Document:

exh1019creditagrmt.htm

SECOND AMENDED AND RESTATED

 

LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement"), is entered into as of May 30, 2014, between AEROCENTURY CORP., a Delaware corporation ("Borrower"), UNION BANK, N.A., together with any other Lender hereunder from time to time (collectively, the "Lenders" and individually, a "Lender") and UNION BANK, N.A., as Agent ("Agent") and Swing Line Lender (“Swing Line Lender”), effective as of the Closing Date, with reference to the following facts:

 

RECITALS

 

A.           Borrower is in the business of purchasing and leasing aircraft and aircraft engines and equipment.

 

B.           Pursuant to that certain Loan and Security Agreement dated as of April 28, 2010, (as amended, the “Original Agreement”), the financial institutions as lender parties thereto (collectively, the “Original Lenders”) and Union Bank, N.A., as administrative agent for the Original Lenders, agreed to make available to Borrower a revolving credit facility (the “Original Loan”), to be used for the purpose of refinancing existing revolving debt, acquiring aircraft and aircraft engines, and supporting Borrower's working capital needs and general corporate purposes.

 

C.           Pursuant to that certain Amended and Restated Loan and Security Agreement dated as of March 13, 2013 (the “Amended and Restated Agreement”), the financial institutions as lender parties thereto (collectively, the “A&R Lenders”) and Union Bank, N.A., as administrative agent for the A&R Lenders, agreed to provide Borrower with an amended revolving line of credit to replace the Original Loan (the “A&R Loan”).

 

D.           Borrower has requested that Lenders provide Borrower with an increased revolving line of credit in an amount equal to the Revolving Commitment, which includes a swing line of credit to be provided by Swing Line Lender, to be used by Borrower for among other things, refinancing the A&R Loan, acquiring aircraft and aircraft engines owned and held for lease, and supporting Borrower’s working capital needs and general corporate purposes.

 

E.           Lenders are willing to extend such a revolving line of credit to Borrower, subject to the terms and conditions set forth herein.

 

F.           Borrower has requested and the parties hereto hereby agree that the A&R Agreement shall be amended and restated in its entirety as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

	
1.  

	
DEFINITIONS AND ACCOUNTING TERMS

 

1.1 Defined Terms

 

.  As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

"Account Debtor" means any Person who is obligated under an Account.

 

"Accounts" means all "accounts," as such term is defined in the UCC, now owned or hereafter acquired by Borrower, including (a) all accounts receivable, payments and pre-payments under Leases, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by chattel paper, documents or instruments), whether arising out of goods sold or services rendered by it or from any other transaction (including any such obligations that may be characterized as an account or contract right under the UCC), (b) all purchase orders or receipts for goods or services, (c) all rights to any goods represented by any of the foregoing (including unpaid sellers' rights of rescission, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all monies due or to become due to Borrower under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower) now or hereafter in existence, including the right to receive the proceeds of said purchase orders and contracts, and (e) all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

 

"Acquisition" means any transaction, or any series of related transactions, consummated after the Closing Date, by which Borrower and/or any of its Subsidiaries directly or indirectly (a) acquires any ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, whether through purchase of assets, merger or otherwise, (b) acquires control of securities of a Person engaged in an ongoing business representing more than 50% of the ordinary voting power for the election of directors or other governing position if the business affairs of such Person are managed by a board of directors or other governing body or (c) acquires control of more than 50% of the ownership interest in any partnership, joint venture, limited liability company, business trust or other Person engaged in an ongoing business that is not managed by a board of directors or other governing body.

 

  

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“Advance Rate” means:

 

(a)           seventy-five percent (75%) of the Appraised Value of Bombardier Aircraft, Embraer Aircraft and ATR Aircraft, provided, however, that the rate for such Bombardier Aircraft, Embraer Aircraft and ATR Aircraft that are not subject to an Eligible Lease for more than two hundred seventy (270) days will be reduced to forty percent (40%);

 

(b)           seventy percent (70%) of the Appraised Value of Leased Spare Engines, provided, however, that the rate for such Leased Spare Engines that are not subject to an Eligible Lease for more than one hundred eighty (180) days shall be reduced to thirty-five percent (35%);

 

(c)           sixty-five percent (65%) of the Net Book Value for Saab 340B Plus Aircraft, provided, however, that the rate for such Saab manufactured Aircraft that are not subject to an Eligible Lease for more than one hundred eighty (180) days shall be reduced to zero percent (0%);

 

(d)           sixty percent (60%) of the Net Book Value of all Other Saab Aircraft, provided, however, that the rate for such Other Saab Aircraft that are not subject to an Eligible Lease for more than one hundred eighty (180) days shall be reduced to zero percent (0%);

 

(e)           fifty percent (50%) of the Appraised Value of Fokker 50 Aircraft, provided, however, that the rate for such Fokker 50 Aircraft that are not subject to an Eligible Lease for more than one hundred eighty (180) days shall be reduced to zero percent (0%); and

 

(f)           thirty percent (30%) of the Appraised Value of Fokker 100 Aircraft, provided, however, that the rate for such Fokker 100 Aircraft that are not subject to an Eligible Lease for any period of time shall be reduced to zero percent (0%).

 

"Affiliate" means, with respect to any Person, another Person that, directly or indirectly, Controls, or is Controlled by or is under common Control with such other Person.  For the purpose of this definition, "Control" or "Controlled" means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.

 

"Agent" means Union Bank, N.A. when acting in its capacity as Agent under any of the Loan Documents, or any successor Agent.

 

"Agreement" means this Second Amended and Restated Loan and Security Agreement, as the same may, from time to time, be amended, supplemented, modified or restated.

 

"Aircraft" means each aircraft purchased by Borrower described in a Mortgage, together with any and all Parts (including Engines) which are either incorporated or installed in or attached to such aircraft’s airframe or required to be subject to the lien and security interest of such Mortgage.

 

"Alternative Dispute Resolution Agreement" means one or more Alternative Dispute Resolution Agreement(s) executed by Agent, each Lender, and Borrower in connection with this Agreement, the A&R Loan Agreement and the Original Agreement, as applicable.

 

"Applicable Base Rate" means the percentage as calculated in Section 2.2.1(a).

 

"Applicable Base Rate Margin" means the percentage determined by reference to Table 1 in Section 2.2.1(c) of this Agreement.

 

"Applicable Law" means, in respect of any Person, all provisions of constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to such Person, and all orders and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it or its properties are bound.

 

"Applicable LIBOR Margin" means the percentage determined by reference to Table 1 in Section 2.2.1(c) of this Agreement.

 

"Applicable LIBOR Rate" means the percentage as calculated in Section 2.2.1(b).

 

"Applicable Unused Line Fee Percentage" means one half of one percent (0.50%).

 

  

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"Appraisal" means a "desktop appraisal" (i.e., an appraisal without a physical inspection of such Equipment), or, if a Default exists, such other type of appraisal (e.g., extended desktop, visual inspection) as shall be required by Agent, of an item of Equipment to determine the Appraised Value of such Equipment, performed by an Appraiser retained by Agent on behalf of the Lenders.

 

"Appraised Value" means, with respect to an item of Equipment, an amount as determined by the Appraiser to be the fair market value as set forth in the most recent Appraisal pursuant to Section 8.1.6 or, with respect to an item of Equipment being added to the Borrowing Base after submission of an annual Appraisal, an individual Appraisal of such item of Equipment.

 

"Appraiser" means (i) ASCEND – Flight Global Advisory Service, (ii) any other independent appraiser acceptable to Agent that is a member of the International Society of Transport Aircraft Trading ("ISTAT") (or if ISTAT ceases to exist, any similar professional aircraft appraiser organization that is acceptable to Agent).

 

"APU" means, whether or not installed on an airframe, the auxiliary power unit of the manufacture and model described in any Mortgage, together with any and all modules and Parts which are either incorporated or installed from time to time in or attached to such APU.

 

"Assets" means all of Borrower's assets and property, whether now existing or owned or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)           all accounts, chattel paper (including tangible and electronic chattel paper), contract rights, deposit accounts, documents (including negotiable documents), equipment (including the Equipment and all accessions and additions thereto, including at any time all Propellers, APUs and Landing Gear, and all parts, components, equipment, instruments, appliances, avionics, radio and radar devices, cargo handling systems and loose equipment that are at such time incorporated or installed in or attached thereto or to an Aircraft or Engine), general intangibles (including payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), leases, letter of credit rights, money, and all of Borrower's books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)           all common law and statutory copyrights and copyright registrations, applications for registration, now existing or hereafter arising, in the United States of America or in any foreign jurisdiction, obtained or to be obtained on or in connection with any of the forgoing, or any parts thereof or any underlying or component elements of any of the forgoing, together with the right to copyright and all rights to renew or extend such copyrights and the right (but not the obligation) of Agent to sue in its own name and/or in the name of the Borrower for past, present and future infringements of copyright;

 

(c)           all trademarks, service marks, trade names and service names and the goodwill associated therewith, together with the right to trademark and all rights to renew or extend such trademarks and the right (but not the obligation) of Agent to sue in its own name and/or in the name of the Borrower for past, present and future infringements of trademark;

 

(d)           all (i) patents and patent applications filed in the United States Patent and Trademark Office or any similar office of any foreign jurisdiction, and interests under patent license agreements, including, without limitation, the inventions and improvements described and claimed therein, (ii) licenses pertaining to any patent whether Borrower is licensor or licensee, (iii) income, royalties, damages, payments, accounts and accounts receivable now or hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (iv) right (but not the obligation) to sue in the name of Borrower and/or in the name of Agent for past, present and future infringements thereof, (v) rights corresponding thereto throughout the world in all jurisdictions in which such patents have been issued or applied for, and (vi) reissues, divisions, continuations, renewals, extensions and continuations-in-part with respect to any of the foregoing; and

 

(e)           any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.

 

“ATR Aircraft” means the ATR 42 series and ATR 72 series aircraft manufactured by Aerei da Trasporto Regionale.

 

"Authorized Party" means each Person identified in Section 2.14.

 

"Authorized Signatory" means (i) with respect to any Compliance Certificates delivered to Agent hereunder, (a) the chief executive officer, (b) the president, or (c) the chief financial officer or deputy financial officer, in each case of Borrower, and (ii) with respect to all other documents required to be executed by Borrower and delivered to Agent and/or Lenders hereunder, each of the foregoing persons or such other senior personnel of Borrower as may be duly authorized and designated in writing by Borrower to execute documents, agreements, and instruments on behalf of Borrower and to pledge Borrower's real and personal property.

 

  

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"Aviation Authority" means the FAA, the Joint Airworthiness Authorities of the European Union /European Aviation Safety Agency and/or any other governmental authority which, from time to time, has control or supervision of civil aviation or has jurisdiction over the airworthiness, operation and/or maintenance of an item of Equipment.

 

"Bankruptcy Code" means the Bankruptcy Code (11 U.S.C. Sections 101 etseq.).

 

"Base Rate" shall have the meaning ascribed thereto in Section 2.2.1(a).

 

"Base Rate Loans" means a Revolving Loan which Borrower requests to be made as a Base Rate Loan or a Revolving Loan which is reborrowed as, or converted to, a Base Rate Loan, in accordance with the provisions of Sections 2.1.2 and 2.1.4(b).

 

"Beneficial Interest" means a beneficial interest in a trust which owns one or more items of Equipment.

 

"Beneficial Interest Pledge Agreement" means a Beneficial Interest Pledge Agreement, to be entered into among Borrower, Owner Trustee, and Agent, whereby Borrower pledges to Agent, as security for certain obligations under this Agreement, all of the beneficial interest of Borrower, as beneficial owner under a particular Trust Agreement. 

 

"Books and Records" means all books, records, board minutes, contracts, licenses, insurance policies, environmental audits, business plans, files, accounting books and records, financial statements (actual and pro forma), and filings with Governmental Authorities.

 

“Bombardier Aircraft” means the deHavilland Dash - 6 and Dash-8 series aircraft, and Canadair Regional Jets Series 700, 705, 900 and 1000 series aircraft manufactured by Bombardier Aerospace.

 

"Borrowing Availability" means, at any time, the lesser of (a) the Maximum Amount, or (b) the Borrowing Base Availability.

 

"Borrowing Base" means, at any time, an amount equal to the sum of the Advance Rate as applied to each item of Equipment included in Eligible Collateral. 

 

"Borrowing Base Availability" means, at any time, an amount equal to (a) the Borrowing Base shown on the Borrowing Base Certificate most recently delivered by Borrower to Agent and on other information available to Agent less (b) the sum of (i) the amount then outstanding under the Credit Facility plus (ii) the total amount of any deferred rent and maintenance reserves due to the Borrower from any Lessee or former Lessee plus (iii) the lesser of (y) five million dollars ($5,000,000.00) or (z) the amount reflected on the Company's balance sheet as "Maintenance Reserves and Accrued Costs" as of the date of measurement.

 

"Borrowing Base Certificate" means a certificate in the form attached hereto as Exhibit A.

 

"Borrowing Base Deficiency" means, at any time, the amount, if any, by which the aggregate amount of any Loans then outstanding exceeds the Borrowing Base Availability.

 

"Borrowing Notice" means a written request for a Loan substantially in the form of Exhibit B signed by an Authorized Signatory of Borrower and properly completed to provide all information required to be included therein.

 

"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close, and in reference to LIBOR Loans means a Business Day that is also a day on which banks in the city of London are open for interbank or foreign exchange transactions.

 

"Cape Town Convention" means the official English language texts of the "Convention on International Interests in Mobile Equipment" and the "Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment", both of which were signed in Cape Town, South Africa on November 16, 2001, and including the Regulations for the International Registry and the Procedures for the International Registry, as promulgated thereunder.

 

"Cape Town Eligible Lease" means those certain Leases which create International Interests under the Cape Town Convention.

 

"Capital Lease Obligations" means all monetary obligations of a Person under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease.

 

"Cash" means, when used in connection with any Person, all monetary and non-monetary items owned by that Person that are treated as cash in accordance with GAAP, consistently applied.

 

  

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"Cash Equivalents" means, when used in connection with any Person, that Person's Investments in:

 

(a)           Government Securities due within one year after the date of the making of the Investment;

 

(b)           readily marketable direct obligations of any State of the United States of America or any political subdivision of any such State or any public agency or instrumentality thereof given on the date of such Investment a credit rating of at least AA by Moody's Investors Service, Inc. or AA by Standard & Poor's Rating Group (a division of McGraw Hill, Inc.), in each case due within one year from the making of the Investment;

 

(c)           certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers' acceptances of, and repurchase agreements covering Government Securities executed by Lender or any bank incorporated under the Applicable Law of the United States of America, any State thereof or the District of Columbia and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000, or total assets of at least $5,000,000,000, in each case due within one year after the date of the making of the Investment;

 

(d)           certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers' acceptances of, and repurchase agreements covering Government Securities executed by Lender or any branch or office located in the United States of America of a bank incorporated under the Applicable Law of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, or total assets of at least $15,000,000,000, in each case due within one year after the date of the making of the Investment;

 

(e)           repurchase agreements covering Government Securities executed by a broker or dealer registered under Section 15(b) of the Securities Exchange Act of 1934, as amended, having on the date of the Investment capital of at least $50,000,000, due within ninety (90) days after the date of the making of the Investment; provided that the maker of the Investment receives written confirmation of the transfer to it of record ownership of the Government Securities on the books of a "primary dealer" in such Government Securities or on the books of such registered broker or dealer, as soon as practicable after the making of the Investment;

 

(f)           readily marketable commercial paper or other debt securities issued by corporations doing business in and incorporated under the Applicable Law of the United States of America or any State thereof or of any corporation that is the holding company for a bank described in clause (c) or (d) above given on the date of such Investment a credit rating of at least P 1 by Moody's Investors Service, Inc. or A 1 by Standard & Poor's Rating Group (a division of McGraw Hill, Inc.), in each case due within one year after the date of the making of the Investment;

 

(g)           "money market preferred stock" issued by a corporation incorporated under the Applicable Law of the United States of America or any State thereof (i) given on the date of such Investment a credit rating of at least AA by Moody's Investors Service, Inc. and AA by Standard & Poor's Rating Group (a division of McGraw Hill, Inc.), in each case having an investment period not exceeding fifty (50) days or (ii) to the extent that investors therein have the benefit of a standby letter of credit issued by Lender or a bank described in clauses (c) or (d) above; provided that (y) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (z) the aggregate amount of all such Investments does not exceed $15,000,000;

 

(h)           a readily redeemable "money market mutual fund" sponsored by a bank described in clause (c) or (d) hereof, or a registered broker or dealer described in clause (e) hereof, that has and maintains an investment policy limiting its investments primarily to instruments of the types described in clauses (a) through (g) hereof and given on the date of such Investment a credit rating of at least AA by Moody's Investors Service, Inc. and AA by Standard & Poor's Rating Group (a division of McGraw Hill, Inc.); and

 

(i)           corporate notes or bonds having an original term to maturity of not more than one year issued by a corporation incorporated under the Applicable Law of the United States of America, or a participation interest therein; provided that (i) commercial paper issued by such corporation is given on the date of such Investment a credit rating of at least AA by Moody's Investors Service, Inc. and AA by Standard & Poor's Rating Group (a division of McGraw Hill, Inc.), (ii) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (iii) the aggregate amount of all such Investments does not exceed $15,000,000.

 

"Change in Control" means (a) any transaction or series of related transactions in which any Unrelated Person or two or more Unrelated Persons acting in concert acquire beneficial ownership (within the meaning of Rule 13d 3(a)(1) under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 20% or more of the ownership interests in Borrower, (b) Borrower consolidates with or merges into another Person or conveys, transfers or leases its properties and assets substantially as an entirety to any Person or any Person consolidates with or merges into Borrower, in either event pursuant to a transaction in which the ownership interests in Borrower are changed into or exchanged for cash, securities or other property, with the effect that any Unrelated Person becomes the beneficial owner, directly or indirectly, of 20% or more of ownership interests in Borrower or that the Persons who were the holders of ownership interests in Borrower immediately prior to the transaction hold less than 80% of the interests of the surviving entity after the transaction, (c) any change in an executive officer of Borrower (provided no change in control shall occur upon the death or incapacitation of an executive officer), (d) Borrower ceases to be managed by JMC pursuant to the JMC Management Agreement, or (e) a "change in control" as defined in any document governing Indebtedness of Borrower which gives the holders of such Indebtedness the right to accelerate or otherwise require payment of such Indebtedness prior to the maturity date thereof.  For purposes of the foregoing, the term "Unrelated Person" means any Person other than (i) any Affiliate of any thereof and members of the immediate family of any thereof,  (ii) a Subsidiary of Borrower or (iii) an employee stock ownership plan or other employee benefit plan covering the employees of Borrower and its Subsidiaries.

 

"Charges" means all Federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to PBGC at the time due and payable), levies, assessments, charges, liens, and all additional charges, interest, penalties, expenses, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of Borrower, (d) the ownership or use of any assets by Borrower, or (e) any other aspect of Borrower's business.

 

"Chattel Paper" means all "chattel paper," as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, but excluding Leases.

 

"Claim" means any and all suits, actions, or proceedings in any court or forum, at law, in equity or otherwise; costs, fines, deficiencies, or penalties; asserted claims or demands by any Person; arbitration demands, proceedings or awards; damages, losses, liabilities and expenses (including reasonable attorneys' fees and disbursements and other costs of collection, defense or appeal); enforcement of rights and remedies; or criminal, civil or regulatory investigations.

 

"Closing Date" means the time and Business Day on which the conditions set forth in Section 4.1 are satisfied or waived.

 

"Collateral" means all of the collateral covered by the Collateral Documents.

 

"Collateral Documents" means, collectively, all of those documents set forth in Section 3.1, including without limitation the following and any agreements, documents, and instruments executed, filed or registered in connection therewith:  this Agreement, to the extent it constitutes a security agreement, the Mortgage, the Owner Trustee Mortgage, UCC financing statements, a Beneficial Interest Pledge Agreement (if any), an Owner Trustee Guaranty (if any), and such other agreements, pledges and security instruments, and all amendments thereto, instruments and documents as Agent may reasonably require pursuant to this Agreement.

 

  

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"Commitment Assignment and Acceptance" means a commitment assignment and acceptance substantially in the form of Exhibit C.

 

"Compliance Certificate" means a Compliance Certificate in the form attached hereto as Exhibit D signed by an Authorized Signatory.

 

"Contract" means, individually and collectively, all contracts, leases, undertakings, and agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which any Person may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account.

 

"Contracting State" shall have the meaning given to such term under Article 4 of the Cape Town Convention.

 

"Contractual Obligation" means, as to any Person, any provision of any outstanding security issued by that Person or of any material agreement, instrument or undertaking to which that Person is a party or by which it or any of its property is bound.

 

"Credit Facility" means the revolving credit facility provided hereunder in respect of the Revolving Loans and the Swing Line Loans.

 

"Custodial Agreement" means an agreement pursuant to which a Person is acting as custodian for Borrower with respect to original "chattel paper" or such other documents as may be addressed under such agreement.

 

"Custodian" means any custodian under the Custodial Agreement.

 

"Debt Service Coverage Ratio" shall have the meaning given such term in Section 6.15.3.

 

"Default" means any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

 

"Default Rate" means (i) for all then outstanding and any future Base Rate Loans, a per annum default rate equal to the Applicable Base Rate plus two percent (2.0%), and (ii) for all then outstanding LIBOR Loans, a per annum default rate equal to the Applicable LIBOR Rate plus two percent (2.0%), which Default Rate with respect to any LIBOR Loans shall be in effect until the end of the LIBOR Loan Period, at which time (provided an Event of Default is then continuing) any such LIBOR Loan(s) shall automatically convert to Base Rate Loan(s) and accrue interest at the Default Rate set forth herein for Base Rate Loans.

