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Exhibit 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement")
dated
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as of February 10, 2003, is among CARMAX AUTO SUPERSTORES, INC.
(the
"Borrower"); the other persons or entities which are listed on
the signature
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pages hereof as debtors or which from time to time become
parties hereto as
debtors (collectively, including the Borrower, the "Debtors" and
individually
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each a "Debtor"); and DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC
("DCSNA"), in
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its capacity as agent for the Lenders referred to below (in such
capacity, the
"Agent").
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W I T N E S S E T H:
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WHEREAS, the Borrower, CarMax, Inc. (the "Company"), various
financial
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institutions (the "Lenders") and the Agent have entered into an
Amended and
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Restated Credit Agreement dated as of the date hereof (as
amended or otherwise
modified from time to time, the "Credit Agreement"), pursuant to
which the
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Lenders have agreed to make extensions of credit to the
Borrower;
WHEREAS, each of the Debtors (other than the Borrower) has
executed and
delivered a guaranty (as amended or otherwise modified from time
to time, the
"Guaranty"; for the avoidance of doubt, such term includes the
guaranty of the
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Company pursuant to the provisions of Section 14 of the Credit
Agreement) of all
obligations of the Borrower under the Credit Agreement;
WHEREAS, the Debtors entered into a Security Agreement dated as
of May
17, 2002 (the "Original Security Agreement") to secure their
obligations under
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the Credit Agreement (in the case of the Borrower) and the
Guaranty (in the case
of the Debtors other than the Borrower); and
WHEREAS, the obligations of the Borrower under the Credit
Agreement and
the obligations of each other Debtor under the Guaranty are to
be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or
other
financial accommodation heretofore or hereafter made to the
Borrower under or in
connection with the Credit Agreement, and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
Original Security Agreement is hereby amended and restated, and
the parties
hereto agree, as follows:
1. Definitions. When used herein, (a) the terms, Account,
Chattel
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Paper, Commercial Tort Claim, Deposit Account, Document, General
Intangible,
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------------------
Instrument and Payment Intangible have the respective meanings
assigned thereto
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in the UCC (as defined below); (b) capitalized terms used but
not defined herein
are used as defined in the Credit Agreement; and (c) the
following terms have
the following meanings (such definitions to be applicable to
both the singular
and plural forms of such terms):
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Assignee Deposit Account - see Section 4.
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Automobile Inventory means Motor Vehicles, and all
accessions,
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additions, attachments, improvements, substitutions and
replacements thereto and
therefor.
Collateral means, with respect to any Debtor, all property and
rights
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of such Debtor in which a security interest is granted
hereunder.
Collections means all payments and items of payment (including,
without
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limitation, cash and Instruments) that are received by the
Debtors from or on
behalf of any Obligor in payment of any amounts owed (including
invoice prices,
finance charges, interest and all other charges, if any) in
respect of any
Receivable or Related Asset, or otherwise applied to repay or
discharge any
Receivable (including insurance payments that the Debtors apply
in the ordinary
course of its business to amounts owed in respect of such
Receivable and net
proceeds of sale or other disposition of repossessed goods that
were the subject
of such Receivable).
Contracts means, with respect to any Receivable, the
agreements
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(including, without limitation, Chattel Paper and Instruments)
between the
Debtors and the related Obligors governing the terms and
conditions of such
Receivable.
Contributed Receivable means a Receivable contributed by a
Debtor to an
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SPE in connection with a Securitization.
Control Agreement Default means the occurrence of any of the
following
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events: (a) any Event of Default or (b) any Unmatured Event of
Default under
Section 11.1.1 or 11.1.4 of the Credit Agreement.
Default means the occurrence of any Event of Default.
