidiaries will be eliminated with the impact being recognized in current period earnings. Pursuant to the Purchase and Sale Agreement a dividend will be made to GM for the income recognized related to the deferred tax assets and liabilities.

On July 28, 2006, the Federal Deposit Insurance Corporation (the FDIC) announced a six-month moratorium on the acceptance of, or final decisions on, notices filed under the Change in Bank Control Act with regard to industrial loan companies (ILCs). In connection with the GMAC Transaction, FIM Holdings has submitted such notices with respect to GMAC’s ILC, GMAC Automotive Bank. GM and GMAC are currently evaluating the effect of the FDIC’s action on these pending notices, but it appears that the timing of any approval of the notices is likely to be affected by the moratorium. Since FDIC approval of the Change in Bank Control Act notices with regard to GMAC Automotive Bank is a condition to closing the GMAC Transaction, GM and GMAC are now working with FIM Holdings to consider ways to try to avoid delaying the targeted closing date until 2007.

21

Management’s Discussion and Analysis

GMAC LLC

Overview

We are a leading global financial services firm with approximately $308 billion of assets and operations in approximately 40 countries. Founded in 1919 as a wholly owned subsidiary of General Motors Corporation, GMAC was originally established to provide GM dealers with the automotive financing necessary to acquire and maintain vehicle inventories and to provide retail customers the means by which to finance vehicle purchases through GM dealers. Our products and services have expanded beyond automotive financing as we currently operate in the following lines of business — Automotive Finance, Mortgage (ResCap), and Insurance. Refer to our 2005 Annual Report on Form 10-K for a more complete description of our business activities, along with the products and services offered and the market competition.

Net income for our businesses is summarized as follows:

	Second Quarter						Six Months
Period ended June 30, ($ in millions)	2006			2005			2006			2005
Automotive Finance (a)		$252			$366			$554			$600
ResCap		548			300			750			622
Insurance		80			100			209			195
Other (b)		20			50			59			127
Net income		$900			$816			$1,572			$1,544
Return on average equity		15.8	%		14.4	%		14.0	%		13.6	%

(a)  Includes our North America and International automotive finance reporting segments, separately identified in Note 10 to the Condensed Consolidated Financial Statements.

(b)  Includes our Commercial Finance Group operating segment, equity interest in Capmark, and Mortgage Group activity.

GMAC LLC earned a record $900 million in the second quarter of 2006, up $84 million from second quarter 2005 earnings of $816 million. Gross revenues increased to $9.3 billion in the second quarter of 2006 as compared to $8.1 billion in the second quarter of 2005. The increase in second quarter earnings was due to strong earnings at ResCap which more than offset lower earnings from Automotive Finance and Insurance. GMAC also provided a significant source of cash flow to GM through the payment of a $1.4 billion dividend in the second quarter.

Results for Automotive Finance were $252 million, down $114 million from $366 million earned in the same period in the prior year. The decrease is due to a combination of continued margin pressures, lower marketing results in the U.S. and Canada and higher consumer credit provisions, slightly offset by certain favorable non-U.S tax rate changes and increases in investment income.

ResCap earnings were $548 million in the second quarter of 2006, up $248 million from $300 million earned in the second quarter of 2005. The increase in earnings was due primarily to a $259 million gain on sale of ResCap’s equity investment in a regional homebuilder. Absent the impact of the equity sale, ResCap earnings declined slightly in comparison to the same period last year. Mortgage originations were $47.0 billion for the second quarter of 2006, representing an increase from the $42.6 billion in the prior year.

GMAC’s Insurance operations generated net income of $80 million in the second quarter of 2006, down $20 million from earnings of $100 million in the second quarter of 2005, primarily due to a combination of lower capital gains and wholesale losses incurred in the quarter related to hail storms in the Midwest. In addition, GMAC Insurance maintained a strong investment portfolio, with a market value of $7.7 billion at June 30, 2006, including after tax net unrealized capital gains of $545 million.

In addition, earnings for GMAC’s Other segment, which includes the Commercial Finance business unit and GMAC’s equity investment of approximately 22% in Capmark, totaled $20 million, down $30 million from $50 million earned in the same period last year when Capmark was wholly-owned and fully consolidated.

GMAC continues to maintain adequate liquidity with cash reserve balances at June 30, 2006, of $22.7 billion, comprised of $17.2 billion in cash and cash equivalents and $5.5 billion invested in marketable securities.

The sale of 51 percent of GMAC to FIM Holdings is expected to close in the fourth quarter of this year, but it is possible that delays in obtaining such approvals or in satisfying other required conditions could defer the closing until 2007. In addition to continuing to enable GMAC to support the sale of GM vehicles, the transaction is intended to support GMAC’s strategic goal of a stable investment grade credit rating and profitable growth.

22

Management’s Discussion and Analysis

GMAC LLC

Automotive Finance

Our Automotive Finance operations offer a wide range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships and other commercial businesses. Our Automotive Finance operations are comprised of two separate reporting segments — North American Automotive Finance Operations and International Automotive Finance Operations — and certain corporate activities. The products and services offered by our Automotive Finance operations include the purchase of retail installment sales contracts and leases, extension of term loans, dealer floor plan financing and other lines of credit to dealers, and fleet leasing. Refer to pages 21-31 of our 2005 Annual Report on Form 10-K for further discussion of the business profile of our Automotive Finance operations.

Results of Operations

The following table summarizes the operating results of our Automotive Finance operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other reporting segments.

		Second Quarter												Six Months
Period ended June 30, ($ in millions)		2006			2005			Change			%			2006			2005			Change			%
Revenue
Consumer			$1,361			$1,676			($315	)		(19	)		$2,786			$3,387			($601	)		(18	)
Commercial			419			416			3			1			788			799			(11	)		(1	)
Operating leases			2,023			1,753			270			15			3,949			3,418			531			16
	Total financing revenue		3,803			3,845			(42	)		(1	)		7,523			7,604			(81	)		(1	)
Interest and discount expense			(2,247	)		(2,182	)		(65	)		(3	)		(4,345	)		(4,458	)		113			3
Provision for credit losses			(152	)		(50	)		(102	)		(204	)		(159	)		(229	)		70			31
	Net financing revenue		1,404			1,613			(209	)		(13	)		3,019			2,917			102			3
Servicing fees			59			21			38			181			118			45			73			162
Gains (losses) on sales:
	Wholesale securitizations		155			139			16			12			305			283			22			8
	Retail automotive whole loan sale transactions		(26	)		(20	)		(6	)		(30	)		(67	)		(49	)		(18	)		(37	)
	Retail automotive securitizations		—			(18	)		18			100			(54	)		(19	)		(35	)		(184	)
Other income			769			679			90			13			1,565			1,384			181			13
Depreciation expense on operating leases			(1,344	)		(1,287	)		(57	)		(4	)		(2,782	)		(2,554	)		(228	)		(9	)
Noninterest expense			(706	)		(583	)		(123	)		(21	)		(1,334	)		(1,145	)		(189	)		(17	)
Income tax expense			(59	)		(178	)		119			67			(216	)		(262	)		46			18
Net income			$252			$366			($114	)		(31	)		$554			$600			($46	)		(8	)
Total assets			$180,866			$205,789			($24,923	)		(12	)

Automotive Finance operations net income decreased 31% and 8% for the second quarter and first six months of 2006, respectively, with decreases in both the North American and International Automotive operations in comparison with 2005 second quarter results. The decrease in net income in comparison with 2005 second quarter results is due to a combination of continued margin pressures, lower remarketing results in the U.S. and Canada and higher consumer credit provisions, slightly offset by certain favorable non-U.S. tax rate changes and increases in investment income.

Total financing revenue was relatively constant in the second quarter and first six months of 2006, with declines in consumer revenue being nearly offset by higher operating lease revenues. The decrease in consumer revenue is consistent with the reduction in consumer asset levels as a result of continued whole loan sale activity. Consumer finance receivables declined by $16 billion, or approximately 20%, since June 30, 2005. Operating lease revenue (along with the related depreciation expense) increased year over year consistent with the increase in the size of the operating lease portfolio (approximately 21% since June 2005). The increase in the portfolio is reflective of the shift in our financing volume mix to more leases in the North American operations. The increase in interest and discount expense for the second quarter as compared to the second quarter of 2005 reflects an increasing cost of funds partially offset by decreasing debt levels.