 

 

"Distribution" means, with respect to any shares of capital stock or membership interests or any warrant or option to purchase an equity security or other equity security issued by a Person, (a) the retirement, redemption, purchase or other acquisition for Cash or for Property by such Person of any such security, (b) the declaration or (without duplication) payment by such Person of any dividend in Cash or in Property on or with respect to any such security, (c) any Investment by such Person in the holder of 5% or more of any such security if a purpose of such Investment is to avoid characterization of the transaction as a Distribution and (d) any other payment in Cash or Property by such Person constituting a distribution under Applicable Law with respect to such security.

 

"Documents" means all "documents," as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, including all bills of lading, dock warrants, dock receipts, warehouse receipts, and other documents of title, whether negotiable or non-negotiable.

 

"Dollars" means lawful currency of the United States.

 

"EBITDA" means Net Income (Loss), plus (a) Interest Expense, (b) depreciation, (c) tax expense, (d) amortization, and (e) Permitted Aircraft Disposition Charges (if any), calculated based on the trailing consecutive twelve (12) month period.

 

"Eligible Asset" means, at any time, an item of Equipment that meets the following criteria:

 

(a)           the purchase price of which has been paid in full and it is not subject to any other financing;

 

(b)           as to which an Equipment Owner or Lessor has good and marketable title, and on which Agent has a fully perfected first priority Lien and which is not subject to any other Lien other than Permitted Liens;

 

(c)           as to which, if owned by Owner Trustee, the Borrower shall have executed and delivered to Agent a Beneficial Interest Pledge Agreement covering, among other things, the Borrower's Beneficial Interest in the owner trust which owns such item(s) of Equipment and/or Lease, and as to which the Owner Trustee shall have executed and delivered to Agent an (x) Owner Trustee Mortgage covering, among other things, such  items of Equipment and/or Lease, (y) a Trust Agreement and (z) an Owner Trustee Guaranty;

 

(d)           as to which the Equipment Owner or Lessor shall have executed and delivered to Agent and/or filed (i) a Mortgage covering, among other things, such items of Equipment and/or Lease and (ii) the other documentation required in respect of Equipment;

 

(e)           with respect to items of Equipment, it has not suffered an Event of Loss, it is being used solely for lawful purposes and in the ordinary course of business of the Equipment Owner; and

 

(f)           in the case of Equipment subject to Lease, it is insured against loss by either the Equipment Owner or the Lessee in accordance with this Agreement and industry practice.

 

  

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"Eligible Assignee" means (a) another Lender, (b) with respect to any Lender, any Affiliate of that Lender, (c) any commercial bank having total assets of $1,000,000,000 or more, (d) any (i) savings bank, savings and loan association or similar financial institution or (ii) insurance company engaged in the business of writing insurance which, in either case (A) has total assets of $1,000,000,000 or more, (B) is engaged in the business of lending money and extending credit under Credit Facility substantially similar to those extended under this Agreement and (C) is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank and (e) any other financial institution (including a mutual fund or other fund) having total assets of $1,000,000,000 or more which meets the requirements set forth in subclauses (B) and (C) of clause (d) above; provided that each Eligible Assignee must either (aa) be organized under the laws of the United States of America, any State thereof or the District of Columbia or (bb) be organized under the laws of the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such a country, and (i) act hereunder through a branch, agency or funding office located in the United States of America and (ii) be exempt from withholding of tax on interest and deliver the documents related thereto pursuant to Section 12.17.

 

"Eligible Collateral" means (i) Equipment included in the Collateral which is subject to an Eligible Lease or (ii) Equipment included in the Collateral which is an Eligible Asset not subject to a lease.  In order to be Eligible Collateral, Agent shall possess a first priority security interest in said Collateral to secure the payment, promptly when due, and the punctual performance of all of the liabilities in connection therewith that is (a) electronically recorded on the International Registry (Cape Town Convention), (b) filed with the FAA in the case of (1) any Aircraft that are registered with the FAA and (2) all Engines, whether attached to an Aircraft or a Leased Spare Engine and (c) thereafter, promptly, to the satisfaction of Agent, and as soon as practical and in any event within one hundred and eighty (180) days following registration with the International Registry, perfected through all additional required local foreign jurisdiction security conventions (if any), to secure the payment, promptly when due.

 

"Eligible Lease" shall mean a lease for Equipment to an unaffiliated Person in which:

 

(a)           Borrower is the lessor of the Equipment;

 

(b)           the lease arose in the ordinary course of business of Borrower;

 

(c)           the Equipment has been delivered to the Lessee and is currently subject to the lease;

 

(d)           neither the lease nor the Equipment is subject to any currently outstanding assignment, claim, lien, security interest or other limitation on the absolute title of Borrower;

 

(e)           the lease payments and maintenance reserves are not more than ninety (90) days past due with respect to any payment required thereby;

 

(f)           the lease is freely assignable by the Lessor (with any notices or consents required in connection therewith having been previously obtained, and subject to any lease requirements concerning the net worth of the assignee) and prohibits assignment in whole or in part by the Lessee thereof without the prior written consent of Lessor;

 

(g)           the lease and the Equipment being leased constitute Collateral;

 

(h)           the remaining lease term at the time of  entry into the pool of Eligible Collateral is for a period of ten years or less;

 

(i)           it is a triple net contract and with respect to which the Lessee thereunder is responsible for all payments in connection therewith, including, but not limited to, payment of all taxes (including sales and use taxes), insurance and maintenance expenses (or payment of maintenance reserves in lieu thereof) and all other expenses pertaining to the assets subject thereto;

 

(j)           it is a non-cancelable lease and provides that the Lessee's obligations thereunder are absolute and unconditional and which obligations are not, either pursuant to the terms of such Lease or otherwise, subject to contingencies, defense, deduction, set-off, reduction, claim or counterclaim of any kind whatsoever and as to which no defenses, deductions, set offs, reductions, claims or counterclaims exist or have been asserted by the Lessee or anyone on its behalf and the Borrower has no obligations thereunder, including, without limitation, any service or maintenance of the related Equipment, other than the obligation to sell, lease or finance the Equipment and grant a covenant of quiet enjoyment to such Lessee; provided, however, that (i) in the case of leases with terms of less than twelve months in which Borrower may be responsible for maintenance and (ii) Borrower may assume the obligation to pay some or all of the cost of engine overhaul, airworthiness directives or manufacturer or government ordered modifications required during the term of the Lease, so long as the Lease states that such obligation is solely that of Borrower and imposes no obligation on the Lenders, in their capacity as lenders to Borrower, and Lessee's only remedy for breach of the obligation is an independent action against Borrower as Lessor, and Lessee waives any and all right to offset such obligation against lease payments owed Borrower;

 

(k)           the Lessee is not a resident of, and the Equipment will not be subject to the laws of any, foreign jurisdiction in which, in the sole determination of Agent, the ability of Agent to perfect a first priority security interest in the Equipment is unsatisfactory or the ability of Agent to foreclose upon the Equipment and receive possession to or sell said Equipment is unsatisfactory;

 

(l)           with respect to which the Borrower's books and records are accurate, complete and genuine;

 

(m)           it requires the Lessee to comply with all maintenance, return, alteration, replacement, pooling and sublease conditions as typically found in leases for similar types of aircraft, engines or equipment and as necessary to maintain at all times the airworthiness certification and serviceability status of the related Equipment pursuant to all applicable governmental and regulatory requirements;

 

(n)           it requires the Lessee to provide liability insurance, all risk ground and flight coverage for damage or loss of the related Equipment, and war risk insurance (if applicable), and with respect to which Agent is named as loss payee;

 

(o)           it requires the Lessee to provide confiscation and expropriation insurance, with deductibles that are acceptable to Agent, for Equipment operated (x) on routes with respect to which it is customary for air carriers flying comparable routes to carry such insurance or (y) in any area designated by companies providing such coverage as a recognized or threatened war zone or area of hostilities or an area where there is a substantial risk of confiscation or expropriation, unless Agent has confirmed in writing to the Borrower that, based on Agent’s assessment of the credit quality of the Lessee and Lessee’s ability to self-insure against such risk and Agent’s assessment of the magnitude of the risk of such loss based on its conclusion regarding the government having jurisdiction over the collateral, such insurance is not necessary;

 

(p)           the Lessee is not based in, and the Lease requires that the related Equipment not be operated in, unless appropriate insurance as determined by Agent is obtained, any country or any jurisdiction, that would not be covered by or would void any insurance coverage required hereunder, or any country which is subject to any United States, the European Union or United Nations sanctions or the lease to which would violate United States law, rule or regulation or other restrictions;

 

(q)           the sole original of which is in the possession of Agent or Custodian, or,  with respect to chattel paper, if there shall be more than one original, then the sole counterpart which shall constitute "chattel paper" for purposes of perfection by possession under the UCC shall be in the possession of Agent; and

 

(r)           the Lessee under which is not a Subsidiary, employee, agent or other Affiliate of the Borrower;

 

provided, that all of the leases set forth on Schedule 1.1a as of the Closing Date are Eligible Leases.

 

  

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"Embraer Aircraft" means Embraer 175, 190 and 195 series aircraft manufactured by Embraer S.A.

 

"Environmental Liabilities and Costs" means all liabilities, obligations, responsibilities, remedial actions, removal costs, losses, damages, costs and expenses that relate to any health or safety condition regulated under any Environmental Law or in connection with any other environmental matter or Release, threatened Release, or the presence of any Hazardous Material.

 

"Engine" means each engine described in any Mortgage (each of which has 550 or more rated takeoff horsepower or the equivalent of such horsepower), together with any and all Parts which are either incorporated or installed in or attached to such engine or required to be subject to the lien and security interest of such Mortgage.

 

"Equipment" means new and used regional Aircraft, including the attached Engines thereto and new and used Leased Spare Engines.  The Aircraft or the Engine, as applicable, shall have been manufactured within twenty eight (28) years immediately preceding the date in question, shall be in good working order immediately or within a reasonable period of time, as determined by Agent, and shall be usable for commercial flight purposes immediately or within a reasonable period of time, as determined by Agent; provided the Aircraft and Engines set forth in Schedule 1.1b shall be included in the definition of "Equipment".

 

"Equipment Owner" means the Borrower or Owner Trustee.

 

"ERISA" means the Employee Retirement Income Security Act of 1974 and the regulations thereunder.

 

"ERISA Affiliate" means any trade or business (whether or not incorporated) which is a member of a "controlled group of corporations," a group of trades or businesses under "common control," or an "affiliated service group," which includes Borrower within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986.

 

"Event of Default" means any of the events specified in Section 9.1.

 

"Event of Loss" means:

 

(a)           if an item of Equipment is not subject to a Lease, any of the following events:

 

(i)           the actual or constructive total loss of such item of Equipment or the agreed or compromised total loss of such item of Equipment;

 

(ii)           its destruction, damage beyond economic repair or being rendered permanently unfit for normal use for any reason whatsoever; and

 

(iii)           any capture, condemnation, confiscation, requisition, purchase, seizure or forfeiture of, or any taking for use or of title to, such item of Equipment, in each case, that shall have resulted in the loss of possession or title of such item of Equipment by the Lessor (other than a requisition for use for not more than one hundred eighty (180) days by the United States Government) or

 

(b)           if an item of Equipment is subject to a Lease, any events defined as an "Event of Loss," "Casualty Occurrence" or similar term in such Lease.

 

(c)           For purposes of this Agreement, the date that an Event of Loss is deemed to have occurred shall be as follows:

 

(i)           if an item of Equipment is not subject to a Lease,

 

(x) in the event of an actual loss of such item of Equipment, on the date of such loss;

 

(y) in the event of damage which results in a constructive or compromised or arranged total loss of such item of Equipment, on the date of the event giving rise to such damage;

 

(z) in the case of an Event of Loss referred to in clause (a)(ii) above, on the date of the occurrence of such event, or

 

(ii)           if an item of Equipment is subject to a Lease, at such times as are set forth in such Lease of such item of Equipment for the foregoing events.

 

In no event will the Event of Loss date be later than the earlier to occur of (i) the Borrower’s or Agent’s (as applicable) receipt of insurance proceeds in respect of such Equipment or (ii) the date that is ninety (90) days after the date of such loss, damage or destruction.

 

"FAA" means the Federal Aviation Administration or any Governmental Authority succeeding to the functions thereof.

 

"Federal Funds Rate" means, as of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such date opposite the caption "Federal Funds (Effective)".  If for any relevant date such rate is not yet published in H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such date under the caption "Federal Funds Effective Rate".  If on any relevant date the appropriate rate for such date is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of three leading brokers of Federal funds transactions in New York City selected by Agent.  For purposes of this Agreement, any change in the Base Rate due to a change in the Federal Funds Rate shall be effective as of the opening of business on the effective date of such change.

 

  

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"Field Examination" means an inspection and/or audit of the Borrower, which Field Examination may be conducted at Agent's direction by Agent and any of its officers, employees, and agents.   The Field Examination may include, without limitation, the review, audit, Appraisal, physical verification, and such other reviews of the Equipment and Borrower's books and records in connection therewith as shall be deemed appropriate by Agent in its sole discretion.

 

"Financial Statements" means the income statement, balance sheet and statement of cash flows of Borrower and its Subsidiaries and of JMC, internally prepared for each Fiscal Quarter and, with respect to JMC, internally prepared for each Fiscal Year, and, with respect to Borrower and its Subsidiaries, audited for each Fiscal Year, in each case prepared in accordance with GAAP including the notes and schedules thereto.

 

"Fiscal Quarter" means any of the quarterly accounting periods of Borrower or JMC, specifically ending March 31, June 30, September 30, and December 31 of each year.

 

"Fiscal Year" means the twelve (12) month fiscal period of Borrower or JMC ending December 31 of each year.  Subsequent changes of the Fiscal Year of Borrower and/or JMC shall not change the term "Fiscal Year" unless Agent shall consent in writing to such change.

 

“Fokker 50” means the fifty passenger turboprop aircraft manufactured by Fokker Aircraft.

 

“Fokker 100” means the one hundred seat jet aircraft manufactured by Fokker Aircraft.

 

"Funded Debt" shall mean, as of the last day of any Fiscal Quarter, all indebtedness, liabilities, and obligations, now existing or hereafter arising, for money borrowed by Borrower whether or not evidenced by any note, indenture, or agreement (including, without limitation, the Notes and any indebtedness for money borrowed from an Affiliate), as determined in accordance with GAAP, consistently applied.

 

"GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

 

"Governmental Authority" means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi governmental agency, authority, board, bureau, commission, department, instrumentality or public body, including any Aviation Authority, or (c) any court or administrative tribunal of competent jurisdiction.

 

"Government Securities" means readily marketable (a) direct full faith and credit obligations of the United States of America or obligations guaranteed by the full faith and credit of the United States of America and (b) obligations of an agency or instrumentality of, or corporation owned, controlled or sponsored by, the United States of America that are generally considered in the securities industry to be implicit obligations of the United States of America.

 

"Guaranteed Indebtedness" means, with respect to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation ("primary obligations") of any other Person (the "primary obligor") in any manner, including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (1) for the purchase or payment of any such primary obligation, or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof.  The amount of any "Guaranteed Indebtedness" at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is made, and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

 

"Hazardous Material" means any substance, material or waste, the generation, handling, storage, treatment or disposal of which is regulated by any Governmental Authority, or forms the bases of liability now or hereafter under, any Environmental Law in any jurisdiction in which Borrower has owned, leased, or operated real property or disposed of hazardous materials.

 

"Indebtedness" means:  (a) with respect to Borrower, the Obligations; (b) all indebtedness of Borrower for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured); (c) all obligations evidenced by notes, bonds, debentures or similar instruments; (d) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by Borrower (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) all Capital Lease Obligations; (f) all Guaranteed Indebtedness; (g) all Indebtedness referred to in clauses (b), (c), (d), (e) or (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; (h) all liabilities under Title IV of ERISA; (i) the net present value of the non-cancelable payments owed by Borrower as lessee under any lease which is qualified as an operating lease in accordance with GAAP for engines, aircraft and engine parts, using a 10% discount rate; (j) all obligations under Interest Rate Protection Agreements, and (k) all obligations with respect to deposits or maintenance reserves to the extent not supported by cash reserved specifically therefor; provided, however, that the term Indebtedness shall not include trade accounts payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered.

 

  

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"Indemnified Person" means Agent, Swing Line Lender and each Lender and each of the foregoing parties' respective Affiliates and their officers, directors, employees, agents and advisors.

 

"Instruments" means all "instruments," as such term is defined in the UCC, now owned or hereafter acquired by Borrower, wherever located, including all certificated securities and all notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

 

"Intellectual Property" means all of the following now owned or hereafter acquired by Borrower:  (a) patents, trademarks, trade dress, trade names, service marks, copyrights, trade secrets and all other intellectual property or Licenses thereof; and (b) all Proceeds of the foregoing.

 

"Interest Coverage Ratio" shall have the meaning given such term in Section 6.15.2.

 

"Interest Expense" means, with respect to any fiscal period, the consolidated interest expense of Borrower and its Subsidiaries for that period, determined in accordance with GAAP, consistently applied, as reported in Borrower's financial statements filed with the SEC (but excluding gains and losses from fair value of derivative charges, whether or not included in other comprehensive income or net income).

 

"Interest Rate Protection Agreement" means a written agreement between Borrower and one or more of the Lenders providing for "swap", "cap", "collar" or other interest rate protection with respect to any Indebtedness.

 

"International Interest" shall have the meaning given to such term in the Cape Town Convention.

 

"International Registry" shall have the meaning given to such term in the Cape Town Convention.

 

"Investment" means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of stock or other securities of any other Person or by means of a loan, advance creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person, including any partnership and joint venture interests of such Person.  The amount of any Investment shall be the amount actually invested (minus any return of capital with respect to such Investment which has actually been received in Cash or has been converted into Cash), without adjustment for subsequent increases or decreases in the value of such Investment.

 

"JMC" means JetFleet Management Corp., a California corporation.

 

"JMC Management Agreement" means that certain Amended and Restated Management Agreement (the "Management Agreement") between Borrower and JMC entered into as of April 23, 1998, as amended, or any successor agreement thereto.

 

"Landing Gear" means, whether or not installed on an airframe, each landing gear, (nose gear and main gear), together with any and all modules and Parts which are either incorporated or installed from time to time in or attached to such Landing Gear.

 

"Lease" means, with respect to an item of Equipment, any written lease agreement, general terms agreement other similar arrangement, as may be in effect between a Lessor, including an Equipment Owner, and a Lessee, as such agreement or arrangement may be amended, modified, extended, supplemented, assigned or novated from time to time in accordance with the terms thereof and the Loan Documents.

 

"Leased Spare Engine" means an Engine that is not attached to an airframe and leased by Lessor to  Lessee as a standalone engine for installation on an airframe or as a spare.

 

"Lender" means each Lender named in Schedule 2.1 and each other party that may be named a "Lender" under this Agreement.

 

"Lender Commitment Amount" means the amount of funds a Lender has committed to advance to Borrower pursuant to the terms hereof, such amount calculated at any time by taking the product of such Lender's Pro Rata Share and the Revolving Commitment.

 

"Lessee" means the lessee of Equipment subject to a Lease.

 

"Lessor" means any Equipment Owner party to a Lease as lessor.

 

"LIBOR" means, for any LIBOR Loan Period, the rate determined by Agent to be the per annum rate (rounded upward to the nearest one-hundredth of one percent (1/100%)) at which deposits in immediately available funds and in lawful money of the United States would be offered to Agent by reference to the British Bankers' Association Interest Settlement Rates for deposits in dollars (as set forth by any service selected by Agent that has been nominated by the British Banker's Association as an authorized information vendor for the purpose of displaying such rates) at approximately 11:00 a.m. (London time) two (2) Business Days before the first day of such LIBOR Loan Period, in an amount equal to the principal amount of, and for a length of time equal to the LIBOR Loan Period for, the LIBOR Loan sought by Borrower.

 

"LIBOR Basis" means a per annum interest rate equal to the quotient of (a) LIBOR divided by (b) one minus the LIBOR Reserve Percentage, stated as a decimal.  The LIBOR Basis shall be rounded upward to the nearest one-sixteenth of one percent (1/16%) and, once determined, shall remain unchanged during the applicable LIBOR Loan Period, except for changes to reflect adjustments in the LIBOR Reserve Percentage.

 

  

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"LIBOR Loan" means a Revolving Loan that Borrower requests to be made as a LIBOR Loan or that is reborrowed as, or converted to, a LIBOR Loan, in each case in accordance with the provisions of Section 2.1.4.

 

"LIBOR Loan Period" means, for each LIBOR Loan, each one (1), two (2), three (3) or six (6) month period (or such other longer or shorter period as approved by Lenders), as selected by Borrower pursuant to Section 2.1.4, during which LIBOR applicable to such LIBOR Loan shall remain unchanged; provided, that (a) any applicable LIBOR Loan Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such LIBOR Loan Period shall end on the immediately preceding Business Day, (b) any applicable LIBOR Loan Period which begins on a day for which there is no numerically corresponding day in the calendar month during which such LIBOR Loan Period is to end shall (subject to clause (a) above) end on the last day of such calendar month, and (c) no LIBOR Loan Period shall extend beyond the Maturity Date.

 

"LIBOR Reserve Percentage" means the percentage in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System as the maximum reserve requirement applicable with respect to Eurocurrency Liabilities (as that term is defined in Regulation D), whether or not any Lender has any Eurocurrency Liabilities subject to such reserve requirement at that time.  The LIBOR Basis for any LIBOR Loan shall be adjusted as of the effective date of any change in the LIBOR Reserve Percentage.

 

"License" means any license under any written agreement now owned or hereafter acquired by Borrower granting the right to use any Intellectual Property or other license of rights or interests now held or hereafter acquired by Borrower.