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Intellectual Property means all past, present and future: trade
secrets
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and other proprietary information; trademarks, service marks,
trade names,
business names, designs, logos, indicia and other source and/or
business
identifiers, and the goodwill of the business relating thereto
and all
registrations or applications for registration which have
heretofore been or may
hereafter be issued thereon throughout the world; copyrights
(including
copyrights for computer programs) and copyright registrations or
applications
for registration which have heretofore been or may hereafter be
issued
throughout the world and all tangible property embodying the
copyrights;
unpatented inventions (whether or not patentable); patent
applications and
patents; industrial designs, industrial design applications and
registered
industrial designs; license agreements related to any of the
foregoing and
income therefrom; books, records, writings, computer tapes or
disks, flow
diagrams, specification sheets, source codes, object codes and
other physical
manifestations, embodiments or incorporations of any of the
foregoing; the right
to sue for all past, present and future infringements of any of
the foregoing;
and all common law and other rights throughout the world in and
to all of the
foregoing.
Liabilities means, as to each Debtor, all obligations (monetary
or
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otherwise) of such Debtor under or in connection with the Credit
Agreement, any
Note, the Guaranty, any other Loan Document and any other
document or instrument
executed in connection therewith, in each case howsoever
created, arising or
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<PAGE>
evidenced, whether direct or indirect, absolute or contingent,
now or hereafter
existing, or due or to become due.
Obligor means a Person obligated to make payments on a
Receivable.
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Purchased Receivable means a Receivable purchased by an SPE in
a
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Securitization.
Receivable means an Account, Chattel Paper, Document,
General
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Intangible, Instrument or Payment Intangible arising from the
sale or lease of
Motor Vehicles.
Related Assets means, with respect to any Receivable: (a) all
Contracts
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that relate to such Receivable; (b) the merchandise (including
returned
merchandise), if any, relating to the sale which gave rise to
such Receivable;
(c) all other security interests or liens and property subject
thereto from time
to time purporting to secure payment of such Receivable, whether
pursuant to the
Contract related to such Receivable or otherwise; (d) all UCC
financing
statements covering any collateral securing payment of such
Receivable; and (e)
all guarantees and other agreements or arrangements of whatever
character from
time to time supporting or securing payment of such Receivable,
whether pursuant
to the Contract related to such Receivable or otherwise.
Returned Goods means all right, title and interest of the
Debtors in
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and to goods and/or merchandise, the sale of which gave rise to
Receivables
(other than Transferred Receivables), that have been returned
to, repossessed by
or foreclosed on by any Debtor.
Subject Receivables means any Receivables, other than
Transferred
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Receivables and Third Party Sold Receivables.
Third Party Sold Receivables means Receivables sold by any
Debtor to a
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Person not an SPE or an Affiliate in the ordinary course of
business.
Transferred Receivables means all Purchased Receivables and
Contributed
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Receivables.
UCC means the Uniform Commercial Code as in effect from time to
time in
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the State of Michigan; provided that, as used in Section 10
hereof, "UCC" shall
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mean the Uniform Commercial Code as in effect from time to time
in any
applicable jurisdiction.
2. Grant of Security Interest. As security for the payment of
all
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Liabilities, each Debtor hereby assigns to the Agent for the
benefit of the
Lenders, and grants to the Agent for the benefit of the Lenders
a continuing
security interest in, the following, whether now or hereafter
existing or
acquired:
(i) all of such Debtor's Automobile Inventory;
(ii) all of such Debtor's Subject Receivables;
(iii) all of such Debtor's rights against Manufacturers
arising out of the purchase of Automobile Inventory from
such
Manufacturers;
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<PAGE>
(iv) all of such Debtor's rights to receive payment (whether
arising from any sale or other disposition or any collection
or
distribution) from any Person in connection with such Debtor's
transfer
of a Receivable to such Person, including, without limitation,
all
rights to payment pursuant to any agreement pursuant to which
such
Receivable was transferred to such Person (but excluding any
right of
such Debtor to receive payments in its capacity as servicer of
a
Transferred Receivable or of a Contract related to a
Transferred
Receivable);
(v) all Collections received by such Debtor on account of
any
Subject Receivables; and
(vi) all Deposit Accounts into which any payment or
Collection
on account of any Third Party Sold Receivable is paid, deposited
or
credited;
together with all books, records, writings, data bases,
information and other property relating to, used or useful
in
connection with, or evidencing, embodying, incorporating or
referring
to any of the foregoing, and all proceeds, products, offspring,
