Document:

Receivables Purchase Agreement

 [EXECUTION COPY] 
 EXHBIT 10.3 – RECEIVABLES PURCHASE AGREEMENT 
 CARMAX BUSINESS SERVICES, LLC, 
 as Seller, 
 and 
 CARMAX AUTO FUNDING LLC, 
 as Purchaser 
  

 RECEIVABLES PURCHASE AGREEMENT 
 Dated as of May 1, 2006 
  

 TABLE OF CONTENTS 
  

					
	 	 	 	 	Page
	ARTICLE I
DEFINITIONS
			
	SECTION 1.1	 	Definitions	 	1
	SECTION 1.2	 	Other Definitional Provisions	 	4
	
	ARTICLE II
CONVEYANCE OF RECEIVABLES
			
	SECTION 2.1	 	Sale and Conveyance of Receivables	 	4
	SECTION 2.2	 	Receivables Purchase Price; Payments on the Receivables	 	5
	SECTION 2.3	 	Transfer of Receivables	 	5
	SECTION 2.4	 	Examination of Receivable Files	 	6
	SECTION 2.5	 	Expenses	 	6
	
	ARTICLE III
REPRESENTATIONS AND WARRANTIES
			
	SECTION 3.1	 	Representations and Warranties of the Purchaser	 	6
	SECTION 3.2	 	Representations and Warranties of the Seller	 	7
	
	ARTICLE IV
CONDITIONS
			
	SECTION 4.1	 	Conditions to Obligation of the Purchaser	 	13
	SECTION 4.2	 	Conditions to Obligation of the Seller	 	14
	
	ARTICLE V
COVENANTS OF THE SELLER
			
	SECTION 5.1	 	Protection of Right, Title and Interest in, to and Under the Receivables	 	15
	SECTION 5.2	 	Security Interests	 	16
	SECTION 5.3	 	Delivery of Payments	 	17
	SECTION 5.4	 	No Impairment	 	17
	SECTION 5.5	 	Costs and Expenses	 	17
	SECTION 5.6	 	Hold Harmless	 	17
	
	ARTICLE VI
MISCELLANEOUS PROVISIONS
			
	SECTION 6.1	 	Amendment	 	17
	SECTION 6.2	 	Termination	 	18
	SECTION 6.3	 	Governing Law	 	18
	SECTION 6.4	 	Notices	 	18
	SECTION 6.5	 	Severability of Provisions	 	18

					
	SECTION 6.6	 	Further Assurances	 	18
	SECTION 6.7	 	No Waiver; Cumulative Remedies	 	18
	SECTION 6.8	 	Counterparts	 	19
	SECTION 6.9	 	Third-Party Beneficiaries	 	19
	SECTION 6.10	 	Headings and Table of Contents	 	19
	SECTION 6.11	 	Representations, Warranties and Agreements to Survive	 	19
	SECTION 6.12	 	No Proceedings	 	19
	SECTION 6.13	 	Accountant’s Letters	 	19
	SECTION 6.14	 	Obligations of Purchaser	 	20
	
	SCHEDULES
			
	SCHEDULE A	 	Receivables Schedule	 	
	
	EXHIBITS
			
	EXHIBIT A	 	Bill of Sale and Assignment	 	
	EXHIBIT B	 	Form of Retail Installment Sale Contract	 	

 RECEIVABLES PURCHASE AGREEMENT 
 This Receivables Purchase Agreement, dated as of May 1, 2006, is between CarMax Business Services, LLC, a Delaware limited liability company
(“CarMax”), as seller (the “Seller”), and CarMax Auto Funding LLC, a Delaware limited liability company (“CarMax Funding”), as purchaser (the “Purchaser”). 
 WHEREAS, in the regular course of business, CarMax Auto Superstores, Inc., a Virginia corporation (“CarMax Auto”), and certain
affiliates of CarMax Auto originate motor vehicle retail installment sale contracts secured by new and used motor vehicles; 
 WHEREAS, the
Seller intends to convey all of its right, title and interest in and to contracts having an aggregate outstanding principal balance of $615,000,047.98 as of the close of business on April 30, 2006 (the “Receivables”) to the
Purchaser and, concurrently with its purchase of the Receivables, the Purchaser intends to convey all of its right, title and interest in and to the Receivables to CarMax Auto Owner Trust 2006-1, as issuer (the “Issuer”), pursuant
to a Sale and Servicing Agreement, dated as of May 1, 2006 (the “Sale and Servicing Agreement”), among the Issuer, CarMax Funding, as depositor, and CarMax, as servicer; and 
 WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant to which the Receivables are to be sold by the Seller to the Purchaser;

 NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 SECTION 1.1 Definitions.
Whenever used in this Agreement, the following words and phrases shall have the following meanings: 
 “Agreement” shall mean
this Receivables Purchase Agreement and all amendments hereof and supplements hereto. 
 “Base Prospectus” shall mean the
prospectus, dated May 19, 2006, of the Purchaser relating to the public offering by the Purchaser of the Notes. 
 “Bill of
Sale” shall mean the Bill of Sale and Assignment, substantially in the form attached as Exhibit A. 
 “CarMax”
shall mean CarMax Business Services, LLC, a Delaware limited liability company, and its successors. 
 “CarMax Auto” shall
mean CarMax Auto Superstores, Inc., a Virginia corporation, and its successors. 

 “CarMax Funding” shall mean CarMax Auto Funding LLC, a Delaware limited liability
company, and its successors. 
 “CarMax Funding II” shall mean CarMax Funding II, LLC, a Delaware limited liability company,
and its successors. 
 “Class A Notes” shall mean the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes issued pursuant to the Indenture. 
 “Class B Notes” shall mean the Class B Notes issued
pursuant to the Indenture. 
 “Class C Notes” shall mean the Class C Notes issued pursuant to the Indenture. 
 “Closing Date” shall mean May 31, 2006. 
 “Cutoff Date” shall mean April 30, 2006. 
 “Delaware Trustee” shall
mean The Bank of New York (Delaware), a Delaware banking corporation, as Delaware trustee under the Trust Agreement, and its successors in such capacity. 
 “Depositor” shall mean CarMax Funding, in its capacity as Depositor under the Trust Agreement, and its successors in such capacity. 
 “Indenture” shall mean the Indenture, dated as of May 1, 2006, between the Issuer and the Indenture Trustee, as amended,
supplemented or otherwise modified and in effect from time to time. 
 “Indenture Trustee” shall mean Wells Fargo Bank,
National Association, a national banking association, as indenture trustee under the Indenture, and its successors in such capacity. 
 “Initial Reserve Account Deposit” shall mean $3,075,000. 
 “Initial Secondary Reserve Account
Deposit” shall mean $130,000. 
 “Issuer” shall mean CarMax Auto Owner Trust 2006-1, a Delaware statutory trust,
and its successors. 
 “Noteholders” shall mean the registered holders of the Notes. 
 “Notes” shall mean the Class A Notes, the Class B Notes and the Class C Notes. 
 “Owner Trustee” shall mean The Bank of New York, a New York banking corporation, as owner trustee under the Trust Agreement, and its
successors in such capacity. 
 “Prospectus Supplement” shall mean the final prospectus supplement, dated May 23, 2006,
of the Purchaser relating to the public offering by the Purchaser of the Notes. 
  

 2 

 “Prospectus” shall mean the Prospectus Supplement and the Base Prospectus. 

“Purchaser” shall mean CarMax Funding, in its capacity as purchaser of the Receivables under this Agreement, and its successors in
such capacity. 
 “Receivables” shall mean the motor vehicle retail installment sale contracts sold by the Seller to the
Purchaser pursuant to this Agreement and identified on the Receivables Schedule. 
 “Receivables Purchase Price” shall mean
$633,450,000. 
 “Receivables Schedule” shall mean the schedule of receivables attached as Schedule A, as amended,
supplemented or otherwise modified and in effect from time to time. 
 “Representative” shall mean Banc of America
Securities LLC, a Delaware limited liability company, as representative of the Underwriters. 
 “Sale and Servicing
Agreement” shall have the meaning specified in the recitals. 
 “Seller” shall mean CarMax, in its capacity as
seller of the Receivables under this Agreement, and its successors in such capacity. 
 “State” shall mean any of the 50
states of the United States or the District of Columbia. 
 “Transaction Documents” shall mean this Agreement, the Trust
Agreement, the Sale and Servicing Agreement, the Indenture, the Administration Agreement and the other documents and certificates delivered in connection therewith, in each case as amended, supplemented or otherwise modified and in effect from time
to time. 
 “Trust Agreement” shall mean the Trust Agreement, dated as of March 16, 2006, among CarMax Funding, the
Delaware Trustee and the Owner Trustee, as amended and restated by the Amended and Restated Trust Agreement, dated as of May 1, 2006, among CarMax Funding, the Delaware Trustee and the Owner Trustee. 
 “Trustee” shall mean either the Owner Trustee or the Indenture Trustee, as the context requires. 
 “UCC” shall mean the Uniform Commercial Code as in effect in the applicable jurisdiction. 
 “Underwriters” shall mean the underwriters named in Schedule A to the Underwriting Agreement. 
 “Underwriting Agreement” shall mean the Underwriting Agreement, dated May 23, 2006, among CarMax Funding, CarMax and the
Representative, relating to the purchase of the Notes by the Underwriters from CarMax Funding. 
  

 3 

 SECTION 1.2 Other Definitional Provisions. 
 (a) Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Sale and Servicing Agreement. 