23

Management’s Discussion and Analysis

GMAC LLC

The provision for credit losses increased in comparison to the prior year largely due to increases in provisions within the North American Operations consumer loan portfolio. The increase in the loss provision is consistent with the increase in delinquencies in the North American Operations portfolio. Refer to the Credit Risk discussion within this Automotive Finance Operations section of the MD&A for further discussion.

Other income increased for both the second quarter and first six months of 2006, as compared to the same periods in 2005. An increase in interest income realized from cash reserve balances as a result of higher short term interest rates in 2006 versus 2005 contributed to the increases over the prior year. In addition, non-interest expenses increased in comparison with 2005 levels due to a decrease in operating lease remarketing results and an overall decrease in lease termination volume.

Total income tax expense declined by $119 million and $46 million in the second quarter and first six months of 2006, respectively, as compared to the same periods in 2005. These decreases were largely due to a reduction in pre-tax income and enacted changes in Canadian corporate and provincial tax rates and the elimination of the large corporation tax for the North American Automotive operations.

Automotive Financing Volume

The following table summarizes our new vehicle consumer financing volume, our share of GM retail sales and our wholesale financing of new vehicles and related share of GM sales to dealers in markets where we operate.

			Second Quarter				Six Months
					Share of				Share of
			GMAC volume		GM sales		GMAC volume		GM sales
Period ended June 30,
(units in thousands)			2006	2005	2006	2005	2006	2005	2006	2005
New vehicle consumer financing
GM vehicles
	North America
		Retail contracts	218	277	25%	25%	406	589	25%	31%
		Leases	168	175	19%	16%	333	313	21%	16%
	Total North America		386	452	44%	41%	739	902	46%	47%
	International (retail contracts and leases)		129	142	23%	27%	264	268	24%	27%
Total GM units financed			515	594	36%	36%	1,003	1,170	37%	40%
Non-GM units financed			17	21			34	36
	Total consumer automotive financing volume		532	615			1,037	1,206
Wholesale financing of new vehicles
GM vehicles
	North America		921	1,016	75%	79%	1,841	1,892	75%	80%
	International		694	631	85%	83%	1,354	1,204	88%	86%
Total GM units financed			1,615	1,647	79%	81%	3,195	3,096	80%	82%
Non-GM units financed			35	48			73	90
	Total wholesale volume		1,650	1,695			3,268	3,186

Our consumer financing volume and penetration levels are significantly impacted by the nature, timing and extent of GM’s use of rate, residual and other financing incentives for marketing purposes on consumer retail contracts and leases. Late in 2004 and through the early part of 2005, GM reduced its use of special rate financing programs and utilized marketing programs that provided cash incentives to customers that use us to finance their purchase of a new GM vehicle. As a result, our North America penetration levels were positively impacted in the first half of 2005. However, as GM has begun to focus on “value pricing”, the use of special rate marketing incentives was reduced and, as a result, our share of retail financing volume has declined since the second quarter of 2005. In addition, the reduction in retail contracts as compared to the second quarter of 2005 had the impact of increasing the percentage of lease contracts relative to the total volume financed. Lease financing volume in the second quarter of 2006 also benefited from a shift by GM in some vehicle incentive programs towards more leasing in replacement of retail marketing activities. In our International Automotive Finance Operations, financing volume has increased as we continue to expand (most notably financing in China and providing financing to Chevrolet-Daewoo). Our wholesale financing continues to be the primary funding source for GM dealer inventories, as total penetration levels in the second quarter of 2006 remained relatively consistent with levels in the second quarter of 2005, and continue to reflect traditionally strong levels.

24

Management’s Discussion and Analysis

GMAC LLC

Consumer Credit

The following tables summarize pertinent loss experience in the consumer managed and on-balance sheet automotive retail contract portfolio. In general, the credit quality of the off-balance sheet portfolio is representative of our overall managed consumer automotive retail contract portfolio. The off-balance sheet portfolio includes receivables securitized and sold that we continue to service and in which we retain an interest or risk of loss but excludes securitized and sold finance receivables that we continue to service but in which we retain no interest or risk of loss. The process of creating a pool of retail finance receivables for securitization or sale typically excludes accounts that are greater than 30 days delinquent at such time. In addition, the process involves selecting from a pool of receivables that are currently outstanding and, therefore, represent seasoned accounts. A seasoned portfolio that excludes delinquent accounts historically results in better credit performance in the managed portfolio than in the on-balance sheet portfolio of retail finance receivables. In addition, the current off-balance sheet transactions are comprised mainly of subvented rate retail finance receivables, which generally attract higher quality customers (or otherwise cash purchasers) than customers typically associated with non-subvented receivables.

The managed portfolio includes retail receivables held on-balance sheet for investment and receivables securitized and sold that we continue to service and have a continued involvement in (i.e., in which we retain an interest or risk of loss in the underlying receivables) but excludes securitized and sold finance receivables that we continue to service but have no other continuing involvement (serviced-only portfolio). We believe that the disclosure of the credit experience of the managed portfolio presents a more complete presentation of our risk of loss in the underlying assets (typically in the form of a subordinated retained interest). Consistent with the presentation in the Condensed Consolidated Balance Sheet, retail contracts presented in the table represent the principal balance of the finance receivables discounted for any unearned rate support received from GM.

	Average		Charge-offs,
	retail		net of		Annualized net
	contracts		recoveries		charge-off rate
Second quarter ended June 30, ($ in millions)	2006		2006	2005	2006	2005
Managed
North America		$54,186	$120	$172	0.89%	0.90%
International		15,115	23	35	0.61%	0.94%
Total managed		$69,301	$143	$207	0.83%	0.91%
On-balance sheet
North America		$48,726	$118	$169	0.97%	0.94%
International		15,115	23	35	0.61%	0.94%
Total on-balance sheet		$63,841	$141	$204	0.88%	0.94%

	Average		Charge-offs,
	retail		net of		Annualized net
	contracts		recoveries		charge-off rate
Six months ended June 30, ($ in millions)	2006		2006	2005	2006	2005
Managed
North America		$56,631	$281	$366	0.99%	0.93%
International		14,944	50	69	0.67%	0.92%
Total managed		$71,575	$331	$435	0.92%	0.93%
On-balance sheet
North America		$51,303	$277	$360	1.08%	0.98%
International		14,944	50	69	0.67%	0.92%
Total on-balance sheet		$66,247	$327	$429	0.99%	0.97%

25

Management’s Discussion and Analysis

GMAC LLC

The following table summarizes pertinent delinquency experience in the consumer automotive retail contract portfolio.

	Percent of retail contracts
	30 days or more past due (a)
	Managed		On-balance sheet
June 30,	2006	2005	2006	2005
North America	2.35%	2.02%	2.57%	2.14%
International	2.64%	2.70%	2.64%	2.70%
Total	2.52%	2.19%	2.63%	2.29%

(a)  Past due contracts are calculated on the basis of the average number of contracts delinquent during a month and exclude accounts in bankruptcy.

In addition to the preceding loss and delinquency data, the following table summarizes bankruptcies and repossession information for the United States consumer automotive retail contract portfolio (which represents approximately 58% of our on-balance sheet consumer automotive retail contract portfolio):

	Managed						On-balance sheet
Second quarter ended June 30,	2006			2005			2006			2005
Average retail contracts in bankruptcy (in units)		92,961			99,338			91,952			95,011
Bankruptcies as a percent of average number of contracts outstanding		2.74	%		2.13	%		2.92	%		2.20	%
Retail contract repossessions (in units)		21,432			23,306			21,081			22,952
Annualized repossessions as a percent of average number of contracts outstanding		2.51	%		1.97	%		2.66	%		2.10	%

	Managed						On-balance sheet
Six months ended June 30,	2006			2005			2006			2005
Average retail contracts in bankruptcy (in units)		98,598			97,809			97,265			93,261
Bankruptcies as a percent of average number of contracts outstanding		2.80	%		2.05	%		2.93	%		2.11	%
Retail contract repossessions (in units)		46,565			50,384			45,964			48,702
Annualized repossessions as a percent of average number of contracts outstanding		2.62	%		2.12	%		2.75	%		2.20	%

26

Management’s Discussion and Analysis

GMAC LLC

The following table summarizes activity related to the consumer allowance for credit losses for our Automotive Finance operations.