 

"Lien" means, with respect to any property, any security deed, mortgage, deed to secure debt, deed of trust, lien, pledge, assignment, charge, security interest, title retention agreement, negative pledge, levy, execution, seizure, attachment, garnishment, or other encumbrance of any kind in respect of such property, whether or not choate, vested, or perfected.

 

"Loan Documents" means collectively, this Agreement, the Notes, the Collateral Documents, and any and all other agreements, documents, or instruments (including financing statements) entered into in connection with the transactions contemplated by this Agreement, together with all alterations, amendments, changes, extensions, modifications, refinancings, refundings, renewals, replacements, restatements, or supplements, of or to any of the foregoing.

 

"Loans" means all loans and advances made by Lenders to or for the benefit of Borrower under this Agreement or under any of the Loan Documents.

 

"Maintenance Expense" means all expenses related to maintenance of the Collateral performed by the Borrower which is unrelated to maintenance reserve accounting.

 

"Material Adverse Effect" means a material adverse effect on (a) the business, property, assets, operations or condition (financial or otherwise) of Borrower, (b) the ability of Borrower to pay or perform in accordance with the terms of any of the Loan Documents taken as a whole, or (c) the rights and remedies of Agent or any Lender under any of the Loan Documents.

 

"Material Contracts" means those instruments, agreements and contracts set forth on Schedule 1.1c hereto, as such schedule shall be updated by the Borrower from time to time.

 

"Maturity Date" means the earliest of (a) May 31, 2019 or (b) the date of prepayment in full by Borrower of the Obligations in accordance with the provisions of Section 2.8.

 

"Maximum Amount" means One Hundred Eighty Million and 00/100 Dollars ($180,000,000.00), or such other decreased or increased amount as provided for under Sections 2.8 and Section 2.18, respectively, of this Agreement.

 

"Maximum Leverage Ratio" means the ratio set forth in Section 6.15.1.

 

"Minimum Tangible Net Worth" shall have the meaning given such term in Section 6.15.4.

 

"Mortgage" means each Mortgage and Security Agreement and any mortgage supplement thereto or each such other security instrument required by Applicable Law, made by Borrower in favor of Agent as security for certain obligations under this Agreement.

 

"Negative Pledge" means a Contractual Obligation which contains a covenant binding on Borrower or any of its Subsidiaries that prohibits Liens on any of its Property, other than (a) any such covenant contained in a Contractual Obligation granting or relating to a particular Lien which affects only the Property that is the subject of such Lien; (b) any such covenant that does not apply to Liens securing the Obligations; and (c) customary permitted junior Liens to be agreed upon by Borrower and Lender.

 

"Net Book Value" means with respect to an item of Equipment, the book value of such item of Equipment determined in accordance with GAAP as set forth on Borrower’s and its Subsidiaries’ financial statements (which shall be the cost of such Equipment if such calculation is being determined at the time of acquisition of such Equipment), utilizing depreciation methods consistent with current practice and GAAP.

 

"Net Income" means, with respect to any fiscal period, the consolidated net income (or loss) of Borrower and its Subsidiaries for that period, determined in accordance with GAAP, consistently applied.

 

"Note" means any note, including any Revolving Note or Swing Line Note, executed and delivered by Borrower to any Lender or Swing Line Lender, as applicable, under this Agreement, and “Notes” means collectively all such notes executed and delivered by Borrower to each Lender and Swing Line Lender under this Agreement.

 

  

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"Obligations" means all loans, advances, debts, expenses reimbursements, fees, liabilities and obligations, for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by Borrower to any Lender and Swing Line Lender of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under this Agreement or in connection with any of the other Loan Documents (including an Interest Rate Protection Agreement entered into in connection with this Agreement), and all covenants and duties regarding such amounts.  This term includes all principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of Borrower), fees, Charges, expenses, reasonable attorneys' fees and any other sum chargeable to Borrower under this Agreement or any of the other Loan Documents, and all principal and interest due in respect of the Loans.

 

“Other Saab Aircraft” means Saab 340A and 340B series aircraft manufactured by Saab Group.

 

"Overadvance" means a Base Rate Loan or LIBOR Loan which, on the date such Loan is made, causes the aggregate amount of all Loans then outstanding to exceed the lesser of the (i) Maximum Amount or (ii) Borrowing Base Availability.

 

"Owner Trustee" means  bank or trust company reasonably satisfactory to Agent acting as trustee of an aircraft owner trust under a Trust Agreement with Borrower as the beneficiary.

 

"Owner Trustee Guaranty" means an Owner Trustee Guaranty made by Owner Trustee in favor of Agent, as security for certain obligations under this Agreement, and guaranteeing Owner Trustee's performance of the obligations under the respective Owner Trustee Mortgage.

 

"Owner Trustee Mortgage" means a Mortgage and Security Agreement made by Owner Trustee in favor of Agent with respect to a Trust Agreement (in connection with certain Equipment), as security for certain obligations under this Agreement.

 

"Parts" means, at any time, all parts, components, equipment, instruments, appliances, avionics, radio and radar devices, cargo handling systems and loose equipment that are at such time incorporated or installed in or attached to an airframe, Engine, Propeller, APU or Landing Gear.

 

"Payment Date" means the last day of each LIBOR Loan Period for a LIBOR Loan.

 

"PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Permitted Aircraft Disposition Charges” means the non-cash impairment charges (if any) and losses (if any) on the sale of Aircraft other than Bombardier Aircraft or Aircraft acquired by Borrower from and after July 2008, up to a total aggregate amount of Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) incurred after the date of this Agreement, used in calculating Tangible Net Worth, EBITDA, and the financial covenants under Section 6.15.1 (Maximum Leverage Ratio), and under section 6.15.2 (Interest Coverage Ratio).

 

"Permitted Indebtedness" means, as applied to Borrower, (a) Indebtedness of Borrower under this Agreement and the Notes, (b) Indebtedness incurred in the ordinary course of Borrower's business which is unsecured and does not constitute Funded Debt, and (c) Indebtedness existing as of the Closing Date and included on Schedule 1.1d hereto.

 

"Permitted Liens" means, as applied to Borrower:  (a) Liens securing taxes, assessments, and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA) or the claims of materialmen, mechanics, carriers, repairmen, warehousemen, or landlords or other like Liens, but which (1) have been bonded, or (2) which are being contested in good faith by appropriate proceedings and for which Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP; (b) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under worker's compensation, unemployment insurance, or similar legislation; (c) Liens constituting encumbrances in the nature of zoning restrictions, easements, and rights of way or restrictions of record on use of real property which, in the reasonable judgment of Agent, do not materially detract from the value of such property or impair the use thereof in the business of Borrower; (d) Liens of record set forth in Schedule 1.1e; (e) Liens created under the Loan Documents; (f) the rights of any Lessee or sublessee under any Lease to utilize an any Collateral pursuant to the terms of a Lease; (g) Liens arising in connection with legal or equitable proceedings against Borrower, which Borrower is contesting with diligence and good faith and which Liens do not have a Material Adverse Effect; (h) liens in respect of personal property leases that do not affect any assets included in the Borrowing Base, which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower so as to cause a Material Adverse Effect; (i) any Lien on any asset not included in the Borrowing Base to secure Indebtedness permitted hereunder; (j) Liens securing Indebtedness that has since been repaid in full, which filings Borrower cannot independently terminate; (k) Liens arising out of judgments that do not constitute an Event of Default under this Agreement; (l) any Lien arising by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution in the ordinary course of business; (m) Liens securing Capital Lease Obligations on assets subject to such leases provided that such capitalized leases are otherwise permitted under this Agreement; (n) Liens arising from the following types of liabilities of a lessee or any other operator of an item of Equipment, so long as such liabilities are either not yet due or are being contested in good faith through appropriate proceedings that do not give rise to any reasonable likelihood of the sale, forfeiture or other loss of such item of Equipment, title thereto or Agent's security interest therein or of criminal or unindemnified civil liability on the part of the Borrower, any Lender or any Agent and with respect to which the lessee maintains adequate reserves (in the reasonable judgment of the Borrower):  (A) fees or charges of any airport or air navigation authority, (B) judgments, or (C) salvage or other rights of insurers; (o) Liens on assets not included in the Borrowing Base evidenced by UCC financing statements which are expressly permitted under the terms of the Loan Documents; provided that none of the foregoing Liens would have priority over the security interest in favor of Agent under the Loan Documents; and (p) Liens on the assets securing Permitted Special Purpose Financings.

 

"Permitted Rights of Others" means those Right of Others consisting of (a) an interest (other than a legal or equitable co ownership interest, an option or right to acquire a legal or equitable co ownership interest and any interest of a ground lessor under a ground lease), that does not materially impair the fair market value or use of Property for the purposes for which it is or may reasonably be expected to be held, (b) an option or right to acquire a Lien that would be a Permitted Lien, (c) the subordination of a lease or sublease in favor of a financing entity and (d) a license, or similar right, of or to Intellectual Property granted in the ordinary course of business.

 

"Person" means any individual or entity, including a trustee, sole proprietorship, partnership, limited partnership, limited liability partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

 

"Phantom Amortization" shall be equal to ten percent (10%) of Funded Debt.

 

"Plan" means, with respect to Borrower or any of its Affiliates, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower or any of its Affiliates maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

 

“Pro Forma EBITDA” means a pro forma EBITDA amount used in calculating the financial covenant in Section 6.15.3 of the Debt Service Leverage Ratio, for a given period, calculated as agreed to by Agent, attributable to Eligible Collateral acquired by Borrower during such period but for which at the time there is not a full four quarters of operating history on which to base the EBITDA calculation.

 

  

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"Proceeds" means "proceeds," as such term is defined in the UCC and, in any event, shall include:  (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any Collateral; (b) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any Collateral by any governmental body, authority, bureau or agency (or any person acting under color of Governmental Authority); (c) any claim of Borrower against third parties for past, present or future infringement or dilution of any Intellectual Property or for injury to the goodwill associated with any Intellectual Property; (d) any recoveries by Borrower against third parties with respect to any litigation or dispute concerning any Collateral; and (e) any and all other amounts from time to time paid or payable under or in connection with any Collateral, upon disposition or otherwise.

 

"Propeller" means each propeller described in a Mortgage.

 

"Property" means any real property, personal property, or Intellectual Property owned, leased or operated by Borrower, Owner Trustee or any Subsidiary.

 

"Pro Rata Share" means, with respect to each Lender, the percentage of the Revolving Commitment set forth opposite the name of that Lender on Schedule 2.1, as such percentage may be increased or decreased pursuant to a Commitment Assignment and Acceptance executed in accordance with Section 12.7.2.

 

"Prospective International Interest" shall have the meaning given to such term in the Cape Town Convention.

 

"Quarterly Payment Date" means each March 31, June 30, September 30, and December 31.

 

"Reference Rate" means the variable per annum rate of interest most recently announced by Agent at its corporate headquarters as the "Union Bank, N.A. Reference Rate," with the understanding that the "Union Bank, N.A. Reference Rate" is one of Agent's index rates and merely serves as a basis upon which effective rates of interest are calculated for loans making reference thereto and may not be the lowest or best rate at which Agent calculates interest or extends credit.  The Reference Rate shall be adjusted on the last Business Day of the calendar month of any change in the "Union Bank, N.A. Reference Rate."  The Reference Rate, as adjusted, shall constitute the Reference Rate on the date when such adjustment is made and shall continue as the applicable Reference Rate until further adjustment.

 

"Release" means, as to Borrower, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials in the indoor or outdoor environment by Borrower, including the movement of Hazardous Materials through or in the air, soil, surface water, ground water or property.

 

"Requisite Lenders" means (a) all Lenders, with respect to those decisions requiring unanimous consent of all Lenders as set forth in Section 12.16.1 through and including 12.16.8 and (b) those Lenders holding Notes evidencing in the aggregate 66.67% or more of the aggregate Indebtedness then evidenced by the Notes, with respect to all other decisions required of the Lenders hereunder.

 

"Revolving Commitment" means, subject to Sections 2.8 and 2.18, One Hundred Eighty Million and 00/100 Dollars ($180,000,000.00).  The respective Pro Rata Shares of the Lenders with respect to the Revolving Commitment are set forth in Schedule 2.1.

 

"Revolving Loan" means a loan(s) made by the Lenders to Borrower pursuant to Section 2.1.

 

"Revolving Note" means each and collectively those certain promissory notes executed and delivered by Borrower to each Lender in accordance with its Pro Rata Share of the Revolving Commitment, dated as of the Closing Date, in the original aggregate principal amount of the Revolving Commitment, together with any other notes executed and delivered by Borrower to any Lender evidencing at any time any portion of the Loans.

 

"Right of Others" means, as to any Property in which a Person has an interest, any legal or equitable right, title or other interest (other than a Lien) held by any other Person in that Property, and any option or right held by any other Person to acquire any such right, title or other interest in that Property, including any option or right to acquire a Lien; provided, however, that (a) no covenant restricting the use or disposition of Property of such Person contained in any Contractual Obligation of such Person and (b) no provision contained in a contract creating a right of payment or performance in favor of a Person that conditions, limits, restricts, diminishes, transfers or terminates such right shall be deemed to constitute a Right of Others.

 

“Saab 340B Plus” means the Saab 340B Plus aircraft, manufactured by Saab Group.

 

"Schedule of Documents" means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with this Agreement and the other Loan Documents and the transactions contemplated hereunder and thereunder, substantially in the form of Schedule 1.1f.

 

"SEC" means the United States Securities Exchange Commission.

 

"Special Eurodollar Circumstance" means the application or adoption after the Closing Date of any Law or interpretation, or any change therein or thereof, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable authority charged with the interpretation or administration thereof, or compliance by Lender or its LIBOR lending office with any request or directive (whether or not having the force of Law) of any such Governmental Authority, central bank or comparable authority.

 

  

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"Stock" means all certificated and uncertificated shares, options, warrants, general or limited partnership interests, participation or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

 

"Subsidiary" means, as of any date of determination and with respect to any Person, any corporation, limited liability company or partnership (whether or not, in any case, characterized as such or as a "joint venture"), whether now existing or hereafter organized or acquired:  (a) in the case of a corporation or limited liability company, of which a majority of the securities having ordinary voting power for the election of directors or other governing body (other than securities having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person and/or one or more Subsidiaries of such Person, or (b) in the case of a partnership, of which a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one or more of its Subsidiaries.

 

"Subsidiary Guaranty" means a guaranty made by a Subsidiary in favor of Agent, whereby such Subsidiary guaranties performance of the Obligations under the Loan Documents.

 

"Swing Line" means the commitment of Swing Line Lender to make Swing Line Loans up to a maximum aggregate principal amount of Ten Million and No/100 Dollars ($10,000,000.00) at any one time outstanding, pursuant to Section 2.17 of this Agreement.

 

"Swing Line Lender" means Union Bank, N.A., in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

 

"Swing Line Loans" means loans made by Swing Line Lender to Borrower pursuant to Section 2.17.

 

"Swing Line Note" means the Swing Line Note executed and delivered by Borrower to Swing Line Lender, dated as of the Closing Date, in the original aggregate principal amount of the Swing Line, together with any other notes executed and delivered by Borrower to any Lender evidencing at any time any portion of the Swing Line Loans.

 

"Tangible Net Worth" means on any date of determination, the following with respect to Borrower and its Subsidiaries on a consolidated basis:  (a) the sum of the total assets less the total liabilities minus (b) intangibles (excluding gains and losses from fair value of derivatives charges whether or not included in other comprehensive income or net income) on such date, plus (c) Permitted Aircraft Disposition Charges (if any), all as determined in accordance with GAAP, consistently applied.

 

"Termination Date" means the date on which the Loans and all other Obligations under this Agreement and the other Loan Documents are indefeasibly paid in full, in cash, and Borrower shall have no further right to borrow any moneys or obtain other credit extensions or financial accommodations under this Agreement.

 

"Total Debt Service" means the sum of (i) Phantom Amortization, (ii) Interest Expense, and (iii) Maintenance Expense, subject to adjustment by both positive and negative pro forma EBITDA for major acquisitions and divestitures.

 

"Trust Agreement" means a Trust Agreement between Owner Trustee, as owner trustee, and Borrower, as the sole beneficiary, as amended, supplemented or otherwise modified from time to time, whereby the parties agreed, among other things, that Owner Trustee shall act as trustee with respect to the "Equipment" and "Lease Agreement" as defined therein.

 

"UCC" means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of California; provided, that in the event by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of Agent's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California, the term "UCC" means the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

 

"Unused Line Fee" shall have the meaning ascribed thereto in Section 2.4.1.

 

"Utilization Rate" shall have the meaning given such term in Section 6.15.6.

 

"Wholly-Owned Subsidiary" means a Subsidiary of Borrower, 100% of the capital stock or other equity interest of which is owned, directly or indirectly, by Borrower, except for director's qualifying shares required by Applicable Law.

 

  

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1.2 Accounting Terms

 

.  All accounting terms used, but not specifically defined, in this Agreement shall be construed and defined in accordance with GAAP.

 

1.3 UCC

 

.  Any terms that are defined in the UCC and used, but not specifically defined, in this Agreement shall be construed and defined in accordance with the UCC.

 

1.4 Construction

 

.  For purposes of this Agreement and the other Loan Documents, the following rules of construction shall apply, unless specifically indicated to the contrary:  (a) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter; (b) the term "or" is not exclusive; (c) the term "including" (or any form thereof) shall not be limiting or exclusive; (d) all references to statutes and related regulations shall include any amendments thereof and any successor statutes and regulations; (e) the words "herein," "hereof" and "hereunder" or other words of similar import refer to this Agreement as a whole, including the exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement; (f) all references in this Agreement or in the schedules to this Agreement to sections, schedules, disclosure schedules, exhibits, and attachments shall refer to the corresponding sections, schedules, disclosure schedules, exhibits, and attachments of or to this Agreement; and (g) all references to any instruments or agreements, including references to any of the Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.

 

1.5 USA Patriot Act Notice

 

.  Each Lender is subject to the USA Patriot Act and hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended and supplemented from time to time, the "Patriot Act"), each Lender is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow each Lender to identify Borrower in accordance with the Patriot Act.

 

	
2.  

	
REVOLVING COMMITMENT

 

2.1 Revolving Loans

 

.  Subject to the terms and conditions of this Agreement, Lenders shall, pro rata according to that Lender's Pro Rata Share of the Revolving Commitment, extend Revolving Loans to Borrower from time to time until the Maturity Date.  The aggregate amount of Loans outstanding shall not exceed at any time the Borrowing Availability.  Prior to the Maturity Date, Borrower may repay at any time any outstanding Loans and any amounts so repaid may be reborrowed, up to Borrowing Availability.  Loans shall be evidenced by and repayable in accordance with the terms of the Notes and this Agreement.

 

2.1.1 Choice of Interest Rate

 

.  Any Revolving Loan shall, at the option of Borrower, be made either as a Base Rate Loan or as a LIBOR Loan; provided, that if a Default or Event of Default has occurred and is continuing, all Loans shall be made as Base Rate Loans.  If Borrower fails to give notice to Agent specifying whether any LIBOR Loan is to be repaid or reborrowed on a Payment Date, such LIBOR Loan shall be repaid and then reborrowed as a Base Rate Loan on the Payment Date.  Each request for a Revolving Loan shall, among other things, specify (1) the date of the proposed Revolving Loan, which shall be a Business Day, (2) the amount of the Revolving Loan, (3) whether it is to be a Base Rate Loan or a LIBOR Loan, and (4) the LIBOR Loan Period, if applicable.

 

2.1.2 Request for Base Rate Loan

 

.  Borrower shall give to Agent, irrevocable notice of a request for a Base Rate Loan by delivering to Agent a Borrowing Notice for such Base Rate Loan not later than 11:00 a.m. (California time) on the date of the proposed Base Rate Loan.  Each Base Rate Loan shall be in a principal amount of not less than Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) and in an integral multiple of $25,000.00.

 

2.1.3 Tranches

 

.  At no time shall there be more than five (5) tranches collectively of Base Rate and LIBOR Loans outstanding.

 

2.1.4 LIBOR Loans

 

.  Borrower shall give to Agent irrevocable notice of a request for a LIBOR Loan by delivering to Agent a Borrowing Notice for such LIBOR Loan not later than two (2) Business Days prior to the date of the proposed LIBOR Loan.  Agent shall determine the applicable LIBOR Basis as of the Business Day prior to the date of the requested LIBOR Loan.  Each determination by Agent of a LIBOR Basis shall, absent manifest error, be deemed final, binding and conclusive upon Borrower.  The LIBOR Loan Period for each LIBOR Loan shall be fixed at one (1), two (2), three (3) or six (6) months.

 

(a) (i) Each LIBOR Loan shall be in a principal amount of not less than Five Million and 0/100 Dollars ($5,000,000.00) and in an integral multiple of $100,000.00, and (ii) the total aggregate principal amount of all LIBOR Loans and Base Rate Loans outstanding at any one time shall not exceed Borrowing Availability.

 

(b) At least two (2) Business Days prior to each Payment Date for a LIBOR Loan, Borrower shall give irrevocable written notice to Lender specifying whether all or a portion of such LIBOR Loan outstanding on the Payment Date (i) is to be repaid and then reborrowed in whole or in part as a new LIBOR Loan, in which case such notice shall also specify the LIBOR Loan Period that Borrower shall have selected for such new LIBOR Loan; provided, that if a Default or Event of Default has occurred and is continuing, Borrower shall not have the option to repay and then reborrow such LIBOR Loan as a new LIBOR Loan, (ii) is to be repaid and then reborrowed in whole or in part as a Base Rate Loan, or (iii) is to be repaid and not reborrowed; provided, that any such reborrowings described in clauses (i) and (ii) above shall be in a principal amount of not less than $5,000,000.00 and in an integral multiple of $100,000.  Upon such Payment Date such LIBOR Loan will, subject to the provisions of this Agreement, be so repaid and, as applicable, reborrowed.