(b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement; Section, subsection, Schedule and Exhibit references contained in this Agreement are references to Sections, subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; the term “proceeds” shall have the meaning set forth in the applicable UCC; and the word “including” shall mean including without limitation. 
 ARTICLE II 
 CONVEYANCE OF RECEIVABLES

 SECTION 2.1 Sale and Conveyance of Receivables. 
 (a) On the Closing Date, subject to the terms and conditions of this Agreement, the Seller hereby agrees to sell, transfer, assign, set over and otherwise convey to the Purchaser, and the Purchaser hereby agrees to
purchase from the Seller, without recourse (subject to the Seller’s obligations hereunder and the satisfaction of the conditions set forth in Section 4.1), all of the right, title and interest of the Seller, whether now owned or hereafter
acquired, in, to and under the following: 
 (i) the Receivables; 
 (ii) all amounts received on or in respect of the Receivables (including proceeds of the repurchase of Receivables by the Seller pursuant
to Section 3.2(f)) after the Cutoff Date; 
 (iii) the security interests in the Financed Vehicles granted by the
Obligors pursuant to the Receivables and any other interest of the Seller in such Financed Vehicles; 
 (iv) all proceeds from
claims on or refunds of premiums of any physical damage or theft insurance policies covering the Financed Vehicles and any proceeds or refunds of premiums of any credit life or credit disability insurance policies relating to the Financed Vehicles
or the Obligors; 
 (v) the Receivable Files; 
 (vi) the right to realize upon any property (including the right to receive future Liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on behalf of the Issuer; and 
 (vii) all present and future claims, demands,
causes of action and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, 

  

 4 

 
including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property; all accounts, general intangibles, chattel
paper, instruments, documents, money, investment property, deposit accounts, letters of credit, letter-of-credit rights, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations; and all other
property which at any time constitutes all or part of or is included in the proceeds of any of the foregoing. 
 (b) The parties hereto
intend that the conveyance of the Receivables and related property hereunder be a sale and not a loan. In the event that the conveyance hereunder is not for any reason considered a sale, the Seller hereby grants to the Purchaser a first priority
perfected security interest in all of the Seller’s right, title and interest in, to and under the Receivables and all other property conveyed hereunder and listed in this Section and all proceeds of any of the foregoing. The parties intend
that this Agreement constitute a security agreement under applicable law. Such grant is made to secure the payment of all amounts payable hereunder, including the Receivables Purchase Price. If such conveyance is for any reason considered to be a
loan and not a sale, the Seller consents to the Purchaser transferring such security interest in favor of the Indenture Trustee and transferring the obligations secured thereby to the Indenture Trustee. 
 (c) The Seller agrees to treat the transfer of the Receivables and the related property contemplated by this Section for all purposes (including tax
and financial accounting purposes) as an absolute transfer on all relevant books, records, tax returns, financial statements and other applicable documents. 
 SECTION 2.2 Receivables Purchase Price; Payments on the Receivables. 
 (a) On the Closing Date, in
exchange for the Receivables and other assets described in Section 2.1, the Purchaser shall pay to the Seller the Receivables Purchase Price. An amount equal to $610,442,256.38 of the Receivables Purchase Price shall be paid by the Purchaser to
the Seller in cash or immediately available funds. The remainder of the Receivables Purchase Price shall be paid by crediting the Seller with a contribution to the capital of the Purchaser. The Purchaser shall deposit, from funds it receives from
the issuance of the Notes, an amount equal to the Initial Reserve Account Deposit into the Reserve Account, which amount shall be an asset of the Issuer. The Purchaser shall deposit, from funds it receives from the issuance of the Notes, an amount
equal to the Initial Secondary Reserve Account Deposit into the Secondary Reserve Account, which amount shall be an asset of the Issuer. 
 (b) The Purchaser shall be entitled to, and shall convey such right to the Owner Trustee pursuant to the Sale and Servicing Agreement, all payments of principal and interest on or in respect of the Receivables received after the Cutoff
Date. 
 SECTION 2.3 Transfer of Receivables. Pursuant to the Sale and Servicing Agreement, the Purchaser will assign all of its
right, title and interest in, to and under the Receivables and other assets described in Section 2.1 to the Issuer. The parties hereto acknowledge that the Issuer will pledge its rights in, to and under the Receivables and other assets
described in Section 2.1 to the Indenture Trustee pursuant to the Indenture. The Purchaser has the right to assign its interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement, without the
consent of the Seller, and the Owner Trustee as assignee shall succeed to the rights and obligations hereunder of the Purchaser. 
  

 5 

 SECTION 2.4 Examination of Receivable Files. The Seller will make the Receivable Files available
to the Purchaser or its agent for examination during normal business hours at the Seller’s offices or such other location as otherwise shall be agreed upon by the Purchaser and the Seller. 
 SECTION 2.5 Expenses. The Seller will reimburse the Purchaser for expenses of the Purchaser in connection with the sale of the Notes, including
expenses which are reimbursable to the Underwriters by the Purchaser pursuant to the Underwriting Agreement. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
 SECTION 3.1
Representations and Warranties of the Purchaser. The Purchaser hereby makes the following representations and warranties to the Seller as of the date of this Agreement and as of the Closing Date: 
 (a) Organization and Good Standing. The Purchaser is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and shall
have, power, authority and legal right to acquire, own and sell the Receivables. 
 (b) Power and Authority; Binding
Obligation. The Purchaser has the power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement has been duly authorized by the Purchaser by all necessary
action. This Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to general equitable principles. 
 (c) No
Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the limited liability company agreement or certificate of formation of the Purchaser, or conflict with or breach any of the material terms or provisions of, or constitute (with or without notice or lapse of time) a
default under, any indenture, agreement or other instrument to which the Purchaser is a party or by which it may be bound. 
 (d) No Proceedings. There are no proceedings or investigations pending, or, to the knowledge of the Purchaser, threatened, against the Purchaser before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Purchaser or its properties (i) asserting the invalidity of this 

  

 6 

 
Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (iii) seeking any determination or
ruling that, in the reasonable judgment of the Purchaser would materially and adversely affect the performance by the Purchaser of its obligations under, or the validity or enforceability of, this Agreement or the Receivables. 
 SECTION 3.2 Representations and Warranties of the Seller. 
 (a) The Seller hereby makes the following representations and warranties to the Purchaser as of the date of this Agreement and as of the Closing Date: 
 (i) Organization and Good Standing. The Seller is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and shall have,
power, authority and legal right to acquire, own and sell the Receivables. 
 (ii) Power and Authority; Binding
Obligation. The Seller has the power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement has been duly authorized by the Seller by all necessary action.
This Agreement constitutes the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general equitable principles. 
 (iii) No Violation. The
consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a
default under, the certificate of formation or limited liability company agreement of the Seller, or conflict with or breach any of the material terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Seller is a party or by which it may be bound. 
 (iv) No
Proceedings. There are no proceedings or investigations pending, or, to the knowledge of the Seller, threatened, against the Seller before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having
jurisdiction over the Seller or its properties (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (iii) seeking any determination or
ruling that, in the reasonable judgment of the Seller would materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement or the Receivables. 
 (v) No Tax Liens. The Seller is not aware of any material judgment or tax lien filings against the Seller. 
  

 7 

 (b) The Seller hereby makes the following representations and warranties to the Purchaser as of the date
of this Agreement and as of the Closing Date, which representations and warranties shall remain operative and in full force and effect, shall survive the transfer and conveyance of the Receivables and other assets described in Section 2.1 by
the Seller to the Purchaser and by the Purchaser to the Issuer and shall inure to the benefit of the Purchaser, the Trustees and the Noteholders: 
 (i) Characteristics of Receivables. Each Receivable (i) has been originated by CarMax Auto or an Affiliate of CarMax Auto in the ordinary course of business in connection with the sale of a new or used
motor vehicle and has been fully and properly executed by the parties thereto, (ii) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the
benefits of the security, (iii) provides for level monthly payments that fully amortize the Amount Financed by maturity (except that the period between the date of such Receivable and the date of the first Scheduled Payment may be less than or
greater than one month and the amount of the first and last Scheduled Payments may be less than or greater than the level payments) and yield interest at the related APR, (iv) provides for, in the event that such Receivable is prepaid, a
prepayment that fully pays the Principal Balance of such Receivable with interest at the related APR through the date of payment, (v) is a retail installment sale contract substantially in the form of Exhibit B, (vi) is secured by a new or
used motor vehicle that had not been repossessed as of the Cutoff Date, (vii) is a Simple Interest Receivable, (viii) relates to an Obligor who has made at least one payment under such Receivable as of the Cutoff Date and (ix) relates
to an Obligor whose mailing address is located in any State. 
 (ii) Receivable Schedule. The information set forth in
the Receivable Schedule was true and correct in all material respects as of the opening of business on the Cutoff Date, and no selection procedures believed to be adverse to the Depositor and/or the Noteholders were utilized in selecting the
Receivables from those retail installment sale contracts which met the criteria contained in this Agreement. The information set forth in the compact disk or other listing regarding the Receivables made available to the Depositor and its assigns
(which compact disk or other listing is required to be delivered as specified herein) is true and correct in all material respects. 
 (iii) Compliance with Law. Each Receivable and the sale of the related Financed Vehicle complied, at the time such Receivable was originated and complies, as of the Closing Date, in all material respects with all requirements of
applicable federal, State and local laws, and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations B and Z, the Servicemembers Civil Relief Act, State adaptations of the National Consumer Act and the Uniform Consumer Credit Code and any other consumer
credit, equal opportunity and disclosure laws applicable to such Receivable and sale. 
 (iv) Binding Obligation. Each
Receivable represents the genuine, legal, valid and binding payment obligation in writing of the related Obligor, enforceable by the 

  

 8 

 
holder thereof in all material respects in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity. 
 (v) No Government Obligor. No Receivable is due from the United States or any State or from any agency, department or instrumentality of the United States or any State. 
 (vi) Security Interest in Financed Vehicles. Immediately prior to the transfer of the Receivables by the Seller to the Depositor,
each Receivable was secured by a valid, binding and enforceable first priority perfected security interest in favor of the Seller in the related Financed Vehicle, which security interest has been validly assigned by the Seller to the Depositor. The
Servicer has received, or will receive within 180 days after the Closing Date, the original certificate of title for each Financed Vehicle (other than any Financed Vehicle that is subject to a certificate of title statute or motor vehicle
registration law that does not require that the original certificate of title for such Financed Vehicle be delivered to the Seller). 
 (vii) Receivables in Force. No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released in whole or in part from the Lien granted by the related Receivable. 
 (viii) No Waiver. No provision of any Receivable has been waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 3.2(b) with respect thereto. 
 (ix) No
Defenses. No Receivable is subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and the operation of any of the terms of any Receivable, or the exercise of any right thereunder, will not render
such Receivable unenforceable in whole or in part or subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and the Seller has no knowledge of any such right of rescission, setoff, counterclaim or
defense being asserted or threatened with respect to any Receivable. 
 (x) No Liens. The Seller has no knowledge of
any liens or claims that have been filed, including liens for work, labor or materials or for unpaid State or federal taxes, relating to any Financed Vehicle that are prior to, or equal or coordinate with, the security interest in such Financed
Vehicle created by the related Receivable. 
 (xi) No Default. Except for payment defaults continuing for a period of
not more than 30 days, the Seller has no knowledge that any default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred or that any continuing condition that with notice or the lapse of time or both
would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable has arisen, and the Seller has not waived any such event or condition. 
  

