Exhibit 1.2 - Form of Underwriting Agreement for Insured Offerings
$[_______________]
CARMAX AUTO OWNER TRUST [__]-[__]
$[_______________] [____]% Class A-1 Asset Backed Notes
$[_______________] [____]% Class A-2 Asset Backed Notes
$[_______________] [____]% Class A-3 Asset Backed Notes
$[_______________] [____]% Class A-4 Asset Backed Notes
$[_______________] [____]% Asset Backed Certificates
CARMAX AUTO FUNDING LLC
Depositor
CARMAX AUTO SUPERSTORES, INC.
Servicer
UNDERWRITING AGREEMENT
[____________], 2003
[_______________]
as Representative of the
several Underwriters
[_______________]
[_______________]
[_______________]
Dear Sirs:
CarMax Auto Funding LLC, a Delaware limited liability company (the
"Depositor"), hereby confirms its agreement with [_______________]
("[_______________]") and each of the other underwriters named in Schedule A
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10), for whom
[_______________] is acting as representative (in such capacity, the
"Representative"), with respect to the sale by the Depositor and the purchase by
the Underwriters, acting severally and not jointly, of the respective principal
amounts set forth in Schedule A of $[_______________] aggregate principal amount
of [____]% Class A-1 Asset Backed Notes (the "Class A-1 Notes"),
$[_______________] aggregate principal amount of [____]% Class A-2 Asset Backed
Notes (the "Class A-2 Notes"), $[_______________] aggregate principal amount of
[____]% Class A-3 Asset Backed Notes (the "Class A-3 Notes"), $[_______________]
aggregate principal amount of [____]% Class A-4 Asset Backed Notes (the "Class
A-4 Notes" and together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes") and $[_______________] aggregate principal amount
of [____]% Class B Asset Backed Certificates (the "Certificates" and, together
with the Notes, the "Securities") of the CarMax Auto Owner Trust [__]-[__] (the
"Trust") under the terms and conditions contained herein.
The Notes will be issued pursuant to an indenture, dated as of
[____________], 2003 (the "Indenture"), between the Trust and [_______________],
as trustee (the "Indenture Trustee").
The Trust will be created and the Certificates will be issued pursuant to an
amended and restated trust agreement, dated as of [____________], 2003 (the
"Trust Agreement"), between the Depositor and [_______________], as trustee (the
"Owner Trustee"). Each Note will represent an obligation of the Trust, each
Certificate will represent an undivided beneficial interest in the Trust and the
Certificates will be subordinated to the Notes to the extent described in the
Indenture and the Trust Agreement. [_______________] (the "Insurer") will issue
a financial guaranty insurance policy for the benefit of the holders of the
Securities (the "Policy").
The assets of the Trust will include, among other things, (i) a pool of
motor vehicle retail installment sale contracts (the "Receivables") secured by
the new and used motor vehicles financed thereby (the "Financed Vehicles"), (ii)
certain monies payable under the Receivables after [____________], (iii)
security interests in the Financed Vehicles, (iv) the Policy; (v) amounts on
deposit in certain accounts, (vi) certain rights under a receivables purchase
agreement, dated as of [____________], 2003 (the "Receivables Purchase
Agreement"), between CarMax Auto Superstores, Inc. ("CarMax") and the Depositor,
pursuant to which CarMax will sell the Receivables to the Depositor, (vii)
certain rights under a sale and servicing agreement, dated as of [____________],
2003 (the "Sale and Servicing Agreement"), among the Trust, the Depositor and
CarMax, as servicer (the "Servicer"), pursuant to which the Receivables and
other property of the Trust will be sold to the Trust and the Receivables will
be serviced by the Servicer and (viii) all proceeds of the foregoing. Pursuant
to the Indenture, the Trust property will be held by the Indenture Trustee on
behalf of the holders of the Notes. Pursuant to an administration agreement,
dated as of [____________], 2003 (the "Administration Agreement"), among CarMax,
as administrator (the "Administrator"), the Trust and the Indenture Trustee, the
Administrator will perform certain administrative obligations of the Trust under
the Indenture. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or the Sale and
Servicing Agreement, as the case may be.
The Indenture, the Trust Agreement, the Administration Agreement, the Sale
and Servicing Agreement and the Receivables Purchase Agreement, an insurance and
reimbursement agreement, dated as of [____________], 2003 (the "Insurance
Agreement"), among the Insurer, the Depositor, CarMax and the Servicer, and an
indemnification agreement, dated [____________], 2003 (the "Indemnification
Agreement"), among the Insurer, the CarMax, the Depositor, [_______________] and
the Underwriters are referred to herein collectively as the "Basic Documents".
The Depositor has prepared and filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-3 (File No.
333-107925), including a preliminary base prospectus and a form of preliminary
prospectus supplement relating to the offering of asset backed notes and asset
backed certificates, issued in series from time to time in accordance with Rule
415 under the Securities Act of 1933, as amended (the "Securities Act"). Such
registration statement has been declared effective by the Commission. If any
post-effective amendment has been filed with respect thereto, prior to the
execution and delivery of this Agreement, the most recent such amendment has
been declared effective by the Commission. The Depositor will file a final base
prospectus and a final prospectus supplement relating to the Securities in
accordance with Rules 415 and 424(b)(2) or (5) under the Securities Act. The
Depositor has included in such registration statement, as amended at the
Effective Date (as hereinafter defined), all information required by the
Securities Act and the rules and regulations
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of the Commission under the Securities Act (the "Securities Act Regulations") to
be included in the prospectus with respect to the offering of the Securities. As
filed, the final prospectus and the final prospectus supplement shall include
all required information with respect to the offering of the Securities and
shall be in all substantive respects in the form furnished to the Representative
prior to the Execution Time (as hereinafter defined) or, to the extent not
completed at the Execution Time, shall contain only such specific additional
information and other changes (beyond those contained in the latest preliminary
base prospectus and preliminary prospectus supplement, if any, that have been
previously been furnished to the Representative) as the Depositor has advised
the Representative, prior to the Execution Time, will be included or made
therein.
As used herein, "Execution Time" means the date and time this Agreement is
executed and delivered to the parties hereto and "Effective Date" means the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission. Such
registration statement, as amended as of the Effective Date, including the
exhibits thereto and any material incorporated by reference therein pursuant to
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is referred to as the "Registration Statement". "Base
Prospectus" means the base prospectus included in the Registration Statement, as
amended at the time of the filing of the Prospectus. "Preliminary Prospectus"
means any preliminary prospectus supplement to the Base Prospectus and the Base
Prospectus which describes the offering of the Securities and is used prior to
the filing of the Prospectus. "Prospectus" means the supplement to the Base
Prospectus that is first filed after the Execution Time pursuant to Rule 424(b),
together with the Base Prospectus, as amended at the time of such filing;
provided, however, that a supplement to the Base Prospectus shall be deemed to
have supplemented the Base Prospectus only with respect to the offering of the
series of securities to which it relates. "Prospectus Supplement" means the
supplement to the Base Prospectus included in the Prospectus.
To the extent that the Depositor has prepared (i) Collateral Term Sheets
(as defined in Section 6) that the Underwriters, the Depositor or CarMax have
provided to a prospective investor, the Depositor shall file with the Commission
such Collateral Term Sheets as an exhibit to a report on Form 8-K within two
business days of its receipt thereof or (ii) Structural Term Sheets or
Computational Materials (each as defined in Section 6), the Depositor shall file
with the Commission a report on Form 8-K containing such Structural Term Sheet
and Computational Materials, as soon as reasonably practicable after the date of
this Agreement, but in any event, not later than the date on which the
Prospectus is made available to the Representative in final form.