 

  

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2.1.5 Request and Disbursement

 

.  Any notice in connection with a requested Revolving Loan under this Agreement that is received by Agent after 11:00 a.m. (California time) on any Business Day, or at any time on a day that is not a Business Day, shall be deemed received by Agent on the next Business Day.  Agent shall, upon the reasonable request of Borrower from time to time, provide to Borrower such information with regard to the LIBOR Basis as Borrower may request.  Promptly following receipt of a request for a Loan, Agent shall notify each Lender by telephone or telecopier (and if by telephone, promptly confirmed by telecopier) of the date and type of Loan, the applicable LIBOR Loan Period, and that Lender's Pro Rata Share of the Loan.  Not later than 10:00 a.m., California time, on the date specified for any Loan (which must be a Business Day), each Lender shall make its Pro Rata Share of the Loan in immediately available funds available to Agent at Agent's office.  Prior to 3:00 p.m. (California time) on the date of a Revolving Loan, Agent shall, subject to the satisfaction of the conditions set forth in Section 4.2, disburse the amount of the requested Revolving Loan by wire transfer pursuant to Borrower's written instructions.

 

2.1.6 Pre-Purchase Draw Exception.  In the event that Borrower requests a draw to be used to finance the purchase of identified Equipment, which draw would cause an Overadvance under the Borrowing Base, but would not be an Overadvance if the identified Equipment were treated at the time of the draw as an Eligible Asset subject to an Eligible Lease, Agent shall permit such a draw, notwithstanding any provisions of this Agreement to the contrary, provided, however, that the following conditions are satisfied:

 

(a) Borrower and seller of the Equipment have executed a purchase agreement for Equipment, and the Equipment, once purchased, would qualify as an Eligible Asset,

 

(b) Borrower and lessee of the Equipment have executed a Lease therefor, which once the Aircraft is delivered to Lessee, would qualify as an Eligible Lease;

 

(c) Borrower has received a commercially reasonable deposit from such Lessee under such Lease;

 

(d) Borrower has provided to Agent a pro-forma Borrowing Base Certificate demonstrating there is sufficient Borrowing Base Availability after giving effect to the requested draw and the deemed treatment of the Equipment as an Eligible Asset subject to an Eligible Lease as of the date of the draw pursuant to the terms hereunder; and

 

(e) Within three (3) days following the purchase of such identified Equipment, (i) such Equipment shall be an Eligible Asset and (ii) with respect to such Equipment, Borrower shall satisfy the requirements set forth in Section 4.2.10, with the exception of Section 4.2.10(e) which shall be satisfied no later than one-hundred and eighty (180) days after such purchase.

 

For the avoidance of doubt, for purposes of this Section, the Advance Rate applicable to such Equipment when making the calculations set forth in (d) above shall be that which would be applicable to such Equipment on the date of commencement of the Lease therefor, assuming the Equipment is an Eligible Asset subject to an Eligible Lease.

 

2.2 Payment of Interest; Interest Rate

 

.

 

2.2.1 Loans

 

.  Interest on Revolving Loans shall be payable as follows:

 

(a) Base Rate Loans

 

.  Interest on each outstanding Base Rate Loan shall be computed for the actual number of days elapsed on the basis of a year of 360 days and shall be payable to Agent for the ratable benefit of Lenders, in arrears (i) on the first Business Day of each month, (ii) on the Maturity Date, and (iii) if any interest accrues or remains payable after the Maturity Date or during the continuance of an Event of Default, upon demand by Agent.  Interest shall accrue and be payable on each Base Rate Loan at a per annum interest rate equal to the Base Rate plus the Applicable Base Rate Margin ("Applicable Base Rate").  The Base Rate shall be equal to the highest of (i) the rate of interest most recently announced by Agent as to its U.S. dollar "Reference Rate", (ii) the Federal Funds Rate plus one-half of one percent (0.50%) or (iii) one month LIBOR plus one and one half percent (1.50%).

 

(b) LIBOR Loans

 

.  Interest on each outstanding LIBOR Loan shall be computed for the actual number of days elapsed on the basis of a year of 360 days and shall be payable to Agent, for the ratable benefit of Lenders, in arrears (i) on the Payment Date if a LIBOR Loan Period of one, two or three months, (ii) on the 90th day and the last day of the applicable LIBOR Loan Period in the case of any LIBOR Loan with a LIBOR Loan Period of six months, (iii) on the Maturity Date, and (iv) if any interest accrues or remains payable after the Maturity Date or during the continuance of an Event of Default, upon demand by Agent.  Interest shall accrue and be payable on each LIBOR Loan at a per annum interest rate equal to the LIBOR Basis applicable to such LIBOR Loan plus the Applicable LIBOR Margin ("Applicable LIBOR Rate").

 

  

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(c) Applicable Margins

 

.  The Applicable Base Rate Margin and the Applicable LIBOR Margin shall be determined based on the Maximum Leverage Ratio as reported in the most recent Compliance Certificate (delivered to Agent pursuant to Section 8) by reference to Table 1 below.

 

	
TABLE 1

	 
	
Level

	 	
Maximum Leverage Ratio

	 	
Applicable LIBOR Margin

	 	 	
Applicable Base Rate Margin

	 
	 	I	 	
< or = to 3.25x

	 	 	3.50	%	 	 	2.50	%
	
II

	 	
> than 3.25x

	 	 	3.75	%	 	 	2.75	%

 

2.2.2 Default Rate

 

.  Upon the occurrence and during the continuance of an Event of Default, interest on all outstanding Obligations shall, upon the election of Agent, confirmed by written notice from Agent to Borrower, accrue and be payable at the Default Rate.  Interest accruing at the Default Rate shall be payable to Agent, for the ratable benefit of Lenders, on demand and in any event on the Maturity Date.  Agent shall not be required to (1) accelerate the maturity of the Loans or (2) exercise any other rights or remedies under the Loan Documents, in order to charge the Default Rate.  Upon the occurrence and during the continuance of an Event of Default specified in Sections 9.1.5, 9.1.6, or 9.1.7, the interest rate shall be increased automatically to the Default Rate without the necessity of any action by Agent.

 

2.3 Maximum Rate of Interest

 

.  In no event shall the aggregate of all interest on the Obligations charged or collected pursuant to the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  In the event that such a court determines that a Lender has charged or received interest under this Agreement or the Notes in excess of the highest applicable rate, the rate in effect under this Agreement and the Notes shall automatically be reduced to the maximum rate permitted by Applicable Law and Lender shall promptly apply such excess to reduce the principal balance of the Obligations, or if the principal balance of the Obligations owing have been paid in full, Lender shall promptly apply such excess to reduce any other Obligations, and if all Obligations have been paid in full, then Lender shall refund to Borrower any interest received by Lender in excess of the maximum lawful rate; provided, that if at any time thereafter the rate of interest payable hereunder is less than the highest applicable rate, Borrower shall continue to pay interest hereunder at the highest applicable rate, until such time as the total interest received by Lender from the making of Loans hereunder is equal to the total interest that Lender would have received had the interest rate payable hereunder been (but for the operation of this Section 2.3) the interest rate payable since the Closing Date as otherwise provided in this Agreement.  It is the intent of this Agreement that Borrower not pay or contract to pay, and that Lender not receive or contract to receive, directly or indirectly, interest in excess of that which may be paid by Borrower under Applicable Law.

 

2.4 Fees

 

.  Borrower shall pay to Agent:

 

2.4.1 Unused Line Fee

 

.  A fee for the ratable benefit of Lenders (the "Unused Line Fee") commencing as of the Closing Date, payable quarterly in arrears, on each Quarterly Payment Date, commencing on May 31, 2014, and ending on the Termination Date.  The Unused Line Fee shall be, for each day after the Closing Date through the Maturity Date, an amount equal to (a) the difference between (1) the Maximum Amount, and (2) the closing balance of the Loans for such day, multiplied by (b) the Applicable Unused Line Fee Percentage, the product of which is then divided by (c) 360.

 

2.4.2 Fees to Agent

 

.  On the Closing Date and on each other date upon which a fee is payable or costs are reimbursable, Borrower shall pay to Agent such fees or cost reimbursements as heretofore agreed upon by letter agreement dated as of March 19, 2014, between Borrower and Union Bank, N.A., as Agent, which fees and cost reimbursements shall be solely for its own account and are nonrefundable.

 

2.5 Late Payments

 

.  If any installment of principal or interest or any fee or cost or other amount payable under any Loan Document to any Lender or Swing Line Lender is not paid when due, it shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, to the fullest extent permitted by Applicable Law.  Accrued and unpaid interest on past due amounts (including, without limitation, interest on past due interest) shall be compounded monthly, on the last day of each calendar month, to the fullest extent permitted by Applicable Law.

 

  

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2.6 Repayment and Prepayment

 

.

 

2.6.1 Repayment and Voluntary Prepayment

 

.  Borrower shall pay the principal balance of the Loans and all other Obligations in full on the Maturity Date.  The principal amount of any Base Rate Loan may be prepaid prior to the Maturity Date at any time; provided, that any such prepayments shall be in an amount equal to or greater than $100,000.00.  The principal amount of any LIBOR Loan together with all accrued and unpaid interest thereon may be prepaid prior to the applicable Payment Date, together with any breakage fees as set forth in Section 2.6.5, upon three (3) Business Days' prior notice to Lender.  Each notice of prepayment shall be irrevocable.

 

2.6.2 Overadvances

 

.  Borrower shall immediately repay to Agent, for the ratable benefit of Lenders, any amount of a Base Rate Loan or LIBOR Loan which causes an Overadvance.  Overadvances constitute Obligations that are evidenced by the Notes, secured by the Collateral, and entitled to all of the benefits of the Loan Documents.

 

2.6.3 Mandatory Prepayment

 

.  No later than ninety (90) days after the occurrence of any Borrowing Base Deficiency, Borrower shall repay all or such portion of the Loans in an amount equal to such deficiency, together with any breakage fees as set forth in Section 2.6.5.  Upon (i) the sale of any asset for a sale price that exceeds $2,500,000.00 and is outside the ordinary course of business or (ii) the receipt of proceeds in excess of $2,500,000.00 from any recovery under any applicable insurance policies (or otherwise) in connection with an Event of Loss, Borrower shall repay immediately all or such portion of the Loans in an amount equal to the proceeds from such sale or recovery.

 

2.6.4 Mandatory Repayment

 

.  Upon the occurrence of a Change in Control, the Revolving Commitment (or any part thereof, as elected by the Requisite Lenders) shall be terminated, and all outstanding Loans (or any part thereof, as elected by the Requisite Lenders) shall be repaid in full, together with all accrued interest thereon and any breakage fees as set forth in Section 2.6.5.

 

2.6.5 Breakage Fees

 

.  Upon payment or prepayment of any LIBOR Loan (other than as the result of a conversion required under Section 14.1.3 on a day other than the last day in the applicable LIBOR Loan Period (whether voluntarily, involuntarily, by reason of acceleration, or otherwise), or upon the failure of Borrower (for a reason other than the breach by a Lender of its obligation to make a LIBOR Loan pursuant to this Agreement) to borrow on the date or in the amount specified for a LIBOR Loan in any Notice of Borrowing, Borrower shall pay to Lender within five (5) Business Days after demand a prepayment fee or failure to borrow fee, as the case may be (determined as though 100% of the LIBOR Loan had been funded in the London Eurodollar Market (the "Designated Eurodollar Market")) equal to the sum of:

 

(a) $250 payable to Agent only;

 

    plus

 

(b) the amount, if any, by which (i) the additional interest would have accrued on the amount prepaid or not borrowed at the LIBOR Basis (not including the Applicable LIBOR Margin) if that amount had remained or been outstanding through the last day of the applicable LIBOR Loan Period exceeds (ii) the interest Lenders could recover by placing such amount on deposit in the Designated Eurodollar Market for a period beginning on the date of the prepayment or failure to borrow and ending on the last day of the applicable LIBOR Loan Period (or, if no deposit rate quotation is available for such period, for the most comparable period for which a deposit rate quotation may be obtained).

 

Each Lender's determination of the amount of any prepayment fee payable under this Section shall be conclusive in the absence of manifest error.

 

2.7 Term

 

.  The Credit Facility shall be in effect until the Maturity Date. The Credit Facility and all other Obligations related thereto shall be automatically due and payable in full on the Maturity Date, unless earlier due and payable or terminated as provided in this Agreement.

 

2.8 Early Termination

 

.  The Credit Facility may be terminated, in whole or in increments of $100,000.00, by Borrower prior to the Maturity Date upon five (5) Business Days' prior written notice to Agent; provided, that at such time Borrower shall (a) prepay all amounts outstanding under the Credit Facility which exceed the reduced Revolving Commitment amount elected by Borrower, (b) pay all accrued interest thereon and fees and charges incurred in connection therewith, and (c) reimburse Lenders for any loss or out-of-pocket expenses incurred by Lenders in connection with such prepayment and termination, including those breakage fees set forth in Section 2.6.5.

 

2.9 Note and Accounting

 

.  Agent shall provide a quarterly accounting to Borrower of the Loans and other transactions under this Agreement, including Agent's calculation of principal and interest.  Each and every such accounting shall, absent manifest error, be deemed final, binding and conclusive upon Borrower, unless Borrower, within thirty (30) days after the date any such accounting is rendered, provides Agent with written notice of any objection which Borrower may have to any item in such accounting, describing the basis for such objection with specificity.  In that event, only those items expressly objected to in such notice shall be deemed to be disputed by Borrower, and in the event the parties cannot resolve their dispute, such dispute shall be resolved in accordance with the terms and conditions of the Alternative Dispute Resolution Agreement.

 

  

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2.10 Manner of Payment

 

.

 

2.10.1 When Payments Due

 

.

 

(a) Except as expressly set forth in this Agreement, each payment (including any prepayment) by Borrower on account of the principal of or interest on the Loans and any other amount owed to Lenders on account of the Obligations shall be made not later than 11:00 a.m. (California time) on the date specified for payment under this Agreement to Agent in lawful money of the United States and in immediately available funds.  Any payment received by Agent on a day that is not a Business Day or after 11:00 a.m. (California time) on a Business Day, shall be deemed received on the next Business Day.  The amount of all payments received by Agent for the account of each Lender shall be immediately paid by Agent to the applicable Lender in immediately available funds and, if such payment was received by Agent by 11:00 a.m., California time, on a Business Day and not so made available to the account of a Lender on that Business Day, Agent shall reimburse that Lender for the cost to such Lender of funding the amount of such payment at the Federal Funds Rate.  All payments shall be made in lawful money of the United States of America.

 

(b) If any payment on any Obligation is specified to be made upon a day that is not a Business Day, it shall (subject to the provisions of the LIBOR Loan Period which may require payment by one (1) earlier Business Day) be deemed to be specified to be made on the next succeeding day that is a Business Day, and such extension of time shall in such case be included in computing interest and fees, if any, in connection with such payment.

 

2.10.2 No Deductions

 

.  Borrower shall pay principal, interest, fees, and all other amounts due on the Obligations without set-off or counterclaim or any deduction whatsoever.

 

2.10.3 Inadequate Payments

 

.  If, on the date on which any amount (including any payment of principal, interest or other costs and expenses) shall be due and payable by Borrower to Lenders, the amount received by any such Lenders from Borrower shall not be adequate to pay the entire amount then due and payable, then Agent shall be authorized, but shall not be obligated, to make a Base Rate Loan to Borrower in the amount of the deficiency.

 

2.11 Application of Payments

 

.  Borrower irrevocably waives the right to direct the application of any and all payments received at any time by any Lender from or on behalf of Borrower and specifically waives the provisions of California Civil Code Sections 1479 and 2822 or similar provisions under any other Applicable Law giving Borrower the right to designate application of payments.  All amounts received by Agent for application to the Obligations shall be applied by Agent in the following order of priority:  (i) to the payment of any fees then due and payable, (ii) to the payments of all other amounts not otherwise referred to in this Section 2.11 then due and payable hereunder or under the other Loan Documents (including any costs and expenses incurred by Agent as a result of a Default or an Event of Default), (iii) pro rata to the payment of interest then due and payable on the Loans, and (iv) pro rata to the payment of principal then due and payable on the Loans.  Notwithstanding the foregoing, Borrower irrevocably agrees that, during the occurrence of an Event of Default, Lenders shall have the continuing exclusive right to determine the order and method of the application of payments against the then due and payable Obligations of Borrower in Lenders' sole discretion and to revise such application prospectively or retroactively in Lenders' sole discretion.

 

2.12 Use of Proceeds

 

.  The proceeds of the Loans shall be used by Borrower to refinance existing revolving debt, to acquire aircraft and engines, and to support Borrower's working capital needs and general corporate purposes.  Borrower will not, directly or indirectly, use any part of any Loan proceeds for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to any Person for the purpose of purchasing or carrying any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors.

 

2.13 All Obligations to Constitute One Obligation

 

.  All Obligations related to the Credit Facility constitute one general obligation of Borrower and shall be secured by Agent's Liens upon all of the Collateral, and by all other Liens previously, now or at any time in the future granted by Borrower to Agent or any Lender to the extent provided in the Collateral Documents and permitted by this Agreement.

 

2.14 Authorization to Make Loans

 

.  Agent, Swing Line Lender and each Lender (each, an "Authorized Party") are authorized to make the Loans based on telephonic or other oral or written instructions received from any Person that an Authorized Party believes in good faith to be an authorized representative of Borrower, or at the discretion of such Authorized Party, if such Loans are necessary to satisfy any of the Obligations.  Borrower consents to the recordation of any telephonic or other communications between an Authorized Party and Borrower for the purpose of maintaining such party's business records of such transactions.

 

2.15 Authorization to Debit Accounts

 

.  Borrower authorizes each Authorized Party, upon prior notice to Borrower, to debit any of Borrower's bank accounts with such party for the purpose of Borrower's payment of principal, interest or other costs and expenses due and payable by Borrower to Lenders under this Agreement.

 

  

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2.16 Agent's Right to Assume Funds Available for Revolving Loans

 

.  Unless Agent shall have been notified by any Lender no later than 10:00 a.m. on the Business Day of the proposed funding by Agent of any Revolving Loan that such Lender does not intend to make available to Agent such Lender's portion of the total amount of such Revolving Loan, Agent may assume that such Lender has made such amount available to Agent on the date of the Revolving Loan and Agent may, in reliance upon such assumption, make available to Borrower a corresponding amount.  If Agent has made funds available to Borrower based on such assumption and such corresponding amount is not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender.  If such Lender does not pay such corresponding amount forthwith upon Agent's demand therefor, Agent promptly shall notify Borrower and Borrower shall pay such corresponding amount to Agent.  Agent also shall be entitled to recover from such Lender interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Agent to Borrower to the date such corresponding amount is recovered by Agent, at a rate per annum equal to the daily Federal Funds Rate.  Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its share of the Revolving Commitment or to prejudice any rights which Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.

 

2.17 Swing Line

 

.

 

2.17.1 Swing Line Loans

 

.  Swing Line Lender shall from time to time from the Closing Date through the day prior to the Maturity Date make Swing Line Loans to Borrower in such amounts as Borrower may request, up to an aggregate principal amount not to exceed the Swing Line (each, a “Swing Line Loan”), provided that (a) if after giving effect to such Swing Line Loan, the sum of the aggregate principal amount of all then outstanding Loans does not exceed the Borrowing Availability at such time; and (b) without the consent of all of the Lenders, no Swing Line Loan may be made during the continuation of an Event of Default, provided written notice of such Event of Default shall have been provided to Swing Line Lender by Agent or a Lender sufficiently in advance of the making of such Swing Line Loan.

 

2.17.2 Request for Swing Line Loan

 

.  Borrower may borrow, repay and reborrow under the Swing Line, subject to the remaining availability under the Swing Line and to availability under the Revolving Commitment, upon a request for borrowing pursuant to a Borrowing Notice delivered by Borrower to Agent not later than 1:00 p.m., California time, on the Business Day of the requested borrowing.  Promptly after receipt of such a request for borrowing, Agent shall provide telephonic verification to Swing Line Lender that, after giving effect to such request, availability under the Swing Line and the Revolving Commitment will exist (and such verification shall be promptly confirmed in writing by telecopier or electronic mail).  Borrower shall notify Swing Line Lender of its intention to make a repayment of a Swing Line Loan not later than 1:00 p.m. California time on the date of repayment.  If Borrower instructs Swing Line Lender to debit its Demand Deposit Account in the amount of any payment with respect to a Swing Line Loan, or Swing Line Lender otherwise receives repayment, after 3:00 p.m., California time, on a Business Day, such payment shall be deemed received on the next Business Day.  Swing Line Lender shall promptly notify Agent of the Swing Line Loan outstanding each time there is a change therein.

 

2.17.3 Swing Line Interest Rate

 

.  Swing Line Loans shall bear interest at an all-in rate as quoted by Swing Line Lender to Borrower at the time a Swing Line Loan is requested by Borrower.  Interest shall be payable monthly on such dates as may be specified by the Swing Line Lender and in any event on the Maturity Date.  The Swing Line Lender shall be responsible for invoicing Borrower for such interest.  The interest payable on Swing Line Loans is solely for the account of the Swing Line Lender (subject to Section 2.17.5 below).

 

2.17.4 Swing Line Maturity Date

 

.  Subject to Section 2.17.6 below, the principal amount of all Swing Line Loans shall be due and payable on the earlier of (i) the maturity date agreed to by the Swing Line Lender and Borrower with respect to such loan or (ii) the Maturity Date.

