Prepared by R.R. Donnelley Financial -- Security Agreement



  
 Exhibit 10.12 
  
 SECURITY AGREEMENT 
  
 THIS SECURITY AGREEMENT
(this “Agreement”) dated as of May 17, 2002, is among CARMAX AUTO SUPERSTORES, INC. (the “Borrower”); the other persons or entities which are listed on the signature pages hereof as debtors or which from time to
time become parties hereto as debtors (collectively, including the Borrower, the “Debtors” and individually each a “Debtor”); and DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC (“DCSNA”), in its
capacity as agent for the Lenders referred to below (in such capacity, the “Agent”). 
  
 W I T
N E S S E T H: 
  
 WHEREAS, the Borrower, CarMax, Inc. (the “Company”), various
financial institutions (the “Lenders”) and the Agent have entered into a Credit Agreement dated as of the date hereof (as amended or otherwise modified from time to time, the “Credit Agreement”), pursuant to which
the Lenders have agreed to make extensions of credit to the Borrower; 
  
 WHEREAS, each of the Debtors (other than
the Borrower) has executed and delivered a guaranty (as amended or otherwise modified from time to time, the “Guaranty”; for the avoidance of doubt, such term includes the guaranty of the Company pursuant to the provisions of
Section 14 of the Credit Agreement) of all obligations of the Borrower under the Credit Agreement; and 
  
 WHEREAS,
the obligations of the Borrower under the Credit Agreement and the obligations of each other Debtor under the Guaranty are to be secured pursuant to this Agreement; 
  
 NOW, THEREFORE, for and in consideration of any loan, advance or other financial accommodation heretofore or hereafter made to the Borrower under or in connection with the
Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 1.    Definitions.    When used herein, (a) the terms, Account, Chattel Paper, Commercial Tort Claim,
Document, General Intangible, Instrument and Payment Intangible have the respective meanings assigned thereto in the UCC (as defined below); (b) capitalized terms used but not defined herein are used as defined in the
Credit Agreement; and (c) the following terms have the following meanings (such definitions to be applicable to both the singular and plural forms of such terms): 
  
 Assignee Deposit Account—see Section 4. 







  
 Automobile Inventory means Motor Vehicles, and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor. 
  
 Collateral means, with
respect to any Debtor, all property and rights of such Debtor in which a security interest is granted hereunder. 
  
 Collections means all payments and items of payment (including, without limitation, cash and Instruments) that are received by the Debtors from or on behalf of any Obligor in payment of any amounts owed (including invoice
prices, finance charges, interest and all other charges, if any) in respect of any Receivable or Related Asset, or otherwise applied to repay or discharge any Receivable (including insurance payments that the Debtors apply in the ordinary course of
its business to amounts owed in respect of such Receivable and net proceeds of sale or other disposition of repossessed goods that were the subject of such Receivable). 
  
 Contracts means, with respect to any Receivable, the agreements (including, without limitation, Chattel Paper and Instruments) between the Debtors and the related
Obligors governing the terms and conditions of such Receivable. 
  
 Contributed Receivable means a Receivable
contributed by a Debtor to an SPE in connection with a Securitization. 
  
 Default means the occurrence of any
Event of Default. 
  
 Intellectual Property means all past, present and future: trade secrets and other
proprietary information; trademarks, service marks, trade names, business names, designs, logos, indicia and other source and/or business identifiers, and the goodwill of the business relating thereto and all registrations or applications for
registration which have heretofore been or may hereafter be issued thereon throughout the world; copyrights (including copyrights for computer programs) and copyright registrations or applications for registration which have heretofore been or may
hereafter be issued throughout the world and all tangible property embodying the copyrights; unpatented inventions (whether or not patentable); patent applications and patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, source codes, object codes and other physical manifestations,
embodiments or incorporations of any of the foregoing; the right to sue for all past, present and future infringements of any of the foregoing; and all common law and other rights throughout the world in and to all of the foregoing. 

 
  
 Liabilities means, as to each Debtor, all obligations (monetary or otherwise) of
such Debtor under or in connection with the Credit Agreement, any Note, the Guaranty, any other Loan Document and any other document or instrument executed in connection therewith, in each case
 
 

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howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due. 
  