		Second Quarter						Six Months
Period ended June 30, ($ in millions)		2006			2005			2006			2005
Allowance at beginning of period			$1,463			$1,978			$1,618			$2,035
Provision for credit losses			148			49			176			226
Charge-offs
	Domestic		(164	)		(193	)		(357	)		(414	)
	Foreign		(36	)		(50	)		(80	)		(99	)
Total charge-offs			(200	)		(243	)		(437	)		(513	)
Recoveries
	Domestic		40			23			78			59
	Foreign		11			13			24			24
Total recoveries			51			36			102			83
Net charge-offs			(149	)		(207	)		(335	)		(430	)
Impacts of foreign currency translation			5			(1	)		7			(12	)
Securitization activity			—			—			1			—
Allowance at June 30,			$1,467			$1,819			$1,467			$1,819
Allowance coverage (a)			2.35	%		2.33	%		2.35	%		2.33	%

(a)  Represents the related allowance for credit losses as a percentage of total on-balance sheet consumer automotive retail contracts.

The overall credit performance of the consumer portfolio has deteriorated from the prior year consistent with the decline in the level of overall managed and on balance sheet receivables as we continue to execute more whole loan sales. Similar to securitizations, the process of creating a pool of retail finance receivables for whole loan sales typically involves excluding retail contracts that are greater than 30 days delinquent at such time and selecting from a pool of receivables currently outstanding which, therefore represents seasoned contracts. A seasoned portfolio that excludes delinquent contracts historically results in better credit performance and, as a result, the increase in whole loan activity over the past year has impacted the charge-offs as a percentage of the managed and on-balance sheet portfolio, when compared to the comparable period in the prior year. In addition to the impact of whole loan activity, delinquencies in the North American Operations managed and on balance sheet portfolio has been negatively impacted by an aging of the overall portfolio as consumer serviced assets continue to decrease as compared to prior year levels. International consumer credit portfolio performance remains strong as both delinquencies and charge-offs have declined as compared to prior year levels.

The allowance for credit losses as a percentage of the total on-balance sheet consumer portfolio remained stable in comparison to the prior period as the consumer allowance quarter over quarter increased along with automotive retail asset levels.

27

Management’s Discussion and Analysis

GMAC LLC

Commercial Credit

Our credit risk on the commercial portfolio is markedly different than that of our consumer portfolio. Whereas the consumer portfolio represents a homogenous pool of retail contracts that exhibit fairly predictable and stable loss patterns, the commercial portfolio exposures are less predictable. In general, the credit risk of the commercial portfolio is tied to overall economic conditions in the countries in which we operate.

At June 30, 2006, the only commercial receivables that had been securitized and accounted for as off-balance sheet transactions represent wholesale lines of credit extended to automotive dealerships, which historically experience low charge-offs. Since only wholesale accounts have historically been securitized, the amount of charge-offs on our managed portfolio is the same as the on-balance sheet portfolio. As a result, only the on-balance sheet commercial portfolio credit experience is presented in the following table:

	Total loans		Impaired loans (a)
	June 30,		June 30,			Dec 31,			June 30,
($ in millions)	2006		2006			2005			2005
Wholesale		23,425		$286			$299			$585
				1.22	%		1.45	%		2.65	%
Other commercial financing		3,995		43			142			158
				1.08	%		1.36	%		1.49	%
Total on-balance sheet		27,420		$329			$441			$743
				1.20	%		1.42	%		2.27	%

(a)  Includes loans where it is probable that we will be unable to collect all amounts due according to the terms of the loan.

The commercial allowance for credit losses was $70 million and $122 million as of June 30, 2006 and 2005, respectively. Charge-off activity in the commercial portfolio was a net charge-off of $1 million and $2 million for the six months ended June 30, 2006 and 2005, respectively. Decreases in the level of allowance from 2005 levels are reflective of proportional decreases in the on-balance sheet commercial portfolio over the same time period.

28

Management’s Discussion and Analysis

GMAC LLC

ResCap

The principal activities of our ResCap operations involve the origination, purchase, servicing, sale and securitization of consumer (i.e., residential) and commercial mortgage loans and mortgage related products (e.g., real estate services). Typically, mortgage loans are originated and sold to investors in the secondary market, including securitization transactions in which the assets are legally sold but are accounted for as secured financings. For additional information, please refer to ResCap’s quarterly report on Form 10-Q for the period ended June 30, 2006, filed separately with the SEC, which report is not deemed incorporated into any of our filings under the Securities Act or the Exchange Act.

Results of Operations

The following table summarizes the operating results for ResCap for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other reporting segments.

	Second Quarter												Six Months
Period ended June 30, ($ in millions)	2006			2005			Change			%			2006			2005			Change			%
Revenue
Total financing revenue		$1,821			$1,225			$596			49			$3,521			$2,410			$1,111			46
Interest and discount expense		(1,558	)		(850	)		(708	)		(83	)		(2,993	)		(1,616	)		(1,377	)		(85	)
Provision for credit losses		(123	)		(145	)		22			15			(245	)		(278	)		33			12
Net financing revenue		140			230			(90	)		(39	)		283			516			(233	)		(45	)
Mortgage servicing fees		387			351			36			10			761			700			61			9
MSR amortization and impairment		—			(306	)		306			100			—			(447	)		447			100
Servicing asset valuation and hedge activities, net		(171	)		117			(288	)		(246	)		(356	)		94			(450	)		(479	)
Net loan servicing income		216			162			54			33			405			347			58			17
Gains on sale of loans		375			151			224			148			642			480			162			34
Other income		843			553			290			52			1,186			878			308			35
Noninterest expense		(695	)		(637	)		(58	)		(9	)		(1,297	)		(1,233	)		(64	)		(5	)
Income tax expense		(331	)		(159	)		(172	)		(108	)		(469	)		(366	)		(103	)		(28	)
Net income		$548			$300			$248			83			$750			$622			$128			21
Total assets		$124,552			$98,571			$25,981			26

ResCap net income increased 83% and 21% to $548 million and $750 million for the second quarter and first six months of 2006. These increases in net income were primarily the result of the sale of our equity interest in a regional homebuilder during the second quarter 2006 which we recorded an after-tax gain of approximately $259 million in the three months ended June 30, 2006. Our net income for the three months ended June 30, 2006, was also impacted by an increase in financing revenues from higher asset levels due to higher loan production as well as continued favorable trends in credit loss provisions. However, these increases were partially offset by higher interest and discount expense driven by increases in short-term market interest rates and debt outstanding.

Net loan servicing income remained relatively flat as the favorable impacts of higher mortgage servicing fees and MSR valuation due to slower prepayment speeds, as a result of the rising interest rate environment, were offset by negative hedging results.

Gain on sales of loans increased due to higher overall loan production and the increased volume of off-balance sheet securitizations versus on-balance sheet secured financings. Other income increased due to the sale of our equity interest in a regional homebuilder and higher residential real estate income due to strong performance and continued growth in residential real estate investments, slightly offset by losses on U.S. Treasury and principal-only securities.

29

Management’s Discussion and Analysis

GMAC LLC

Mortgage Loan Production, Sales and Servicing

Our mortgage loan production increased to $47.0 billion for the three months ended June 30, 2006, compared to $42.6 billion for the same period in 2005. These increases were primarily a result of increases in domestic market share. The domestic mortgage origination markets was estimated to be $1.3 trillion for the six months ended June 30, 2006, a decline of 6.1% compared to the comparable period in 2005. The market share growth continues to be achieved through effectively changing our product offerings and pricing in our market.

The following summarizes mortgage loan production for the periods indicated.

			Second Quarter				Six Months
Period ended June 30, ($ in millions)			2006		2005		2006		2005
Consumer:
	Principal amount by product type:
		Prime conforming		$11,965		$10,512		$20,534		$24,700
		Prime nonconforming		14,638		14,998		26,365		25,066
		Government		1,081		1,044		1,942		2,241
		Nonprime		6,060		8,321		15,156		13,937
		Prime second-lien		6,585		3,186		12,400		5,674
		Total U.S. production		40,329		38,061		76,397		71,618
		International		6,693		4,547		12,205		7,451
	Total			$47,022		$42,608		$88,602		$79,069
	Principal amount by origination channel:
		Retail and direct channels		$7,424		$9,696		$14,102		$18,177
		Correspondent and broker channels		32,905		28,365		62,295		53,441
		Total U.S. production		$40,329		$38,061		$76,397		$71,618
	Number of loans (in units):
		Retail and direct channels		65,011		76,569		125,899		142,970
		Correspondent and broker channels		208,747		150,385		399,599		303,634
		Total U.S. production		273,758		226,954		525,498		446,604

The following table summarizes the primary domestic mortgage loan servicing portfolio for which we hold the corresponding mortgage servicing rights:

	U.S. mortgage loan servicing portfolio
	June 30, 2006				December 31, 2005
	Number		Dollar amount		Number		Dollar amount
($ in millions)	of loans		of loans		of loans		of loans
Principal conforming		1,421,361		$194,907		1,393,379		$186,405
Prime non-conforming		293,923		89,415		257,550		76,980
Government		179,721		18,342		181,679		18,098
Nonprime		472,491		55,168		493,486		56,373
Prime second-lien		621,689		24,234		500,534		17,073
Total primary servicing portfolio (a)		2,989,185		$382,066		2,826,628		$354,929

(a)  Excludes loans for which we acted as a subservicer. Subserviced loans totaled 304,749 with an unpaid principal balance of $45.4 billion at June 30, 2006, and 271,489 with an unpaid balance of $38.9 billion at December 31, 2005.