All references in this Agreement to financial statements and schedules and
other information which is "contained", "included" or "stated" in the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are or are deemed to be incorporated by reference in the Registration Statement,
any Preliminary Prospectus or the Prospectus, as the case may be. All references
in this Agreement to the terms "amend", "amendments" or "supplements" with
respect to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall
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be deemed to mean and include the filing of any documents under the Exchange Act
after the Effective Date of the Registration Statement or the issue date of the
Base Prospectus, any Preliminary Prospectus or the Prospectus, as the case may
be, which are or are deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Depositor. The Depositor
represents and warrants to the Underwriters as of the date hereof and as of the
Closing Time referred to in Section 2(b) and agrees with the Underwriters as
follows:
(i) Compliance with Registration Requirements. The Depositor meets the
requirements for use of Form S-3 under the Securities Act. If the
Registration Statement contains the undertaking specified by Regulation S-K
Item 512(a), the Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x). The Registration Statement has
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Securities Act and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Depositor, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with. The Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
At the respective times that the Registration Statement and any
post-effective amendments thereto became effective and at Closing Time, the
Registration Statement and any amendments thereto complied and will comply
in all material respects with the requirements of the Securities Act, the
Securities Act Regulations, the Trust Indenture Act and the rules and
regulations of the Commission under the Trust Indenture Act (the "Trust
Indenture Act Regulations") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendment or supplement thereto,
at the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time, included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Depositor in writing by any Underwriter through the
Representative expressly for use in the Registration Statement or the
Prospectus.
Any Preliminary Prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to
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Rule 424 of the Securities Act Regulations, complied when so filed in all
material respects with the Securities Act Regulations and any Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with the offering of the Securities will, at the time of such
delivery, be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Regulations") and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the date of the Prospectus and
at the Closing Time, did not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise set forth therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Depositor, whether
or not arising in the ordinary course of business, or in the ability of the
Depositor to perform its obligations under this Agreement and each Basic
Document to which it is a party (a "Material Adverse Effect") and (B) there
have been no transactions entered into by the Depositor, other than those
in the ordinary course of business, which are material with respect to it.
(iv) Due Organization of the Depositor. The Depositor has been duly
formed and is validly existing as a limited liability company under the
laws of the State of Delaware, and all filings required at the date hereof
under the Delaware Limited Liability Company Act (6 Del. C.(S)18-101, et
seq.) (the "LLC Act") with respect to the due formation and valid existence
of the Depositor as a limited liability company have been made; the
Depositor has all requisite power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus and to enter into and to perform its
obligations under this Agreement and each Basic Document to which it is a
party (collectively, the "Depositor Agreements") and the Securities; and
the Depositor is duly qualified or registered as a foreign limited
liability company to transact business and is in good standing in each
jurisdiction in which such qualification or registration is required,
whether by reason of the ownership of property or the conduct of business,
except where the failure to so qualify or register or to be in good
standing would not result in a Material Adverse Effect.
(v) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Depositor.
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(vi) Authorization of Basic Documents. As of the Closing Time, each of
the Basic Documents to which the Depositor is a party has been duly
authorized, executed and delivered by the Depositor, and, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
will constitute a valid and binding agreement of the Depositor, enforceable
against it in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law).
(vii) Issuance of the Notes. The Notes have been duly authorized and,
at the Closing Time, will have been duly executed and, when authenticated,
issued and delivered in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor as provided in
this Agreement, will constitute valid and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(viii) Issuance of the Certificates. The Certificates have been duly
authorized and, at the Closing Time, will have been duly executed and, when
authenticated, issued and delivered in the manner provided for in the Trust
Agreement, will be validly issued and outstanding and will be in the form
contemplated by, and entitled to the benefits of, the Trust Agreement.
(ix) Description of the Securities, the Policy and Basic Documents.
The Securities, the Policy and the Basic Documents conform in all material
respects to the descriptions thereof and the statements relating thereto
contained in the Registration Statement and the Prospectus.
(x) Absence of Defaults and Conflicts. The Depositor is not in
violation of its limited liability company agreement or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it may be bound, or to which any of its
properties or assets is subject (collectively, "Agreements and
Instruments"), except for defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance by the
Depositor of the Depositor Agreements and the Securities, the consummation
of the transactions contemplated herein and therein, in the Registration
Statement or in the Prospectus and compliance by it with its obligations
hereunder and thereunder have been duly and validly authorized by all
necessary action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively,
"Liens") upon any of its property or
6
assets pursuant to the Agreements and Instruments except for Liens
permitted by the Basic Documents and conflicts, breaches or defaults that,
individually or in the aggregate, will not result in a Material Adverse
Effect, nor will such action result in any violation of the provisions of
its limited liability company agreement or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Depositor or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Depositor.
(xi) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
the Depositor, threatened, against or affecting the Depositor which is
required to be disclosed in the Registration Statement and the Prospectus
(other than as stated therein or stated in a document incorporated by
reference therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect its properties or assets; the aggregate of
all pending legal or governmental proceedings to which the Depositor is a
party or of which any of its properties or assets is the subject which are
not described in the Registration Statement and the Prospectus, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein which have not been so
described and filed as required.
(xiii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court, governmental authority or agency or
any other person is necessary in connection with (A) the issuance of the
Securities or the offering and sale of the Securities, (B) the execution,
delivery and performance by the Depositor of the Depositor Agreements or
(C) the consummation by the Depositor of the transactions contemplated
hereby or thereby, except such as have been obtained and are in full force
and effect as of the Closing Time.
(xiv) Possession of Licenses and Permits. The Depositor possesses or,
as of the Closing Time, has applied, for such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it;
the Depositor is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; except for
Governmental Licenses that have been applied for as of the Closing Time,
all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or
7
the failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect or would render a material portion
of the Receivables unenforceable; and the Depositor has not received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect or would render a material portion of the
Receivables unenforceable.
(xv) Title to Receivables; Payment of Fees. As of the Closing Time,
the Depositor will have good and marketable title to the Receivables listed
in Schedule 1 to the Sale and Servicing Agreement, free and clear of any
Lien; and the Depositor's assignment and delivery of the Receivables to the
Trust will vest in the Trust the good and marketable title purported to be
conveyed thereby, and the Trust will be the sole owner of each Receivable
free and clear of Liens other than the Lien in favor of the Indenture
Trustee under the Indenture and the security interest afforded to the
Insurer under the Insurance Agreement; all taxes, fees and other
governmental charges arising in connection with the transactions
contemplated by this Agreement and the Basic Documents and with the
execution and delivery of the Receivables, including any amendments thereto
and assignments and/or endorsements thereof, have been paid by the
Depositor.
(xvi) Investment Company Act. Neither the Trust nor the Depositor is
now or, as a result of the transactions contemplated by this Agreement,
will be, an "investment company", as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(xvii) Incorporation of Representations and Warranties. The
representations and warranties of the Depositor in each Basic Document to
which it is a party are true and correct in all material respects and are
hereby restated for the benefit of the Underwriters and incorporated by
reference herein with the same effect as if set forth in full herein.