 Obligor means a Person obligated to make payments on a Receivable. 
  
 Purchased Receivable means a Receivable purchased by an SPE in a Securitization. 
  
 Receivable means an Account, Chattel Paper, Document, General Intangible, Instrument or Payment Intangible arising from the sale or lease of Motor Vehicles.

  
 Related Assets means, with respect to any Receivable: (a) all Contracts that relate to such Receivable;
(b) the merchandise (including returned merchandise), if any, relating to the sale which gave rise to such Receivable; (c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or otherwise; (d) all UCC financing statements covering any collateral securing payment of such Receivable; and (e) all guarantees and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise. 
  
 Returned Goods means all right, title and interest of the Debtors in and to goods and/or merchandise, the sale of which gave rise to Receivables (other than Transferred Receivables), that have
been returned to, repossessed by or foreclosed on by any Debtor. 
  
 Subject Receivables means any
Receivables, other than Transferred Receivables and Receivables sold by any Debtor to a Person not an Affiliate in the ordinary course of business. 
  
 Transferred Receivables means all Purchased Receivables and Contributed Receivables. 
  
 UCC means the Uniform Commercial Code as in effect from time to time in the State of Michigan; provided that, as used in Section 10 hereof, “UCC” shall mean the
Uniform Commercial Code as in effect from time to time in any applicable jurisdiction. 
  
 2.    Grant of Security Interest.    As security for the payment of all Liabilities, each Debtor hereby assigns to the Agent for the benefit of the Lenders, and grants to the Agent for
the benefit of the Lenders a continuing security interest in, the following, whether now or hereafter existing or acquired: 
  
 (i)  all of such Debtor’s Automobile Inventory; 
  
 (ii)  all of such
Debtor’s rights against Manufacturers arising out of the purchase of Automobile Inventory from such Manufacturers; 
 

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 (iii)  all of such Debtor’s rights to receive payment (whether
arising from any sale or other disposition or any collection or distribution) from any Person in connection with such Debtor’s transfer of a Receivable to such Person, including, without limitation, all rights to payment pursuant to any
agreement pursuant to which such Receivable was transferred to such Person (but excluding any right of such Debtor to receive payments in its capacity as servicer of a Transferred Receivable or of a Contract related to a Transferred Receivable); and

  
 (iv)  all Collections received by such Debtor on account of any Subject Receivables; 

 
 together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all proceeds, products, offspring, rents, issues, profits and returns of and from, and any and all claims and/or insurance payments arising out of the loss, nonconformity or
interference with the use of, defects or infringements of rights in, or damage to, any of the foregoing; provided that: 
  
 (x)  the property in which a security interest is granted hereunder shall not include or continue into any Receivable (or any Related Asset related to such Receivable); 
  

(y)  nothing in the foregoing clause (x) shall be deemed to constitute a release by the Agent of: (A) its lien on and security interest in the
proceeds received by any Debtor from or on behalf of any SPE or other Person for any sale of Receivables and Related Assets (including, without limitation, cash payments made by an SPE or other Person and any note or other Instrument issued by an
SPE or other Person in favor of a Debtor in connection with any such sale), (B) any lien, claim, encumbrance or security interest the Agent may have in Collections of Subject Receivables, (C) any lien, claim, encumbrance or security interest the
Agent may have as against any interest of a Debtor in Returned Goods, and (D) any other Collateral not constituting Receivables and Related Assets related to Receivables; and 
  
 (z)  so long as any Ford Restriction exists, the Collateral shall not include, and Kenosha shall be deemed not to have granted a security interest in, any New
Motor Vehicle of the Ford, Lincoln or Mercury makes that is held by Kenosha. 
  