Our international servicing portfolio was comprised of $27.8 billion of mortgage loans as of June 30, 2006.

30

Management’s Discussion and Analysis

GMAC LLC

Allowance for Loan Losses

The following table summarizes the activity related to the allowance for loan losses:

	Second Quarter						Six Months
Period ended June 30, ($ in millions)	2006			2005			2006			2005
Allowance at beginning of period		$1,261			$1,075			$1,253			$1,015
Provision for loan losses		123			145			245			298
Charge-offs		(164	)		(134	)		(294	)		(242	)
Recoveries		10			8			26			23
Allowance at June 30		$1,230			$1,094			$1,230			$1,094
Allowance as a percentage of total mortgage loans held for investment and lending receivables		1.42	%		1.63	%		1.42	%		1.63	%

Nonperforming Assets

The following table summarizes the nonperforming assets. Nonperforming assets are nonaccrual loans, foreclosed assets and restructured loans. Mortgage loans and lending receivables are generally placed on nonaccrual status when they are 60 days or more past due, or when the timely collection of the principal of the loan, in whole or in part, is doubtful. Management’s classification of a loan as nonaccrual does not necessarily indicate that the principal of the loan is uncollectible in whole or in part.

			June 30,			December 31,			June 30,
($ in millions)			2006			2005			2005
Nonaccrual loans:
	Mortgage loans:
		Prime conforming		$9			$10			$19
		Prime nonconforming		328			361			176
		Government		—			—			32
		Prime second-lien		70			85			58
		Nonprime (a)		5,587			5,731			4,841
Lending receivables:
		Warehouse		21			42			4
		Construction		13			8			9
		Commercial real estate		—			17			—
Total nonaccrual loans				$6,028			$6,254			$5,139
Restructured loans				17			23			9
Foreclosed assets				728			506			525
Total nonperforming assets				$6,773			$6,783			$5,673
Total nonaccrual loans as a percentage of total mortgage loans held for investment and lending receivables				7.0	%		7.6	%		7.6	%
Total nonperforming assets as a percentage of total ResCap assets				5.4	%		5.7	%		5.7	%

(a)  Includes $180 as of June 30, 2006, $374 as of December 31, 2005, and $843 as of June 30, 2005, of loans that were purchased distressed and already in nonaccrual status.

Our classification of a loan as nonperforming does not necessarily indicate that the principal amount of the loan is ultimately uncollectible in whole or in part. In certain cases, borrowers make payments to bring their loans contractually current and, in all cases, our mortgage loans are collateralized by residential real estate. As a result, our experience has been that any amount of ultimate loss is substantially less than the unpaid principal balance of a nonperforming loan.

31

Management’s Discussion and Analysis

GMAC LLC

Insurance Operations

Our Insurance operations insure automobile service contracts and underwrite personal automobile insurance coverages (ranging from preferred to non-standard risks) and selected commercial insurance and reinsurance coverages. Refer to pages 42-45 of our 2005 Annual Report on Form 10-K for further discussion of the business profile of our Insurance operations.

Results of Operations

The following table summarizes the operating results of GMAC Insurance for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other operating segments.

	Second Quarter												Six Months
Period ended June 30, ($ in millions)	2006			2005			Change			%			2006			2005			Change			%
Revenue
Insurance premiums and service revenue earned		$1,042			$919			$123			13			$2,046			$1,830			$216			12
Investment income		84			96			(12	)		(13	)		189			186			3			2
Other income		31			39			(8	)		(21	)		63			76			(13	)		(17	)
Total revenue		1,157			1,054			103			10			2,298			2,092			206			10
Insurance losses and loss adjustment expenses		(653	)		(597	)		(56	)		(9	)		(1,250	)		(1,185	)		(65	)		(5	)
Acquisition and underwriting expense		(363	)		(291	)		(72	)		(25	)		(693	)		(575	)		(118	)		(21	)
Premium tax and other expense		(24	)		(21	)		(3	)		(14	)		(52	)		(44	)		(8	)		(18	)
Income before income taxes		117			145			(28	)		(19	)		303			288			15			5
Income tax expense		(37	)		(45	)		8			18			(94	)		(93	)		(1	)		(1	)
Net income		$80			$100			($20	)		(20	)		$209			$195			$14			7
Total assets		$13,475			$12,173			$1,302			11			$13,475			$12,173			$1,302			11
Insurance premiums and service revenue written		$1,030			$1,038			($8	)		(1	)		$2,131			$2,156			($25	)		(1	)
Combined ratio (a)		96.2	%		94.4	%								93.8	%		94.1	%

(a)  Management uses combined ratio as a primary measure of underwriting profitability, with its components measured using Generally Accepted Accounting Principles. Underwriting profitability is indicated by a combined ratio under 100% and is calculated as the sum of all reported losses and expenses (excluding interest and income tax expense) divided by the total of premiums and service revenues earned and other income.

Net income from Insurance operations totaled $80 million and $209 million for the second quarter and first six months of 2006, respectively, as compared to $100 million and $195 million for the same periods in 2005. Net income fell quarter over quarter due to unfavorable underwriting results driven by a higher level of losses and loss adjustment expenses, as exhibited by the increase in combined ratio to 96.2% from 94.4% and a lower level of realized capital gains. Underwriting results declined due to higher weather losses in the auto dealer physical damage business and increased loss experience in international personal lines. The decrease in underwriting results was favorably impacted by increases in insurance premiums and service revenue earned and favorable loss experience in the extended service contract product line and favorable results in domestic personal lines. Net income year-to-date increased due to favorable underwriting results in the first quarter resulting from a lower level of incurred losses and an increase in recognized capital gains. This increase was offset by lower underwriting results and capital gains realized in the second quarter. In addition, year-to-date results benefited from the strategic acquisition of MEEMIC, a personal lines business that offers automobile and homeowners insurance in the Midwest.

Insurance premiums and service revenue written totaled $1.0 billion and $2.1 billion for the second quarter and first six months of 2006, respectively, as compared to $1.0 billion and $2.2 billion for the same periods in 2005. The decrease in the first six months as compared to the same period last year is primarily attributable to a lower volume of policies in the extended service contract business due to lower penetration and retail vehicle sales. The decrease in insurance premiums and service revenue written was partially offset by the inclusion of MEEMIC and growth in the reinsurance assumed business.

The combination of investment and other income decreased 15% and 4% in the second quarter and first six months of 2006, respectively, as compared to the same 2005 periods. The decline is primarily attributable to lower capital gains recognized, somewhat offset by an

32

Management’s Discussion and Analysis

GMAC LLC

increase in interest and dividend income in our portfolio of invested assets. The market value of the investment portfolio was $7.7 billion at June 30, 2006, compared to $7.5 billion at June 30, 2005.

Total expenses increased 14% in the second quarter of 2006 as compared to the same period in 2005, and 11% for the first six months of 2005 over the same period in 2005. The increases were commensurate with higher insurance premiums and service revenue earned and an increase in amortization of deferred acquisition costs.

Other

Other operations is comprised of our Commercial Finance Group, equity interest in Capmark, certain corporate activities related to the Mortgage Group, and reclassifications and elimination between the reporting segments.

Results of Operations

Net income for GMAC’s Other operations is summarized as follows:

	Second Quarter										Six Months
Period ended June 30, ($ in millions)	2006		2005		Change			%			2006		2005		Change			%
Commercial Finance Group		$1		$12		($11	)		(92	)		$11		$26		($15	)		(58	)
Capmark		19		38		(19	)		(50	)		48		101		(53	)		(52	)
Net income		$20		$50		($30	)		(60	)		$59		$127		($68	)		(54	)
Total assets (a)		$6,804		$24,347		($17,543	)		(72	)

(a)  Represents assets of Commercial Finance Group and Capmark.

