Exhibit 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement")
dated
---------
as of February 10, 2003, is among CARMAX
AUTO SUPERSTORES, INC. (the
"Borrower"); the other persons or entities
which are listed on the signature
--------
pages hereof as debtors or which from time
to time become parties hereto as
debtors (collectively, including the
Borrower, the "Debtors" and individually
-------
each a "Debtor"); and DAIMLERCHRYSLER
SERVICES NORTH AMERICA LLC ("DCSNA"), in
------
-----
its capacity as agent for the Lenders
referred to below (in such capacity, the
"Agent").
-----
W I T N E S S E T H:
--------------------
WHEREAS,
the Borrower, CarMax, Inc. (the "Company"), various financial
-------
institutions (the "Lenders") and the Agent
have entered into an Amended and
-------
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
----------------
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
--------
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
---------------------------
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
------------
------- -------
Paper, Commercial Tort Claim, Deposit
Account, Document, General Intangible,
----- --------------------- --------------- -------- ------------------
Instrument and Payment Intangible have the
respective meanings assigned thereto
----------
------------------
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):
<PAGE>
Assignee Deposit Account - see Section 4.
------------------------
---------
Automobile Inventory means Motor Vehicles, and all accessions,
--------------------
additions, attachments, improvements,
substitutions and replacements thereto and
therefor.
Collateral means, with respect to any Debtor, all property and
rights
----------
of such Debtor in which a security interest
is granted hereunder.
Collections means all payments and items of payment (including,
without
-----------
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
---------
(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
----------------------
SPE in connection with a
Securitization.
Control Agreement Default means the occurrence of any of the
following
-------------------------
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.
-------
Intellectual Property means all past, present and future: trade
secrets
---------------------
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
-----------
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
2
<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.
-------
Purchased Receivable means a Receivable purchased by an SPE in
a
--------------------
Securitization.
Receivable means an Account, Chattel Paper, Document, General
----------
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
--------------
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
--------------
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
-------------------
Receivables and Third Party Sold
Receivables.
Third Party Sold Receivables means Receivables sold by any Debtor
to a
----------------------------
Person not an SPE or an Affiliate in the
ordinary course of business.
Transferred Receivables means all Purchased Receivables and
Contributed
-----------------------
Receivables.
UCC means the Uniform Commercial Code as in effect from time to
time in
---
the State of Michigan; provided that, as
used in Section 10 hereof, "UCC" shall
----------
---
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
--------------------------
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;
3
<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
----------
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
4
<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
---------------
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
----------
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
-----------
Schedule III hereto, such Debtor is not now
known and during the five years
------------
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
------------
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
----------------
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
5
<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
------------
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
------------------------
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 A