 

2.17.5 Swing Line Participation

 

.  Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from the Swing Line Lender a participation therein in an amount equal to that Lender’s Pro Rata Share times the amount of the Swing Line Loan.  Upon demand made by Swing Line Lender to Lenders, which shall occur not more than once per week, each Lender shall, according to its Pro Rata Share, promptly provide to Swing Line Lender its purchase price therefor in an amount equal to its participation therein.  The obligation of each Lender to so provide its purchase price to Swing Line Lender shall be absolute and unconditional (except for modifications or demand made by Swing Line Lender) and shall not be affected by the existence of an uncured Event of Default; provided that no Lender shall be obligated to purchase its Pro Rata Share of (i) Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, advances under the Revolving Commitment exceed the Borrowing Availability, (ii) Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, the aggregate amount of Swing Line Loans outstanding exceed $10,000,000.00, or (iii) any Swing Line Loan made (absent the consent of all of the Lenders) during the continuation of an Event of Default if written notice of such Event of Default shall have been provided to Swing Line Lender by Agent or a Lender sufficiently in advance of the making of such Swing Line Loan.  Each Lender that has provided to Swing Line Lender the purchase price due for its participation in Swing Line Loans shall thereupon acquire a pro rata participation, to the extent of such payment, in the claim of Swing Line Lender against Borrower for principal and interest and shall share, in accordance with that pro rata participation, in any principal payment made by Borrower with respect to such claim and in any interest payment made by Borrower (but only with respect to periods subsequent to the date such Lender paid Swing Line Lender its purchase price) with respect to such claim.

 

  

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2.17.6 Swing Line Repayment; Revolving Loans

 

.  Swing Line Lender may, at any time, in its sole discretion, upon not less than two Business Days’ prior written notice to Borrower, Agent and Lenders, demand repayment of the full amount or any portion of the outstanding amount of Swing Line Loans by Borrower through a Revolving Loan advance made to Borrower and applied toward the demanded Swing Line Loan repayment.  In each case, Agent shall automatically provide the advances made by each Lender to Swing Line Lender (which Swing Line Lender shall then apply to the outstanding amount of the Swing Line Loans).  In the event that Borrower fails to request a Revolving Loan within the time specified by this Section 2.17.6 on any such date, Agent may, but is not required to, without notice to or the consent of Borrower, cause Base Rate Loans to be made by the Lenders under the Revolving Commitment in amounts which are sufficient to reduce the outstanding amount of the Swing Line Loans as required above.  The proceeds of such advances shall be paid directly to Swing Line Lender for application to the outstanding amount of the Swing Line Loans.

 

2.18 Optional Increase to the Revolving Commitment.

 

2.18.1 Provided that no Default or Event of Default then exists, Borrower may request, from time to time, on or after the Closing Date, in writing, that the then effective Revolving Commitment be increased up to an aggregate amount not in excess of Two Hundred Million and 00/100 Dollars ($200,000,000.00).  Any request under this Section 2.18, which request shall be in minimum increments of Five Million and 00/100 Dollars ($5,000,000.00), shall be submitted by Borrower to Lenders through Agent not less than thirty (30) days prior to the proposed increase, specify the proposed effective date and amount of such increase, and be accompanied by (i) a certificate signed by an Authorized Signatory, stating that no Default or Event of Default exists as of the date of the request or will result from the requested increase and (ii) an updated Appraisal of the Collateral satisfactory to Agent, in its sole and absolute discretion.  Any such request shall be approved by Agent if Borrower provides the foregoing items and Agent receives sufficient commitments from Lenders pursuant to Sections 2.18.2 through 2.18.4 to fund the requested increase.

 

2.18.2 Borrower shall be solely responsible for requesting a commitment from each Lender to assume a portion of the proposed increase to the Revolving Commitment, and Borrower shall copy Agent on all such requests.  Each Lender may approve or reject such request in its sole and absolute discretion, and any Lender who fails to send an affirmative written response to Borrower, with a copy to Agent, within ten (10) Business Days after receipt of such request, shall be deemed to have rejected Borrower's request.

 

2.18.3 In responding to a request under this Section, each Lender that is willing to assume a portion of the proposed increase to the Revolving Commitment shall specify the amount of the proposed increase that it is willing to assume.  Each consenting Lender shall be entitled to participate ratably (based on its Pro Rata Share of the Revolving Commitment before such increase) in any resulting increase in the Revolving Commitment, subject to the right of Agent to adjust allocations of the increased Revolving Commitment so as to result in the amounts of the Pro Rata Shares of the Lenders being in integral multiples of $100,000.00.

 

2.18.4 If the aggregate principal amount offered to be assumed by the consenting Lenders is less than the amount requested, Borrower may (i) reject the proposed increase in its entirety, (ii) accept the offered amounts, or (iii) designate new lenders who qualify as Eligible Assignees and which are reasonably acceptable to Agent as additional Lenders hereunder in accordance with this Agreement (each, a "New Lender"), which New Lenders may assume the amount of the increase in the Revolving Commitment that has not been assumed by the consenting Lenders.

 

2.18.5 After completion of the foregoing, Agent shall give written notification to the Lenders and any New Lenders of the increase to the Revolving Commitment which shall thereupon become effective, and in connection with such notification, Agent will distribute to the Borrower and the Lenders a revised Schedule 2.18 reflecting the then applicable Pro Rata Shares of the Lenders.

 

2.18.6 Each New Lender shall become an additional party hereto as a Lender concurrently with the effectiveness of the proposed increase in the Revolving Commitment upon its execution of an instrument of joinder to this Agreement, which is in form and substance reasonably acceptable to Agent and which, in any event, contains the representations, warranties, indemnities and other protections afforded to Agent and the other Lenders which would be granted or made by an Eligible Assignee by means of the execution of a Commitment Assignment and Acceptance.

 

2.18.7 Subject to the foregoing, any increase to the Revolving Commitment requested under this Section shall be effective upon the date agreed to by Agent and Borrower and shall be in the principal amount equal to (i) the amount which consenting Lenders are willing to assume as increases to their respective Revolving Commitment plus (ii) the amount assumed by New Lenders.  Upon the effectiveness of any such increase, each Revolving Loan outstanding shall be refinanced with new Loans reflecting the adjusted Pro Rata Share of each Lender in the Revolving Commitment if there is any change thereto and Borrower shall:

 

(a) issue a replacement Revolving Note to each affected Lender and a new Revolving Note to each New Lender, and the Pro Rata Share of each Lender will be adjusted, as applicable, to give effect to the increase in the Revolving Commitment;

 

(b) execute and deliver to Agent such amendments to the Loan Documents as Agent may reasonably request relating to such increase to, among other things, assure the continued priority and perfection the Lien granted by Borrower to Agent, for the ratable benefit of Lenders and Non-Lenders, upon all of Borrower's right, title and interest in the Collateral; and

 

(c) pay to the existing Lenders any breakage costs as set forth in Section 2.6.5, which are payable in connection with the refinancing of any LIBOR Loans.

 

  

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3.  

	
SECURITY

 

3.1 Grant of Security Interest

 

.  To secure the prompt payment and performance of all Obligations for the ratable benefit of Lenders,

 

3.1.1 Borrower has granted and pledged, and hereby reaffirms such grant and pledge, to Agent a continuing security interest in all presently existing and hereafter acquired or arising Assets, including all Assets that immediately prior to the Closing Date constituted Collateral securing any part of the A&R Loan, in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents.  Such security interest constitutes a valid, first priority security interest in the presently existing Assets, and will constitute a valid first priority security interest in Assets acquired after the date hereof;

 

3.1.2 Borrower shall cause each Subsidiary to (i) grant to Agent a perfected security interest and Lien on and (ii) assign to Agent, all right, title and interest of it in and to all of its Assets, whether now existing or owned or hereafter acquired;

 

3.1.3 Borrower shall grant to Agent a first priority perfected, secured Lien on, and assign to  Agent, all right, title and interest of the Borrower in and to all "Collateral" (as such term is defined in the Mortgage) whether now existing or owned or hereafter acquired, by the delivery to Agent of a fully executed Mortgage and Security Agreement in the form of Exhibit E hereto (as amended, modified or supplemented from time to time, the "Mortgage");

 

3.1.4 Borrower shall cause the Owner Trustee, if any, to pledge to Agent all of the Borrower's right, title and interest in a Beneficial Interest under a Trust Agreement by the delivery to Agent a fully executed Beneficial Interest Pledge Agreement, each in the form of Exhibit F hereto (each, as amended, modified or supplemented from time to time, a "Beneficial Interest Pledge Agreement");

 

3.1.5 Borrower shall cause the Owner Trustee, if any, to execute and deliver to Agent an Owner Trustee Mortgage and Security Agreement in favor of Agent in the form of Exhibit G hereto (as amended, modified or supplemented from time to time, an "Owner Trustee Mortgage");

 

3.1.6 Borrower shall cause the Owner Trustee, if any, to execute and deliver to Agent an Owner Trustee Guaranty in the form of Exhibit H, guarantying the performance of the Obligations (as amended, modified or supplemented from time to time, an "Owner Trustee Guaranty");

 

3.1.7 Borrower shall make or cause any Person to make such filings, registrations, or otherwise with the FAA, International Registry, the U.S. Patents and Trademarks Office and otherwise under the UCC and all other Applicable Law as shall be required to perfect the Lien of Agent with respect to all Collateral under the Collateral Documents or any other Loan Documents, including but not limited to the following:

 

(a) UCC financing statements, naming Agent as secured party and Agent for the benefit of Lenders in order to perfect and preserve Agent's first priority Lien on the Collateral shall have been filed in such states in the United States of America as required, in the judgment of Agent, to perfect the Lien of Agent in all UCC Collateral;

 

(b) the Lien and International Interest (or Prospective International Interest), and any and all assignments and prospective assignments, as applicable, thereof, of the Mortgage and an Owner Trustee Mortgage, if any, with respect to the Equipment and Cape Town Eligible Leases with respect thereto owned by the Borrower and each Subsidiary as of the date of this Agreement shall have been registered with the International Registry and, with respect to all Engines and U.S. registered aircraft, the FAA; provided that if the International Registry does not then provide as a "drop down" registration category the serial number of any item of Equipment to be registered, then the Borrower shall register the same by "free text" notation in the International Registry and shall subsequently register such item of Equipment in its serial number category as soon as such registration category is available on the International Registry;

 

(c) without limiting the generality of the foregoing, all filings with the United States Patent and Trademark Office necessary or desirable to perfect Agent's Lien on all patents and trademarks of the Borrower; and

 

(d) the Lien as applicable, of the Mortgage and Owner Trustee Mortgage, if any, with respect to the Equipment and Leases owned by the Borrower and each Subsidiary as of the date of this Agreement and not located in a Contracting State shall have been registered with the appropriate authorities pursuant to Applicable Law.

 

3.2 Priority of Agent's Security Interest

 

.  Borrower represents, warrants and agrees as follows:  (1) upon the execution of this Agreement by the parties hereto and all other documents contemplated hereby (as referenced in Section 3.1 above) and as a result of the filing by Agent of appropriate financing statements in the appropriate jurisdictions and appropriate documentation with the FAA, Agent's Liens in the Collateral are and will be fully perfected Liens on all Collateral, which Liens are and will, until the Termination Date, be enforceable as first priority, fully perfected Liens as against all other creditors of, and purchasers from, Borrower; (2) all actions necessary or desirable to protect and perfect such Liens in favor of Agent in all of the Collateral has been duly taken; (3) Borrower or Owner Trustee, as applicable, are and will be the sole owner of each such item of the Collateral, and have and will have good and marketable title to such Collateral free and clear of any and all Liens except for Permitted Liens; and (4) no effective security agreement, mortgage, deed of trust, financing statement, equivalent security or Lien instrument or continuation statement covering all or any part of the Collateral is or will be on file or of record in any public office, except those filed by Borrower in favor of Agent pursuant to the Loan Documents, and those relating to other Permitted Liens.  Borrower shall defend the right, title and interest of Agent in and to the Collateral against the claims and demands of all Persons whomsoever, and shall take such actions, including (i) the prompt delivery of all original Instruments, Chattel Paper and certificated Stock owned by Borrower to Agent, (ii) notification of Agent's interest in Collateral at Agent's request, and (iii) the institution of litigation against third parties as shall be prudent in order to protect and preserve Borrower's and Agent's respective and several interests in the Collateral.  All Chattel Paper shall be marked with the following legend:

 

"THIS WRITING AND THE OBLIGATIONS EVIDENCED OR SECURED HEREBY ARE SUBJECT TO THE LIEN OF UNION BANK, N.A."

 

  

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3.3 Agent's Rights

 

.

 

3.3.1 In addition to any and all rights under the Collateral Documents, at any time after the occurrence and continuance of an Event of Default, Agent may, at any time in Agent's own name or in the name of Borrower, (1) communicate with Account Debtors, parties to Contracts and Leases, and obligors in respect of Instruments, Chattel Paper or other Collateral to verify to Agent's satisfaction the existence, amount and terms of any such Accounts, Contracts, Instruments, Chattel Paper, Leases or other Collateral, and (2) without prior notice to Borrower, notify Account Debtors, parties to Contracts, parties to Leases, and obligors in respect of Chattel Paper, Instruments, or other Collateral that such Collateral has been assigned to Agent and that payments shall be made directly to Agent.  Upon the request of Agent, Borrower shall so notify such Account Debtors, parties to Contracts, parties to Leases, and obligors in respect of Instruments, Chattel Paper, Leases or other Collateral.

 

3.3.2 It is expressly agreed by Borrower and Owner Trustee that Borrower and Owner Trustee, as applicable, shall remain liable under each Contract, License and Lease to observe and perform all the conditions and obligations to be observed and performed by it thereunder, and Agent shall have no obligation or liability whatsoever to any Person under any Contract, License or Lease (between Borrower, Owner Trustee and any Person other than Agent) by reason of or arising out of the execution, delivery or performance of this Agreement, and Agent shall not be required or obligated in any manner (1) to perform or fulfill any of the obligations of Borrower thereunder, (2) to make any payment or inquiry, or (3) to take any action of any kind to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times under or pursuant to any Contract, License or Lease.

 

3.3.3 For the purposes of allowing Agent to conduct a Field Examination, Borrower shall, with respect to each owned, leased, or controlled property or facility, during normal business hours and upon reasonable prior notice (unless a Default or Event of Default has occurred and is continuing, in which event no notice shall be required and Agent shall have access at any and all times):  (1) provide access to such facility or property to Agent and any of its officers, employees and Agent, as frequently as Agent determines to be appropriate; (2) permit Agent and any of its officers, employees and Agent to inspect, audit and make extracts from all of Borrower's books and records; and (3) subject to the Lessee's rights under any Lease, permit Agent to inspect, review, evaluate and make physical verifications and appraisals of any Equipment and other Collateral in any manner and through any medium that Agent considers advisable, and Borrower shall provide to Agent, at Borrower's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto.  Borrower shall make available to Agent and its counsel, as quickly as practicable under the circumstances, originals or copies of all of Borrower's books and records and any other instruments and documents which Agent may reasonably request.  Borrower shall deliver any document or instrument reasonably necessary for Agent, as it may from time to time request, to obtain records from any service bureau or other Person that maintains records for Borrower.  Borrower's obligation to reimburse Agent for the costs of such Field Examinations shall not exceed $10,000 per year.

 

3.3.4 Upon the occurrence and during the continuance of an Event of Default, Borrower, at its own expense, shall cause its independent certified public accountants to prepare and deliver to Agent at any time and from time to time, promptly upon Agent's request:  (1) a reconciliation of all Accounts; (2) an aging of all Accounts; (3) trial balances; and (4) test verifications of such Accounts as Agent may request.  Borrower, at its own expense, shall cause its independent certified public accountants to deliver to Agent the results of (i) any physical verifications of all or any portion of the Collateral made or observed by such accountants, and (ii) any verifications of Borrower's Accounts, in each case when and if any such verifications are conducted.  Agent shall be permitted to observe and consult with Borrower and Borrower's certified public accountants in the performance of these tasks.

 

3.4 Power of Attorney

 

.  To the extent permitted by Applicable Law, Borrower hereby irrevocably makes, constitutes, and appoints Agent (and any of Agent's officers, employees or Agent designated by Agent) as Borrower's true and lawful attorney-in-fact, with power to:  (a) sign the name of Borrower on any document to be executed, recorded or filed in order to perfect or continue perfected Agent's Lien upon the Collateral if Borrower fails to do so promptly after request therefor by Agent, including filing any financing or continuation statement without the signature of Borrower to the extent permitted by applicable law; (b) at any time after the occurrence and continuance of an Event of Default, sign Borrower's name on any invoice or bill of lading relating to any Account, drafts against Account Debtors, schedules and assignments of Accounts, verifications of Accounts and notices to Account Debtors; (c) at any time after the occurrence and continuance of an Event of Default, send requests for verification of Accounts; (d) at any time after the occurrence and continuance of an Event of Default, endorse Borrower's name on any checks, notices, acceptances, money orders, drafts, or other forms of payment or security that may come into Agent's possession; and (e) at any time that a Default or Event of Default has occurred and is continuing, (1) notify the post office authorities to change the address for delivery of Borrower's mail to an address designated by Agent, to receive and open all mail addressed to Borrower, and to retain all mail relating to the Collateral and forward all other mail to Borrower, (2) make, settle, and adjust all claims under Borrower's policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (3) settle and adjust disputes and claims respecting the Accounts directly with Account Debtors, for amounts and upon terms which Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases which Agent determines to be necessary.  The appointment of Agent as Borrower's attorney-in-fact, and each and every one of Agent's rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Agent's obligation to provide Loans hereunder is terminated.  NEITHER LENDERS NOR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, LENDERS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER FOR ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE POWER OF ATTORNEY HEREIN OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

3.5 Grant of License to Use Intellectual Property Collateral

 

.  For the purpose of enabling Agent to exercise its rights and remedies under the Loan Documents, Borrower hereby grants to Agent an irrevocable, non-exclusive license (exercisable only upon the occurrence and continuance of an Event of Default and without payment of royalty or other compensation to Borrower) to use, transfer, license or sublicense any Intellectual Property now owned, licensed to, or hereafter acquired by Borrower, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer and automatic machinery software and programs used for the compilation or printout thereof, and Borrower represents, warrants and agrees that any such license or sublicense is not and will not be in conflict with the contractual or commercial rights of any other Person; provided, that such license will terminate on the Termination Date.

 

3.6 Reinstatement

 

.  The provisions of this Section 3 shall to the extent permitted by Applicable Law remain in full force and effect and continue to be effective even if:  (a) any petition is filed by or against Borrower or Owner Trustee for liquidation or reorganization; (b) Borrower or Owner Trustee becomes insolvent or makes an assignment for the benefit of creditors; (c) a receiver or trustee is appointed for all or any significant part of Borrower's or Owner Trustee's assets; or (d) at any time payment and performance of the Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations and Agent's Liens in the Collateral shall be reinstated and deemed reduced only by any amount paid and not so rescinded, reduced, restored or returned.

 

3.7 Release of Security Interest

 

.  Provided no Default or Event of Default exists and no Overadvance would result, Agent shall from time to time execute partial releases of Collateral sold by Borrower in the ordinary course of its business in accordance with this Agreement from the security interests under the Loan Documents which partial releases shall be in form reasonably satisfactory to Agent.

 

  

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4.  

	
CONDITIONS PRECEDENT

 

4.1 Conditions Precedent to Closing

 

.  Lenders shall not be obligated to make any Loan, or to take, fulfill, or perform any other action under this Agreement, until the following conditions have been satisfied to each Lender's reasonable satisfaction or waived in writing by each Lender:

 

4.1.1 Agent shall have received:

 

(a) originals of the documents set forth on Schedule 1.1f (Schedule of Documents), each duly executed by the appropriate parties, together with such other assurances, certificates, documents or consents related to the foregoing as Agent and/or Lenders reasonably may require, all in form and substance satisfactory to Agent and Lenders;

 

(b) such documentation as Agent may reasonably require to establish the due organization, valid existence and good standing of Borrower, its qualification to engage in business in each material jurisdiction in which it is engaged in business or required to be so qualified, its authority to execute, deliver and perform the Loan Documents to which it is a party, the identity, authority and capacity of each Authorized Signatory thereof authorized to act on its behalf, including certified copies of articles of organization and amendments thereto, bylaws and operating agreements and amendments thereto, certificates of good standing and/or qualification to engage in business, tax clearance certificates, certificates of corporate resolutions, incumbency certificates, certificates of Authorized Signatory, and the like;

 

(c) a list of all of Borrower's Material Contracts and a copy of such Material Contracts requested by Agent;

 

(d) a copy of all insurance certificates or other evidence of insurance for the Collateral;

 

(e) originals of favorable written opinions, dated as of the date hereof, of independent and internal counsel to the Borrower, addressed to Agent and Lenders (and their respective participants and assigns) and otherwise in form and substance satisfactory to Agent as to such matters as Agent shall determine;

 

(f) copies of all consents and authorizations of, permits from or filings with, any Governmental Authority or other Person required in connection with the execution, delivery, performance or enforceability of the Loan Documents or any provision thereof and no material changes in governmental regulations affecting the Borrower, Agent or the Lenders shall have occurred;

 

(g) (i) a certified lien search for the State of Delaware and the State of California with respect to the Borrower and each of its Subsidiaries, (ii) an International Registry search with respect to each applicable item of Equipment; (iii) an FAA search with respect to each applicable item of Equipment, (iv) a Federal tax lien search with respect to the Borrower and each of its Subsidiaries, and any other searches as may be required by Agent; and

 

(h) the "chattel paper" original of each Lease, which thereafter shall be held by Agent until the Termination Date; provided Agent shall not be liable in the event of any damage, loss or destruction of any of such documents or instruments.

 

4.1.2 All of the financing statements and other documentation described in Section 3.1.7 shall have been filed with the appropriate Governmental Agencies, and Agent shall hold a first priority perfected Lien in the Collateral, for the ratable benefit of Lenders, subject only to Permitted Liens.