Commercial Finance Group

The Commercial Finance Group earned $1 million and $11 million for the second quarter and first six months of 2006, respectively, as compared to $12 million and $26 million earned in the same periods of the prior year. The decrease is primarily due to increases in provisions for credit losses. Additionally, net income has been negatively impacted by a decline in average earning assets and factored sales volume, which declined by 6% and 12%, respectively, during the second quarter in comparison to the prior year. For the six months ended June 30, 2006, the volume declined by 2% and 10% in comparison to the same period in 2005.

During the second quarter, our Commercial Finance Group experienced a certain amount of attrition of key personnel, including their President and CEO. As a result, the Commercial Finance Group reporting unit has initiated a goodwill impairment test, outside the normal fourth quarter cycle, which is expected to be completed during the third quarter of 2006.

Equity Interest in Capmark

On March 23, 2006, we closed on the sale of approximately 78 percent of our equity in Capmark for approximately $1.5 billion in cash. At the closing, Capmark also repaid to us approximately $7.3 billion in intercompany loans, bringing the total cash proceeds from the sale to $8.8 billion.

We retained an equity voting interest in Capmark and have representation on its Board of Directors. We no longer have a majority ownership or a majority controlling interest in Capmark but do have the ability to exercise significant influence and have accounted for our remaining interest under the equity method of accounting. In addition to our equity investment, we have an investment of $250 million of subordinated indenture notes issued by Capmark. Both investments are reflected in Other assets in the Condensed Consolidated Balance Sheet.

Our net after-tax earnings in Capmark decreased 50% and 52% to $19 million and $48 million for the second quarter and first six months of 2006. These decreases are primarily a result of a loss on the sale and a decline in earnings for the quarter as we are no longer fully consolidating the results of Capmark but instead reflect our 22% equity share of Capmark earnings effective March 23, 2006.

Critical Accounting Estimates

We have identified critical accounting estimates that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to our financial condition, results of operations or cash flows under different conditions or using different assumptions.

33

Management’s Discussion and Analysis

GMAC LLC

Our most critical accounting estimates are:

•  Determination of the allowance for credit losses

•  Valuation of automotive lease residuals

•  Valuation of mortgage servicing rights

•  Valuation of interests in securitized assets

•  Determination of reserves for insurance losses and loss adjustment expenses

The adoption of SFAS 156 as of January 1, 2006, requires us to present our servicing rights at fair value for those classes of servicing rights for which we have elected the fair value method.

There have been no other significant changes in the methodologies and processes used in developing these estimates from what is described in our 2005 Annual Report on Form 10-K. Refer to Note 1 for further discussion of the impact of adopting this standard.

Funding and Liquidity

Funding Sources and Strategy

Our liquidity and our ongoing profitability is, in large part, dependent upon our timely access to capital and the costs associated with raising funds in different segments of the capital markets. Over the past several years, our funding strategy has focused on the development of diversified funding sources across a global investor base, both public and private and, as appropriate, the extension of debt maturities. In addition, we maintain a large cash reserve ($22.7 billion at June 30, 2006) including certain marketable securities that can be utilized to meet our obligations in the event of any market disruption. From time to time, we repurchase previously issued debt as part of our cash and liquidity management strategy. This multi-faceted strategy, combined with a continuous prefunding of requirements, is designed to enhance our ability to meet our obligations.

The diversity of our funding sources enhances funding flexibility, limits dependence on any one source of funds and results in a more cost effective strategy over the longer term. In developing this approach, management considers market conditions, prevailing interest rates, liquidity needs and the desired maturity profile of our liabilities. This strategy has helped us maintain liquidity during periods of weakness in the capital markets, changes in our business or changes in our credit ratings. Despite our diverse funding sources and strategies, our ability to maintain liquidity may be affected by certain risk factors. Refer to Risk Factors for further discussion on risk factors.

34

Management’s Discussion and Analysis

GMAC LLC

The following table summarizes our outstanding debt by funding source, excluding Capmark balances, for the periods indicated:

		Outstanding
		June 30,			December 31,
($ in millions)		2006			2005
Commercial paper			$850			$524
Institutional term debt			77,621			82,557
Retail debt programs			32,047			34,482
Secured financings			124,945			121,138
Bank loans, and other			13,512			15,704
	Total debt (a)		248,975			254,405
Customer deposits (b)			9,143			6,855
Off-balance sheet securitizations (c)
	Retail finance receivables		6,476			3,165
	Wholesale loans		20,881			20,724
	Mortgage loans		92,361			77,573
	Total funding		377,836			362,722
Less: cash reserves (d)			(22,703	)		(19,605	)
	Net funding		$355,133			$343,117
Leverage ratio covenant (e)			6.8:1			7.5:1
Funding Commitments ($ in billions)
	Bank liquidity facilities (f)		$44.4			$44.1
	Secured funding facilities (g)		$109.3			$114.9

(a)  Excludes fair value adjustment as described in Note 7 to the Condensed Consolidated Financial Statements.

(b)	Includes consumer and commercial bank deposits and dealer wholesale deposits.
(c)	Represents net funding from securitizations of retail and wholesale automotive receivables and mortgage loans accounted for as sales, further described in Note 8 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K.
(d)	Includes $17.2 billion in cash and cash equivalents and $5.5 billion invested in marketable securities at June 30, 2006, and $15.4 billion and $4.2 billion at December 31, 2005, respectively.
(e)	As described in Note 7 to the Condensed Consolidated Financial Statements, our liquidity facilities and certain other funding facilities contain a leverage ratio covenant of 11.0:1 which excludes from debt, securitization transactions that are accounted for on-balance sheet as secured financings (totaling $97,841 and $94,346 at June 30, 2006, and December 31, 2005, respectively). Our debt to equity ratio was 11.2:1 and 11.9:1, at June 30, 2006, and December 31, 2005, respectively, as determined by accounting principles generally accepted in the United States of America, which was the former basis for the leverage ratio covenant.

(f)  Represents both committed and uncommitted bank liquidity facilities. Refer to Note 7 to the Condensed Consolidated Financial Statements for details.

(g)  Represents both committed and uncommitted secured funding facilities. Includes commitments with third-party asset-backed commercial paper conduits as well as forward flow sale agreements with third parties and repurchase facilities. Refer to Note 7 to the Condensed Consolidated Financial Statements for details.

In the second and third quarters of 2005 our unsecured debt ratings (excluding ResCap) were lowered to a non-investment grade rating by three of the four nationally recognized rating agencies that rate us (refer to the Credit Ratings section of this MD&A for further information). These downgrades were a continuation of a series of credit rating actions over the past few years caused by concerns as to the financial outlook of GM, including its overall market position in the automotive industry and its burdensome health care obligations, as well as the uncertainty surrounding the auto parts supplier Delphi Corporation and its impact on GM’s financial condition. As a result of these rating actions, our unsecured credit spreads widened to unprecedented levels in 2005. In anticipation of, and as a result of, these credit rating actions, we modified our diversified funding strategy to focus on secured funding and automotive whole loan sales. These funding sources are generally not directly affected by ratings on unsecured debt and therefore offer both stability in spread and access to the market. For the six months of 2006, secured funding and automotive whole loan sales represented 94% of our U.S. automotive term funding volume. The increased use of automotive whole loan sales is part of our migration to an originate and sell model for our U.S. automotive finance business. In the second quarter of 2006, we executed $5.5 billion in automotive whole loan sales.

In addition, through our banking activities in our mortgage and automotive operations, bank deposits (certificates of deposits and brokered deposits) have become an important funding source for us. We have also been able to diversify our unsecured funding through the

35

Management’s Discussion and Analysis

General Motors Acceptance Corporation

formation of ResCap. ResCap, an indirect wholly owned subsidiary, was formed as the holding company of our residential mortgage businesses and in the second quarter of 2005 successfully achieved an investment grade rating (separate from GMAC). To date, ResCap has issued $12.2 billion in public and private unsecured debt and closed a $3.5 billion syndication of its bank facilities. The syndication, which closed in July 2005, consisted of a $1.75 billion syndicated term loan; an $875 million syndicated line of credit committed through July 2008 and an $875 million syndicated line of credit committed through July 2007. In the fourth quarter of 2005, ResCap filed a $12 billion shelf registration statement in order to offer senior and/or subordinated debt securities and has issued $7.2 billion in unsecured debt to date from this shelf. In May 2006 $1.7 billion was issued off of this shelf which was comprised of two tranches, GBP 400 million and EUR 750 million. The proceeds from bond transactions were used to repay the intercompany subordinated note to us, thus providing additional liquidity.