  
 3.    Warranties.    Each Debtor warrants that as of the date hereof (or as of the date such Debtor becomes a party hereto by delivering a counterpart hereof) and as of each date on
which the representations and warranties under the Credit Agreement and the other Loan Documents shall be made: (i) no financing statement (other than any which may have been filed on behalf of the Agent or in connection with liens expressly
permitted by the Credit Agreement (“Permitted Liens”)) covering any of the Collateral is on file in any public office; (ii) such Debtor is and will be the lawful owner of all Collateral in which it has granted a security interest
hereunder, free of all liens and
 
 

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claims whatsoever, other than the security interest hereunder and Permitted Liens, with full power and authority to execute this Agreement and perform such Debtor’s obligations hereunder,
and to subject such Collateral to the security interest hereunder; (iii) all information with respect to such Collateral set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Debtor to the
Agent or any Lender is and will be true and correct in all material respects as of the date furnished; (iv) such Debtor’s state of incorporation/organization, organizational identification number, chief executive office and principal place of
business are as set forth on Schedule I hereto (and such Debtor has not maintained its chief executive office and principal place of business at any other location at any time after January 1, 2001); (v) each other location where such Debtor
maintains a place of business is set forth on Schedule II hereto; (vi) except as set forth on Schedule III hereto, such Debtor is not now known and during the five years preceding the date hereof has not previously been known by any
trade name; (vii) except as set forth on Schedule III hereto, during the five years preceding the date hereof such Debtor has not been known by any legal name different from the one set forth on the signature pages of this Agreement nor has
such Debtor been the subject of any merger or other corporate reorganization; (viii) such Debtor is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation or a limited liability company
duly formed and validly existing under the laws of the state of its organization; (ix) the execution and delivery of this Agreement and the performance by such Debtor of its obligations hereunder are within such Debtor’s corporate or limited
liability company powers, have been duly authorized by all necessary corporate or limited liability company action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any
provision of law or of the charter or by-laws or other organizational documents of such Debtor or of any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon such Debtor; (x) this Agreement is a
legal, valid and binding obligation of such Debtor, enforceable against such Debtor in accordance with its terms, except that the enforceability of this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (xi) such
Debtor is in compliance in all material respects with the requirements of all applicable laws (including the provisions of the Fair Labor Standards Act), rules, regulations and orders of every governmental authority; and (xii) each Debtor that owns
Motor Vehicles covered by certificates of title is and shall continue to be in the business of selling goods of that kind. 
  
 4.    Collections, etc.    Until such time during the existence of a Default as the Agent shall notify such Debtor of the revocation of such power and authority, each Debtor may, in the
ordinary course of its business, at its own expense, sell, lease or furnish under contracts of service any of the Automobile Inventory normally held by such Debtor for such purpose, use and consume, in the ordinary course of its business, any raw
materials, work in process or materials normally held by such Debtor for such purpose, and use, in the ordinary course of its business (but subject to the terms of the Credit Agreement), the cash proceeds of Collateral and other money which
constitutes
 
 

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Collateral. The Agent may, at any time that a Default exists, whether before or after any revocation of such power and authority or the maturity of any of the Liabilities, notify any parties
obligated on any of the Subject Receivables to make payment to the Agent of any amounts due or to become due thereunder (but only if the applicable Debtor shall have failed, within two Business Days after having been requested in writing to do so by
the Agent, to notify such parties to make payment of such amounts to the Agent) and enforce collection of any of the Subject Receivables by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or
renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. 
  
 Upon request by the Agent during the existence of a Default, each Debtor will forthwith, upon receipt, transmit and deliver to the Agent, in the form received, all cash, checks, drafts and other instruments or writings for the
payment of money (properly endorsed, where required, so that such items may be collected by the Agent) which may be received by such Debtor at any time in full or partial payment or otherwise as proceeds of any of the Collateral. Except as the Agent
may otherwise consent in writing, any such items which may be so received by any Debtor will not be commingled with any other of its funds or property, but will be held separate and apart from its own funds or property and in express trust for the
Agent until delivery is made to the Agent. Each Debtor will comply with the terms and conditions of any consent given by the Agent pursuant to the foregoing sentence. 
  