 

4.1.3 With respect to all Equipment, the following statements shall be true, and Agent shall have received evidence reasonably satisfactory to it (including, with respect to each item of Equipment which is eligible for registration with the International Registry, a printout of the "priority search certificate" from the International Registry showing the Equipment Owner's ownership interest with respect to such Equipment under a contract of sale) with respect to each item of Equipment and any related Lease included in the Borrowing Base to the effect that:

 

(a) the Borrower is in compliance with the applicable requirements of the Mortgage and Applicable Law;

 

(b) the applicable Equipment Owner has good title under Applicable Law to such item of Equipment, free and clear of Liens other than (i) Permitted Liens and (ii) the Lien of Agent;

 

(c) the Borrower has completed all registrations and filings required by any Aviation Authority in such jurisdiction and Agent shall hold a first priority Lien on each item of Equipment under Applicable Law (or with respect to Assets for which a pre-filing has been made, Agent shall be the beneficiary of a second priority Lien on such Equipment, and documentation sufficient to terminate any first priority lien on such Equipment shall have been delivered to Agent or to an escrow with such documentation to be filed upon payoff of such lien through Revolving Loan proceeds) and has provided, or is in a position to provide, all opinions of independent counsel as required by Agent; and

 

(d) Agent shall have received evidence reasonably satisfactory to it (including, with respect to each Cape Town Eligible Lease, a printout of the "priority search certificate" (as defined in the Regulations for the International Registry) from the International Registry relating to the Lessor's interest in and International Interest with respect to such item of Equipment under such Lease and including, with respect to all Leases that are not Cape Town Eligible, an original, favorable written opinion of independent counsel addressed to Agent and Lenders (and their respective participants and assigns) with respect to Agent's Lien on such item of Equipment;

 

4.1.4 Payment by Borrower to Agent of all fees, costs, and expenses of closing (including reasonable fees of legal counsel to Agent presented as of the Closing Date);

 

  

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4.1.5 No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, Governmental Authority or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of, this Agreement or any other Loan Document or the consummation of the transactions contemplated hereby or thereby and which, in any Lender's sole judgment, would make it inadvisable to consummate the transactions contemplated by this Agreement or any other Loan Document;

 

4.1.6 Payment by Borrower to each Lender of any of the fees due to each Lender;

 

4.1.7 No circumstance or event shall have occurred, including but not limited to any litigation, actions, suits, proceedings or investigations pending as to Borrower, that constitutes a Material Adverse Effect as of the Closing Date;

 

4.1.8 All of the representations and warranties of Borrower under this Agreement shall be true and correct as of the Closing Date;

 

4.1.9 Borrower shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing;

 

4.1.10 Agent shall have completed its independent business and legal due diligence, including but not limited to financial, legal and insurance reviews, with results satisfactory to Agent;

 

4.1.11 Each Lender and Agent each shall have obtained satisfactory credit or other required internal approval(s) in connection with the transactions contemplated by this Agreement and the Loan Documents;

 

4.1.12 The Closing Date shall occur on or before May 31, 2014;

 

4.1.13 Borrower shall have established a non-interest bearing account with Agent;

 

4.1.14 All legal matters relating to the Loan Documents shall be satisfactory to Sheppard, Mullin, Richter & Hampton LLP, legal counsel to Union Bank, N.A., in all of its capacities hereunder.

 

If any other term of any Loan Document should conflict, or appear to conflict, with this Section 4.1, the terms of this Section 4.1 shall control, and Borrower shall have no rights under this Agreement or any other Loan Document until each of the conditions of this Section 4.1 has been complied with to Agent's and Lenders' satisfaction or specifically waived in a writing by Lenders.

 

4.2 Conditions to All Loans

 

.  It shall be a condition to the funding of any Loan that the following statements be true on the date of each such funding or advance:

 

4.2.1 Agent shall have timely received a Borrowing Notice or telephonic request, as applicable, together with an Borrowing Base Certificate dated as of the date of such Borrowing Notice;

 

4.2.2 Agent shall determine that, after giving effect to the requested Revolving Loan, no Overadvance will occur;

 

4.2.3 all of the representations and warranties of Borrower under this Agreement and the other Loan Documents shall be true and correct at such date, except to the extent any such representations and warranties relate to an earlier date, both before and after giving effect to the funding or issuance of such Loan, and Agent shall have received, if it so elects, a certification to that effect signed by an Authorized Signatory;

 

4.2.4 Borrower shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing;

 

4.2.5 no circumstance or event shall have occurred since the Closing Date, or would result from the funding, advance or incurrence of any Loan, that constitutes a Material Adverse Effect;

 

4.2.6 other than matters described in Schedule 5.10 or not required as of the Closing Date to be therein described, there shall not then be pending or threatened any action, suit, proceeding or investigation against or affecting Borrower or any of its Subsidiaries or any Property of any of them before any Governmental Authority that constitutes a Material Adverse Effect;

 

4.2.7 Agent shall have received, in form and substance satisfactory to Agent, such other assurances, certificates, documents or consents related to the foregoing as Agent may reasonably require;

 

4.2.8 Agent shall hold a perfected, first priority Lien on all Collateral, for the ratable benefit of Lenders, subject only to Permitted Liens and those liens referenced in clause (b) of Section 4.2.10;

 

4.2.9 With respect to an item of Equipment that is owned by an Owner Trustee, or with respect to each Lease to a Lessee domiciled or whose chief executive office is located in a non-U.S. jurisdiction, which is or is to be included in the Borrowing Base on such Borrowing Date, Agent shall have received the documentation set forth in the definition of "Eligible Lease," (including, without limitation, the Owner Trustee Guaranty(ies), Owner Trustee Mortgage(s), Trust Agreement(s), and Beneficial Interest Pledge Agreement(s));

 

4.2.10 With respect to all Equipment, the following statements shall be true, and Agent shall have received evidence reasonably satisfactory to it with respect to each item of Equipment and any related Lease included in the Borrowing Base to the effect that:

 

(a) the Borrower is in compliance with the applicable requirements of the Mortgage and Applicable Law;

 

(b) the applicable Equipment Owner has good title under Applicable Law to such item of Equipment, free and clear of Liens other than (i) Permitted Liens and (ii) the Lien of Agent;

 

(c) the Borrower has completed all registrations and filings required by any Aviation Authority in such jurisdiction and Agent shall hold a first priority Lien on each item of Equipment under Applicable Law and has provided, or is in a position to provide, all opinions of independent counsel as required by Agent;

 

(d) with respect to each Cape Town Eligible Lease, Agent shall have received evidence reasonably satisfactory to it (including, a printout of the "priority search certificate" as defined in the Regulations for the International Registry) from the International Registry relating to the Lessor's interest in and International Interest with respect to such item of Equipment under such Lease;

 

(e) with respect to all Leases that are not Cape Town Eligible, Agent shall have received an original, favorable written opinion of independent counsel addressed to Agent and Lenders (and their respective participants and assigns) with respect to Agent's Lien on such item of Equipment;

 

(f) with respect to each item of Equipment which is eligible for registration with the International Registry, Agent shall have received a printout of the "priority search certificate" from the International Registry showing the Equipment Owner's ownership interest with respect to such Equipment under a contract of sale; and

 

(g) with respect to such item of Equipment and any related Lease, the Borrower is in compliance with the applicable provisions of this Agreement, the Mortgage and all other Loan Documents.

 

Notwithstanding the foregoing, but subject to clause (b) of this Section 4.2.10, if the Mortgage or Owner Trustee Mortgage and/or Lease for any item of Equipment is not available on any Borrowing Date, but provided, in the case of a Lease of any item of Equipment, the parties hereto agree nevertheless to close on the financing of such item of Equipment so long as a (x)  a Prospective International Interest or International Interest in such Equipment and such Mortgage or Owner Trustee Mortgage (and Lease if it is a Cape Town Eligible Lease) has been duly registered in favor of Agent at the International Registry; (y)  no prior International Interest in such item of Equipment has been filed, and such Lease shall have been registered at the International Registry prior to the registration of such Prospective International Interest or International Interest in favor of Agent; and (z)  the Borrower shall cause the Mortgage or Owner Trustee Mortgage, as applicable (and Lease if the aircraft in a U.S. registered aircraft) to be filed with the FAA within three (3) days of such registration of Prospective International Interest or International Interest.

 

The request and acceptance by Borrower of the proceeds of the Loan shall be deemed to constitute, as of the date of such Loan, (1) a representation and warranty by Borrower that the conditions in this Section 4.2 have been satisfied, and (2) a confirmation by Borrower of the granting and continuance of Agent's Liens pursuant to the Collateral Documents.

 

  

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5.  

	
REPRESENTATIONS AND WARRANTIES

 

Borrower represents, warrants and agrees that from and after the Closing Date and until the Termination Date:

 

5.1 Corporate Existence; Compliance with Law

 

.  Borrower is a corporation duly formed, validly existing and in good standing under the Applicable Law of Delaware.  Borrower is duly qualified or registered to transact business and is in good standing in Delaware and California and in each other jurisdiction in which the conduct of its business or the ownership or leasing of its Property makes such qualification or registration necessary and in which the failure to be so qualified or registered could have a Material Adverse Effect.  Borrower has all requisite power and authority to conduct its business, to own, pledge, mortgage or otherwise encumber and operate its Property, to lease the Property it operates under lease, to conduct its business as now or proposed to be conducted, to execute and deliver each Loan Document to which it is a party and to perform its Obligations. Borrower is in compliance with all Applicable Law and other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Authority that are necessary for the transaction of its business.

 

5.2 Executive Offices; Corporate or Other Names; Conduct of Business

 

.  The locations of Borrower's executive offices, principal place of business, corporate offices, warehouses, other locations of Collateral and locations where all of Borrower's records with respect to Collateral are kept are as set forth in Schedule 5.2 and, except as set forth in such schedule, such locations have not changed during the preceding twelve (12) months.  Borrower shall not change its (a) name, (b) chief executive office, (c) principal place of business or jurisdiction of formation, or (d) location of its records concerning the Collateral, without, in each instance, giving thirty (30) days' prior written notice thereof to Agent and taking all actions deemed necessary or appropriate by Agent to protect and perfect Agent's Liens continuously upon the Collateral.

 

5.3 Authority; Compliance with Other Agreements and Instruments and Government Regulations

 

.  The execution, delivery and performance by Borrower, any Owner Trustee, and any Subsidiary of the Loan Documents to which each is a party have been duly authorized by all necessary corporate action, and do not and will not:

 

5.3.1 Require any consent or approval not heretofore obtained of any member, partner, director, stockholder, security holder or creditor of such party;

 

5.3.2 Violate or conflict with any provision of such party's operating agreement, charter, articles of incorporation or bylaws, as applicable;

 

5.3.3 Result in or require the creation or imposition of any Lien (other than pursuant to the Loan Documents) or Right of Others upon or with respect to any Property now owned or leased or hereafter acquired or leased by such party;

 

5.3.4 Violate any Applicable Law applicable to such party; or

 

5.3.5 Result in a breach of or constitute a default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other Contractual Obligation to which such party is a party or by which such party or any of its property is bound or affected; and such party is not in violation of, or default under, any Applicable Law or Contractual Obligation, or any indenture, loan or credit agreement, in any respect.

 

5.4 No Governmental Approvals Required

 

.  Except as previously obtained or made, no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Authority is or will be required to authorize or permit under Applicable Law the execution, delivery and performance by Borrower, Owner Trustee and any Subsidiary of the Loan Documents to which it is a party.

 

5.5 Subsidiaries

 

.  Borrower has no Subsidiaries as of the Closing Date.

 

5.6 Financial Statements

 

.  Borrower has furnished to Lender the audited financial statements of Borrower as of the Fiscal Year ending December 31, 2013 (including balance sheets and income statements) and the unaudited financial statements of Borrower as of the Fiscal Quarter ending March 31, 2014.  The financial information contained therein fairly presents in all material respects the financial condition, results of operations and changes in financial position of Borrower as of such dates and for such periods.

 

5.7 No Other Liabilities; No Material Adverse Changes

 

.  Borrower and its Subsidiaries do not have any material liability or material contingent liability required under GAAP to be reflected or disclosed, and not reflected or disclosed, in the balance sheets described in Section 5.6 other than liabilities and contingent liabilities arising in the ordinary course of business since the date of such financial statements.  Except as set forth on Schedule 5.7, as of the Closing Date, no circumstance or event has occurred that constitutes a Material Adverse Effect.

 

5.8 Title To and Location of Property

 

.  Borrower and its Subsidiaries have valid title to the Property, including all Equipment, as reflected in the balance sheet described in Section 5.6, other than items of Property or exceptions to title which are in each case immaterial and Property subsequently sold or disposed of in the ordinary course of business.  Such Property is free and clear of all Liens and Rights of Others, other than those described in Schedule 5.7 and Permitted Liens and Permitted Rights of Others.

 

5.9 Intellectual Property

 

.  Borrower and its Subsidiaries own, or possess, the right to use to the extent necessary in their respective businesses, all Intellectual Property, and no such Intellectual Property conflicts with the valid Intellectual Property of any other Person.  Except as set forth in Schedule 5.9, Borrower has not used any trade name, trade style or "dba" during the five year period ending on the Closing Date.

 

5.10 Litigation

 

.  Except for matters set forth in Schedule 5.10, there are no actions, suits, proceedings or investigations pending as to which Borrower or any of its Subsidiaries have been served or have received notice or, to the best knowledge of Borrower, threatened against or affecting Borrower or any of its Subsidiaries or any Property of any of them, the Collateral, or any other transactions contemplated by this Agreement.

 

  

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5.11 Binding Obligations

 

.  Each of the Loan Documents to which Borrower, Owner Trustee, and any Subsidiary is a party will, when executed and delivered by such party, constitute the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms.

 

5.12 No Default

 

.  No event has occurred and is continuing that is a Default or Event of Default.

 

5.13 ERISA

 

.  Neither Borrower nor any of its Subsidiaries has any Pension Plans.  Neither Borrower nor any of its Subsidiaries has incurred or expects to incur any withdrawal liability to any Multiemployer Plan (as defined herein).  As used herein, "Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA) and "Multiemployer Plan" means any employee benefit plan of the type described in Section 001(a)(3) of ERISA to which Borrower or any of its ERISA affiliates contributes or is obligated to contribute.

 

5.14 Regulation U; Investment Company Act

 

.  No part of the proceeds of any Loan hereunder will be used to purchase or carry, or to extend credit to others for the purpose of purchasing or carrying, any margin stock in violation of Regulation U.  Neither Borrower nor any of its Subsidiaries is or is required to be registered as an "investment company" under the Investment Company Act of 1940.

 

5.15 Disclosure

 

.  No written statement made by a Authorized Signatory to Lender in connection with this Agreement, or in connection with any Loan, as of the date thereof contained any untrue statement of a material fact or omitted a material fact necessary to make the statement made not misleading in light of all the circumstances existing at the date the statement was made.

 

5.16 Tax Liability

 

.  Borrower and its Subsidiaries have filed all tax returns which are required to be filed, and have paid, or made provision for the payment of, all taxes with respect to the periods, Property or transactions covered by said returns, or pursuant to any assessment received by Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established and maintained.

 

5.17 Hazardous Materials

 

.  Except as described in Schedule 5.17, as of the Closing Date (a)  neither Borrower nor any of its Subsidiaries at any time has disposed of, discharged, released or threatened the release of any Hazardous Materials in violation of any Hazardous Materials Law, (b) to the best knowledge of Borrower, no condition exists that violates any Hazardous Material Law affecting any real property owned by Borrower or any of its Subsidiaries, (c) no real property or any portion thereof is or has been utilized by Borrower or any of its Subsidiaries as a site for the manufacture of any Hazardous Materials and (d) to the extent that any Hazardous Materials are used, generated or stored by Borrower or any of its Subsidiaries on any real property, or transported to or from such real property by Borrower or any of its Subsidiaries, such use, generation, storage and transportation are in compliance with all Hazardous Materials Laws.

 

5.18 Security Interests

 

.  Upon the execution and delivery of all of this Agreement and the Collateral Documents and the completion of all actions to perfect the security interests so created, as set forth in Section 3.1.7, Agent will hold a valid first priority security interest in the Collateral described therein securing the Obligations.

 

5.19 Insurance

 

.  Schedule 5.19 lists all current insurance of any nature maintained by Borrower, as well as a summary of the terms of such insurance provided Schedule 5.19 shall list insurance for Equipment leased pursuant to an Eligible Lease.  Borrower shall deliver to Agent endorsements to all of its (a) "All Risk" and business interruption insurance policies naming Agent as loss payee, and (b) general liability and other liability policies naming Agent as an additional insured.  All policies of insurance on real and personal property will include an endorsement, in form and substance acceptable to Agent, showing loss payable to Agent (Form 438 BFU or equivalent) and extra expense and business interruption endorsements.  Such endorsement, or an independent instrument furnished to Agent, will provide that the insurer will endeavor to give at least thirty (30) days' prior written notice to Agent before any such policy or policies of insurance shall be canceled.  Upon the occurrence and continuation of a Default or Event of Default, Borrower hereby directs all present and future insurers under its and its Subsidiaries’ "All Risk" policies of insurance to pay all proceeds payable thereunder directly to Agent for the ratable benefit of Lenders.  Agent reserves the right at any time, upon review of Borrower's risk profile, to require additional forms and limits of insurance to adequately protect Lenders' interests in accordance with Agent's normal practices for similarly situated borrowers, and if the circumstances are unusual, in Agent's sole opinion.

 

5.20 Leases and Equipment

 

.  Each of the following is true and correct with respect to each Lease for an item of Equipment included in the Borrowing Base:

 

5.20.1 The amounts of rent and other amounts due under each Lease, as shown on the Borrower's books and records and on any statement or schedule delivered to Agent in connection therewith, are the true and correct amounts actually owed to the Borrower and the other Lessors;

 

5.20.2 The Borrower has not and will not enter into any agreement with a Lessee of any Equipment which provides, directly or indirectly, for the crediting of any obligation or liability of the Borrower to such Lessee against future rentals accruing under the Lease, other than as provided therein;

 

5.20.3 The Lessor delivered to Agent an original counterpart of such Lease;

 

5.20.4 The documents and information delivered to Agent pursuant to Section 4 with respect to such Equipment and Leases have been so delivered; and

 

5.20.5 All rentals, fees, costs, expenses and charges paid or payable by the Lessee under any Lease, including without limitation, any brokerage and other fees paid to the Borrower do not violate any Applicable Law relating to the maximum fees, costs, expenses or charges that can be charged in any jurisdiction in which any Equipment is located or in which the corresponding Lessee is located, or in which a transaction was consummated, or in any other jurisdiction which may have jurisdiction with respect to any such Equipment, Lease or Lessee.

 

  

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5.21 Cape Town Convention

 

.

 

5.21.1 The Borrower is (a) a "Transactional User Entity" (as such term is defined in the Regulations for the International Registry); (b) "situated", for the purposes of the Cape Town Convention, in the United States; and (c) has the "power to dispose" (as such term is used in the Cape Town Convention) of the Equipment;

 

5.21.2 The Equipment are "aircraft objects" (as such term is defined in the Cape Town Convention);

 

5.21.3 The Borrower has identified any and all Cape Town Eligible Leases, and has notified Agent of such Leases, in writing;

 

5.21.4 The payment of principal of and interest on the Notes, and the performance by the Borrower of the Obligations, are "associated rights" (as such term is defined in the Cape Town Convention) with respect to the Equipment.

 

5.22 Depreciation Policies

 

.  The Borrower's depreciation policies with respect to the Equipment are as set forth on Schedule 5.22.  These policies have been in effect substantially without change since January 1, 1998.

 

5.23 Interest Rate Protection Agreements

 

.  There are no Interest Rate Protection Agreements in effect as of the Closing Date.

 

5.24 Eligible Leases

 

.  A list of all items of Eligible Assets subject to a Lease in effect as of the Closing Date is set forth in Schedule 1.1a.

 

5.25 Preservation of International Interests and Liens

 

.  Borrower shall or shall cause any other Person, as applicable, to (i) register with the FAA and/or International Registry and/or create a Lien in favor of Agent under Applicable Law, and thereafter maintain, such Lien and, as applicable, the International Interest of each Mortgage and Owner Trustee Mortgage, if any, and the International Interest of each Lease with a Lessee domiciled or with its chief executive office in a Contracting State; and (ii) maintain the rights and International Interests of the Equipment Owner in the Equipment, as against any third parties under Applicable Law and as against all third parties, whether in any Contracting State under the Cape Town Convention or otherwise.

 

5.26 Solvency

 

.  Borrower is, and after giving effect to the transactions contemplated hereby, will be, Solvent.  "Solvent" for purposes of this Agreement means, with respect to any Person, that the aggregate present fair saleable value of such Person's assets is in excess of the total amount of its probable liabilities on its existing debts as they become absolute and matured, such Person has not incurred debts beyond its foreseeable ability to pay such debts as they mature, and such Person has capital adequate to conduct the business it is presently engaged in or is about to engage in.

 

	
6.  

	
AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)

 

So long as any portion of the Loan remains in force and/or any Obligation remains unpaid, Borrower shall, and shall cause its Subsidiaries to, unless Requisite Lenders otherwise consent:

 

6.1 Payment of Taxes and Other Potential Liens

 

.  Pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon any of them, upon its respective Property or any part thereof and upon its respective income or profits or any part thereof, except that Borrower and its Subsidiaries shall not be required to pay or cause to be paid any tax, assessment, charge or levy that is not yet past due, or is being contested in good faith by appropriate proceedings so long as the relevant entity has established and maintains adequate reserves for the payment of the same.

 

6.2 Preservation of Existence

 

.  Preserve and maintain its respective existences in the jurisdiction of its formation and all material authorizations, rights, franchises, privileges, consents, approvals, orders, licenses, permits, or registrations from any Governmental Authority that are necessary for the transaction of its respective business and qualify and remain qualified to transact business in each jurisdiction in which such qualification is necessary in view of its respective business or the ownership or leasing of its respective Property.