(b) CarMax represents and warrants to the Underwriters as of the date
hereof and as of the Closing Time that the representations and warranties of the
Depositor set forth in Sections 1(a) are true and correct and further represents
and warrants to the Underwriters that:
(i) Due Organization of CarMax. CarMax has been duly incorporated and
is validly existing in good standing under the laws of the State of
Virginia and is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction where the character
of its properties or the nature of its activities makes such qualification
necessary, except such jurisdictions, if any, in which the failure to be so
qualified will not have a Material Adverse Effect on either the business or
properties of CarMax; CarMax has the corporate power and authority to own
its properties and conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement and each of
the Basic Documents to which it is a party (collectively, the "CarMax
Agreements"); CarMax holds all material licenses, certificates and permits
from all governmental authorities necessary for the conduct of its business
as described in the Prospectus.
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(ii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by CarMax.
(iii) Authorization of Basic Documents. As of the Closing Time, each
of the Basic Documents to which CarMax is a party has been duly authorized,
executed and delivered by CarMax, and, assuming the due authorization,
execution and delivery thereof by the other parties thereto, will
constitute a valid and binding agreement of CarMax, enforceable against it
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(iv) Absence of Defaults and Conflicts. CarMax is not in violation of
its articles of incorporation or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any Agreements and Instruments, except for defaults that would not result
in a Material Adverse Effect; and the execution, delivery and performance
by CarMax of the CarMax Agreements, the consummation of the transactions
contemplated herein and therein, in the Registration Statement or in the
Prospectus and compliance by it with its obligations hereunder and
thereunder have been duly and validly authorized by all necessary action
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, a default
or Repayment Event (as defined below) under, or result in the creation or
imposition of any Lien upon any of its property or assets pursuant to the
Agreements and Instruments except for Liens permitted by the Basic
Documents and conflicts, breaches or defaults that, individually or in the
aggregate, will not result in a Material Adverse Effect, nor will such
action result in any violation of the provisions of its articles of
incorporation or bylaws or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
CarMax or any of its assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by CarMax.
(v) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
CarMax, threatened, against or affecting CarMax which is or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect its
properties or assets; the aggregate of all pending legal or governmental
proceedings to which CarMax is a party or of which any of its properties or
assets is the subject which are not described in the Prospectus, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(vi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court,
9
governmental authority or agency or any other person is necessary in
connection with (A) the issuance of the Securities or the offering and sale
of the Securities, (B) the execution, delivery and performance by CarMax of
the CarMax Agreements or (C) the consummation by CarMax of the transactions
contemplated hereby or thereby, except such as have been obtained and are
in full force and effect as of the Closing Time.
(vii) Possession of Licenses and Permits. CarMax possesses or, as of
the Closing Time, has applied, for such Governmental Licenses issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it; CarMax is in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; except for Governmental Licenses
that have been applied for as of the Closing Time, all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not have a Material Adverse Effect or
would render a material portion of the Receivables unenforceable; and
CarMax has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect or would render a
material portion of the Receivables unenforceable.
(viii) Title to Receivables; Payment of Fees. As of the Closing Time,
CarMax will have good and marketable title to the Receivables listed in
Schedule 1 to the Receivables Purchase Agreement, free and clear of any
Lien; and CarMax's sale and delivery of the Receivables to the Depositor
will vest in the Depositor the good and marketable title purported to be
conveyed thereby.
(ix) No Material Adverse Change. Since the date as of which
information is given in the Prospectus, except as otherwise set forth
therein, (A) there has been no Material Adverse Effect with respect to
CarMax and (B) there have been no transactions entered into by CarMax,
other than those in the ordinary course of business, which are material
with respect to it.
(x) Incorporation of Representations and Warranties. The
representations and warranties of CarMax in each Basic Document to which it
is a party are true and correct in all material respects and are hereby
restated for the benefit of the Underwriters and incorporated by reference
herein with the same effect as if set forth in full herein.
(c) Officer's Certificates. Any certificate signed by any officer of
CarMax, the Depositor or any of their respective Affiliates and delivered at the
Closing Time to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by CarMax, the Depositor or such Affiliate,
as the case may be, to the Underwriters as to the matters covered thereby. When
used in this Agreement, the term "Affiliate" or "Affiliates" shall have the
meaning assigned by Rule 501(b) of the Securities Act Regulations.
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Section 2. Sale and Delivery to the Underwriters; Closing.
(a) Purchase of Securities. On the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Depositor agrees to sell to the Underwriters, and the
Underwriters severally agree to purchase from the Depositor, the aggregate
principal amount of Notes set forth opposite each Underwriter's name on Schedule
A at a purchase price equal to, in the case of (i) the Class A-1 Notes, %
-------
of the principal amount thereof, (ii) the Class A-2 Notes, % of the
-------
principal amount thereof, (iii) the Class A-3 Notes, % of the principal
-------
amount thereof, (iv) the Class A-4 Notes, % of the principal amount
-------
thereof and (v) the Certificates, % of the principal amount thereof.
-------
(b) Payment. Payment of the purchase price, and delivery of certificates,
for the Securities shall be made at the offices of McGuireWoods LLP, One ▇▇▇▇▇
Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other
place as shall be agreed upon by the Representative and the Depositor, at 10:00
A.M. (New York time) on , or such other time not later than five business
-------
days after such date as shall be agreed upon by the Representative and the
Depositor (such date and time of payment and delivery being called the "Closing
Time"). Pursuant to Rule 15c6-1(d) of the Exchange Act Regulations, the parties
hereto have agreed that the Closing Time will be not less than five business
days following the date hereof.
Each class of Securities will initially be represented by one or more
certificates registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Securities will
be represented by book entries on the records of DTC and participating members
thereof. Certificates for the Securities shall be made available for examination
by the Representative in Richmond, Virginia not later than 10:00 A.M. (New York
time) on the business day prior to the Closing Time.
Delivery of the Securities shall be made against payment of the purchase
price therefor by wire transfer of immediately available funds to a bank account
designated by the Depositor.
Section 3. Covenants of the Depositor. The Depositor covenants with each
Underwriter as follows:
(a) Compliance with Securities Act Regulations and Commission
Requests. The Depositor, subject to Section 3(b), will comply with the
requirements of Rules 424(b) and 430A of the Securities Act Regulations, if
and as applicable, and will notify the Representative immediately, and
confirm the notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
supplement or amendment to the Prospectus, (ii) the receipt of any comments
from the Commission, (iii) any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any
11
proceedings for any of such purposes. The Depositor will promptly effect
the filings necessary pursuant to Rule 424 and will take such steps as it
deems necessary to ascertain promptly whether the Prospectus transmitted
for filing under Rule 424 was received for filing by the Commission and, in
the event that it was not, it will promptly file the Prospectus. The
Depositor will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Depositor will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement, any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the Securities Act, the
Exchange Act or otherwise, will furnish the Representative with copies of
all such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the Representative or counsel for the Underwriters shall
object.