 During the existence of a Default, all items or amounts which are delivered by any Debtor to the Agent on account of partial or full payment or otherwise as proceeds of any
of the Collateral shall be deposited to the credit of a deposit account (each an “Assignee Deposit Account”) of such Debtor with a financial institution selected by the Agent over which the Agent has sole dominion and control, as
security for payment of the Liabilities. No Debtor shall have any right to withdraw any funds deposited in the applicable Assignee Deposit Account. The Agent may, from time to time, in its discretion, and shall upon request of the applicable Debtor
made not more than once in any week, apply all or any of the then balance, representing collected funds, in the Assignee Deposit Account toward payment of the Liabilities, whether or not then due, in such order of application as the Agent may
determine, and the Agent may, from time to time, in its discretion, release all or any of such balance to the applicable Debtor. 
  
 At any time that a Default exists, the Agent (or any designee of the Agent) is authorized to endorse, in the name of the applicable Debtor, any item, howsoever received by the Agent, representing any payment on or other proceeds of
any of the Collateral. 
  
  
 5.    Certificates,
Schedules and Reports.    Each Debtor will from time to time, as the Agent may request, deliver to the Agent such schedules, certificates and reports respecting all or any of the Collateral at the time subject to the security
interest hereunder, and the items or amounts received by such Debtor in full or partial payment of any of the Collateral, as the Agent may
 
 

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reasonably request. Any such schedule, certificate or report shall be executed by a duly authorized officer of such Debtor and shall be in such form and detail as the Agent may reasonably
specify. Each Debtor shall immediately notify the Agent of the occurrence of any event causing any loss or depreciation in the value of its Automobile Inventory or other assets which could reasonably be expected to have a Material Adverse Effect,
and such notice shall specify the amount of such loss or depreciation. 
  
 6.    Agreements of
the Debtors.    Each Debtor (a) hereby authorizes the Agent to file (with or without the signature of such Debtor), and will upon request of the Agent execute, such financing statements and other documents (and pay the cost
of filing or recording the same in all public offices reasonably deemed appropriate by the Agent) and do such other acts and things, all as the Agent may from time to time reasonably deem necessary or request, to establish and maintain a valid
security interest in the Collateral (free of all other liens, claims and rights of third parties whatsoever, other than Permitted Liens) to secure the payment of the Liabilities; (b) will keep all its Automobile Inventory at, will not change its
state of incorporation/organization and will not maintain any place of business at any location other than, its state of incorporation/organization and address(es) shown on Schedules I and II hereto or in such other jurisdiction or at
such other addresses of which such Debtor shall have given the Agent not less than thirty (30) days’ prior written notice; (c) will not change its type of organization from that listed on the financing statements filed on behalf of the Agent or
be the subject of any merger or other corporate reorganization unless the applicable Debtor shall have given the Agent not less than thirty (30) days’ prior written notice; (d) will keep its records concerning the Subject Receivables in such a
manner as will enable the Agent or its designees to determine at any time the status of the Subject Receivables; (e) will furnish the Agent such information concerning such Debtor and the Collateral as the Agent may from time to time reasonably
request; (f) will permit the Agent and its designees, from time to time, on reasonable notice and at reasonable times and intervals during normal business hours (or at any time without notice during the existence of a Default) to inspect such
Debtor’s Automobile Inventory, and to inspect, audit and make copies of and extracts from all records and other papers in the possession of such Debtor pertaining to the Collateral; (g) will, upon request of the Agent, stamp on its records
concerning the Collateral, and add on all Chattel Paper and Instruments constituting a portion of the Collateral, a notation, in form satisfactory to the Agent, of the security interest of the Agent hereunder; (h) except for the sale or lease of
Automobile Inventory in the ordinary course of its business and for dispositions permitted by Section 9.10 of the Credit Agreement, will not sell, lease, assign or create or permit to exist any Lien on any Collateral other than Permitted Liens; (i)
will at all times keep all of its Automobile Inventory insured as required by Section 9.3 of the Credit Agreement and cause all policies covering the Collateral to provide that loss thereunder shall be payable to the Agent as its interest may appear
(it being understood that (A) so long as no Default shall be existing, the Agent shall deliver any proceeds of such insurance which may be received by it to such Debtor and (B) whenever a Default shall be existing, the Agent may apply any proceeds
of such insurance which may be received by it toward payment of the Liabilities, whether or not due, in such order of application as the Agent may determine), and such policies or certificates thereof shall,
 