 

6.3 Maintenance of Property

 

.  Maintain, or, with respect to Property subject to Leases, require the Lessees to maintain, in good working order and condition, consistent with industry practice and standards (taking into consideration normal wear and tear), all of its Property and not permit any waste thereof, and, in the ordinary course of business, make all needful and proper repairs, replacements, additions and improvements thereto as are necessary for the conduct of its business, except that the failure to maintain, preserve and protect a particular item of Property that is at the end of its useful life or that is not of significant value, either intrinsically or to the operations of Borrower, shall not constitute a violation of this covenant.

 

  

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6.4 Maintenance of Insurance

 

.  Maintain or cause Lessee(s), as applicable, liability, casualty and other insurance (subject to customary deductibles and retentions) on all Property with responsible insurance companies in such amounts and against such risks as is carried by responsible companies engaged in similar businesses and owning similar assets in the general areas in which Borrower and its Subsidiaries operate and shall furnish to Lenders statements of its insurance coverage and shall promptly, upon Agent's request, furnish other or additional insurance deemed necessary by Agent to the extent that such insurance may be available.  Borrower shall take all actions required to maintain the foregoing insurance and/or to comply with all requirements of such insurance coverage.  Prior to any Loan disbursement, Agent shall be named as additional insureds on all liability insurance, all risk ground and flight coverage for damage or loss of the related Equipment, and war risk insurance (if applicable) and Agent shall be named as a loss payee under all hull insurance policies insuring the Collateral.  Borrower shall deliver to Agent endorsements to all of its (a) "All Risk" and business interruption insurance policies naming Agent as loss payee, and (b) general liability and other liability policies naming Agent as an additional insured.  All policies of insurance on real and personal property will include an endorsement, in form and substance acceptable to Agent, showing loss payable to Agent (Form 438 BFU or equivalent) and extra expense and business interruption endorsements.  Such endorsement, or an independent instrument furnished to Agent, will provide that the insurer will give at least thirty (30) days' prior written notice to Agent before any such policy or policies of insurance shall be canceled.  Upon the occurrence and continuation of a Default or Event of Default, Borrower hereby directs all present and future insurers under its and its Subsidiaries’ "All Risk" policies of insurance to pay all proceeds payable thereunder directly to Agent for the ratable benefit of Lenders.  Agent reserves the right at any time, upon review of Borrower's risk profile, to require additional forms and limits of insurance to adequately protect Lenders' interests in accordance with Agent's normal practices for similarly situated borrowers, and if the circumstances are unusual, in Agent's sole opinion. 

 

6.5 Compliance with Applicable Law

 

.  Comply with all Applicable Law, except that Borrower and its Subsidiaries need not comply with an Applicable Law then being contested by any of them in good faith by appropriate proceedings.

 

6.6 Inspection Rights

 

.  Upon reasonable notice, at any time during regular business hours and as often as reasonably requested (but not so as to materially interfere with the business of Borrower or any of its Subsidiaries) permit Agent, or any authorized employee or representative thereof, to examine, audit and make copies and abstracts from the records and books of account of, and to visit and inspect the Property of, Borrower and its Subsidiaries and to discuss the affairs, finances and accounts of Borrower and its Subsidiaries with any of its officers, key employees or accountants.  In addition, Agent shall cause a Field Examination to be completed annually commencing with the Fiscal Year ending December 31, 2013.  If no Event of Default or Potential Default shall be in existence, Borrower shall reimburse Agent for the reasonable expense of such annual Field Examination whether the examination is performed by Agent or a third party approved by Agent. If any Field Examination shall be made during the continuance of a Potential Default or an Event of Default, Borrower shall reimburse Agent for the reasonable expense of such Field Examination without limit. At all times, it is understood and agreed by Borrower that all expenses in connection with any such Field Examination which may be incurred by Borrower, any officers and employees thereof and the attorneys and independent certified public accountants therefor shall be expenses payable by Borrower and shall not be expenses of Agent or Lenders.  Agent shall complete a Field Examination within 90 days of the Closing Date, with the scope of such Field Examination to be determined by Agent.

 

6.7 Keeping of Records and Books of Account

 

.  Keep adequate records and books of account reflecting all financial transactions in conformity with GAAP, consistently applied, and in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower and its Subsidiaries.

 

6.8 Compliance with Agreements

 

.  Promptly and fully comply with all Contractual Obligations to which any one or more of them is a party, except for any such Contractual Obligations (a) the performance of which would cause a Default or (b) then being contested by any of them in good faith by appropriate proceedings.

 

6.9 Use of Proceeds

 

.  Use the proceeds of the Loans only for the purposes set forth in this Agreement.

 

6.10 Hazardous Materials Laws

 

.  Keep and maintain all real property used and/or owned by Borrower and any of its Subsidiaries and each portion thereof in compliance in all material respects with all applicable Hazardous Materials Laws and promptly notify Lender in writing (attaching a copy of any pertinent written material) of (a) any and all material enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened in writing by a Governmental Authority pursuant to any applicable Hazardous Materials Laws, (b) any and all material claims made or threatened in writing by any Person against Borrower relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials and (c) discovery by any senior officer of any of Borrower of any material occurrence or condition on any real property adjoining or in the vicinity of such real property that could reasonably be expected to cause such real property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such real property under any applicable Hazardous Materials Laws.

 

6.11 Future Subsidiaries

 

.  Borrower shall not create nor allow to exist any Subsidiary.

 

  

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6.12 Payment of Obligations

 

.  (a) Pay and discharge or cause to be paid and discharged all Obligations in a timely manner; (b) pay and discharge, or cause to be paid and discharged, its Indebtedness in the ordinary course of business prior to an Event of Default; (c) pay and discharge, or cause to be paid and discharged promptly, all Charges; and (d) pay all lawful claims for labor, materials, supplies and services or otherwise, before any thereof shall become in default.

 

6.13 Conduct of Business

 

.  (a) Conduct its business substantially as now conducted or as otherwise permitted hereunder; and (b) at all times maintain, preserve and protect all of the Collateral and keep the same in good repair, working order and condition consistent with industry practices and standards (taking into consideration ordinary wear and tear and excluding inventory and parts which by their nature may not be in good repair, working order or condition) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices and standards.

 

6.14 Further Assurances; Schedule Supplements

 

.  At any time and from time to time, upon the written request of Agent and at the sole expense of Borrower, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as such Agent may reasonably request to obtain the full benefits of this Agreement and to protect, preserve and maintain all respective parties' rights in the Collateral and under this Agreement.  Upon the occurrence and continuation of a Default or Event of Default and as often as Agent may thereafter require, Borrower will supplement each Schedule to this Agreement with respect to any matter hereafter arising that, if existing or occurring as of the Closing Date, would have been required to be set forth or described in such Schedule; provided, that such supplement shall not be deemed to be an amendment thereof unless expressly consented to in writing by Agent.

 

6.15 Financial Covenants

 

.  Maintain the following financial covenants on a consolidated basis, each of which shall be calculated in accordance with GAAP consistently applied as of the end of each Fiscal Quarter, and, where indicated, on a twelve (12) month trailing basis:

 

6.15.1 Maximum Leverage Ratio

 

.  A ratio of Funded Debt to Tangible Net Worth (taking into account Permitted Aircraft Disposition Charges (if any)) of not more than 3.75 : 1.00 ("Maximum Leverage Ratio"), measured at the end of each Fiscal Quarter.

 

6.15.2 Interest Coverage Ratio

 

.  An Interest Coverage Ratio of at least 2.75 to 1.00.  For purposes of this Section 6.15.2, "Interest Coverage Ratio" means the ratio calculated as follows (calculated on a twelve (12) month trailing basis): EBITDA, divided by Interest Expense.

 

  

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6.15.3 Debt Service Coverage Ratio

 

.  From the date of this Agreement, a Debt Service Coverage Ratio of at least 1.05: 1.00, calculated on a twelve (12) month trailing basis.  "Debt Service Coverage Ratio" means the ratio of (a) the sum of (i) EBITDA less (ii) taxes paid in cash during the prior consecutive twelve (12) month period plus (iii) Maintenance Expense for such period to (b) Total Debt Service for such period.  For purposes of this Section 6.15.3, EBITDA shall include an amount, if any, constituting Pro Forma EBITDA.

 

6.15.4 Minimum Tangible Net Worth Covenant

 

.  "Minimum Tangible Net Worth" shall be an amount equal to or greater than the sum of the following:  (i) eighty five percent (85%) of Tangible Net Worth as of December 31, 2013, (ii) fifty percent (50%) of Net Income reported in each successive Fiscal Quarter with no deduction for operating losses reported for such Fiscal Quarter, (iii) one hundred percent (100%) of the net proceeds from any additional equity offering in excess of Five Million and 00/100 Dollars ($5,000,000.00), and (iv) fifty percent (50%) of any incremental additive equity associated with any Acquisition.

 

6.15.5 No Net Loss

 

.  Borrower shall not suffer a consolidated net loss, as calculated according to GAAP, as of the end of any Fiscal Quarter, calculated on a twelve (12) month trailing basis.  For the avoidance of doubt, net loss will be calculated without any adjustment for Permitted Aircraft Disposition Charges (if any) incurred during the calculation period.

 

6.15.6 Utilization Covenant

 

.  The Utilization Rate shall be at least seventy-five percent (75%) calculated on a twelve (12) month trailing basis and weighted by the Appraised Value of each item of Equipment.  "Utilization Rate" means the sum of (i) the number of days each item of Equipment is subject to an Eligible Lease during the measurement period multiplied by its Appraised Value divided by the sum of (ii) the number of days each item of Equipment is owned multiplied by its Appraised Value.

 

6.15.7 Revenue Concentration Limit

 

.  Borrower shall have (i) no more than twenty-five percent (25%) of Borrower’s annual operating lease revenue (excluding maintenance reserves) from any one (1) Lessee nor (ii) more than forty percent (40%) of Borrower’s annual operating lease revenue (excluding maintenance reserves) from any two (2) Lessees, each calculated on a twelve (12) month trailing basis.

 

6.16 Subordination of Third Party Fees

 

.  Borrower shall provide a subordination, on terms satisfactory to Agent, of any fees paid to any Subsidiaries or Affiliates of Borrower pursuant to ongoing contractual arrangements for services provided to Borrower, including without limitation, licensing, management and marketing fees, including without limitation, those fees payable under the JMC Management Agreement.

 

6.17 Maintenance of Borrowing Base

 

.  Maintain the value of the Borrowing Base at all times such that no Borrowing Base Deficiency occurs.

 

  

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6.18 Placards

 

.  Affix and maintain or use its best efforts to cause each Lessee under a Lease to affix to and maintain on all item(s) of Eligible Assets a placard bearing an inscription substantially in the form attached hereto as Exhibit I or such other inscription as Agent from time to time may reasonably request.  The Borrower shall, on a quarterly basis, provide to Agent a list of all Eligible Assets subject to a Lease indicating, to the best knowledge of the Borrower, which items of Equipment have placards affixed and on which no such placard is affixed.

 

6.19 Maintenance of Current Depreciation Policies

 

.  Maintain its method of depreciating its assets substantially consistent with past practices as set forth in Schedule 5.22 and promptly notify Lender of any deviation from such practices.

 

6.20 Preservation of International Interests and Liens

 

.  At its expense, cause (i) the registration with the International Registry of the International Interests with respect to the Mortgage and each Lease with a Lessee domiciled or with its chief executive office in a Contracting State or otherwise create a Lien in favor of Agent under Applicable Law, and (ii) maintain the rights and International Interests of the Equipment Owner in the Equipment or otherwise maintain such Lien, as against any third parties under Applicable Law and as against all third parties, whether in any Contracting State under the Cape Town Convention or otherwise. The Borrower agrees to furnish Agent with copies of all documents relating to the foregoing and with recording and registration data as promptly as practicable following the issuance of the same by the FAA, the International Registry, or such other Person under Applicable Law.

 

6.21 Maintenance of JMC Management Agreement

 

.  Maintain substantially consistent with past practices and not terminate the JMC Management Agreement or otherwise transfer Borrower's interest thereunder and promptly notify Agent of any deviation from such practices.

 

6.22 Interest Rate Protection Agreements

 

.  Promptly upon the incurrence of such obligation after the Closing Date and until the Termination Date, Borrower shall provide to Agent prompt written notice of such event and a copy of such Interest Rate Protection Agreement.

 

6.23 Maintenance of Eligible Collateral

 

.  Agent shall possess a first priority security interest in any Equipment included in the Collateral which shall be (i) electronically recorded on the International Registry (Cape Town Convention), (ii) filed with the FAA in the case of (A) any Aircraft that are registered with the FAA and (B) all Engines and (iii) promptly, to the satisfaction of Agent, and as soon as practical and in any event within one hundred and eighty (180) days following registration with the International Registry, perfected through all additional required local foreign jurisdiction security conventions (if any) to secure the payment, promptly when due.

 

6.24 Maintenance of Records

 

.  Borrower shall cause all lessees of Equipment to maintain adequate maintenance and usage records in English in accordance with applicable aviation regulations.

 

  

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7.  

	
NEGATIVE COVENANTS

 

Borrower covenants and agrees that, without Requisite Lenders' prior written consent, from the Closing Date until the Termination Date, Borrower and its Subsidiaries shall not, directly or indirectly, by operation of law or otherwise:

 

7.1 Modification of Formation Documents

 

.  Amend its certificate of incorporation or formation documents that could have or reasonably be expected to have a Material Adverse Effect.

 

7.2 Failure to Act/Duty to Act

 

.  Take any action or omit to take any action, which act or omission would constitute a material default or a material event of default pursuant to, or noncompliance with, any contract, lease (including any Leases), mortgage, deed of trust or instrument to which it is a party or by which it or any of its property is bound, or any document creating a Lien and which would have a Material Adverse Effect on Borrower's business.

 

7.3 Modification of Debt

 

.  Cancel or modify any debt owing to it, except for reasonable consideration in the ordinary course of its business or which would not have a Material Adverse Effect on Borrower's financial condition.

 

7.4 Intentionally deleted

 

.

 

7.5 Disposition of Property

 

.  Make any sale, transfer or other disposition in any single transaction or series of related transactions of any asset or group of related assets of Borrower or any of its Subsidiaries, whether now owned or hereafter acquired ("Disposition"), except a Disposition by Borrower to a Wholly-Owned Subsidiary.

 

7.6 Mergers

 

.  Merge or consolidate with or into any Person, except (a) mergers and consolidations of a Subsidiary of Borrower into Borrower or a Wholly-Owned Subsidiary or of Subsidiaries with each other and (b) a merger or consolidation of a Person into Borrower or with or into a Wholly-Owned Subsidiary of Borrower that is not prohibited by Section 7.7; provided that (i) Borrower is the surviving entity, (ii) no Change in Control results therefrom, (iii) no Default or Event of Default then exists or would result therefrom, (iv) Borrower executes such amendments to the Loan Documents as Agent may reasonably determine are appropriate as a result of such merger and/or Borrower shall cause any Subsidiary to execute such amendments to the Loan Documents or additional Loan Documents, including but not limited to a Subsidiary Guaranty, as Agent may reasonably determine are appropriate as a result of such merger, (v) the aggregate consideration paid or to be paid (whether cash, notes, stock, or assumption of debt or otherwise) by the Borrower and/or its Subsidiaries in any one such merger or consolidation does not exceed $10,000,000.00, and (vi) such aggregate consideration with respect to all such mergers or consolidations shall not exceed $15,000,000.00 in any Fiscal Year. Without limitation, no such merger or consolidation shall result in a violation of the terms of Section 6.2 or Section 6.13. The Borrower shall promptly notify the Agent of any merger or consolidation involving the Borrower.

 

7.7 Hostile Acquisitions

 

.  Directly or indirectly use the proceeds of any Loan in connection with the Acquisition of part or all of a voting interest of five percent (5%) or more in any corporation or other business entity if such Acquisition is opposed by the board of directors of such corporation or business entity.

 

7.8 Distributions

 

.  Make any Distribution, whether from capital, income or otherwise,  whether in Cash or other Property; provided, Borrower may declare or pay a dividend if no Default or Event of Default exists prior to or after giving effect to such declaration, payment or reserve for payment.

 

7.9 ERISA

 

.  Create or maintain any Pension Plans or incur any withdrawal liability to any Multiemployer Plan (as defined herein).

 

7.10 Change in Nature of Business; Change in Control

 

.  Make any material change in the nature of the business of Borrower and its Subsidiaries, taken as a whole, or at any time, permit any Change in Control to occur.

 

7.11 Change in JMC Management Agreement

 

.  Make any material change in the nature or terms of the JMC Management Agreement.

 

7.12 Liens and Negative Pledges

 

.  Create, incur, assume or suffer to exist any Lien or Negative Pledge of any nature upon or with respect to any of its respective Property or any Collateral or engage in any sale and leaseback transaction with respect to any of its respective Property or any Collateral, whether now owned or hereafter acquired, except:

 

7.12.1 Liens and Negative Pledges under the Loan Documents;

 

7.12.2 Permitted Liens;

 

7.12.3 Liens on Property acquired by Borrower or any of its Subsidiaries that were in existence at the time of the acquisition of such Property and were not created in contemplation of such acquisition; or

 

7.12.4 Liens securing purchase money Indebtedness permitted by Section 7.13.3 on and limited to the capital assets acquired, constructed or financed with the proceeds of such Indebtedness or with the proceeds of any Indebtedness directly or indirectly refinanced by such Indebtedness.

 

  

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7.13 Indebtedness and Guaranteed Indebtedness

 

.  Create, incur or assume any Indebtedness or guaranty obligation except:

 

7.13.1 Indebtedness and Guaranteed Indebtedness existing on the Closing Date and disclosed in Schedule 7.13, and refinancings, renewals, extensions or amendments that do not increase the amount thereof;

 

7.13.2 Indebtedness and Guaranteed Indebtedness under the Loan Documents;

 

7.13.3 Indebtedness and Guaranteed Indebtedness owed to Borrower or any of its Subsidiaries;

 

7.13.4 Indebtedness consisting of Capital Lease Obligations, or otherwise incurred to finance the purchase or construction of capital assets (which shall be deemed to exist if the Indebtedness is incurred at or within ninety (90) days before or after the purchase or construction of the capital asset), or to refinance any such Indebtedness;

 

7.13.5 Indebtedness consisting of Interest Rate Protection Agreements;

 

7.13.6 Guaranteed Indebtedness in support of the obligations of a Wholly-Owned Subsidiary, provided that such obligations are not prohibited by this Agreement; and

 

7.13.7 Permitted Indebtedness.

 

7.14 Transactions with Affiliates

 

.  Make, or suffer to exist, any loan or advance or extend any credit to any Person, including, without limitation, any Affiliate of the Borrower other than:

 

7.14.1 advances to Affiliates in the ordinary course of business not to exceed $250,000.00 in the aggregate outstanding at any time;

 

7.14.2 trade credit advanced in the ordinary course of business;

 

7.14.3 transactions between or among Borrower and its Subsidiaries; and

 

7.14.4 transactions on overall terms at least as favorable to Borrower or its Subsidiaries as would be the case in an arm's length transaction between unrelated parties of equal bargaining power.

 

7.15 Subsidiary Indebtedness

 

.  Permit (whether or not otherwise permitted under Section 7.13) any Subsidiary to create, incur, assume or suffer to exist any Indebtedness or guaranty obligation, except (a) Indebtedness and Guaranteed Indebtedness in existence on the Closing Date, (b) Indebtedness owed to Borrower or another Subsidiary of Borrower, and (c) Capital Lease Obligations and purchase money obligations of a Subsidiary in respect of Property used or leased by that Subsidiary.

 

7.16 Intentionally deleted

 

.

 

7.17 New Shareholders

 

.  Issue or otherwise grant shares of stock to any new shareholders unless (i) Agent has confirmed that such transaction would not cause a violation of the Patriot Act and (ii) such new shareholder(s) has executed a stock pledge agreement and stock power in favor of Agent for the ratable benefit of Lenders, in form and substance satisfactory to Agent.

 

7.18 Redemptions; Dividends

 

.  Purchase, redeem, retire or otherwise acquire, directly or indirectly, or make any sinking fund payments with respect to, any shares of its Stock now or hereafter outstanding or set apart any sum for any such purpose; provided, however, that the Borrower may repurchase its issued and outstanding shares of Stock provided the sum of all dividends and stock repurchases in any Fiscal Year shall not exceed fifty percent (50%) of the Net Income for the prior four Fiscal Quarters.

 

  

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7.19 Investments

 

.  Make or suffer to exist any Investment, other than:

 

7.19.1 Investments in existence on the Closing Date and disclosed on Schedule 7.19;

 

7.19.2 Investments consisting of Cash Equivalents;

 

7.19.3 Investments in a Person that is the subject of an Acquisition not prohibited by Section 7.7;

 

7.19.4 Investments consisting of advances to officers, directors and employees of Borrower and its Subsidiaries for travel, entertainment, relocation, anticipated bonus and analogous ordinary business purposes;

 

7.19.5 Investments in a Subsidiary that is a Wholly-Owned Subsidiary; provided that Borrower shall not (a) create or allow to exist any Subsidiary (unless with respect to Subsidiaries the same shall have executed and delivered to the Agent a guaranty and a security agreement each in form acceptable to the Agent creating in favor of the Agent a first priority perfected Lien on its assets, or Borrower shall have delivered to Agent a pledge of 100% of the stock of such Subsidiary in form and substance satisfactory to Agent), or (b) purchase or otherwise acquire (unless no Default exists or would exist immediately thereafter) including, without limitation, by way of share exchange, any part or amount of the capital stock or assets of, or make any Investments in any other Person, except for stock, obligations or securities received in settlement of debts owing to it created in the ordinary course of business and Investments otherwise expressly permitted under this Agreement.