rents,
issues, profits and returns of and from, and any and all claims
and/or
insurance payments arising out of the loss, nonconformity or
interference with the use of, defects or infringements of rights
in, or
damage to, any of the foregoing; provided that:
(x) the property in which a security interest is
granted hereunder shall not include or continue into any
Transferred Receivable or Third Party Sold Receivable (or
any
Related Asset related to such Transferred Receivable or
Third
Party Sold Receivable);
(y) nothing in the foregoing clause (x) shall be
deemed to constitute a release by the Agent of: (A) its lien
on and security interest in the proceeds received by any
Debtor from or on behalf of any SPE or other Person for any
sale of Receivables and Related Assets (including, without
limitation, cash payments made by an SPE or other Person and
any note or other Instrument issued by an SPE or other
Person
in favor of a Debtor in connection with any such sale), (B)
any lien, claim, encumbrance or security interest the Agent
may have in Subject Receivables or Collections of Subject
Receivables, (C) any lien, claim, encumbrance or security
interest the Agent may have as against any interest of a
Debtor in Returned Goods, and (D) any other Collateral not
constituting Transferred Receivables or Third Party Sold
Receivables (or Related Assets related to such Transferred
Receivables or Third Party Sold Receivables); and
(z) so long as any Ford Restriction exists, the
Collateral shall not include, and Kenosha shall be deemed
not
to have granted a security interest in, any New Motor
Vehicle
of the Ford, Lincoln or Mercury makes that is held by
Kenosha.
3. Warranties. Each Debtor warrants that as of the date hereof
(or as
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of the date such Debtor becomes a party hereto by delivering a
counterpart
hereof) and as of each date on which the representations and
warranties under
the Credit Agreement and the other Loan Documents shall be made:
(i) no
financing statement (other than any which may have been filed on
behalf of the
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<PAGE>
Agent or in connection with liens expressly permitted by the
Credit Agreement
("Permitted Liens")) covering any of the Collateral is on file
in any public
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office; (ii) such Debtor is and will be the lawful owner of all
Collateral in
which it has granted a security interest hereunder, free of all
liens and claims
whatsoever, other than the security interest hereunder and
Permitted Liens, with
full power and authority to execute this Agreement and perform
such Debtor's
obligations hereunder, and to subject such Collateral to the
security interest
hereunder; (iii) all information with respect to such Collateral
set forth in
any schedule, certificate or other writing at any time
heretofore or hereafter
furnished by such Debtor to the Agent or any Lender is and will
be true and
correct in all material respects as of the date furnished; (iv)
such Debtor's
state of incorporation / organization, organizational
identification number,
chief executive office and principal place of business are as
set forth on
Schedule I hereto (and such Debtor has not maintained its chief
executive office
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and principal place of business at any other location at any
time after January
1, 2001); (v) each other location where such Debtor maintains a
place of
business is set forth on Schedule II hereto; (vi) except as set
forth on
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Schedule III hereto, such Debtor is not now known and during the
five years
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preceding the date hereof has not previously been known by any
trade name; (vii)
except as set forth on Schedule III hereto, during the five
years preceding the
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date hereof such Debtor has not been known by any legal name
different from the
one set forth on the signature pages of this Agreement nor has
such Debtor been
the subject of any merger or other corporate reorganization;
(viii) such Debtor
is a corporation duly organized, validly existing and in good
standing under the
laws of the state of its incorporation or a limited liability
company duly
formed and validly existing under the laws of the state of its
organization;
(ix) the execution and delivery of this Agreement and the
performance by such
Debtor of its obligations hereunder are within such Debtor's
corporate or
limited liability company powers, have been duly authorized by
all necessary
corporate or limited liability company action, have received all
necessary
governmental approval (if any shall be required), and do not and
will not
contravene or conflict with any provision of law or of the
charter or by-laws or
other organizational documents of such Debtor or of any
agreement, indenture,
instrument or other document, or any judgment, order or decree,
which is binding
upon such Debtor; (x) this Agreement is a legal, valid and
binding obligation of
such Debtor, enforceable against such Debtor in accordance with
its terms,
except that the enforceability of this Agreement may be limited
by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer,
reorganization,
moratorium or other similar laws now or hereafter in effect
relating to
creditors' rights generally and by general principles of equity
(regardless of
whether enforcement is sought in a proceeding in equity or at
law); (xi) such
Debtor is in compliance in all material respects with the
requirements of all
applicable laws (including the provisions of the Fair Labor
Standards Act),
rules, regulations and orders of every governmental authority;
and (xii) each
Debtor that owns Motor Vehicles covered by certificates of title
is and shall
continue to be in the business of selling goods of that
kind.