 9 

 (xii) Title. The Seller intends that the transfer of the Receivables contemplated
by Section 2.1 constitute a sale of the Receivables from the Seller to the Depositor and that the beneficial interest in, and title to, the Receivables not be part of the Seller’s estate in the event of the filing of a bankruptcy petition
by or against the Seller under any bankruptcy law. The Seller has not sold, transferred, assigned or pledged any Receivable to any Person other than the Depositor. Immediately prior to the transfer of the Receivables contemplated by
Section 2.1, the Seller had good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person and, immediately upon such transfer, the Depositor shall have good and marketable title to the Receivables
free and clear of any Lien, claim or encumbrance of any Person. 
 (xiii) Security Interest Matters. This Agreement
creates a valid and continuing “security interest” (as defined in the Relevant UCC) in the Receivables in favor of the Depositor, which security interest is prior to all other Liens and is enforceable as such against creditors of and
purchasers from the Seller. With respect to each Receivable, the Seller has taken all steps necessary to perfect its security interest against the related Obligor in the related Financed Vehicle. The Receivables constitute “tangible chattel
paper” (as defined in the Relevant UCC). The Seller has caused or will cause prior to the Closing Date the filing of all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law
necessary to perfect the security interest in the Receivables granted to the Depositor under this Agreement. Other than the security interest granted to the Depositor under this Agreement, the Seller has not pledged, assigned, sold, granted a
security interest in or otherwise conveyed any of the Receivables. The Seller has not authorized the filing of and is not aware of any financing statements against the Seller that include a description of collateral covering the Receivables other
than any financing statement relating to the security interest granted to the Depositor under the Sale and Servicing Agreement or that has been terminated. The motor vehicle retail installment sale contracts that constitute or evidence the
Receivables do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Depositor, the Issuer or the Indenture Trustee. The Seller is not aware of any judgment or tax lien
filings against the Seller. 
 (xiv) Financing Statements. All financing statements filed or to be filed against the
Seller in favor of the Indenture Trustee (as assignee of the Depositor and the Issuer) contain a statement substantially to the following effect: “A purchase of or security interest in any collateral described in this financing statement will
violate the rights of the Indenture Trustee.” 
 (xv) Valid Assignment. No Receivable has been originated in, or
is subject to the laws of, any jurisdiction under which the sale, transfer, assignment and conveyance of such Receivable under this Agreement or the Sale and Servicing Agreement or the pledge of such Receivable under the Indenture is unlawful, void
or voidable or under which such Receivable would be rendered void or voidable as a result of any such sale, transfer, assignment, conveyance or pledge. The Seller has not entered into any agreement with any account debtor that prohibits, restricts
or conditions the assignment of the Receivables. 
  

 10 

 (xvi) One Original. There is only one original executed copy of each Receivable.

 (xvii) Principal Balance. Each Receivable had an original Principal Balance of not more than $65,000 and a remaining
Principal Balance as of the Cutoff Date of not less than $500. 
 (xviii) No Bankrupt Obligors. As of the Cutoff Date,
no Receivable was due from an Obligor that was the subject of a proceeding under the Bankruptcy Code of the United States or was bankrupt. 
 (xix) New and Used Vehicles. As of the Cutoff Date, approximately 3.26% of the Pool Balance related to Receivables secured by new Financed Vehicles and approximately 96.74% of the Pool Balance related to
Receivables secured by used Financed Vehicles. 
 (xx) Origination. Each Receivable was originated after
October 1, 2000. 
 (xxi) Term to Maturity. Each Receivable had an original term to maturity of not more than 72
months and not less than 12 months and a remaining term to maturity as of the Cutoff Date of not more than 71 months and not less than three months. 
 (xxii) Weighted Average Remaining Term to Maturity. As of the Cutoff Date, the weighted average remaining term to maturity of the Receivables was approximately 56.60 months. 
 (xxiii) Annual Percentage Rate. Each Receivable has an APR of at least 4.45% and not more than 25.00%. 
 (xxiv) Location of Receivable Files. The Receivable Files are maintained at the location listed in Schedule 2 to the Sale and
Servicing Agreement. 
 (xxv) Simple Interest Method. All payments with respect to the Receivables have been allocated
consistently in accordance with the Simple Interest Method. 
 (xxvi) No Delinquent Receivables. As of the Cutoff Date,
no payment due under any Receivable was more than 30 days past due. 
 (xxvii) Insurance. Each Obligor has obtained or
agreed to obtain physical damage insurance (which insurance shall not be force placed insurance) covering the related Financed Vehicle in accordance with the Seller’s normal requirements. 
 (xxviii) Fair Market Value. The Receivables Purchase Price represents the fair market value of the Receivables. 
  

 11 

 (xxix) Custodial Agreements. Immediately prior to the transfer of the Receivables
by the Seller to the Depositor, the Seller or an Affiliate of the Seller had possession of the Receivable Files and there were no, and there will not be any, custodial agreements in effect materially adversely affecting the right or ability of the
Seller to make, or cause to be made, any delivery required under this Agreement. 
 (xxx) Bulk Transfer Laws. The
transfer of the Receivables and the Receivable Files by the Seller to the Depositor pursuant to this Agreement is not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction. 
 (c) The Seller shall indemnify the Purchaser and hold the Purchaser harmless against any losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and other costs and expenses resulting from any third party claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of the Seller’s representations and warranties set forth in
Section 3.2(b). The Trustees shall also have the remedies provided in the Sale and Servicing Agreement. 
 (d) Any cause of action
against the Seller relating to or arising out of the breach of any of its representations and warranties set forth in Section 3.2(b) shall accrue as to any Receivable upon (i) discovery of such breach by the Purchaser or either
Trustee or notice thereof by the Seller to the Purchaser, (ii) failure by the Seller to cure such breach and (iii) demand upon the Seller by the Purchaser for all amounts payable in respect of such Receivable under this Agreement.

 (e) The Purchaser or the Seller, as the case may be, shall inform the other parties promptly, in writing, upon discovery of any breach of
the Seller’s representations and warranties set forth in Section 3.2(b) which materially and adversely affects the interests of the Noteholders in any Receivable. 
 (f) If a breach of any representation or warranty set forth in Section 3.2(b) which materially and adversely affects the interests of the Purchaser,
the Issuer or the Noteholders in any Receivable shall not have been cured by the close of business on the last day of the Collection Period which includes the thirtieth day after the date on which the Seller becomes aware of, or receives written
notice from the Servicer, the Purchaser or the Owner Trustee of, such breach or failure, the Seller shall repurchase such Receivable from the Purchaser on the Distribution Date following such Collection Period. In consideration for the repurchase of
any such Receivable, the Seller shall remit the Purchase Amount of such Receivable to the Purchaser. Upon any such repurchase, the Purchaser shall, without further action, be deemed to transfer, assign, set-over and otherwise convey to the Seller,
without recourse, representation or warranty, all the right, title and interest of the Purchaser in, to and under such repurchased Receivable and all other related assets described in Section 2.1. The Purchaser shall execute such documents and
instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Seller to effect the conveyance of such Receivable pursuant to this Section. The sole remedy of the Purchaser with respect to a breach of the
Seller’s representations and warranties set forth in Section 3.2(b) shall be to require the Seller to repurchase the related Receivables pursuant to this Section. 
  

 12 

 ARTICLE IV 
 CONDITIONS 
 SECTION 4.1 Conditions to Obligation of the Purchaser. The obligation of the Purchaser
to purchase the Receivables from the Seller on the Closing Date is subject to the satisfaction of the following conditions: 
 (a) Representations and Warranties True. The representations and warranties of the Seller contained herein and in the other Transaction Documents shall be true and correct on the Closing Date with the same effect as if made on the
Closing Date, and each of the Seller and the Servicer shall have performed all obligations to be performed by it hereunder and under the other Transaction Documents on or before the Closing Date. 
 (b) Computer Files Marked. The Seller shall, at its own expense, on or before the Closing Date, indicate in its computer files that
the Receivables have been sold to the Purchaser pursuant to this Agreement and deliver to the Purchaser the Receivables Schedule, certified by an officer of the Seller to be true, correct and complete. 
 (c) Release of Lenders. The Seller shall obtain executed release agreements and UCC partial releases with respect to the
Receivables from Bank of America, N.A. (and certain other parties) and CarMax Funding II, in each case in form and substance satisfactory to the Purchaser. 
 (d) Documents to be Delivered. The Purchaser shall have received the following, all of which shall be dated as of the Closing Date or such other date as specified: 
 (i) the Receivables Schedule; 
 (ii) an Officer’s Certificate of the Seller, in form and substance previously approved by the Purchaser and its counsel, as to, among other things, the representations and warranties of the Seller and
satisfaction of conditions precedent; 
 (iii) an opinion or opinions of counsel for the Seller, in form and substance
previously approved by the Purchaser and its counsel, addressed to the Purchaser; 
 (iv) [RESERVED]; 
 (v) copies of resolutions of the manager of the Seller approving the execution, delivery and performance of the Transaction Documents to
which the Seller is a party, and the performance of the transactions contemplated hereunder and thereunder, certified by the Secretary or an Assistant Secretary of the Seller; 
  