As previously disclosed, on March 23, 2006, we completed the sale of 78% of our equity in GMAC Commercial Mortgage. Under the terms of the transaction, we received $8.8 billion at closing which is comprised of sale proceeds and repayment of intercompany debt, thereby increasing our liquidity position and reducing the amount of funding required. Please refer to Note 1 of our Condensed Consolidated Financial Statements for further details.

The change in focus in the funding strategy has allowed us to maintain adequate access to capital and a sufficient liquidity position despite reductions in and limited access to traditional unsecured funding sources (i.e., commercial paper, term debt, bank loans and lines of credit) due to the deterioration in our unsecured credit rating. Unsecured sources most impacted by the reduction in our credit rating have been our commercial paper programs, the term debt markets, certain bank loan arrangements primarily at ResCap and our International Automotive operations, as well as Fannie Mae custodial borrowing arrangements at ResCap.

A further reduction of our credit rating could increase borrowing costs and further constrain our access to unsecured debt markets, including capital markets for retail debt. In addition, a further reduction of our credit ratings could increase the possibility of additional terms and conditions in any new or replacement financing arrangements and impact elements of certain existing secured borrowing arrangements. However, our funding strategy has increased our focus on expanding and developing diversified secured funding sources and increased use of automotive whole loan sales that are not directly impacted by ratings on our unsecured debt.

With limited access to traditional unsecured funding sources, management will continue to diversify and expand our use of asset-backed funding and we believe that our funding strategy will provide sufficient access to the capital markets to meet our short- and medium-term funding needs. Notwithstanding the foregoing, management believes that the current ratings situation and outlook increases the level of risk to our long-term ability to sustain the current level of asset originations. In an effort to mitigate this risk, on April 3, 2006, GM announced that it agreed to sell a 51 percent controlling interest in us to a consortium led by Cerberus Capital Management, which is expected to close in the fourth quarter of this year. In addition to continuing to enable us to support the sale of GM vehicles, the transaction is intended to support our strategic goal of a stable investment grade rating and profitable growth. In connection with the targeted fourth quarter sale closing, we expect to arrange two asset-backed funding facilities that total up to $25 billion, which will support our ongoing business and enhance our liquidity position. A $10 billion facility is expected to be available before closing and the other facility is expected to be available on or after closing. Citigroup has committed $12.5 billion in the aggregate to these two facilities. The funding facilities are in addition to Citigroup’s initial equity investment in us. There can be no assurance that the sale transaction will be successful in achieving a stable investment grade rating and therefore we plan to maintain the current conservative funding strategy until risks to closing the transaction are reduced.

Credit Ratings

The cost and availability of unsecured financing is influenced by credit ratings, which are intended to be an indicator of the creditworthiness of a particular company, security, or obligation. Lower ratings generally result in higher borrowing costs as well as reduced access to capital markets. This is particularly true for certain term debt institutional investors whose investment guidelines require investment grade term ratings and for short-term institutional investors (money markets in particular) whose investment guidelines require the two highest rating categories for short-term debt. Substantially all of our debt has been rated by nationally recognized statistical rating organizations. Concerns over the competitive and financial strength of GM, including how it will fund its burdensome health care liabilities and uncertainties at Delphi Corporation, have resulted in a series of credit rating actions, which commenced late in 2001. In the second and third quarters of 2005, Standard & Poor’s, Fitch and Moody’s downgraded GMAC’s (excluding ResCap) senior debt to a non-investment grade rating with DBRS continuing to maintain an investment grade rating on our senior debt. As a result of GM’s announcement on October 17, 2005, that it was exploring the possible sale of a controlling interest in us to a strategic partner, the four rating agencies changed our review status to either evolving or developing. Most recently, on March 16, 2006, Moody’s placed our senior unsecured ratings under review for a possible downgrade following GM’s announcement that it would delay filing its annual report on

36

Management’s Discussion and Analysis

GMAC LLC

Form 10-K with the SEC. Following the April 3, 2006, announcement by GM that it agreed to sell a 51 percent controlling interest in us, Fitch revised our rating watch status to Positive from Evolving, indicating that the ratings may be upgraded or maintained at current levels.

The following summarizes our current ratings, outlook and the date of last rating action by the respective nationally recognized rating agencies.

Rating	Commercial		Senior
Agency	Paper		Debt		Outlook		Date of Last Action
Fitch		B		BB		Positive		September 26, 2005  (a)
						Possible
Moody’s		Not-Prime		Ba1		downgrade		August 24, 2005 (b)
S&P		B-1		BB		Developing		May 5, 2005 (c)
DBRS		R-2 (low)		BBB (low)		Developing		August 2, 2005 (d)

(a)	Fitch downgraded our senior debt to BB from BB+, affirmed the commercial paper rating of B and on October 17, 2005, placed the ratings on Rating Watch Evolving and on April 3, 2006, changed the rating watch status to Positive.
(b)	Moody’s lowered our senior debt to Ba1 from Baa2, downgraded the commercial paper rating to Not-Prime from Prime-2 and on October 17, 2005, changed the review status of the long-term debt ratings to direction uncertain and on March 16, 2006, changed the review status of the senior debt ratings to possible downgrade.
(c)	Standard & Poor’s downgraded our senior debt to BB from BBB-, downgraded the commercial paper rating to B-1 from A-3 and on October 10, 2005, changed the outlook to CreditWatch with developing implications.
(d)	DBRS downgraded our senior debt to BBB (low) from BBB, downgraded the commercial paper rating to R-2 (low) from R-2 (middle), and on October 11, 2005, placed the ratings under review with developing implications and affirmed the review status on October 17, 2005.

In addition, ResCap, our indirect wholly owned subsidiary, has investment grade ratings (separate from GMAC) from the nationally recognized rating agencies. The following table summarizes ResCap’s current ratings, outlook and the date of the last rating or outlook change by the respective agency.

Rating	Commercial		Senior
Agency	Paper		Debt		Outlook		Date of Last Action
Fitch		F3		BBB-		Positive		September 26, 2005  (a)
						Possible
Moody’s		P-3		Baa3		downgrade		August 24, 2005 (b)
S&P		A-3		BBB-		Developing		June 9, 2005 (c)
DBRS		R-2 (middle)		BBB		Developing		June 9, 2005 (d)

(a)	Fitch downgraded the senior debt of ResCap to BBB- from BBB, downgraded the commercial paper rating to F3 from F2, and on October 17, 2005, placed the ratings on Rating Watch Evolving and on April 3, 2006, changed the rating watch status to Positive.
(b)	Moody’s downgraded the senior debt of ResCap to Baa3 from Baa2, downgraded the commercial paper rating to P3 from P2, on October 17, 2005, changed the review status of the long-term debt ratings to direction uncertain and on March 16, 2006, changed the review status of the senior debt ratings to possible downgrade.
(c)	Standard & Poor’s initial ratings for ResCap were assigned, and on October 10, 2005, S&P changed the outlook to CreditWatch with developing implications.
(d)	DBRS initial ratings for ResCap were assigned and on October 11, 2005, DBRS placed the ratings under review with developing implications and affirmed the review status on October 17, 2005.

37

Management’s Discussion and Analysis

GMAC LLC

Off-balance Sheet Arrangements

We use off-balance sheet entities as an integral part of our operating and funding activities. For further discussion of our use of off-balance sheet entities, refer to the Off-balance Sheet Arrangements section in our 2005 Annual Report on Form 10-K.

The following table, which excludes Capmark balances, summarizes assets carried off-balance sheet in these entities.

		June 30,		December 31,
($ in billions)		2006		2005
Securitization (a)
	Retail finance receivables		$7.2		$6.0
	Wholesale loans		21.6		21.4
	Mortgage loans		94.7		79.4
Total securitization			123.5		106.8
Other off-balance sheet activities
	Mortgage warehouse		0.8		0.6
	Other mortgage		0.1		0.2
Total off-balance sheet activities			$124.4		$107.6

(a)  Includes only securitizations accounted for as sales under SFAS 140, as further described in Note 9 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K.