(c) Delivery of Registration Statements. The Depositor has furnished
or will deliver to the Representative and counsel for the Underwriters,
without charge, a signed copy of the Registration Statement as originally
filed and of the amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to
be incorporated by reference therein) and a signed copy of all consents and
certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of the amendment thereto (without exhibits) for each
of the Underwriters. The Registration Statement and the amendment thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(d) Delivery of Offering Documents. The Depositor will deliver to each
Underwriter, without charge, as many copies of any Computational Materials,
any Structural Term Sheet, any Collateral Term Sheet and any Preliminary
Prospectus as such Underwriter may reasonably request, and the Depositor
hereby consents to the use of such copies for purposes permitted by the
Securities Act. The Depositor will furnish to each Underwriter, without
charge, during the period when the Prospectus is required to be delivered
under the Securities Act or the Exchange Act, such number of copies of the
Prospectus as such Underwriter may reasonably request. The Prospectus and
any amendments or supplements thereto furnished to the Underwriters will be
identical to any electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(e) Continued Compliance with Securities Laws. The Depositor will
comply with the Securities Act and the Securities Act Regulations, the
Exchange Act and the Exchange Act Regulations and the Trust Indenture Act
Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement, the Basic Documents, the
Registration Statement and the Prospectus. If at any time when the
Prospectus is required by the Securities Act or the Exchange Act to be
delivered in
12
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the Underwriters or counsel to the Depositor, to amend the Registration
Statement in order that the Registration Statement will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or to amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of
the Securities Act or the Securities Act Regulations, the Depositor will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Depositor will furnish to the Underwriters,
without charge, such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
(f) State Securities Law Qualifications. The Depositor will use its
best efforts to assist the Underwriters in arranging for the qualification
of the Securities for offering and sale and the determination of their
eligibility for investment, as the case may be, under the laws of such
jurisdictions as the Underwriters designate and will continue to assist the
Underwriters in maintaining such qualifications in effect for a period of
not less than one year from the date of the Prospectus; provided, however,
that the Depositor shall not be obligated to file any general consent to
service of process or to qualify as a foreign limited liability company or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Depositor
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of
not less than one year from the date of the Prospectus. The Depositor will
also supply the Underwriters with such information as is necessary for the
determination of the legality of the offering and sale of the Securities
for investment under the laws of such jurisdictions as the Underwriters may
reasonably request.
(g) Earnings Statement. The Depositor will timely file such reports
pursuant to the Exchange Act as are necessary in order to make generally
available to its security-holders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by,
the last paragraph of Section 11(a) of the Securities Act.
(h) Use of Proceeds. The Depositor shall cause the Trust to use the
net proceeds received by it from the sale of the Securities in the manner
specified in the Base Prospectus under "Use of Proceeds".
(i) Reports, Statements and Certificates. So long as any Securities
are outstanding, the Depositor shall deliver or cause to be delivered to
the Underwriters, as soon as copies become available, copies of (i) each
payment date certificate delivered to
13
Securityholders pursuant to Section 4.9 of the Sale and Servicing
Agreement, (ii) the annual statements of compliance, annual independent
certified public accountants' reports and annual opinions of counsel
furnished to the Indenture Trustee or the Owner Trustee pursuant to the
Basic Documents, as soon as such statements, reports and opinions are
furnished to the Indenture Trustee or the Owner Trustee and (iii) such
other information concerning CarMax, the Depositor, the Trust or the
Securities as the Underwriters may reasonably request from time to time.
(j) Reporting Requirements. The Depositor, during the period when the
Prospectus is required to be delivered under the Securities Act or the
Exchange Act, will file all documents required to be filed with the
Commission pursuant to the Exchange Act within the time periods required by
the Exchange Act and the Exchange Act Regulations.
Section 4. Payment of Expenses.
(a) Expenses. The Depositor shall pay all of its own expenses incident to
the performance of its obligations under this Agreement, including without
limitation (i) the preparation, printing and filing of the Registration
Statement, any Computational Materials, any Structural Term Sheet, any
Collateral Term Sheet, any Preliminary Prospectus, the Prospectus and each
amendment or supplement thereto, (ii) the preparation, reproduction and delivery
to the Underwriters of this Agreement, any agreement among Underwriters, each
Basic Document and each other document as may be required in connection with the
issuance of the Securities or the offering, purchase, sale or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, (iv) the fees and expenses of the counsel,
accountants and other advisors of the Depositor and any of its Affiliates in
connection with the transactions contemplated by this Agreement, (v) the
qualification of the Securities under state securities laws in accordance with
the provisions of Section 3(f), including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith, (vi)
the printing and delivery to the Underwriters of copies of any Computational
Materials, any Structural Term Sheet, any Collateral Term Sheet, any Preliminary
Prospectus, the Prospectus and any amendments on supplements thereto, (vii) the
fees and expenses of the Owner Trustee, the Indenture Trustee and the Insurer,
including the reasonable fees and disbursements of their respective counsel in
connection with the transactions contemplated by this Agreement and (viii) any
fees payable to ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and Standard &
Poor's, a Division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("Standard & Poor's" and,
together with Moody's, the "Rating Agencies"), in connection with the rating of
the Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i),
the Depositor shall reimburse the Underwriters for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters are subject to the accuracy of the
representations and warranties of CarMax and the Depositor contained in Section
1 or in certificates of any officer of CarMax or the Depositor or any of their
respective Affiliates delivered pursuant to the provisions hereof, to the
performance
14
by CarMax and the Depositor of their respective covenants and other obligations
hereunder and to the following additional conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act and at the Closing Time no proceedings for
that purpose shall have been instituted or be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel for the Underwriters. A prospectus containing information relating
to the description of the Securities, the specific method of distribution
and similar matters shall have been filed with the Commission in accordance
with Rule 424(b) of the Securities Act Regulations (or any required
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A of
the Securities Act Regulations).
(b) Accountants' Comfort Letter. At the Closing Time, the Underwriters
and the Depositor shall have received from KPMG LLP a letter or letters
dated as of the Closing Time, in form and substance as previously agreed
upon by the Representative and otherwise satisfactory in form and substance
to the Underwriters and counsel for the Underwriters, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" with respect to certain financial, statistical and other
information contained in or incorporated by reference into the Prospectus.
(c) Officer's Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any Material Adverse Effect with
respect to either CarMax or the Depositor whether or not arising in the
ordinary course of business, and the Underwriters shall have received a
certificate, dated as of the Closing Time, of an authorized officer of: (i)
the Depositor to the effect that (A) there has been no such Material
Adverse Effect, (B) the representations and warranties in Section 1(a) are
true and correct with the same force and effect as though expressly made at
and as of the Closing Time and (C) the Depositor has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time; and (ii) CarMax to the effect
that (A) there has been no such Material Adverse Effect, (B) the
representations and warranties in Section 1(b) are true and correct with
the same force and effect as though expressly made at and as of the Closing
Time and (C) CarMax has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Time.
(d) Opinion of Special Bankruptcy Counsel for CarMax. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of McGuireWoods LLP, special bankruptcy counsel for
CarMax, in form and substance satisfactory to counsel for the Underwriters,
regarding (i) the conveyance of the Receivables by CarMax to the Depositor
being a "true sale", (ii) the granting to the Depositor of a first priority
perfected security interest in the Receivables and (iii) to the effect that
should CarMax become the debtor in a case under the United States
15
bankruptcy code, the court would not order the substantive consolidation of
the assets and liabilities of the Depositor with those of CarMax, and such
opinion shall be in substantially the form previously discussed with the
Representative and counsel for the Underwriters and in any event
satisfactory in form and in substance to counsel for the Underwriters.
(e) Opinion of Special Tax Counsel for the Depositor. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of McGuireWoods LLP, special federal and Virginia
State income tax counsel for the Depositor, in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect
that for federal and Virginia State income tax purposes, the Notes will be
considered debt and the Trust will not be an association taxable as a
corporation and that the statements in the (i) Prospectus Supplement and
(ii) Prospectus under the headings "Summary - Tax Status", "Summary - ERISA
Considerations", "Material Federal Income Tax Consequences" and "ERISA
Considerations", to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by such
counsel and provide a fair summary in all material respects.