 13 

 (vi) copies of the certificate of formation of the Seller, together with all amendments,
revisions and supplements thereto, certified by the Delaware Secretary of State as of a recent date, and a certificate of good standing from the Delaware Secretary of State, dated as of a recent date, to the effect that the Seller has been duly
formed, is in good standing and has a legal existence; 
 (vii) UCC search reports from the appropriate offices in Delaware as
to the Seller; 
 (viii) reliance letters to each opinion of counsel to the Seller or the Servicer delivered to
Standard & Poor’s or Moody’s in connection with the purchase of the Receivables hereunder or the issuance or sale of the Notes; 
 (ix) a financing statement to be filed with the Delaware Secretary of State, naming the Seller, as seller or debtor, the Purchaser, as purchaser or secured party, and the Issuer as assignee, naming the Receivables and
the related property described in Section 2.1 as collateral and meeting the requirements of the laws of each such jurisdiction and in such manner as is necessary to perfect the sale, transfer, assignment and conveyance of the Receivables to the
Purchaser; 
 (x) the Bill of Sale; and 
 (xi) such other documents, certificates and opinions as may be reasonably requested by the Purchaser or its counsel. 
 (e) Execution of Transaction Documents. The Transaction Documents shall have been executed and delivered by the parties thereto.

 (f) Rating of the Notes. Moody’s and Standard & Poor’s, respectively, shall have assigned ratings
of (i) ”Prime-1” and “A-1+” to the Class A-1 Notes, (ii) ”Aaa” and “AAA” to the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, (iii) ”A2” and
“A” to the Class B Notes and (iv) “Baa3” and “BBB” to the Class C Notes. 
 (g) No
Unsolicited Ratings. There shall not have been issued an unsolicited rating of any Class of Notes by any nationally recognized statistical rating agency at a level that is lower than the ratings for such Class of Notes from Moody’s or
Standard & Poor’s specified in Section 4.1(f). 
 (h) Other Transactions. The transactions
contemplated by the Transaction Documents and the Underwriting Agreement shall be consummated on the Closing Date. 
 SECTION 4.2
Conditions to Obligation of the Seller. The obligation of the Seller to sell the Receivables to the Purchaser on the Closing Date is subject to the satisfaction of the following conditions: 
  

 14 

 (a) Representations and Warranties True. The representations and warranties of the
Purchaser contained herein and in the other Transaction Documents shall be true and correct on the Closing Date with the same effect as if then made, and the Purchaser shall have performed all obligations to be performed by it hereunder and under
the other Transaction Documents on or before the Closing Date. 
 (b) Payment of Receivables Purchase Price. In
consideration of the sale of the Receivables from the Seller to the Purchaser as provided in Section 2.1, on the Closing Date the Purchaser shall have paid to the Seller the Receivables Purchase Price. 
 (c) Opinions of Purchaser. An opinion or opinions of counsel for the Purchaser addressed to the Seller and the Underwriters shall
have been delivered. 
 ARTICLE V 
 COVENANTS OF THE SELLER 
 SECTION 5.1 Protection of Right, Title and Interest in, to and Under the Receivables. 

(a) The Seller, at its expense, shall cause all financing statements and continuation statements and any other necessary documents covering the
Purchaser’s right, title and interest in, to and under the Receivables and other property conveyed by the Seller to the Purchaser hereunder to be promptly authorized, recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required by law fully to preserve and protect the right, title and interest of the Purchaser hereunder to the Receivables and such other property. The Seller shall deliver to the
Purchaser file-stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recording, registration or filing. The Purchaser shall cooperate fully with the Seller in
connection with the obligations set forth above and will execute any and all documents reasonably required to fulfill the intent of this subsection. 
 (b) Within five days after the Seller makes any change in its name, identity or organizational structure which would make any financing statement or continuation statement filed in accordance with Section 4.1(d) seriously misleading
within the meaning of the UCC as in effect in the applicable State, the Seller shall give the Purchaser notice of any such change and, within 30 days after such change, shall authorize and file such financing statements or amendments as may be
necessary to continue the perfection of the Purchaser’s security interest in the Receivables and the proceeds thereof. 
 (c) The Seller
shall give the Purchaser written notice within five days of any relocation of the State of organization of the Seller or any office in which the Seller keeps records concerning the Receivables and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and, within 30 days after such relocation, shall authorize and file such
financing statements or amendments as may be necessary to continue the perfection of the interest of the Purchaser in the Receivables and the proceeds thereof. The Seller shall at all times maintain its State of organization, its principal 

  

 15 

 
place of business and its chief executive office and the location of the office where the Receivables Files and any accounts and records relating to the
Receivables are kept within the United States. 
 (d) The Seller shall maintain accounts and records as to each Receivable accurately and in
sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries
on (or with respect to) each Receivable. 
 (e) The Seller shall maintain its computer systems so that, from and after the time of the
transfer of the Receivables to the Purchaser pursuant to this Agreement, the Seller’s master computer records (including any back-up archives) that refer to a Receivable shall indicate clearly and unambiguously that such Receivable is owned by
the Purchaser (or, upon transfer of the Receivables to the Issuer, by the Issuer). Indication of the Purchaser’s ownership of a Receivable shall be deleted from or modified on the Seller’s computer systems when, and only when, such
Receivable shall have been paid in full or repurchased by the Seller. 
 (f) If at any time the Seller shall propose to sell, grant a
security interest in or otherwise transfer any interest in any motor vehicle retail installment sale contract to any prospective purchaser, lender or other transferee, the Seller shall give to such prospective purchaser, lender or other transferee
computer tapes, compact disks, records or print-outs (including any restored from back-up archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly and unambiguously that such Receivable has been sold and
is owned by the Purchaser (or, upon transfer of the Receivables to the Issuer, the Issuer), unless such Receivable has been paid in full or repurchased by the Seller. 
 (g) The Seller shall permit the Purchaser and its agents at any time during normal business hours to inspect, audit and make copies of and abstracts from the Seller’s records regarding any Receivable. 

(h) If the Seller has repurchased one or more Receivables from the Purchaser or the Issuer pursuant to Section 3.2(f), the Seller shall, upon
request, furnish to the Purchaser, within ten days, a list of all Receivables (by receivable number and name of Obligor) then owned by the Purchaser, together with a reconciliation of such list to the Receivables Schedule. 
 SECTION 5.2 Security Interests. Except for the conveyances hereunder, the Seller covenants that it will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Receivable, whether now existing or hereafter created, or any interest therein; the Seller will immediately notify the Purchaser of the existence of any Lien on any
Receivable and, in the event that the interests of the Noteholders in such Receivable are materially and adversely affected, such Receivable shall be repurchased from the Purchaser by the Seller in the manner and with the effect specified in
Section 3.2(f), and the Seller shall defend the right, title and interest of the Purchaser in, to and under the Receivables, whether now existing or hereafter created, against all claims of third parties claiming through or under the Seller.

  

 16 

 SECTION 5.3 Delivery of Payments. The Seller covenants and agrees to deliver in kind upon receipt
to the Servicer under the Sale and Servicing Agreement all payments received by the Seller in respect of the Receivables as soon as practicable after receipt thereof by the Seller. 
 SECTION 5.4 No Impairment. The Seller covenants that it shall take no action, nor omit to take any action, which would impair the rights of the
Purchaser in any Receivable, nor shall it, except as otherwise provided in this Agreement or the Sale and Servicing Agreement, reschedule, revise or defer payments due on any Receivable. 
 SECTION 5.5 Costs and Expenses. The Seller shall pay all reasonable costs and expenses incurred in connection with the perfection of the
Purchaser’s right, title and interest in, to and under the Receivables. 
 SECTION 5.6 Hold Harmless. The Seller shall protect,
defend, indemnify and hold the Purchaser and the Issuer and their respective assigns and their attorneys, accountants, employees, officers and directors harmless from and against all losses, costs, liabilities, claims, damages and expenses of every
kind and character, as incurred, resulting from or relating to or arising out of (i) the inaccuracy, nonfulfillment or breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, (ii) any legal
action, including any counterclaim, that has either been settled by the litigants (which settlement, if the Seller is not a party thereto shall be with the consent of the Seller) or has proceeded to judgment by a court of competent jurisdiction, in
either case to the extent it is based upon alleged facts that, if true, would constitute a breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, (iii) any actions or omissions of the Seller or any
employee or agent of the Seller occurring prior to the Closing Date with respect to any Receivable or Financed Vehicle or (iv) any failure of a Receivable to be originated in compliance with all requirements of law. These indemnity obligations
shall be in addition to any obligation that the Seller may otherwise have. 
 ARTICLE VI 
 MISCELLANEOUS PROVISIONS 
 SECTION 6.1
Amendment. 
 (a) This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Purchaser
and the Seller, without the consent of any Noteholder, to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or to add any other provision with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions of this Agreement or the Sale and Servicing Agreement; provided, however, that any such amendment shall not, as evidenced by an Opinion of Counsel to the
Seller delivered to the Indenture Trustee, adversely affect in any material respect the interests of the Noteholders. 
 (b) This Agreement
may also be amended from time to time for any other purpose by a written amendment duly executed and delivered by the Seller and by the Purchaser; provided, however, that any such amendment that materially adversely affects the
interests of the 

  