Accounting and Reporting Developments

Statement of Position 05-1 — In September 2005 the AICPA issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting for deferred acquisition costs on internal replacements of insurance contracts. SOP 05-1 defines an internal replacement, and specifies the conditions that determine whether the replacement contract is substantially or unsubstantially changed from the replaced contract. An internal replacement determined to result in a substantially changed contract should be accounted for as an extinguishment of the replaced contract, and unamortized deferred acquisition costs and unearned revenue liabilities of the replaced contract should no longer be deferred. An internal replacement determined to result in an unsubstantially changed contract should be accounted for as a continuation of the replaced asset. SOP 05-01 introduces the terms integrated and non-integrated contract features and specifies that non-integrated features do not change the base contract and are to be accounted for in a manner similar to a separately issued contract. Integrated features are evaluated in conjunction with the base contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

Statement of Financial Accounting Standards No. 155 — In February 2006 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 155 Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140 (SFAS 155). This standard permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS 155 allows an entity to make an irrevocable election to measure such a hybrid financial instrument at fair value on an instrument-by-instrument basis. The standard eliminates the prohibition on a QSPE from holding a derivative financial instrument that pertains to a beneficial instrument other than another derivative financial instrument. SFAS 155 also clarifies which interest-only and principal-only strips are not subject to the requirements of SFAS 133 as well as determines that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the fiscal year that begins after September 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Staff Position — FIN 46(R)-6 — In April 2006 the FASB issued FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R) which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46(R). The variability is used in applying FIN 46(R) to determine whether an entity is a variable interest entity, which interests are variable interests in the entity and who is the primary beneficiary of the variable interest entity. This statement is applied prospectively and is effective for all reporting periods after June 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Interpretation No. 48 — In June 2006 the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) which supplements Statement of Financial Accounting Standard No. 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is

38

Management’s Discussion and Analysis

GMAC LLC

“more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

Consolidated Operating Results

The following section provides a discussion of our consolidated results of operations as displayed in the Condensed Consolidated Statement of Income. The individual business segment sections of this MD&A provide a further discussion of the operating results.

Revenues

Total revenue increased by $410 million and $922 million, respectively, in the second quarter and first six months of 2006, compared to the same period of 2005, primarily due to increases in operating lease income, revenue from mortgage loans held for sale and mortgage consumer interest income. Mortgage originations increased to $47.0 billion in the second quarter from $42.6 billion in the prior period. These increases were partially offset by a decline in auto consumer revenue.

Interest and discount expense increased by $769 million and $1,329 million in the second quarter and first six months of 2006, as compared to the same period of the prior year. This increase is primarily the result of the negative impact of higher funding costs due to an increase in overall market interest rates. The provision for credit losses increased for the second quarter of 2006 by $84 million.

Insurance premiums and service revenue earned increased by 13% and 12% in the second quarter and first six months of 2006 as compared with the same period in 2005, as a result of the acquisition of MEEMIC, growth in the extended service contract line, reinsurance assumed business and international personal lines operations. Gain on sale of mortgage and automotive loans increased due to higher overall loan production and increased volume of off-balance sheet securitizations versus on-balance secured financings.

Investment income decreased by $106 million and $98 million in the second quarter and first six months of 2006, respectively, as compared to the same period in the prior year. The decreases are primarily driven by lower capital gains recognized and an increase in losses on U.S. Treasury and principal-only securities during the first half of 2006. Gain on sale of equity investments increased by $411 million in the second quarter and first six months of 2006 as compared to the same period in the prior year. The increase is primarily driven due to the sale of our equity interest in a regional homebuilder during the second quarter of 2006.

Expenses

Noninterest expense increased by $197 million, or 5% in the second quarter of 2006 and $529 million, or 7% for the first six months of 2006, as compared to the same period in the prior year. Depreciation expense on operating lease assets increased during the second quarter and first six months of 2006, as a result of higher average operating lease asset levels as compared to the same period of 2005. In addition, other operating expenses increased due to a decrease in the gains realized on the disposal of off-lease vehicles.

39

Management’s Discussion and Analysis

GMAC LLC

Forward Looking Statements

The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations and other portions of this Form 10-Q contains various forward-looking statements within the meaning of applicable federal securities laws, including the Private Securities Litigation Reform Act of 1995, that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.

The words “anticipate,” “estimate,” “believe,” “expect,” “intend,” “may,” “plan,” “project,” “future” and “should” and any similar expressions are intended to identify forward-looking statements. Forward-looking statements involve a number of risks, uncertainties and other factors, including (but not limited to) the Risk Factors described in Item 1A of our 2005 Form 10-K, as updated in this Form 10-Q, and which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: the ability of GM to complete the previously announced transaction with a strategic investor regarding a controlling interest in us while maintaining a significant stake in us, securing separate credit ratings and low cost funding to sustain growth for us and ResCap and maintaining the mutually beneficial relationship between us and GM; changes in economic conditions, currency exchange rates, significant terrorist attacks or political instability in the major markets where we operate; changes in the laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates; and the threat of terrorism, the outbreak or escalation of hostilities between the United States and any foreign power or territory and changes in international political conditions may continue to affect both the United States and the global economy and may increase other risks.

40

Controls and Procedures

GMAC LLC

Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, our Principal Executive Officer and our Principal Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures. Based on management’s evaluation, GMAC’s Principal Executive and Principal Financial Officer each concluded that our disclosure controls and procedures were not effective as of June 30, 2006, solely because of the material weakness in internal control over financial reporting with respect to the preparation, review, presentation and disclosure of the Consolidated Statement of Cash Flows as disclosed in our report on Form 10-K for year ended December 31, 2005.

In order to remediate this material weakness in our internal control over financial reporting, management is in the process of designing and implementing and continuing to enhance controls to aid in the correct preparation, review, presentation and disclosure of our Consolidated Statement of Cash Flows. We are continuing to monitor, evaluate and test the operating effectiveness of these controls.

There were no other changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

41

Other Information

GMAC LLC

Legal Proceedings

We are subject to potential liability under laws and government regulations and various claims and legal actions that are pending or may be asserted against us. The following update supplements our Legal Proceedings section in our 2005 Annual Report on Form 10-K. Please refer to the Legal Proceedings section in our 2005 Annual Report on Form 10-K for additional information regarding the items noted below and other pending governmental proceedings, claims and legal actions.

The previously reported bondholder class actions, J&R Marketing, et al. v. General Motors Corporation, et al., Mager v. General Motors Corporation, et al., and Zielezienski, et al. v. General Motors, et al. have been consolidated in the United States District Court for the Eastern District of Michigan under the caption J&R Marketing, et al. v. General Motors Corporation, et al. and lead plaintiffs’ counsel have been appointed by the court. On July 28, 2006, plaintiffs filed a Consolidated Amended Complaint. The amended complaint mainly differs from the initial complaint in that it asserts claims for GMAC debt securities purchased during a different time period (July 28, 2003 through November 9, 2005), and adds additional underwriter defendants. No determination has been made that the case may be maintained as a class action. The GM and GMAC defendants intend to vigorously defend this action.

Risk Factors

There have been no material changes to the Risk Factors section of our 2005 Annual Report on Form 10-K as supplemented by our March 31, 2006 Form 10-Q.

The following risk factors, which were disclosed in our 2005 Annual Report on Form 10-K and March 31, 2006 Form 10-Q, have not materially changed since we filed those reports. See our 2005 Annual Report on Form 10-K and March 31, 2006 Form 10-Q for a complete discussion of these risk factors.

Risks Related to Our Controlling Stockholder

•  GM has agreed to sell a controlling interest in GMAC. There is a risk that the sale may not occur or, if it does occur, may not restore our investment grade rating or maintain ResCap’s investment grade ratings.

Risks Related to Our Business

•  We have recently experienced a series of credit rating actions, resulting in the downgrade of our credit ratings to historically low levels. Any further reduction of our credit ratings or failure to restore our credit ratings to higher levels could have a material adverse effect on our business.

•  Our business requires substantial capital and, if we are unable to maintain adequate financing sources, our profitability and financial condition will suffer and jeopardize our ability to continue operations.

•  Our indebtedness and other obligations are significant and could materially adversely affect our business.

•  The profitability and financial condition of our operations are dependent upon the operations of our parent, General Motors.

•  We have substantial credit exposure to General Motors.