(f) Opinion of Special Local Counsel for CarMax. At the Closing Time,
the Underwriters shall have received the favorable opinions, each dated as
of the Closing Time, of [_______________], special [____________],
[____________] and [____________] counsel for CarMax and [_______________],
special [____________] counsel for CarMax, in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect
that upon consummation of the transactions contemplated by the Basic
Documents, the Trust had a perfected security interest in the Financed
Vehicles financed under Receivables originated in the relevant
jurisdiction.
(g) Opinion of Counsel for CarMax and the Depositor. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of McGuireWoods LLP, counsel for CarMax and the
Depositor, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) CarMax is a corporation validly existing and in good standing
under the laws of the Commonwealth of Virginia and has the corporate
power and authority to own its properties and to conduct its business
as described in the Prospectus and to execute, deliver and perform its
obligations under the CarMax Agreements.
(ii) The execution, delivery and performance by CarMax of the
CarMax Agreements have been duly and validly authorized by all
necessary corporate action on the part of CarMax.
(iii) This Agreement has been duly and validly executed and
delivered by each of CarMax and the Depositor.
(iv) The Basic Documents to which CarMax is a party have been
duly and validly executed and delivered by CarMax and constitute
legal, valid and
16
binding agreements of CarMax, enforceable against CarMax in accordance
with their respective terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, receivership, conservatorship and
similar laws relating to or affecting creditors' rights generally from
time to time in effect and by equitable principles of general
applicability (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(v) Each of the Sale and Servicing Agreement, the Receivables
Purchase Agreement, the Insurance Agreement and the Indemnification
Agreement constitutes a legal, valid and binding agreement of the
Depositor, enforceable against the Depositor in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, receivership, conservatorship and similar laws relating to
or affecting creditors' rights generally from time to time in effect
and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(vi) The authorization, execution, delivery and performance by
CarMax of the CarMax Agreements and the Depositor of the Depositor
Agreements, as applicable, and the issuance, offering, sale or
delivery of the Securities do not require the authorization, approval,
consent, license, order, registration, qualification, decree or
approval of, or any filing with, any court or governmental agency or
body having jurisdiction over CarMax or the Depositor, respectively
(except such consents, authorizations, approvals or filings as have
been obtained or made and as are in full force and effect or those
that may be required under the state securities or blue sky laws of
the various States, and except for the filing of UCC-3 partial release
statements relating to the release of the existing liens on the
Receivables and the other property of the Trust of CarMax's secured
lenders and the filing of UCC-1 financing statements relating to the
conveyance of the Receivables and other property of the Trust by the
Depositor to the Trust and by the Trust to the Indenture Trustee,
which UCC statement filings are in the process of being made) and do
not conflict with, violate, result in a breach of or constitute a
default under (A) any term or provision of the amended and restated
articles of incorporation or bylaws of CarMax or any term or provision
of the limited liability company agreement of the Depositor, as
applicable, (B) in any material respect, any statute, order known to
such counsel, rule or regulation of any court or governmental agency
or body having jurisdiction over CarMax or the Depositor or (C) in any
material respect, any indenture or other agreement or instrument known
to such counsel to which CarMax or the Depositor is a party or by
which it or any of its properties is bound.
(vii) To the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court,
administrative agency or other tribunal (A) asserting the invalidity
of any CarMax Agreement, any Depositor Agreement or the Securities,
(B) seeking to prevent the issuance of the Securities or the
consummation by CarMax or the Depositor of the transactions
17
contemplated by the CarMax Agreements or the Depositor Agreements,
respectively, or (C) which, if adversely determined, would reasonably
be expected to materially and adversely affect the performance by
either CarMax or the Depositor of its obligations under, or the
validity or enforceability of, any CarMax Agreement or any Depositor
Agreement, as applicable.
(viii) Each of CarMax and the Depositor possesses such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; each of CarMax and the Depositor is
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or
in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect or would render a material portion of
the Receivables unenforceable; and neither CarMax nor the Depositor
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect or would render a
material portion of the Receivables unenforceable.
(ix) Assuming that the Notes have been duly executed and
delivered by the Owner Trustee, authenticated by the Indenture Trustee
in accordance with the Indenture and delivered against payment of the
consideration specified in this Agreement, the Notes will be entitled
to the benefits of the Indenture and will constitute valid and binding
obligations of the Trust, enforceable against the Trust in accordance
with their terms, except as the enforcement thereof may be subject to
or limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer and other similar laws
relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law),
including concepts of commercial reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or
injunctive relief.
(x) Such counsel is familiar with the standard operating
procedures of CarMax relating to the acquisition by CarMax of a first
priority perfected security interest in the financed vehicles financed
by installment sale contracts originated by CarMax in the ordinary
course of its business and relating to the sale of such contracts and
such security interests in the financed vehicles in the ordinary
course of its business. Assuming that such standard procedures have
been and are followed with respect to the perfection of security
interests in the Financed Vehicles (and such counsel has no reason to
believe that CarMax has not or will not continue to follow its
standard procedures in connection with the perfection of security
interests in the Financed Vehicles), CarMax has acquired a first
priority
18
perfected security interest in the Financed Vehicles. As to each
security interest in a Financed Vehicle created by a Receivable, no
filing or other action is necessary to perfect or continue the
perfected status of such security interest as against creditors of or
transferees from the obligor under such Receivable; provided that (A)
no opinion is rendered as to a security interest in a Financed Vehicle
as to which neither a properly endorsed certificate of title naming
CarMax or an Affiliate or predecessor of CarMax as legal owner nor an
application for an original registration together with an application
for registration of CarMax or an Affiliate or predecessor of CarMax as
legal owner, has been deposited with the appropriate department of
motor vehicles and (B) no opinion is given as to the enforceability of
the security interest in a Financed Vehicle as against a subsequent
owner of a Financed Vehicle or a holder or assignee of a certificate
of title relating to such Financed Vehicle through fraudulent or
negligent transfer of such certificate title.
(xi) The Securities, the Policy and the Basic Documents conform
in all material respects to the descriptions thereof and the
statements relating thereto contained in the Prospectus.
(xii) The execution, delivery and performance by CarMax of the
CarMax Agreements and the Depositor of the Depositor Agreements and
the consummation of the transactions contemplated herein and therein
and compliance with its obligations hereunder and thereunder do not
and will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or
Repayment Event under or result in the creation or imposition of any
Lien upon any property or assets of CarMax or the Depositor pursuant
to any Agreement or Instrument to which CarMax or the Depositor is a
party or by which either may be bound (except for Liens permitted by
the Basic Documents), or to which any of the property or assets of
CarMax or the Depositor is subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any
violation of any applicable law, statute, rule, regulation, judgment,
order, writ or decree known to such counsel, of any government,
government instrumentality or court having jurisdiction over CarMax or
the Depositor or any of their respective properties, assets or
operations.
(xiii) The information set forth in any Computational Materials,
any Structural Term Sheet or any Collateral Term Sheet and the
Prospectus Supplement under the headings "Summary - Servicer",
"Summary - Seller", "Risk Factors - Geographic Concentration May
Result in More Risk to You", "The Receivables" and "CarMax" and the
information set forth in the Base Prospectus under the headings
"Summary - Servicer", "Summary - Seller", "The Receivables", "The
Seller", "CarMax", "Certain Information Regarding the Securities" and
"Material Legal Issues Relating to the Receivables", to the extent
that they constitute matters of law or legal conclusions with respect
thereto, have been prepared or reviewed by such counsel and provide a
fair and accurate summary in all material respects.