 17 

 
Noteholders under the Indenture, the Sale and Servicing Agreement or the Trust Agreement must be consented to by the Holders of Notes evidencing not less
than 51% of the Note Balance of the Controlling Class. 
 (c) Promptly after the execution of any amendment to this Agreement, the Seller
shall furnish written notification of the substance of such amendment to the Owner Trustee, the Indenture Trustee and the Rating Agencies. 
 SECTION 6.2 Termination. The respective obligations and responsibilities of the Seller and the Purchaser created hereby shall terminate, except for the indemnity obligations of the Seller as provided herein, upon the termination of
the Issuer as provided in the Trust Agreement. 
 SECTION 6.3 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS. 
 SECTION 6.4 Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or sent by telecopier, overnight courier or mailed by registered mail, return receipt requested, in the case of (i) the Purchaser, to CarMax Auto Funding LLC, 12800 Tuckahoe Creek Parkway, Suite
400, Richmond, Virginia 23238, Attention: Treasurer, and (ii) the Seller, to CarMax Business Services, LLC, 12800 Tuckahoe Creek Parkway, Richmond, Virginia 23238, Attention: Treasury Department; or, as to either of such Persons, at such other
address as shall be designated by such Person in a written notice to the other Person. 
 SECTION 6.5 Severability of Provisions. If
any one or more of the covenants, agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions and terms of this Agreement and shall in no way affect the validity or enforceability of the other covenants, agreements, provisions and terms of this Agreement or any amendment or supplement hereto. 
 SECTION 6.6 Further Assurances. The Seller and the Purchaser agree to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the other party hereto or by the Issuer or the Indenture Trustee more fully to effect the purposes of this Agreement, including the execution of any financing statements, amendments,
continuation statements or releases relating to the Receivables for filing under the provisions of the UCC or other law of any applicable jurisdiction. 
 SECTION 6.7 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Purchaser, the Issuer or the Seller, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial 

  

 18 

 
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights, remedies, powers and privileges provided by law. 
 SECTION 6.8 Counterparts. This Agreement may be executed in two or more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and the same instrument. 
 SECTION 6.9 Third-Party
Beneficiaries. This Agreement will inure to the benefit of and be binding upon the parties hereto, the Issuer and the Indenture Trustee for the benefit of the Noteholders, who shall be considered to be third-party beneficiaries hereof. Except as
otherwise provided in this Agreement, no other Person will have any right or obligation hereunder. 
 SECTION 6.10 Headings and Table of
Contents. The Table of Contents and headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof. 
 SECTION 6.11 Representations, Warranties and Agreements to Survive. The respective agreements, representations, warranties and other statements by
the Seller and by the Purchaser set forth in or made pursuant to this Agreement shall remain in full force and effect and will survive the closing hereunder of the transfers and assignments by the Seller to the Purchaser and by the Purchaser to the
Issuer and shall inure to the benefit of the Purchaser, the Trustees and the Noteholders. 
 SECTION 6.12 No Proceedings. The Seller
covenants and agrees that so long as this Agreement is in effect, and for one year plus one day following its termination, it will not file any involuntary petition or otherwise institute any bankruptcy, reorganization arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or State bankruptcy law or similar law against the Issuer or the Owner Trustee. 
 SECTION 6.13 Accountant’s Letters. 
 (a) The Seller shall cause a firm of independent certified public accountants (who
may also render other services to the Seller) to perform certain procedures regarding the characteristics of the Receivables described in the Receivables Schedule and to compare those characteristics to the information with respect to the
Receivables contained in the Prospectus. The Seller shall cooperate with the Purchaser and such accountants in making available all information and taking all steps reasonably necessary to permit such accountants to complete such procedures and to
deliver the letters required of them under the Underwriting Agreement. 
 (b) The Seller shall cause a firm of independent certified public
accountants (who may also render other services to the Seller) to deliver to the Purchaser a letter dated May 19, 2006 and a letter dated May 31, 2006, each in the form previously agreed to by the Seller and the Purchaser, with respect to
the financial and statistical information contained in the Prospectus under the caption “CarMax—Delinquency, Credit Loss and Recovery Information” and with respect to such other information as may be agreed in the forms of such
letters. 
  

 19 

 SECTION 6.14 Obligations of Purchaser. The obligations of the Purchaser under this Agreement shall
not be affected by reason of any invalidity, illegality or irregularity of any Receivable. 
 [SIGNATURE PAGE FOLLOWS] 
  

 20 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written. 
  

			
	 CARMAX BUSINESS SERVICES, LLC,
 as
Seller

		
	By:	 	 /s/ Keith D. Browning

	Name:	 	Keith D. Browning
	Title:	 	Chief Financial Officer
	
	 CARMAX AUTO FUNDING LLC,
 as
Purchaser

		
	By:	 	 /s/ Thomas W. Reedy

	Name:	 	Thomas W. Reedy
	Title:	 	Treasurer

  

 S-1 
 Receivables Purchase Agreement 

 SCHEDULE A 
 RECEIVABLES SCHEDULE 
 [ON FILE WITH THE SERVICER] 
  

 SA-1 

 EXHIBIT A 
 BILL OF SALE AND ASSIGNMENT 
 For value received, in accordance with the receivables purchase agreement,
dated as of May 1, 2006 (the “Receivables Purchase Agreement”), between the undersigned and CarMax Auto Funding LLC (the “Purchaser”), the undersigned does hereby sell, assign, transfer and otherwise convey
unto the Purchaser, without recourse, all right, title and interest of the undersigned in and to (i) the Receivables listed on Schedule A hereto (the “Receivables”); (ii) all amounts received on or in respect of the
Receivables (including proceeds of the repurchase of Receivables by the Seller pursuant to the Receivables Purchase Agreement) after the Cutoff Date; (iii) the security interests in the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any other interest of the undersigned in such Financed Vehicles; (iv) all proceeds from claims on or refunds of premiums of any physical damage or theft insurance policies covering the Financed Vehicles and any proceeds or
refunds of premiums of any credit life or credit disability insurance policies relating to the Financed Vehicles or the Obligors; (v) the Receivable Files; (vi) the right to realize upon any property (including the right to receive future
Liquidation Proceeds) that shall have secured a Receivable and have been repossessed by or on behalf of the Issuer; and (vii) all present and future claims, demands, causes of action and choses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property,
all accounts, general intangibles, chattel paper, instruments, documents, money, investment property, deposit accounts, letters of credit, letter-of-credit rights, insurance proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations, and all other property which at any time constitutes all or part of or is included in the proceeds of any of the foregoing. 
 This Bill of Sale and Assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Receivables Purchase Agreement and is to be governed by the
Receivables Purchase Agreement. 
 Capitalized terms used and not otherwise defined herein shall have the meaning assigned to them in the
Receivables Purchase Agreement. 
 IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale and Assignment to be duly executed as of
May 31, 2006. 
  

			
	CARMAX BUSINESS SERVICES, LLC
		
	 By:
	 	  

	 Name:
	 	
	 Title:
	 	

  

 A-1 

 EXHIBIT B 
 FORM OF RETAIL INSTALLMENT SALE CONTRACT 
 [SEE ATTACHED] 
  

 B-1K2 Inc. 2006 Long-Term Incentive Plan

 EXHIBIT 4.1 
 K2 Inc. 
 2006 Long-Term Incentive Plan 
 As Approved by Stockholders on May 11, 2006 
 Section 1. Purpose; Definitions

 The purpose of the K2 Inc. 2006 Long-Term Incentive Plan (the “Plan”) is to enable K2 Inc. (the “Company”) to
attract, retain, and reward non-employee directors, officers, managers, and key employees of the Company and its Subsidiaries, and motivate such persons to exert their best efforts on behalf of the Company and its Subsidiaries. 
 For purposes of the Plan, the following terms shall be defined as set forth below 
 (a) “Award” means an award under the Plan of Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Other Stock-Based Awards and/or Performance Awards. 
 (b) “Board” means the Board of Directors of
the Company. 
 (c) “Book Value” means, as of any given date, on a per share basis (a) the Stockholders’ Equity in
the Company as of the end of the immediately preceding fiscal year as reflected in the Company’s consolidated balance sheet, subject to such adjustments as the Committee shall specify at or after grant, divided by (b) the number of then
outstanding shares of Stock as of such year-end date (as adjusted by the Committee for subsequent events). 
 (d) “Cause”
means, but is not limited to, any of the following actions: theft, dishonesty or fraud, insubordination, persistent inattention to duties or excessive absenteeism, violation of the Company’s work rules, code of conduct or policies or state or
federal law, or any conduct which would disqualify the participant from entitlement to unemployment benefits. The determination of whether Cause exists shall be made in the Company’s sole discretion. Such determination shall have no effect upon
any determination of the rights or obligations of either party for any other purpose. 
 (e) “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any successor thereto. 
 (f) “Committee” means the Committee
referred to in Section 2 of the Plan. If at any time no Committee shall be in office, then the functions of the Committee specified in the Plan shall be exercised by the Board. 
 (g) “Company” means K2 Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation. 

(h) “Disability” means disability as determined under procedures established by the Committee for purposes of this Plan or if none,
the Company’s disability plan. 
 (i) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and any successor thereto. 
 (j) “Fair Market Value” means, as of any given date, unless otherwise determined by the
Committee in good faith, the mean between the highest and lowest quoted selling price, regular way, of the Stock on the New York Stock Exchange or, if no such sale of Stock occurs on the New York Stock Exchange on such date, the fair market value of
the Stock as determined by the Committee in good faith. 
 (k) “Incentive Stock Option” means any Stock Option intended to
be and designated as an “incentive Stock Option” within the meaning of Section 422 of the Code. 
 (l) “Nonqualified
Stock Option” means any Stock Option that is not an Incentive Stock Option. 
 (m) “Other Stock-Based Award” means
an award under Section 8 below that is valued in whole or in part by reference to, or is otherwise based on, Stock. 
 (n)
“Performance Award” means an award under Section 9 below that is valued based on the level of attainment of performance objectives related to the performance measures set forth in Section 9. 
 (o) “Person” means “person” as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in Section 13(d) of the Exchange Act but excluding the Company and Subsidiary and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of
such plan acting as trustee). 
 (p) “Plan” means K2 Inc.’s 2006 Long-Term Incentive Plan, as hereinafter amended from
time to time. 
 (q) “Restricted Stock” means an award of shares of Stock that is subject to restrictions under
Section 7 below. 
 (r) “Restricted Stock Unit” means a fixed or variable right to acquire Stock, which may or may not
be subject to restriction, contingently awarded under Section 7 of the Plan. 
 (s) “Stock” means the Common Stock,
$1.00 par value per share, of the Company. 