•  As a wholly owned subsidiary of GM, we are jointly and severally responsible with GM and its other subsidiaries for funding obligations under GM’s and its subsidiaries’ qualified U.S. defined benefit pension plans. Our financial condition and our ability to repay unsecured debt could be impaired if we were required to pay significant funding obligations for the GM plans.

•  We are exposed to credit risk which could affect our profitability and financial condition.

•  Our earnings may decrease because of increases or decreases in interest rates.

•  Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates and could affect our profitability and financial condition.

42

Other Information

GMAC LLC

•  Our residential mortgage subsidiary’s ability to pay dividends and to prepay subordinated debt obligations to us is restricted by contractual arrangements.

•  A failure of or interruption in the communications and information systems on which we rely to conduct our business could adversely affect our revenues and profitability.

•  We use estimates and assumptions in determining the fair value of certain of our assets, in determining our allowance for credit losses, in determining lease residual values and in determining our reserves for insurance losses and loss adjustment expenses. If our estimates or assumptions prove to be incorrect, our cash flow, profitability, financial condition and business prospects could be materially adversely affected.

•  Our business outside the United States exposes us to additional risks that may cause our revenues and profitability to decline.

•  Our business could be adversely affected by changes in currency exchange rates.

•  General business and economic conditions of the industries and geographic areas in which we operate affect our revenues, profitability and financial condition.

•  Our profitability and financial condition may be materially adversely affected by decreases in the residual value of off-lease vehicles.

•  Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues.

•  Changes in existing U.S. government-sponsored mortgage programs, or disruptions in the secondary markets in the United States or in other countries in which our mortgage subsidiaries operate, could adversely affect the profitability and financial condition of our mortgage business.

•  We may be required to repurchase contracts and provide indemnification if we breach representations and warranties from our securitization and whole loan transactions, which could harm our profitability and financial condition.

•  Significant indemnification payments or contract, lease or loan repurchase activity of retail contracts or leases or mortgage loans could harm our profitability and financial condition.

•  A loss of contractual servicing rights could have a material adverse effect on our financial condition, liquidity and results of operations.

•  The regulatory environment in which we operate could have a material adverse effect on our business and earnings.

•  The worldwide financial services industry is highly competitive. If we are unable to compete successfully or if there is increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, our margins could be materially adversely affected.

Other Information

None.

Exhibits

The exhibits listed on the accompanying Index of Exhibits are filed as a part of this report. Such Index is incorporated herein by reference.

43

Signatures

GMAC LLC

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, this 7th day of August, 2006.

GMAC LLC

(Registrant)

/s/ Sanjiv Khattri

Sanjiv Khattri

Executive Vice President and

Chief Financial Officer

/s/ Linda K. Zukauckas

Linda K. Zukauckas

Vice President and Corporate Controller

44

Index of Exhibits

GMAC LLC

Exhibit		Description	Method of Filing
	2.1	Purchase and Sale Agreement by and among General Motors Corporation, General Motors Acceptance Corporation, GM Finance Co. Holdings Inc. and FIM Holdings LLC dated as of April 2, 2006	Filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated as of April 2, 2006 (File No. 1-3754); incorporated herein by reference.
	3.1	Certificate of Formation of GMAC LLC dated July 20, 2006	Filed herewith.
	3.2	Certificate of Conversion to Limited Liability Company of General Motors Acceptance Corporation to GMAC LLC dated July 20, 2006	Filed herewith.
	3.3	Limited Liability Company Agreement of GMAC LLC dated July 21, 2006	Filed herewith.
	4.1	Form of Indenture dated as of July 1, 1982, between the Company and Bank of New York (Successor Trustee to Morgan Guaranty Trust Company of New York), relating to Debt Securities	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 2-75115; incorporated herein by reference.
	4.1.1	Form of First Supplemental Indenture dated as of April 1, 1986, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 33-4653; incorporated herein by reference.
	4.1.2	Form of Second Supplemental Indenture dated as of June 15, 1987, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(h) to the Company’s Registration Statement No. 33-15236; incorporated herein by reference.
	4.1.3	Form of Third Supplemental Indenture dated as of September 30, 1996, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(i) to the Company’s Registration Statement No. 333-33183; incorporated herein by reference.
	4.1.4	Form of Fourth Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(j) to the Company’s Registration Statement No. 333-48705; incorporated herein by reference.
	4.1.5	Form of Fifth Supplemental Indenture dated as of September 30, 1998, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(k) to the Company’s Registration Statement No. 333-75463; incorporated herein by reference.
	4.2	Form of Indenture dated as of September 24, 1996, between the Company and The Chase Manhattan Bank, Trustee, relating to SmartNotes	Filed as Exhibit 4 to the Company’s Registration Statement No. 333-12023; incorporated herein by reference.
	4.2.1	Form of First Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.2	Filed as Exhibit 4(a)(1) to the Company’s Registration Statement No. 333-48207; incorporated herein by reference.
	4.2.2	Form of Second Supplemental Indenture dated as of June 30, 2006, supplementing the Indenture designated as Exhibit 4.2	Filed as Exhibit 4(a)(2) to the Company’s Registration Statement No. 333-136021; incorporated herein by reference.
	4.3	Form of Indenture dated as of October 15, 1985, between the Company and U.S. Bank Trust (Successor Trustee to Comerica Bank), relating to Demand Notes	Filed as Exhibit 4 to the Company’s Registration Statement No. 2-99057; incorporated herein by reference.
	4.3.1	Form of First Supplemental Indenture dated as of April 1, 1986, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 33-4661; incorporated herein by reference.
	4.3.2	Form of Second Supplemental Indenture dated as of June 24, 1986, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(b) to the Company’s Registration Statement No. 33-6717; incorporated herein by reference.

45

Index of Exhibits

GMAC LLC

Exhibit		Description	Method of Filing
	4.3.3	Form of Third Supplemental Indenture dated as of February 15, 1987, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(c) to the Company’s Registration Statement No. 33-12059; incorporated herein by reference.
	4.3.4	Form of Fourth Supplemental Indenture dated as of December 1, 1988, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(d) to the Company’s Registration Statement No. 33-26057; incorporated herein by reference.
	4.3.5	Form of Fifth Supplemental Indenture dated as of October 2, 1989, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(e) to the Company’s Registration Statement No. 33-31596; incorporated herein by reference.
	4.3.6	Form of Sixth Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(f) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.
	4.3.7	Form of Seventh Supplemental Indenture dated as of June 15, 1998, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.
	4.4	Form of Indenture dated as of December 1, 1993, between the Company and Citibank, N.A., Trustee, relating to Medium-Term Notes	Filed as Exhibit 4 to the Company’s Registration Statement No. 33-51381; incorporated herein by reference.
	4.4.1	Form of First Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.4	Filed as Exhibit 4(a)(1) to the Company’s Registration Statement No. 333-59551; incorporated herein by reference.
	10	Copy of agreement dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation.	Filed as Exhibit 10 to the Company’s current report on Form 8-K dated as of October 23, 2001 (File No. 1-3754); incorporated herein by reference.
	12	Computation of ratio of earnings to fixed charges	Filed herewith.
	31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.
	31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.
The following exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that Section. In addition Exhibit No. 32 shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
	32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350	Filed herewith.

46 EX-31.1 4 k07516exv31w1.htm SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Exhibit 31.1

CERTIFICATION

I, G. Richard Wagoner, Jr., certify that:

1. I have reviewed this quarterly report for the period ended June 30, 2006 on Form 10-Q of General Motors Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  G. RICHARD WAGONER, JR.

G. Richard Wagoner, Jr.

Chairman and Chief Executive Officer

Date: August 7, 2006

EX-31.1

exv31w1

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Frederick A. Henderson, certify that:

1. I have reviewed this quarterly report for the period ended June 30, 2006 on Form 10-Q of General Motors Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of the directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  FREDERICK A. HENDERSON

FREDERICK A. HENDERSON

Vice Chairman and Chief Financial Officer

Date: August 7, 2006

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Motors Corporation (the “Corporation”) on Form 10-Q for the period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Richard Wagoner, Jr., Chairman and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/  G. RICHARD WAGONER, JR.

G. Richard Wagoner, Jr.

Chairman and Chief Executive Officer

August 7, 2006

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Motors Corporation (the “Corporation”) on Form 10-Q for the period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick A. Henderson, Vice Chairman and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/  FREDERICK A. HENDERSON

Frederick A. Henderson

Vice Chairman and Chief Financial Officer

August 7, 2006