19
(xiv) Neither the Trust nor the Depositor is required to register
as an "investment company" under the Investment Company Act.
(xv) The Indenture has been duly qualified under the Trust
Indenture Act.
(xvi) The Indenture creates a valid security interest in favor of
the Indenture Trustee in the Collateral, the security interests in the
Financed Vehicles securing the Receivables and the proceeds of each of
the foregoing.
(xvii) The Registration Statement has become effective under the
Securities Act; to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(xviii) The Registration Statement and the Prospectus (in each
case other than the financial statements and supporting schedules
included therein or omitted therefrom and the Trustee's Statement of
Eligibility on Form T-1, as to which such counsel need not express any
opinion), as of their respective effective or issue dates, as the case
may be, complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act Regulations.
Such counsel shall also state that such counsel has examined the
Registration Statement and the Prospectus and nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement (other than the financial statements and schedules
and other financial, numerical, statistical and quantitative information,
in each case contained or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which such counsel need make no
statement), at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other than the
financial statements and schedules and other financial, numerical,
statistical and quantitative information, in each case contained or
incorporated by reference therein or omitted therefrom and the Form T-1, as
to which such counsel need make no statement), at the date thereof and at
the Closing Time, included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(h) Opinion of Special Delaware Counsel for the Depositor. At the
Closing Time, the Underwriters shall have received the favorable opinion,
dated as of the Closing Time, of [_______________], special Delaware
counsel for the Depositor, in form and substance satisfactory to counsel
for the Underwriters, substantially to the effect that:
(i) The Depositor is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of
Delaware and has the
20
power and authority to own its properties and to conduct its business
as described in the Prospectus and to execute, deliver and perform its
obligations under the Depositor Agreements.
(ii) The Limited Liability Company Agreement of the Depositor,
dated as of August 6, 2003 (the "LLC Agreement"), by CarMax (the
"Member"), as the sole equity member of the Depositor, and the special
members named therein, constitutes a legal, valid and binding
agreement of the Member, and is enforceable against the Member in
accordance with its terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer and other
similar laws relating to or affecting the enforcement of creditor's
rights generally and to general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at
law).
(iii) Under the LLC Act and the LLC Agreement, the Depositor has
all necessary limited liability company power and authority to execute
and deliver, and to perform its obligations under the Depositor
Agreements.
(iv) Under the LLC Act and the LLC Agreement, the execution and
delivery by the Depositor of the Depositor Agreements, and the
performance by the Depositor of its obligations under the Depositor
Agreements, have been duly authorized by all necessary limited
liability company action on the part of the Depositor.
(v) The Depositor Agreements have been duly and validly executed
and delivered by the Depositor.
(vi) The Trust Agreement constitutes a legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in
accordance with its respective terms, except that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, receivership, conservatorship and
similar laws relating to or affecting creditors' rights generally from
time to time in effect and by equitable principles of general
applicability (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(vii) The execution and delivery by the Depositor of the
Depositor Agreements, and the performance by the Depositor of its
obligations thereunder, do not violate (A) any Delaware law, rule or
regulation or (B) the LLC Certificate or the LLC Agreement.
(viii) No authorization, consent, approval or order of any
Delaware court or any Delaware governmental or administrative body is
required solely in connection with the execution and delivery by the
Depositor of the Depositor Agreements or the performance by the
Depositor of its obligations thereunder.
21
(ix) The Depositor's assignment and delivery of the Receivables
to the Trust and the filing of applicable UCC financing statements
with the Delaware Secretary of State will vest in the Trust a first
priority perfected security interest therein, subject to the security
interest afforded to the Insurer under the Insurance Agreement.
(i) Opinion of Special Delaware Counsel for the Trust. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of [_______________], special Delaware counsel for the
Trust, in form and substance satisfactory to counsel for the Underwriters,
substantially to the effect that:
(i) The Trust has been duly formed and is validly existing as a
statutory trust pursuant to the laws of the State of Delaware, 12 Del.
C. (S)(S) 3801, et seq. (the "Statutory Trust Act"), and has the power
and authority under the Trust Agreement and the Act to execute,
deliver and perform its obligations under the Basic Documents to which
the Trust is a party, to issue the Certificates and the Notes and to
grant the Owner Trust Estate to the Indenture Trustee as security for
the Notes.
(ii) The Basic Documents to which the Trust is a party have been
duly authorized, executed and delivered by the Trust and the Notes
have been duly executed by the Trust.
(iii) Assuming the due authorization, execution and delivery of
each Basic Document to which the Trust is a party by the Owner
Trustee, on behalf of the Trust, and by each other party thereto each
such Basic Document constitutes the valid, legal and binding
obligation of the Trust enforceable against the Trust in accordance
with its terms, except as enforceability thereof may be subject to or
limited by bankruptcy, insolvency, reorganization or other laws now or
hereafter in effect affecting the enforcement of creditors' rights
generally, and except that no opinion need be expressed as to the
availability of remedies of specific performance, injunction or other
forms of equitable relief, all of which may be subject to certain
tests of equity jurisdiction, equitable defenses and the discretion of
the court before which any proceeding therefor may be brought.
(iv) The Notes have been duly authorized, executed and issued by
the Trust.
(v) The Certificates have been duly authorized by the Trust and,
when executed by the Trust, authenticated by the Owner Trustee and
delivered to the purchasers thereof in accordance with the Trust
Agreement and this Agreement, the Certificates will be validly issued
and outstanding and entitled to the benefits of the Trust Agreement.
(vi) Neither the execution, delivery and performance by the Trust
of the Basic Documents to which the Trust is a party, the Certificates
or the Notes, nor the consummation by the Trust of any of the
transactions contemplated
22
thereby, requires the consent or approval of, the withholding of
objection on the part of, the giving of notice to, the filing,
registration or qualification with, or the taking of any other action
in respect of, any governmental authority or agency of the State of
Delaware, other than the filing of the Certificate of Trust with the
Secretary of State.
(vii) Neither the execution, delivery and performance by the
Trust of the Basic Documents to which the Trust is a party, the
Certificates or the Notes, nor the consummation of the transactions
contemplated thereby, will conflict with or result in a breach of, or
constitute a default under the provisions of the Trust Agreement or
any law, rule or regulation of the State of Delaware applicable to the
Trust or, to our knowledge without independent investigation, any
judgment or order of the Sate of Delaware applicable to the Trust or
its properties or, to our knowledge without independent investigation,
any indenture, mortgage, contract or other agreement or instrument to
which the Trust is a party or by which it is bound.
(viii) Under Section 3805(b) of the Statutory Trust Act, no
creditor of any Certificate Owner shall have any right to obtain
possession of, or otherwise exercise legal or equitable remedies with
respect to, the Owner Trust Estate except in accordance with the terms
of the Trust Agreement.
(ix) Under Section 3805(c) of the Statutory Trust Act, except to
the extent otherwise provided in the Trust Agreement, a Certificate
Owner has no interest in specific Trust property.
(x) Under Section 3808(a) and (b) of the Statutory Trust Act, the
Trust may not be terminated or revoked by any Certificate Owner, and
the dissolution, termination or bankruptcy of any Certificate Owner
shall not result in the termination or dissolution of the Trust,
except to the extent otherwise provided in the Trust Agreement.