 (t) “Stock Appreciation Right” means the right to participate in an increase in the
value of a share of Stock pursuant to an award granted under Section 6. 
 (u) “Stock Option” or
“Option” means any option to purchase shares of Stock (including Restricted Stock, if the Committee so determines) granted pursuant to Section 5 below. 
 (v) “Subsidiary” means a corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of
the corporations (other than the last corporation in the unbroken chain) owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain, or otherwise
controls one of the other corporations in the chain. 
 (w) “Treasury” means the United States Department of the Treasury.

 Section 2. Administration 
 The Plan shall be administered by a committee of not less than two members of the Board, who shall be appointed by, and serve at the pleasure of, the Board. In selecting the members of the Committee, the Board shall take into account the
requirements for the members of the Committee to be treated as “Outside Directors” within the meaning of Section 162(m) of the Code and “Non-Employee Directors” for purposes of Rule 16b-3, as promulgated under
Section 16 of the Exchange Act. The functions of the Committee specified in the Plan shall be exercised by the Board, if and to the extent that no Committee exists which has the authority to so administer the Plan or to the extent that the
Committee is not comprised solely of Non-Employee Directors for purposes of Rule 16b-3, as promulgated under Section 16 of the Exchange Act. 
 The Committee shall have full authority to grant, pursuant to the terms of the Plan, to non-employee directors, officers, managers, and key employees, eligible under Section 4: (i) Stock Options and Incentive Stock Options;
(ii) Stock Appreciation Rights; (iii) Restricted Stock and Restricted Stock Units; (iv) Other Stock-Based Awards; and/or (v) Performance Awards. 
 In particular the Committee shall have the authority: 
  

	 	(i)	To select the non-employee directors, officers, managers, and key employees of the Company and its Subsidiaries to whom Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards, and/or Performance Awards may from time to time be granted hereunder; 

  

	 	(ii)	To establish subplans or other arrangements not inconsistent with the Plan which the Committee deems necessary or advisable to comply with laws or requirements of foreign
jurisdictions; 

  

	 	(iii)	To determine whether and to what extent Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock Based
Awards, and/or Performance Awards or any combination thereof, are to be granted hereunder to one or more eligible employees and non-employee directors; 

  

	 	(iv)	Subject to the provisions of Sections 3, 5 and 9, to determine the number of shares to be covered by each such award granted hereunder; 

  

	 	(v)	To determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to, the share price and any
restriction or limitation, or, subject to the minimum vesting requirements in the Plan, any vesting acceleration or waiver of forfeiture restrictions regarding any Stock Option or other award and/or the shares of Stock relating thereto, based in
each case on such factors as the Committee shall determine in its sole discretion); 

  

	 	(vi)	To determine whether and under what circumstances an award of Restricted Stock or Restricted Stock Units may be settled in cash; 

  

	 	(vii)	To determine whether, to what extent and under what circumstances Option grants and/or other awards under the Plan made by the Company are to be made, and operate, on a tandem basis
vis-à-vis other awards under the Plan and/or cash awards made outside of the Plan, or on an additive basis; 

  

	 	(viii)	To determine whether, to what extent and under what circumstances Stock and other amounts payable with respect to an award under this Plan shall be deferred either automatically or
at the election of the participant (including providing for and determining the amount (if any) of any deemed earnings on any deferred amount during any deferral period); and 

  

	 	(ix)	To designate officers or employees of the Company or competent professional advisors to assist the Committee in the administration of the Plan, and to grant authority to such
persons to execute agreements or other documents on its behalf. 

 The Committee shall have the authority to adopt, alter, and
repeal such rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto), and to
otherwise supervise the administration of the Plan. 
 All decisions made by the Committee pursuant to the provisions of the Plan shall be
made in the Committee’s sole discretion and shall be final, conclusive and binding on all persons, including the Company and Plan participants. 
 Section 3. Stock Subject to Plan 
 The total number of shares of Stock reserved and available for distribution
under the Plan shall be three million four hundred thousand (3,400,000) shares. No individual may receive in any calendar year Awards under the Plan relating, in the aggregate, to more than five hundred thousand (500,000) shares of Stock.
Non-employee directors of the Company may receive Awards relating to up to fifty thousand (50,000) shares of Stock in any calendar year. 
 Subject to Section 6(b)(iv) below, if any shares of Stock that have been optioned cease to be subject to a Stock Option or an Incentive Stock Option, or if any such shares of Stock that are subject to any Restricted Stock or Restricted
Stock Units award or Other Stock-Based Award granted hereunder are forfeited or any such award otherwise terminates without a payment being made to the participant in the form of Stock, such shares shall not be counted against the share limits set
forth in this Section 3 and shall again be available for distribution in connection with future awards under the Plan. 

 Except as provided in Section 10, in the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, large non-recurring cash dividend (as determined by the Committee), Stock split or other change in corporate structure affecting the Stock, such substitution or adjustment shall be made in the aggregate number of
shares subject to, and reserved for issuance under, the Plan (including any sub-limits in this Section 3), in the number and exercise price of shares subject to outstanding Options and Stock Appreciation Rights granted under the Plan, and in
the number of shares subject to other outstanding Awards granted under the Plan as may be determined to be appropriate by the Committee, in its sole discretion, provided that the number of shares as so adjusted shall always be a whole number.

 Section 4. Eligibility 
 Non-employee directors, officers, managers, and other key employees of the Company and its Subsidiaries who are responsible for or contribute to the management, growth and/or profitability of the business of the Company and/or its
Subsidiaries are eligible to be granted awards under the Plan. 
 Section 5. Stock Options 
 Stock Options may be granted alone, in addition to or in tandem with other Awards granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve. 
 Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Nonqualified Stock Options. 
 The Committee shall have the authority to grant to any optionee Incentive Stock
Options, Nonqualified Stock Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights). 
 Options
granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: 
 (a) Exercise Price. The exercise price per share of Stock purchasable under a Stock Option shall be determined by the Committee at the time
of grant but shall be not less than one hundred percent (100%) of the Fair Market Value of the Stock at grant, provided however, that the exercise price per share of Stock purchasable under a Stock Option that is granted in connection with a
merger, stock exchange, or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than one hundred percent (100%) of the Fair Market Value of the Stock at the time of grant
provided that the exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger, stock exchange, or other acquisition. 
 (b) Option Term. The term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten
(10) years after the date the Option is granted. 
 (c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the Committee at or after grant; provided, that except in the case of an Award issued in connection with the start of employment or service with the Company or its
Subsidiaries, or under such other circumstances as are deemed appropriate by the Committee, Stock Options shall not be exercisable prior to the first anniversary of grant. If the Committee provides, in its sole discretion, that any Stock Option is
exercisable only in installments, the Committee may waive such installment exercise provisions at any time at or after grant in whole or in part, based on such factors as the Committee shall determine, in its sole discretion. 
 (d) Method of Exercise. Subject to whatever installment exercise provisions apply under Section 5(c), Stock Options may be exercised
upon vesting in whole or in part at any time during the option period, by giving written notice of exercise to the Company, or its designated representative, specifying the number of shares to be purchased. 
 Such notice shall be accompanied by payment in full of the purchase price, either by check, note or such other instrument as the Committee may accept. As
determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may also be made in the form of unrestricted Stock already owned by the optionee, the withholding of Stock otherwise deliverable upon exercise of the
Stock Option or in any other manner approved by the Committee. 
 No shares of Stock shall be issued until full payment therefore has been
made. An optionee shall generally have the rights to dividends or other rights of a stockholder with respect to the shares subject to the Option when the optionee has given written notice of exercise, has paid in full for such shares. 
 (e) Transferability of Options. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Option to be
transferred to a member of the participant’s immediate family or to a trust or similar vehicle for the benefit of such immediate family members, no Option shall be assignable or transferable except by will or the laws of descent and
distribution, and except to the extent required by law, no right or interest of any participants shall be subject to any lien, obligation or liability of the participant. Notwithstanding the foregoing, an Option may be transferred pursuant to a
domestic relations order. 
 (f) Termination by Death. Subject to Section 5(j), if an optionee’s employment by or
service with the Company and any Subsidiary terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised in accordance with the terms and conditions established by the Committee and provided in the stock option
agreement. In the event of termination of employment or service by reason of death, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option. 
 (g) Termination by Reason of Disability. Subject to
Section 5(j), if an optionee’s employment by or service with the Company and any Subsidiary terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee in accordance with the terms
and conditions established by the Committee and provided in the stock option agreement. In the event of termination of employment or service by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option. 
 (h) Termination for Cause. Subject to Section 5(j), if an optionee’s employment by the Company and any Subsidiary is terminated for Cause, the Stock Option shall thereupon terminate, whether or not exercisable at
that time. 
 (i) Other Termination. Unless otherwise determined by the Committee, if an optionee’s employment by or
service with the Company and any Subsidiary terminates for any reason other than death or Disability or for Cause, the Stock Option shall thereupon terminate. 