 

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if the Agent so requests, be deposited with or furnished to the Agent; (j) will take such actions as are reasonably necessary to keep its Automobile Inventory in good repair and condition; (k)
will take all steps reasonably necessary to protect, preserve and maintain all of its rights in the Collateral; (l) will keep all of the Automobile Inventory in the United States; (m) will not change its name without providing thirty (30) days’
prior written notice to the Agent; (n) if such Debtor has any Commercial Tort Claim against any Manufacturer arising out of the purchase by such Debtor of Automobile Inventory from such Manufacturer, and the amount of such Commercial Tort Claim
exceeds $500,000, such Debtor shall provide to the Agent a detailed description of such Commercial Tort Claim and this Agreement shall be amended to include a specific reference (sufficient under Section 9-108 of the UCC) to such Commercial Tort
Claim; and (o) acknowledges and agrees that it is not authorized to file any financing statement in favor of the Agent without the prior written consent of the Agent and that it will not do so without the prior written consent of the Agent, subject
to such Debtor’s rights under Section 9-509(d)(2) of the UCC. 
  
 Any expenses incurred in protecting,
preserving or maintaining any Collateral shall be borne by the applicable Debtor, and each Debtor shall promptly, upon demand, reimburse and indemnify the Agent for all reasonable costs and expenses incurred by the Agent in the exercise of its
rights under this Section 6. Notwithstanding the foregoing, the Agent shall have no obligation or liability regarding the Collateral or any thereof by reason of, or arising out of, this Agreement, except to the extent caused by the gross
negligence or wilful misconduct of the Agent. 
  
 7.    Default.    During the existence of a Default, the Agent may exercise from time to time any right or remedy available to it under applicable law. Each Debtor agrees, in case of
Default, to assemble, at its expense, all its Automobile Inventory that is not then located at one of the inventory locations listed on the inventory detail report most recently delivered pursuant to Section 9.1.10 of the Credit Agreement and make
it available to the Agent at one or more of such locations. Any notification of intended disposition of any of the Collateral required by law shall be deemed reasonably and properly given if given at least ten days before such disposition. Any
proceeds of any disposition by the Agent of any of the Collateral may be applied by the Agent to payment of expenses in connection with the Collateral, including Attorney Costs, and any balance of such proceeds may be applied by the Agent toward the
payment of such of the Liabilities, and in such order of application, as the Agent may from time to time elect. 
  
 8.    License of Intellectual Property.    Each Debtor hereby grants to the Agent a non-exclusive and royalty-free right and license to use, during the existence of a Default, all of
such Debtor’s Intellectual Property throughout the world, solely for the purpose of enabling the Agent to exercise its rights and remedies hereunder including, without limitation, the right to use the Intellectual Property in connection with
the disposition or maintenance of Automobile Inventory as the Agent deems necessary or appropriate. The Agent shall have the right to grant sublicenses to others to use the Intellectual Property during the existence of a Default and solely to enable
such sublicensees to exercise any rights and remedies of the Agent under this Agreement, provided each
 
 

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such sublicensee agrees to be bound by an agreement similar to the next sentence. The Agent agrees that it will, when exercising its rights under any Intellectual Property license hereunder,
comply in all material respects with quality standards and specifications employed by the Debtors in commerce prior to the Closing Date. 
  
 9.    Limitation on Duty in Respect of Collateral.    Beyond the exercise of reasonable care in the custody and preservation thereof, the Agent will have no duty as to any
Collateral in its possession or control or in the possession or control of any sub-agent or bailee or any income therefrom or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any of the Collateral in its possession if it takes such action for that purpose as any applicable Debtor requests in writing, but failure of the Agent to comply with any such request
shall not of itself be deemed a failure to exercise reasonable care, and no failure of the Agent to preserve or protect any right with respect to such Collateral against prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by any Debtor, shall be deemed of itself a failure to exercise reasonable care in the custody or preservation of such Collateral. 
  