(xi) Under the Statutory Trust Act, the Trust is a separate legal
entity and, assuming that the Sale and Servicing Agreement conveys
good title to the Trust property to the Trust as a true sale and not
as a security arrangement, the Trust rather than the Certificate
Owners will hold whatever title to the Trust property as may be
conveyed to it from time to time pursuant to the Sale and Servicing
Agreement, except to the extent that the Trust has taken action to
dispose of or otherwise transfer or encumber any part of the Trust
property.
(xii) To the extent that Article 9 of the Uniform Commercial Code
as in effect in the State of Delaware (the "UCC") is applicable
(without regard to conflicts of laws principles), and assuming that
the security interest created by the Indenture in the Collateral has
been duly created and has attached, upon the filing of the Financing
Statement with the Secretary of State, the Indenture Trustee will have
a perfected security interest in the Trust's rights in that portion of
the Collateral described in the Financing Statement that constitutes
"chattel paper,"
23
"general intangibles" or "accounts" (as such terms are defined in the
UCC) and the proceeds thereof; and such security interest will be
prior, subject to the security interest afforded to the Insurer under
the Insurance Agreement, to any other security interest granted by the
Trust that is perfected solely by the filing of financing statements
under the UCC, subject to Section 9-312 of the UCC (with respect to
purchase money security interests) and Section 9-306 of the UCC (with
respect to temporarily perfected security interests in proceeds).
(j) Opinion of Counsel for the Insurer. At the Closing Time, the
Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of [_______________], counsel for the Insurer, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Insurer is a corporation validly existing, in good
standing and licensed to transact the business of surety and financial
guaranty insurance under the laws of [____________].
(ii) The Insurer has the corporate power to execute and deliver,
and to take all action required of it under the Policy, the Insurance
Agreement and the Indemnification Agreement.
(iii) Except as have already been obtained, no authorization,
consent, approval, license, formal exemption, or declaration from, nor
any registration or filing with, any court or governmental agency or
body of the United States of America or the State of [____________],
which if not obtained would affect or impair the validity or
enforceability of the Policy, the Insurance Agreement or the
Indemnification Agreement against the Insurer, is required in
connection with the execution and delivery by the Insurer of the
Policy, the Insurance Agreement, the Indemnification Agreement or in
connection with the Insurer's performance of its obligations
thereunder.
(iv) The Policy, the Insurance Agreement and the Indemnification
Agreement have been duly authorized, executed and delivered by the
Insurer, and the Policy and, assuming due authorization, execution and
delivery of the Insurance Agreement and the Indemnification Agreement
by the parties thereto (other than the Insurer), the Insurance
Agreement and the Indemnification Agreement, constitute the legally
valid and binding obligations of the Insurer, enforceable against the
Insurer in accordance with their respective terms subject, as to
enforcement, to (A) bankruptcy, reorganization, insolvency, moratorium
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, including, without limitation, laws
relating to fraudulent transfers or conveyances, preferential
transfers and equitable subordination, presently or from time to time
in effect and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), as
such laws may be applied in any such proceeding with respect to the
Insurer, (B) the qualification that the remedy of specific performance
may be subject to equitable defenses and to the discretion of the
court before which any proceedings with respect thereto
24
may be brought and (C) the enforceability of rights to indemnification
under the Indemnification Agreement may be subject to limitations of
public policy under applicable securities laws.
(v) The Policy is not required to be registered under the
Securities Act.
(k) Opinion of Counsel for the Insurer. At the Closing Time, the
Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of [_______________], Esq., General Counsel of the Insurer,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that no information has come to the attention of such counsel which
would cause him to believe that the information under the captions
"Description of the Insurer" and "Description of the Insurance Policy" in
the Prospectus contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, misleading.
(l) Opinion of Counsel for the Indenture Trustee. At the Closing Time,
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of in-house counsel for the Indenture Trustee, in form and
substance satisfactory to counsel for the Underwriters, substantially to
the effect that:
(i) The Indenture Trustee has been duly incorporated and is
validly existing as a [____________] under the laws of [____________].
(ii) The Indenture Trustee, at the time of its execution and
delivery of the Indenture, had full power and authority to execute and
deliver the Indenture and has full power and authority to perform its
obligations thereunder.
(iii) The Indenture has been duly and validly authorized,
executed and delivered by the Indenture Trustee and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes the valid and binding obligation of the Indenture Trustee
enforceable against the Indenture Trustee in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws relating to or affecting creditors' rights or
by general principles of equity.
(iv) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
or affecting the Indenture Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
adversely decided, would materially and adversely affect the ability
of the Indenture Trustee to carry out the transactions contemplated in
the Indenture.
(v) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body
of the United States of America or any state thereof was or is
required for the execution, delivery or performance by the Indenture
Trustee of the Indenture.
25
(vi) Each of the Basic Documents to which the Indenture Trustee
is a party has been duly executed and delivered by the Indenture
Trustee and constitutes a legal, valid and binding obligation of the
Indenture Trustee enforceable against the Indenture Trustee in
accordance with its respective terms, except that certain of such
obligations may be enforceable solely against the Collateral and
except that such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights generally, and by
general principles of equity, including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vii) The Notes have been duly authenticated and delivered by the
Indenture Trustee in accordance with the terms of the Indenture.
(m) Opinion of Counsel for the Owner Trustee. At the Closing Time, the
Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of [_______________], counsel for the Owner Trustee, in form
and substance satisfactory to counsel for the Underwriters, substantially
to the effect that:
(i) [________________] is duly incorporated and validly existing
as a [____________] under the laws of [____________] and has the power
and authority to execute, deliver and perform its obligations under
the Trust Agreement and to consummate the transactions contemplated
thereby.
(ii) The Trust Agreement has been duly authorized, executed and
delivered by [_______________] and is the legal, valid and binding
agreement of [_______________], enforceable against [_______________]
in accordance with its terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer and other
similar laws relating to or affecting the enforcement of creditor's
rights generally and to general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at
law).
(iii) The Owner Trustee has duly executed and delivered each
Basic Document to which the Trust is a party on behalf of the Trust in
accordance with the authorization contained in the Trust Agreement.
(iv) Neither the execution, delivery and performance by
[_______________] of the Trust Agreement, nor the consummation of the
transactions contemplated thereby, nor compliance with the terms
thereof, will conflict with or result in a breach of, or constitute a
default under the charter or bylaws of [_______________] or any law,
rule or regulation of [____________] governing the banking or trust
powers of [____________] or, to our knowledge, without independent
investigation, any judgment or order of [____________] applicable to
[_______________] or its properties or, to our knowledge, without
26
independent investigation, any indenture, mortgage, contract or other
agreement or instrument to which [_______________] is a party or by
which it is bound.
(v) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission of [____________] is required by or with respect
to [_______________] for the (A) valid execution, delivery and
performance of the Trust Agreement, (B) valid execution and delivery
by the Owner Trustee on behalf of the Trust of the Basic Documents to
which the Trust is a party, or (C) validity or enforceability the
agreements listed in clauses (A) or (B) of this paragraph, other than
the filing of the Certificate of Trust with the Secretary of State.
(vi) To our knowledge, without independent investigation, there
are no pending or threatened actions, suits or proceedings affecting
[_______________] before any court or other government authority of
[____________] which, if adversely determined, would materially and
adversely affect the ability of [_______________] to carry out the
transactions contemplated by the Trust Agreement.