4. Collections, etc. Until such time during the existence of a
Default
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as the Agent shall notify such Debtor of the revocation of such
power and
authority, each Debtor may, in the ordinary course of its
business, at its own
expense, sell, lease or furnish under contracts of service any
of the Automobile
Inventory normally held by such Debtor for such purpose, use and
consume, in the
ordinary course of its business, any raw materials, work in
process or materials
normally held by such Debtor for such purpose, and use, in the
ordinary course
of its business (but subject to the terms of the Credit
Agreement), the cash
proceeds of Collateral and other money which constitutes
Collateral. The Agent
may, at any time that a Default exists, whether before or after
any revocation
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<PAGE>
of such power and authority or the maturity of any of the
Liabilities, notify
any parties obligated on any of the Subject Receivables to make
payment to the
Agent of any amounts due or to become due thereunder (but only
if the applicable
Debtor shall have failed, within two Business Days after having
been requested
in writing to do so by the Agent, to notify such parties to make
payment of such
amounts to the Agent) and enforce collection of any of the
Subject Receivables
by suit or otherwise and surrender, release or exchange all or
any part thereof,
or compromise or extend or renew for any period (whether or not
longer than the
original period) any indebtedness thereunder or evidenced
thereby.
When any Debtor or any of its Affiliates (or any shareholder,
director,
officer, employee, agent or those Persons acting for or in
concert with such
Debtor or an Affiliate of such Debtor) shall receive or
otherwise come into
possession or control of any monies, checks, notes, drafts or
other payment
items (each, a "Payment Item") representing the purchase price
of any Third
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Party Sold Receivable sold by such Debtor, then, except as
otherwise permitted
in a writing signed by the Agent, such Debtor shall, or shall
cause such
Affiliate or such other Person to, deposit the same in kind in
precisely the
form in which such Payment Item was received (with all Payment
Items endorsed if
necessary for collection) into a Deposit Account maintained in
the United States
of America with respect to which the depositary bank has
executed the Control
Agreement. Without limiting the foregoing, each Debtor selling
any Third Party
Sold Receivable shall instruct the purchaser thereof to remit
the purchase price
for such Receivable into such a Deposit Account. During the
existence of a
Control Agreement Default, the Agent may issue the Notice (as
defined in the
Control Agreement) pursuant to the Control Agreement.
Upon request by the Agent during the existence of a Default,
each
Debtor will forthwith, upon receipt, transmit and deliver to the
Agent, in the
form received, all cash, checks, drafts and other instruments or
writings for
the payment of money (properly endorsed, where required, so that
such items may
be collected by the Agent) which may be received by such Debtor
at any time in
full or partial payment or otherwise as proceeds of any of the
Collateral.
Except as the Agent may otherwise consent in writing, any such
items which may
be so received by any Debtor will not be commingled with any
other of its funds
or property, but will be held separate and apart from its own
funds or property
and in express trust for the Agent until delivery is made to the
Agent. Each
Debtor will comply with the terms and conditions of any consent
given by the
Agent pursuant to the foregoing sentence.
During the existence of a Default, all items or amounts which
are
delivered by any Debtor to the Agent on account of partial or
full payment or
otherwise as proceeds of any of the Collateral shall be
deposited to the credit
of a deposit account (each an "Assignee Deposit Account") of
such Debtor with a
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financial institution selected by the Agent over which the Agent
has sole
dominion and control, as security for payment of the
Liabilities. No Debtor
shall have any right to withdraw any funds deposited in the
applicable Assignee
Deposit Account. The Agent may, from time to time, in its
discretion, and shall
upon request of the applicable Debtor made not more than once in
any week, apply
all or any of the then balance, representing collected funds, in
the Assignee
Deposit Account toward payment of the Li
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