 To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Debtor acknowledges and agrees that it is not commercially unreasonable for
the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work-in-process into finished goods or other finished products for disposition, (b) to
fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against account debtors or other Persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against
account debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in the same business as the Debtors, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, including, without limitation, any warranties
of title, merchantability or fitness for a particular purpose, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral, or to provide to the Agent a guaranteed return from
the collection or
 
 

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disposition of Collateral or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Agent in
the collection or disposition of any of the Collateral. Each Debtor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being specifically referred to in this Section. Without limitation upon
the foregoing, nothing contained in this Section shall be construed to grant any right to a Debtor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this
Section. 
  
 10.    General.    All notices hereunder shall be in
writing (including facsimile transmission) and shall be sent to the applicable party at its address shown below its signature hereto or at such other address as such party may, by written notice received by the other parties, have designated as its
address for such purpose. Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail,
postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received. 
  
 Each of the Debtors agrees to pay all reasonable expenses, including Attorney Costs, paid or incurred by the Agent or any Lender in endeavoring to collect the Liabilities of such Debtor, or any part thereof, and in enforcing this
Agreement against such Debtor, and such obligations will themselves be Liabilities. 
  
 No delay on the part of the
Agent in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.

  
 This Agreement shall remain in full force and effect until all Liabilities have been paid in full and all
Commitments have terminated. If at any time all or any part of any payment theretofore applied by the Agent or any Lender to any of the Liabilities is or must be rescinded or returned by the Agent or such Lender for any reason whatsoever (including
the insolvency, bankruptcy or reorganization of any Debtor), such Liabilities shall, for the purposes of this Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or such Lender, and this Agreement shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by the Agent or such Lender had not been made. 

 
 This Agreement shall be construed in accordance with and governed by the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State
 
 

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(except to the extent that perfection, the effect of perfection or nonperfection, or the priority of the security interests granted hereunder may be determined by the UCC of a different
jurisdiction). Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 
  
 The rights and privileges of the Agent hereunder shall inure to the benefit of its successors and assigns. 
  
 This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the same Agreement. At any time after the date of this Agreement, one or more additional Persons may become parties hereto by executing and delivering to the Agent a
counterpart of this Agreement together with supplements to the Schedules hereto setting forth all relevant information with respect to such party as of the date of such delivery. Immediately upon such execution and delivery (and without any further
action), each such additional Person will become a party to, and will be bound by all the terms of, this Agreement. 
  
 EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MICHIGAN AND OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN FOR THE PURPOSE OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. EACH DEBTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH BELOW
ITS SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF MICHIGAN. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. 
  
 EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH LENDER
HEREBY WAIVES ANY RIGHT TO A TRIAL
 
 

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BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. 
 

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 IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written. 
  
 
	 DEBTORS:
 	 	  
	 
	 CARMAX, INC.
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
  
 
	 CARMAX AUTO SUPERSTORES, INC.
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
  
 
	 CARMAX AUTO SUPERSTORES WEST COAST, INC.
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
 

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	 KENOSHA AUTOMOTIVE, LLC
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
  
  
 
	 CARMAX AUTO MALL, INC.
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
  
 
	 CARMAX OF LAUREL, LLC
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
 

 14 








  
  
 
	 AGENT:
 	 	  
	 
	 DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, as Agent
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Address:
 
	 27777 Franklin Road, 18th Floor
 
	 Southfield, Michigan 48034-8286
 
	 CIMS 465-18-15
 
	 Attention: Jeff Canizaro
 
	 Telephone: (248) 948-3108
 
	 Facsimile: (248) 948-3848
 

 
  
 Signature page for the Security Agreement dated as of May 17, 2002 among CARMAX AUTO
SUPERSTORES, INC., CARMAX, INC. (the “Company”), various subsidiaries of the Company and DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, as Agent. 
  
 The undersigned is executing a counterpart hereof for purposes of becoming a party hereto (and attached to this signature page are supplements to the Schedules to the Security Agreement setting forth all relevant information
with respect to the undersigned): 
  
 
	 [ADDITIONAL DEBTOR]
 
	 
	 By:
 	 	 

	 Title:
 	 	 

	 Address:
 	 	  
	 
	 Attention:
 	 	  
	 Telephone:
 	 	  
	 Facsimile:
 	 	  

 
 

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