 (j) Incentive Stock Options. Anything in the Plan to the contrary notwithstanding, no term
of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock Option under such Section 422. 
 (k) No Repricing.
Other than in connection with a change in the Company’s capitalization (as described in Section 3) the exercise price of a Stock Option may not be reduced without stockholder approval (including canceling previously awarded Stock Options
and re-granting them with a lower exercise price). 
 Section 6. Stock Appreciation Rights 
 (a) Grant and Exercise. Stock Appreciation Rights may be granted alone or in conjunction with all or part of any Stock Option granted under
the Plan. In the case of a Nonqualified Stock Option, such rights may be granted either at or after the time of the grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such
Stock Option. 
 The term of each Stock Appreciation Right granted independent of a Stock Option (a “freestanding SAR”) shall be
fixed by the Committee, but no Stock Appreciation Right shall be exercisable more than ten (10) years after the date the Stock Appreciation Right is granted. A Stock Appreciation Right or applicable portion thereof granted with respect to a
given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, subject to such provisions as the Committee may specify at grant where a Stock Appreciation Right is granted with respect
to less than the full number of shares covered by a related Stock Option. 
 A Stock Appreciation Right may be exercised by an optionee,
subject to Section 6(b), in accordance with the procedures established by the Committee for such purposes. Upon such exercise, the optionee shall be entitled to receive an amount determined in the manner prescribed in Section 6(b). Stock
Options relating to exercised Stock Appreciation Rights shall no longer be exercisable to the extent that the related Stock Appreciation Rights have been exercised. 
 (b) Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the
Committee, including the following: 
  

	 	(i)	Stock Appreciation Rights shall be exercisable at such time or times as shall be determined by the Committee at or after grant; provided, however, that Stock Appreciation Rights
shall be subject to the same terms and conditions applicable to Stock Options set forth in Section 5. Stock Appreciation Rights granted in conjunction with Stock Options shall be exercisable only at such time or times and to the extent that the
Stock Options to which they relate shall be exercisable in accordance with the provisions of Section 5 and this Section 6 of the Plan. 

  

	 	(ii)	Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to receive an amount in cash and/or shares of Stock equal in value to the excess of the Fair Market
Value on the date of exercise of one share of Stock over the exercise price per share determined by the Committee at the time of grant multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised,
with the Committee having the right to determine the form of payment. Notwithstanding anything else in the Plan to the contrary, the exercise price per share of any freestanding SAR but shall be not less than one hundred percent (100%) of the
Fair Market Value of the Stock at grant, provided however, that the exercise price per share under a freestanding SAR that is granted in connection with a merger, stock exchange, or other acquisition as a substitute or replacement award for stock
appreciation rights held by employees of the acquired entity may be less than one hundred percent (100%) of the Fair Market Value of the Stock at the time of grant provided that the exercise price is based on a formula set forth in the terms of
the stock appreciation rights held by such individuals or in the terms of the agreement providing for such merger, stock exchange, or other acquisition. When payment is to be made in shares, the amount and/or number of shares to be paid shall be
calculated on the basis of the Fair Market Value of the shares on the date of exercise. 

  

	 	(iii)	Upon the exercise of a Stock Appreciation Right granted in conjunction with a Stock Option under the Plan, the number of shares issued under such Stock Appreciation Right based on
the value of the Stock Appreciation Right at the time of exercise shall be deemed to be issued for purposes of the share authorization set forth in Section 3 of the Plan. 

 (c) No Repricing. Other than in connection with a change in the Company’s capitalization (as described in Section 3) the exercise
price of a Stock Appreciation Right may not be reduced without stockholder approval (including canceling previously awarded Stock Appreciation Rights and re-granting them with a lower exercise price). 
 Section 7. Restricted Stock and Restricted Stock Units 
 (a) Administration. Subject to the limitations set forth in Section 3, shares of Restricted Stock and/or Restricted Stock Units may be issued either alone or, in addition to, or in tandem with,
other awards granted under the Plan and/or awards made outside of the Plan. The Committee shall determine the eligible persons to whom, and the time or times at which, grants of Restricted Stock and/or Restricted Stock Units will be made, the number
of shares to be awarded, the price (if any) to be paid by the recipient of Restricted Stock and/or Restricted Stock Units (subject to Section 7(b)), the time or times within which such awards may be subject to forfeiture, and all other terms
and conditions of the awards. 
 The Committee may condition the grant of Restricted Stock and Restricted Stock Units upon the attainment of
specified performance goals or such other factors as the Committee may determine, in its sole discretion. 
 The provisions of Restricted
Stock and Restricted Stock Unit awards need not be the same with respect to each recipient. 
 (b) Awards and Certificates. The
prospective recipient of a Restricted Stock or Restricted Stock Unit Award shall not have any rights with respect to such award, unless and until such recipient has complied with the applicable terms and conditions of such Award. 
  

	 	(i)	The purchase price for shares of Restricted Stock and Restricted Stock Units shall be set by the Committee and may be zero. 

  

	 	(ii)	Awards of Restricted Stock and Restricted Stock Units must be accepted within a reasonable period (or such specific period as the Committee may specify at grant) after the award
date, by executing an award agreement and paying whatever price (if any) is required under Section 7(b)(i). 

 (c) Terms and Conditions. The shares of Restricted Stock and Restricted Stock Units awarded
pursuant to this Section 7 shall be subject to the following restrictions and conditions: 
  

	 	(i)	Subject to the provisions of this Plan and the award agreement, during a period set by the Committee commencing with the date of such award (the “Restriction Period”), the
participant shall not be permitted to sell, transfer, assign, pledge or otherwise encumber shares of Restricted Stock or Restricted Stock Units awarded under the Plan. Other than (a) as provided in Section 7(c)(iii), (b) with respect
to Award made in connection with the start of employment or service with the Company or its Subsidiaries or (c) under such other circumstances deemed appropriate by the Committee, in no event shall such Restriction Period be deemed satisfied in
full in less than (x) three (3) years after the date of grant, if the non-forfeitability of Restricted Stock or Restricted Stock Units is based solely on continued employment or service and the grant of the Restricted Stock or Restricted
Stock Units (“Time-Based Retention Shares”) and is not a form of payment of earned incentive or other performance-based compensation, or (y) one (1) year after the date of grant, if the non-forfeitability of Restricted Stock is
also subject to the attainment of performance goals or the grant of Time-Based Retention Shares is a form of payment of earned incentive or other performance-based compensation. Within these limits, the Committee, in its sole discretion, may provide
for the lapse of such restrictions in pro rata installments, based on service, performance and or such other factors or criteria as the Committee may determine, in its sole discretion. 

  

	 	(ii)	Except as provided in this paragraph (ii) and Section 7(c)(i), the Committee, in its sole discretion, as determined at the time of the award, may permit the participant to
have, (a) with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any cash dividends and (b) with respect to the shares underlying
an Award of Restricted Stock Units, the right to receive any cash dividends. The Committee, in its sole discretion, as determined at the time of award, may permit or require the payment of cash dividends and may permit or require such cash dividends
to be deferred and, if the Committee so determines, reinvested, subject to Section 13(e), in additional Restricted Stock or Restricted Stock Units to the extent shares are available under Section 3, or otherwise reinvested. Pursuant to
Section 3 above, Stock dividends issued with respect to Restricted Stock and Restricted Stock Units shall be treated as additional shares of Restricted Stock or Restricted Stock Units, as applicable, that are subject to the same restrictions
and other terms and conditions that apply to the shares with respect to which such dividends are issued. 

  

	 	(iii)	Subject to the applicable provisions of the award agreement and this Section 7, upon termination of a participant’s employment or service with the Company and any
Subsidiary for any reason during the Restriction Period, all shares of Restricted Stock or Restricted Stock Units still subject to restriction will vest, or be forfeited, in accordance with the terms and conditions established by the Committee at or
after grant. 

  

	 	(iv)	If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock or Restricted Stock Units subject to such Restriction Period, certificates for an
appropriate number of unrestricted shares shall be delivered to the participant promptly (unless the Committee decides pursuant to Section 2(v) to settle the award in cash). Notwithstanding anything in the Plan to the contrary, the Committee
may, in an award agreement or otherwise, provide for the deferred delivery of Stock upon settlement of an Award of Restricted Stock or Restricted Stock Units. 

 Section 8. Other Stock-Based Awards 
 (a) Administration. Other awards of
Stock and other awards that are valued in whole or in part by reference to, or are otherwise based on, Stock (“Other Stock-Based Awards”), including, without limitation, stock purchase rights, performance shares, exchangeable securities
and Stock awards or options valued by reference to Book Value or Subsidiary performance, may be granted either along with, or in addition to, or in tandem with, Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units
granted under the Plan and/or cash awards made outside of the Plan. 
 Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such awards shall be made, the number of shares of Stock to be awarded pursuant to such awards, and all other conditions of the awards. The Committee may also provide for the
grant of Stock upon the completion of a specified performance period. 
 The provision of Other Stock-Based Awards need not be the same in
respect to each recipient. 
 (b) Terms and Conditions. Other Stock-Based Awards made pursuant to this Section 10 shall be
subject to the following terms and conditions: 
  

	 	(i)	Subject to the provisions of this Plan and the Award agreement referred to in Section 8(b)(v) below, shares subject to Awards made under this Section 8 may not be sold,
assigned, transferred, pledged, or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance, or deferral period lapses. 

  

	 	(ii)	Subject to the provision of this Plan and the Award agreement and unless otherwise determined by the Committee at grant, the recipient of an Award under this Section 8 shall be
entitled to receive, currently, or on a deferred basis, interest or dividends or interest or dividend equivalents with respect to the number of shares covered by the Award, as determined at the time of the Award by the Committee, in its sole
discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Stock or otherwise reinvested. 

  

	 	(iii)	Any Award under Section 8 and any Stock covered by any such Award shall vest or be forfeited to the extent so provided in the award agreement as determined by the Committee, in
its sole discretion; provided, that subject to Section 10(b)(iv) and except with respect to Awards made in connection with the start of employment or service with the Company or its Subsidiaries or under such other circumstances as are deemed
appropriate by the Committee, any such Other Stock-Based Award shall have a vesting requirement of at least one year. 

  

	 	(iv)	In the event of the participant’s Disability or death, or in cases of special circumstances, the Committee may, in its sole discretion, waive in whole or in part any or all of
the remaining limitations imposed hereunder (if any) with respect to any or all of an Award under this Section 8. 

  

	 	(v)	Each Award under this Section 8 shall be confirmed by, and subject to the terms of, an agreement or other instrument by the Company and by the participant.