(n) Opinion of Counsel for the Underwriters. At the Closing Time, the
Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriters, in form and substance satisfactory to the Underwriters. In
rendering such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York
and the federal law of the United States, upon the opinions of counsel
reasonably satisfactory to the Underwriters.
(o) Reliance Letters. At the Closing Time, counsel to CarMax and the
Depositor shall provide reliance letters to the Underwriters relating to
each legal opinion relating to the transaction contemplated hereby rendered
to either Trustee or either Rating Agency.
(p) Maintenance of Rating. At the Closing Time, the Class A-1 Notes
shall be rated by each Rating Agency in its highest short-term rating
category and each other class of Securities shall be rated in its highest
rating category, and the Depositor shall have delivered to the Underwriters
a letter dated the Closing Time from each Rating Agency, or other evidence
satisfactory to the Underwriters, confirming that the Securities have such
ratings; and since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Securities or any
other securities of CarMax or any of its Affiliates by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act, and no
such rating agency shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
the Securities or any other securities of CarMax or any of its Affiliates.
(q) Additional Rating Agency Requirements. The Depositor will, to the
extent, if any, that the ratings provided with respect to the Securities by
either Rating
27
Agency are conditioned upon the furnishing or the taking of any other
actions by the Depositor, furnish such documents and take all such other
actions.
(r) Additional Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as
it may reasonably require for the purpose of enabling it to pass upon the
issuance of the Securities and the sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Depositor in connection
with the foregoing shall be satisfactory in form and substance to counsel
for the Underwriters.
(s) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Underwriters by notice to the
Depositor at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive
any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Underwriters. CarMax and the Depositor agree jointly
and severally to indemnify and hold harmless the Underwriters and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in each Collateral
Term Sheet (if any), each Structural Term Sheet (if any), all Computational
Materials (if any), any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d)) any such settlement is effected with the written consent of the
Depositor; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriters),
reasonably incurred in
28
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever, based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under clause (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Depositor by the Underwriters expressly for use in the Registration
Statement (or any amendment thereto), each Collateral Term Sheet (if any),
each Structural Term Sheet (if any), all Computational Materials (if any),
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), it being understood and agreed that the only such
information furnished by the Underwriters consists of the following
information under the caption "Underwriting" in each of the Prospectus and
Prospectus Supplement, and in the Prospectus Supplement the (i) concession
and reallowance figures appearing in the second table and (ii) information
regarding discretionary sales contained in the second, third and
----------
paragraphs.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have
the respective meanings assigned to them in the February 13, 1995 letter of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ on behalf of the Public Securities
Association (which letter, and the Commission's response thereto, were publicly
available February 17, 1995). The term "Collateral Term Sheet" as used herein
includes any subsequent Collateral Term Sheet that reflects a substantive change
in the information presented. The term "Computational Materials" has the meaning
assigned to it in the May 17, 1994 letter of ▇▇▇▇▇ & Wood on behalf of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & Co., Inc. (which letter, and the Commission's response thereto, were
publicly available May 20, 1994).
(b) Indemnification of CarMax and the Depositor. The Underwriters agree
severally but not jointly to indemnify and hold harmless CarMax and the
Depositor and each person, if any, who controls CarMax and the Depositor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in Section 6(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, of
material facts made in the Prospectus (or any amendment thereto), each
Collateral Term Sheet (if any), each Structural Term Sheet (if any), all
Computational Materials (if any), any Preliminary Prospectus or the Registration
Statement (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to CarMax and the Depositor by the
Underwriters expressly for use in the Registration Statement (or any amendment
thereto), each Collateral Term Sheet (if any), each Structural Term Sheet (if
any), all Computational Materials (if any), any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from
29
any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a), counsel
to the indemnified parties shall be selected by the Underwriters, and, in the
case of parties indemnified pursuant to Section 6(b), counsel to the indemnified
parties shall be selected by CarMax or the Depositor. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 7
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 7. Contribution. If the indemnification provided for in Section 6
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by CarMax and the
Depositor on the one hand and the Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of CarMax and the Depositor on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by CarMax and the Depositor on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds
30
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by CarMax and the Depositor and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
initial offering prices of the Securities. The relative fault of CarMax and the
Depositor on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by CarMax and the
Depositor or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
CarMax, the Depositor and the Underwriters each agree that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever, based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
underwriting discounts and commissions received by such Underwriter in respect
of the Securities underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls CarMax or the Depositor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as CarMax and the
Depositor. The Underwriters' respective obligations to contribute pursuant to
this Section are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule A and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of CarMax and the Depositor and their Affiliates
submitted pursuant hereto shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or any
controlling person, or by or on behalf of CarMax and the Depositor and their
Affiliates, and shall survive delivery of the Securities to the Underwriters.
31
Section 9. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this Agreement, by
notice to the Depositor, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of CarMax or the Depositor,
whether or not arising in the ordinary course of business, (ii) if there has
occurred any material adverse change in the financial markets in the United
States, any outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in national
or international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) if trading in any securities of CarMax,
the Depositor or any of their Affiliates has been suspended or materially
limited by the Commission or if trading generally on the American Stock
Exchange, the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority,
(iv) a material disruption has occurred in commercial banking or securities
settlement or clearing services in the United States or (v) if a banking
moratorium has been declared by either federal, Virginia, [____________] or New
York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4, and provided further that Sections 1, 6, 7, 8
and 10 shall survive such termination and remain in full force and effect.
Section 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Notes which it
or they are obligated to purchase (the "Defaulted Securities"), then the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Securities to be purchased
on such date, the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations in Schedule A bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities exceeds
10% of the aggregate principal amount of Securities to be purchased on such
date, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
32
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement either the Representative or the Depositor shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or the Prospectus or
in any other documents or arrangements.
Section 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at [____________________],
attention of [____________]; notices to CarMax or the Depositor, respectively,
shall be directed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention
of General Counsel.
Section 12. Parties. This Agreement shall inure to the benefit of and be
binding upon each of the Underwriters, CarMax, the Depositor and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, CarMax, the Depositor and their respective successors and
the controlling persons, directors and officers referred to in Sections 6 and 7
and their heirs and legal representatives any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, CarMax, the
Depositor and their respective successors, and the controlling persons,
directors and officers referred to in Sections 6 and 7 and their heirs and legal
representatives and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
Section 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of law provisions (other than Section 5-1401 of the General
Obligations Law), and the obligations, rights and remedies of the parties under
this Agreement shall be determined in accordance with such laws.
Section 14. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction hereof.
33
Underwriting Agreement If the foregoing is in accordance with your
understanding of our agreement, please sign and return to the Representative a
counterpart hereof, whereupon it will become a binding agreement among CarMax,
the Depositor and the several Underwriters in accordance with its terms.
CARMAX AUTO FUNDING LLC,
as Depositor
By:
------------------------------------
Name:
Title:
CARMAX AUTO SUPERSTORES, INC.
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
[_______________],
as Representative of the Underwriters
named in Schedule A hereto
By:
---------------------------------
Name:
Title:
Underwriting Agreement
SCHEDULE A
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4
Underwriter Notes Notes Notes Notes
--------------------- --------- --------- --------- ---------
[__________]......... $ $ $ $
Total................ $ $ $ $
=== === === ===
Amount of
Underwriter Certificates
--------------------- ------------
[__________]......... $
Total................ $
===
S-A-1