  

	 	(vi)	Stock (including securities convertible into Stock) issued on a bonus basis under this Section 8 may be issued for no cash consideration. 

 Section 9. Performance Related Awards 
 (a) Performance Objectives. Notwithstanding anything else contained in the Plan to the contrary, unless the Committee otherwise determines
at the time of grant, an Award of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards to an employee who is a “covered employee” within the meaning of Section 162(m) of the Code and the Treasury regulations
promulgated thereunder, other than an award which will vest on the basis of the passage of time, shall become vested, if at all, upon the determination by the Committee that performance objectives established by the Committee have been attained, in
whole or in part (a “Performance Award”). Such performance objectives shall be determined over a measurement period or periods established by the Committee and related to one or more of the following criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or to a business unit, division, Subsidiary or geographic region, either individually, alternatively or in any combination, and measured either annually or cumulatively
over the period established by the Committee, on an absolute basis or relative to a pre-established target, to results from a previous period or to a designated comparison corporation or group, in each case as specified by the Committee in the
Award: (i) cash flow; (ii) earnings (including, but not limited to, earnings before interest, taxes, depreciation and amortization); (iii) earnings per share, diluted or basic; (iv) debt reduction; (v) working capital
reduction; (vi) return on investment; (vii) sales; (viii) market share; (ix) cost of capital; (x) expense reduction levels; (xi) productivity; (xii) delivery performance; (xiii) safety record; (xiv) stock
price; (xv) return on equity; (xvi) total stockholder return; (xvii) return on assets or net assets; (xviii) income, gross margin, operating income or net income; and (xix) completion of acquisitions, business expansion,
product diversification, new or expanded market penetration and other non-financial operating and management performance objectives (each criteria is referred to as a “Qualifying Performance Criteria”). To the extent consistent with
Section 162(m) of the Code, the Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (a) asset write-downs,
(b) litigation, claims, judgments or settlements, (c) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (d) accruals for reorganization and restructuring programs and
(e) any extraordinary, unusual or non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the
Company’s Annual Report to stockholders for the applicable year. Notwithstanding satisfaction of any performance objectives, the number of shares issued under or the amount paid under a Performance Award may, to the extent specified in the
applicable award agreement, be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine. 
 (b) Certification. The Committee shall certify the extent to which any Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof, prior to payment, settlement or
vesting of any Performance Award that is intended to satisfy the requirements for performance-based compensation under Section 162(m)(4)(C) of the Code. 
 (c) Interpretation. Notwithstanding anything else in the Plan to the contrary, to the extent a Performance Award is intended to qualify as performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code, the Committee shall not be entitled to exercise any discretion if the exercise of such discretion would cause such award to fail to qualify as performance-based compensation. 
 Section 10. Change of Control Provisions 
 (a) Result of a Change of Control Other Than a Corporate Transaction. In the event of a Change of Control (as defined in subsection (c) below) other than a Corporate Transaction (as defined in subsection (c) below)
immediately prior thereto all restrictions relating to all outstanding awards issued or granted under this Plan, including Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based
Awards and Performance Awards, shall lapse and such awards shall vest and become fully exercisable to the extent not already fully vested or fully exercisable, and each outstanding Option holder shall be given a reasonable opportunity to exercise
his or her Options prior to the Change of Control, unless determined otherwise by the Committee prior to the Change of Control. 
 (b)
Result of Corporate Transaction. 
  

	 	(i)	In the event of a Corporate Transaction, immediately prior thereto all restrictions relating to all outstanding Awards issued or granted under this Plan shall vest and become fully
exercisable to the extent not already fully vested or fully exercisable, with a reasonable opportunity to exercise such Awards, prior to the Corporate Transaction, unless such Awards are assumed by the successor entity or its parent in the Corporate
Transaction, in which event such Awards shall not become fully vested or exercisable, but shall continue to vest (or not) in accordance with their terms. Each outstanding Award which is assumed in connection with the Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of securities or other property which would have been issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such Award immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the exercise or purchase price payable with respect to such Awards, provided the
aggregate amount payable for such securities shall remain the same. In addition, the class and number of securities available for issuance under the Plan following the consummation of the Corporate Transaction shall be appropriately adjusted.

  

	 	(ii)	In the event that outstanding Awards are assumed in connection with a Corporate Transaction as set forth in Section 10(b)(i), and a Plan participant whose Award was so assumed
is subsequently involuntarily terminated from all employment or other service by the Company, any of its Subsidiaries or any of their respective successors or parent of the successors after the Corporate Transaction (other than termination as a
result of Cause) within one (1) year following the Corporation Transaction, any Awards held by such Plan participant shall immediately vest in full, and shall be exercisable, as applicable, until the earlier of the close of business on the
sixtieth (60th) day following such termination or the expiration of the Award in accordance with its terms. 

 (c)
Change of Control Defined. For purposes of this Plan, a “Change of Control” shall be deemed to have occurred if: 
  

	 	(i)	any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company)
directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing more than thirty-five percent (35%) of the total combined voting power of the Company’s
outstanding securities; 

  

	 	(ii)	there is a change in the composition of the Board over a period of twenty-four (24) consecutive months or less such that a majority of the Board members (rounded up to the next
whole number) cease, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least two-thirds of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board;

  

	 	(iii)	a merger or consolidation occurs in which the Company is not the surviving entity, or any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to holders different from those who held such securities immediately prior to such merger (a
“Corporate Transaction”); or 

	 	(iv)	all or substantially all of the Company’s assets are sold or transferred other than in connection with an internal reorganization of the Company. 

 Section 11. Amendments and Termination 
 The
Board or the Committee may amend, alter or discontinue the Plan and may to the extent permitted by the Plan amend any agreement or other document evidencing an Award made under this Plan but, except as provided pursuant to the anti-dilution
adjustment provisions of Section 3, no such amendment shall, without the approval of the stockholders of the Company: 
  

	 	(a)	increase the maximum number of shares of Stock for which Awards may be granted under this Plan; 

  

	 	(b)	reduce the price at which Options may be granted below the price provided for in Section 5(a); 

  

	 	(c)	reduce the option price of outstanding Options; 

  

	 	(d)	extend the term of this Plan; 

  

	 	(e)	change the class of persons eligible to receive Awards under the Plan; or 

  

	 	(f)	increase the individual maximum limits in Section 3. 

 The Board or the Committee may to the extent permitted by the Plan amend any agreement evidencing an Award made under this Plan, but no amendment or alteration shall be made which would impair the rights of any Plan participant, without
such participant’s consent, under any Award theretofore granted. 
 Section 12. Unfunded Status of Plan 
 The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any such participant or optionee any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or payments in lieu of or with respect to awards hereunder; provided, however, that unless the Committee otherwise determines with the consent
of the affected participant, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan. 
 Section 13. General Provisions 
 (a) The Committee may require each person purchasing shares pursuant to an Option
or other Award under the Plan to represent to and agree with the Company in writing that the optionee or participant is acquiring the shares without a view to distribution thereof. The certificates for such shares may include any legend, which the
Committee deems appropriate to reflect any restrictions on transfer. 
 All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which
the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by the Plan participant or other subsequent transfers by the Plan participant of any Stock issued under an Award, including without limitation (i) restrictions under an insider
trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by the Plan participant and holders of other Company equity compensation arrangements, (iii) restrictions as
to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring the Stock to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations. 
 This Plan, the grant, issuance, vesting, exercise and settlement of Awards hereunder, and the obligation of the Company to sell, issue or deliver Stock
under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company
shall not be required to register in a Plan participant’s name or deliver any Stock prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any
government body which the Committee shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed
by the Company’s counsel to be necessary to the lawful issuance and sale of any Stock hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such Stock as to which such
requisite authority shall not have been obtained. No Stock Option shall be exercisable and no Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the Stock underlying such Award is
effective and current or the Company has determined that such registration is unnecessary. 
 (b) Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases. 

(c) The adoption of the Plan shall not confer upon any employee or director of the Company or any Subsidiary any right to continued employment or
service as a director with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any of its employees or service of a director at any time.

 (d) Except as the participant and the Company may otherwise agree, no later than the date as of which an amount first becomes includable
in the gross income of the participant for federal income tax purposes with respect to any award under the Plan, the participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of any federal,
state, or local taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations may be settled with Stock, including Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment of arrangements and the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. 

 (e) To the extent that the Committee determines that any Award granted under the Plan is subject to
Section 409A of the Code, the award agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and award agreements shall be interpreted in accordance
with Section 409A of the Code and the Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued or amended after the effective date of the
Plan. Notwithstanding any provision of the Plan to the contrary, in the event that following the effective date of the Plan the Committee determines that any Award may be subject to Section 409A of the Code and related Treasury guidance
(including such Treasury guidance as may be issued after the effective date of the Plan), the Committee may adopt such amendments to the Plan and the applicable award agreement or adopt other policies and procedures (including amendments, policies
and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (1) exempt such Award from Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to such Award, or (2) comply with the requirements of Section 409A of the Code and related Treasury guidance. 
 (f) The actual or deemed reinvestment of dividends or dividend equivalents in additional Restricted Stock or Restricted Stock Units (or in other types of Awards) at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for such reinvestment (taking into account then outstanding Stock Options and other Awards). 
 (g) The Company and any Subsidiary or affiliate which is in existence or hereafter comes into existence shall not be liable to a Plan participant or any other Person as to: (i) the non-issuance or sale of Stock
as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Stock hereunder; and (ii) any tax
consequence expected, but not realized, by any Plan participant or other Person due to the receipt, exercise or settlement of any Award granted hereunder. 
 (h) Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the
Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under this Plan or an arrangement not intended to qualify under
Section 162(m) of the Code, and such arrangements may be either generally applicable or applicable only in specific cases. 
 (i) The
Plan and all awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware. 
 Section 14. Term of Plan 
 No Award shall be granted pursuant to the Plan on or after the tenth
(10th) anniversary of the date of stockholder approval, but awards granted prior to such tenth (10th) anniversary may extend beyond that date.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]