 

7.19.6 Investments consisting of the extension of credit to customers or suppliers of Borrower and its Subsidiaries in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof;

 

7.19.7 Investments received in connection with the settlement of a bona fide dispute with another Person;

 

7.19.8 Investments representing all or a portion of the sales price of Property sold or services provided to another Person; or

 

7.19.9 Investment consisting of acquisition of all of the outstanding capital stock or assets of JetFleet Holding Corp., a California corporation, under substantially the terms and conditions set forth in the JMC Management Agreement.

 

7.20 Additional Bank Accounts

 

.  Directly or indirectly, open, maintain or otherwise have any checking, savings or other accounts where money is or may be deposited or maintained outside the United States of America, except as may be required for the receipt of Lease payments from a Lessee located in a non-U.S. jurisdiction.

 

	
8.  

	
INFORMATION AND REPORTING REQUIREMENTS

 

8.1 Reports and Notices

 

.  Borrower represents, warrants and agrees that, from and after the Closing Date until the Termination Date, Borrower shall deliver, or cause to be delivered, to Agent:

 

8.1.1 within sixty (60) days following the end of each of the first three Fiscal Quarters for each Fiscal Year

 

(a) (unless an extension is approved by the SEC), SEC Form 10-Q of Borrower for such Fiscal Quarter; provided that the timely EDGAR SEC filing of such Form 10-Q, along with delivery of a hard or .pdf copy to Agent of such Form 10-Q, shall satisfy this requirement; provided further that if any such Form 10-Q is not filed with the SEC within such sixty (60) day time period, then Borrower shall instead deliver, or cause to be delivered, to Agent internally prepared financial statements of Borrower and its Subsidiaries (including income statement, balance sheet, and statement of cash flows) on or before the end of the sixty (60) day period;

 

(b) internally prepared financial statements for such Fiscal Quarter of JMC and its Subsidiaries, if applicable, (including income statement, balance sheet, and statement of cash flows);

 

8.1.2 within sixty (60) days following the end of each of the first three Fiscal Quarters, a certification from Borrower, in the form of a Compliance Certificate;

 

8.1.3 within ninety (90) days following the end of each Fiscal Year

 

(a) (unless an extension is approved by the SEC) or, in any event, within fifteen (15) days of a timely filing with the SEC, (a) the Financial Statements of Borrower for such Fiscal Year certified by an Authorized Signatory; (b) an unqualified report and opinion by an independent certified public accounting firm acceptable to Agent with respect to such Financial Statements, (c) any management letters of such public accounting firm addressed to Borrower, and (d) a Compliance Certificate; provided that the timely EDGAR SEC filing of a Form 10-K, along with delivery of a hard or .pdf copy to Agent of such Form 10-K, shall satisfy the requirements of subsections 8.13(a) and (b); provided further, that if such Form 10-K is not filed with the SEC within such ninety (90) day time period, then the Borrower shall instead deliver, or cause to be delivered, to Agent internally prepared Financial Statements of Borrower and its Subsidiaries and of JMC, if applicable, (including income statement, balance sheet, and statement of cash flows) on or before the end of the period ending one hundred five (105) days after the end of the Fiscal Year;

 

(b) internally prepared financial statements for such Fiscal Year of JMC and its Subsidiaries, if applicable, (including income statement, balance sheet, and statement of cash flows);

 

8.1.4 as soon as practicable and in any event within 15 days after the end of each calendar month, a report listing the Leases of Equipment in the Borrowing Base (in form and substance reasonably satisfactory to the Agent);

 

8.1.5 as soon as available, but in any event within fifteen (15) days after the end of the immediately preceding calendar month, a Borrowing Base Certificate of the Borrower showing, as of the end of such calendar month setting forth, among other things, (i) a list of the Eligible Assets that are subject to an Eligible Lease; (ii) a list of all Equipment acquired and all Equipment sold by the Borrower since the date of the last Borrowing Base Certificate delivered to Agent; (iii) and a lease receivables aging report, which covers both Leases under which the Lessees are current and Leases under which the Lessees are delinquent (all of the foregoing in form and substances reasonably satisfactory to Agent);

 

8.1.6 as soon as available, but in any event within fifteen (15) days after the end of each Fiscal Year, an Appraisal performed by an Appraiser acceptable to Agent and at Borrower’s expense, with respect to all Eligible Assets.  In addition, upon the request of any Lender, Borrower shall permit Agent to retain an Appraiser to conduct additional Appraisals, which shall be performed at Borrower’s expense once per Fiscal Year with subsequent additional Appraisals at the requesting Lender’s expense;

 

8.1.7 within twenty (20) days following the receipt by Agent of the Borrowing Base Certificate covering the last month of a Fiscal Quarter, an Appraisal with respect to Eligible Assets added to the Borrowing Base during the Fiscal Quarter just ended;

 

8.1.8 promptly upon their becoming available, copies of any (a) correspondence or notices received by the Borrower or any Subsidiary from any Governmental Authority which regulates the operations of the Borrower or any Subsidiary, including as to environmental matters and Hazardous Material, relating to an actual or threatened change or development which would have, or would reasonably be expected to have, a Material Adverse Effect on the Borrower or any Subsidiary; (b) written reports submitted to the Borrower by its independent accountants in connection with any annual or interim audit of the books of the Borrower made by such accountants; and (c) any appraisals received by the Borrower or any Subsidiary with respect to its Assets;

 

8.1.9 promptly, notice in writing of (i) any litigation, legal proceeding or dispute, other than disputes in the ordinary course of business or, whether or not in the ordinary course of business, involving amounts, individually or in the aggregate, in excess of $200,000.00, affecting the Borrower or any Subsidiary as a defendant, whether or not fully covered by insurance, and regardless of the subject matter thereof, or, if no monetary amounts are claimed in connection therewith, which proceeding or dispute, if determined or resolved against the Borrower or any Subsidiary is reasonably likely to have a Material Adverse Effect on the Borrower or any Subsidiary, (ii) any cancellation or threatened cancellation by any insurance carrier of any insurance policy or policies carried by the Borrower or by any of its Subsidiaries on the assets and properties of the Borrower or any Subsidiary or (iii) any resignation or termination of any director or executive or senior officer of the Borrower;

 

8.1.10 promptly, and in any event within one (1) Business Day of when the Borrower becomes aware or, in the exercise of reasonable due diligence should have become aware of the same, notice in writing in the event that at any time the outstanding principal amount of the Loans to the Borrower shall exceed the amount of the Borrowing Base, and promptly, and in any event within five (5) Business Days, notify in writing the Agent of any material damage to or other Event of Loss with respect to any Eligible Assets;

 

  

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8.1.11 promptly upon the earlier of the date on which the Borrower becomes aware or, in the exercise of reasonable due diligence should have become aware of the same, notify the Agent (or, in the case of (f) below, the Agent) by telephone (to be confirmed within three calendar days in writing from the Borrower to each Bank) of the occurrence of any of the following:

 

(a) any Default;

 

(b) any default or event of default under any contract or contracts and the default or event of default involves payments by the Borrower in an aggregate amount equal to or in excess of $200,000.00;

 

(c) a default or event of default under or as defined in any evidence of or agreements for any Indebtedness for borrowed money under which the Borrower's liability is equal to or in excess of $200,000.00, individually or in the aggregate, whether or not an event of default thereunder has been declared by any party to such agreement or any event which, upon the lapse of time or the giving of notice or both, would become an event of default under any such agreement or instrument or would permit any party to any such instrument or agreement to terminate or suspend any commitment to lend to the Borrower or to declare or to cause any such indebtedness to be accelerated or payable before it would otherwise be due;

 

(d) any change in any Applicable Law, including, without limitation, changes in tax laws and regulations, which would have a Material Adverse Effect on the Borrower or any Subsidiary;

 

(e) any litigation, administrative proceeding, investigation, business development, or change in financial condition which could reasonably have a Material Adverse Effect on the Borrower or any Subsidiary;

 

(f) any instance in which Equipment are operated (x) on routes with respect to which it is customary for air carriers flying comparable routes to carry confiscation or expropriation insurance or (y) in any area designated by companies providing such coverage as a recognized or threatened war zone or area of hostilities or an area where there is a substantial risk of confiscation or expropriation;

 

8.1.12 promptly upon receipt thereof or concurrently with delivery thereof by the Borrower, as the case may be, copies of any correspondence, requests, reports, statements, claims, consents, notices or other documents of any kind received or sent by the Borrower under or with respect to any Material Contract which evidence or relate to an event or circumstance which would have, or would reasonably be expected to have, a Material Adverse Effect on the Borrower or any Subsidiary;

 

8.1.13 promptly upon the filing thereof with the SEC one copy of each financial statement, report, notice or proxy statement sent by the Borrower to stockholders generally, and, a copy of each regular or periodic report, and any registration statement, or prospectus in respect thereof, filed by the Borrower with any securities exchange or with federal or state securities and exchange commissions or any successor agency; and

 

8.1.14 subject to the prohibitions set forth in Section 7.1 hereof, promptly deliver to the Agent copies of any material amendments, modifications or supplements to (i) certificate of incorporation or by-laws, (ii) any Material Contract and (iii) the JMC Management Agreement, certified, with respect to the certificate of incorporation, by the appropriate state officials, and, with respect to the other foregoing documents, by the secretary or assistant secretary of the Borrower.

 

8.2 Budgets

 

.  within ninety (90) days following the end of each Fiscal Year Borrower shall deliver to Agent its annual budget for the next Fiscal Year (such budget to include forecasted balance sheet, income statement and cash flow statement of Borrower).

 

8.3 Other Reports

 

.  Borrower shall notify Agent promptly of any occurrence causing a material loss or decline in value of any Collateral and the estimated (or actual, if available) amount of such loss or decline.  Borrower shall, upon the request of any Lender or Agent, furnish to Agent such other reports in connection with the affairs, business, financial condition, operations, prospects or management of Borrower or the Collateral, all in reasonable detail, and Borrower shall advise Agent promptly, in reasonable detail, of:  (a) any Lien, other than Permitted Liens, attaching to or asserted against any of the Collateral; (b) any material change in the composition of the Collateral; and (c) the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect.

 

  

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9.  

	
EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

9.1 Events of Default

 

.  The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "Event of Default" under this Agreement:

 

9.1.1 Borrower shall fail to make any regularly scheduled payment of principal or interest in respect of any Obligations within three (3) Business Days after the same shall become due and payable or is declared due and payable (provided that no grace period shall apply to nonpayment of the Obligations on the Maturity Date); or

 

9.1.2 Borrower or Owner Trustee, as applicable, shall fail or neglect to perform, keep or observe any of the covenants, promises, agreements, requirements, conditions or other terms, Obligations (other than under Section 9.1.1) or provisions contained in this Agreement or any of the other Loan Documents and such default shall have continued for a period of thirty (30) days after Agent's or any Lender's notice to Borrower and/or Owner Trustee, as applicable, of such default hereunder; provided, there shall be no grace period for Borrower's failure to perform, keep or observe any of the covenants, promises, agreements, requirements, conditions or other terms or provisions contained in Section 6.15 and Section 7 (except for Section 7.12); or

 

9.1.3 an event of default shall occur under any Indebtedness to which Borrower is a party, or by which any such Person or its property is bound, and such event of default (1) involves the failure to make any payment, whether of principal, interest or otherwise, and whether due by scheduled maturity, required prepayment, acceleration, demand or otherwise, in respect of any Indebtedness (other than the Obligations) of such Person in an aggregate amount exceeding $250,000, or (2) causes (or permits any holder of such Indebtedness or a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate amount exceeding $250,000 to become due prior to its stated maturity or prior to its regularly scheduled dates of payment; or

 

9.1.4 any representation or warranty in this Agreement or any other Loan Document, or in any written statement, report or certificate pursuant hereto or thereto, shall be untrue or incorrect in any material respect as of the date when made or deemed to be made by the Borrower or any Subsidiaries; or

 

9.1.5 any of the assets of Borrower or any Subsidiary having a value of $1,000,000 or more shall be attached, seized, levied upon or subjected to a writ or distress warrant or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of such Person, and any of the foregoing shall remain unstayed or undismissed for sixty (60) consecutive days; or any Person other than Borrower or any Subsidiary shall apply for the appointment of a receiver, trustee or custodian for the assets of Borrower or any Subsidiary and the order appointing such receiver, trustee or custodian shall remain unstayed or undismissed for sixty (60) consecutive days; or Borrower or any Subsidiary shall have concealed, removed or permitted to be concealed or removed, any part of its Property with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent transfer or other similar law; or

 

9.1.6 a case or proceeding shall have been commenced involuntarily against Borrower or any Subsidiary in a court having competent jurisdiction seeking a decree or order:  (1) under the Bankruptcy Code or any other applicable Federal, state or foreign Bankruptcy or other similar law, and seeking either (i) the appointment of a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Person or of any substantial part of its properties, or (ii) the reorganization or winding up or liquidation of the affairs of any such Person and such case or proceeding shall remain undismissed or unstayed for sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding; or (2) invalidating or denying (i) any Person's right, power, or competence to enter into or perform any of its obligations under any Loan Document, or (ii) the validity or enforceability of this Agreement or any other Loan Document or any action taken hereunder or thereunder; or

 

9.1.7 Borrower or any Subsidiary shall (1) file a petition under the Bankruptcy Code or any other applicable Federal, state or foreign bankruptcy or other similar law, (2) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any such Person or of any substantial part of its properties, (3) fail generally to pay (or admit in writing its inability to pay) its debts as such debts become due, or (4) take any corporate action in furtherance of any such action; or

 

9.1.8 final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $1,000,000 in the aggregate shall be rendered against Borrower or any Subsidiary, unless the same shall be (i) fully covered by insurance (subject to any contractual deductibles) and the issuer(s) of the applicable policies shall have acknowledged substantial coverage in writing within fifteen (15) days of judgment, or (ii) vacated, stayed, bonded, paid or discharged within a period of fifteen (15) days from the date of such judgment; or

 

9.1.9 Borrower or any Subsidiary voluntarily or involuntarily dissolves or is dissolved, terminates or is terminated; or

 

9.1.10 Borrower or any Subsidiary is enjoined, restrained, or in any way prevented by the order of any court or other Governmental Authority, the effect of which order restricts such Person from conducting all or any material part of its business; or

 

9.1.11 the loss, suspension, revocation or failure to renew any License or permit now held or hereafter acquired by Borrower or any Subsidiary, which loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; or

 

9.1.12 any Lien or any provision of any Loan Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms, or any Lien granted, or intended by the Loan Documents to be granted, to Agent shall cease to be a valid and perfected Lien having the first priority (or a lesser priority if expressly permitted in the Loan Documents) in any of the Collateral covered or purported to be covered thereby; or

 

9.1.13 any Change of Control of Borrower shall have occurred; or

 

9.1.14 The occurrence of any event of default or the equivalent thereof under any other Debt Instrument (as defined below), in each case following any applicable grace period, under any term, condition or covenant of any bond, note, debenture, guaranty, trust agreement, mortgage or similar instrument to which the Borrower or any Subsidiary is a party or by which it is bound, or by which any of its properties or assets may be affected (a "Debt Instrument") if the outstanding Indebtedness or obligations of the Borrower or such Subsidiary under such Debt Instrument exceeds $1,000,000.00 in aggregate principal amount and (x) may be declared to be due and payable by reason of such default or event of default prior to the date on which such indebtedness or obligations would otherwise become due and payable, with or without the giving of notice or the passage of time or both, or to terminate or suspend any commitment to make advances or lend monies or to accelerate the rate of payment of unpaid Indebtedness or to terminate the Borrower or such Subsidiary as a servicer or manager of such Indebtedness or the assets secured thereby, (y) is due and payable and unpaid, or (z) shall be indebtedness under any Interest Rate Protection Agreement; or

 

9.1.15 Borrower is no longer managed by JMC under the JMC Management Agreement under substantially the same terms and conditions that exist as of the Closing Date; or

 

9.1.16 A circumstance or event has occurred that constitutes a Material Adverse Effect.

 

  

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9.2 Remedies

 

.

 

9.2.1 If any Default or Event of Default has occurred and is continuing, then Agent may, with the prior written approval of Requisite Lenders, exercise one or more of the following remedies:  (1) upon notice to Borrower from Agent, increase the rate of interest applicable to the Loans to the Default Rate effective as of the date of the initial Default; or (2) terminate or suspend Lenders' obligation to make further Loans.  In addition, if any Event of Default shall have occurred and be continuing, Agent may (upon prior written approval of Requisite Lenders), without notice, take any one or more of the following actions:  (i) declare all or any portion of the Obligations to be forthwith due and payable, whereupon such Obligations shall become and be due and payable; or (ii) exercise any rights and remedies provided to Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC; provided, that upon the occurrence of an Event of Default specified in Sections 9.1.5, 9.1.4 or 9.1.7, the Obligations shall become immediately due and payable (and any obligation of Lenders to make further Loans, if not previously terminated, shall immediately be terminated) without declaration, notice or demand by Agent.

 

9.2.2 In addition to all other rights and remedies of Agent or Lenders under this Agreement (except to the extent any such Collateral is subject to a lease (including any Lease) which provides for the quiet use and enjoyment of such Collateral by the Lessee thereunder), Borrower expressly agrees that, upon the occurrence of any Event of Default and prior written approval of Requisite Lenders, Agent may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, assign, give an option or options to purchase or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any exchange at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  Agent shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of such Agent by credit bid the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption Borrower hereby releases.  Such sales may be adjourned, or continued from time to time with or without notice.

 

9.2.3 Borrower further agrees, upon the occurrence of an Event of Default and at Agent's request (except to the extent any such Collateral is subject to a Lease which provides for the quiet use and enjoyment of such Collateral by the Lessee thereunder), to assemble the Collateral and make it available to Agent at places which Agent shall reasonably select.  Until Agent is able to effect a sale, lease, or other disposition of the Collateral and except to the extent any such Collateral is subject to a Lease which provides for the quiet use and enjoyment of such Collateral by the Lessee thereunder, Agent shall have the right to complete, assemble, use or operate the Collateral or any part thereof, to the extent that Agent deems appropriate, for the purpose of preserving such Collateral or its value or for any other purpose. Agent shall have no obligation to Borrower to maintain or preserve the rights of Borrower as against third parties with respect to any Collateral while such Collateral is in the possession of Agent.  Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of any Collateral and to enforce any of Agent's remedies with respect to such appointment without prior notice or hearing.  To the maximum extent permitted by Applicable Law, Borrower waives all claims, damages, and demands against Agent, its Affiliates, Agent, and the officers and employees of any of them arising out of the repossession, retention or sale of any Collateral except such as are determined in a final judgment by a court of competent jurisdiction to have arisen out of the gross negligence or willful misconduct of such Person.  Borrower agrees that ten (10) days' prior notice by Agent to Borrower of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters.  Borrower shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which Agent is entitled.

 

9.2.4 Each Lender's rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies which Lenders may have under any Loan Document or at law or in equity.  Recourse to the Collateral shall not be required. All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any Applicable Law, and all provisions of this Agreement are intended to be subject to any Applicable Law that may be controlling and to be limited, to the extent necessary, so that they do not render this Agreement invalid, unenforceable, in whole or in part.

 

9.3 Waivers by Borrower

 

.  Except as otherwise provided for in this Agreement and to the fullest extent permitted by Applicable Law, Borrower waives:  (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all Loan Documents, the Notes or any other notes, commercial paper, Accounts, Contracts, Documents, Instruments, Chattel Paper and guaranties at any time held by Lender on which Borrower may in any way be liable, and hereby ratifies and confirms whatever Lender may do in this regard; (b) all rights to notice and a hearing prior to Lender's taking possession or control of, or to Lender's replevin, attachment or levy upon, any Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.  Borrower acknowledges that it has been advised by counsel with respect to this Agreement, the other Loan Documents and the transactions evidenced hereby and thereby.

 

9.4 Proceeds

 

.  The Proceeds of any sale, disposition or other realization upon any Collateral shall be applied by any Lender upon receipt as set forth in Section 2.11.

 

	
10.  

	
SUCCESSORS AND ASSIGNS

 

Each Loan Document shall be binding on and shall inure to the benefit of Borrower, Lenders, Agent and their respective successors and assigns, except as otherwise provided herein or therein.  Borrower shall not assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties under any Loan Document without the prior written consent of all of the Lenders, and any such purported assignment, transfer, hypothecation or other conveyance by Borrower without the prior express written consent of the Requisite Lenders shall be void.  The terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining the relative rights and obligations of Borrower and Lenders with respect to the transactions contemplated hereby and thereby, and there shall be no third party beneficiaries of any of the terms and provisions of any of the Loan Documents.  Subject to Section 12.8.5 of this Agreement, each Lender reserves the right at any time to create and sell a participation in any portion of the Loans and the Loan Documents and to sell, transfer or assign any or all of its rights in the Loans and under the Loan Documents.

 

  

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11.  

	
DISPUTE RESOLUTION

 

11.1 Alternative Dispute Resolution Agreement

 

.  Any controversy or claim between or among the parties, their agents and employees, arising under or in connection with (1) this Agreement or any of the other Loan Documents, (2) any negotiations, correspondence or communications relating to this Agreement or any of the other Loan Documents, whether or not incorporated herein or therein, or any indebtedness evidenced hereby or thereby, (3) the administration or management of this Agreement or any of the other Loan Documents or any indebtedness evidenced hereby or thereby, or (4) any alleged agreements, promises, representations or transactions in connection herewith or therewith, including any claim or controversy which arises out of or is based upon an alleged tort, shall be subject to and resolved in accordance with the Alternative Dispute Resolution Agreement.

 

11.2 No Limitation on Remedies

 

.  No provision of, or the exercise of any rights under, Section 11.1 shall limit the right of any party to the Alternative Dispute Resolution Agreement to exercise self-help remedies such as set-off, to foreclose against any Collateral, or to obtain provisional or ancillary remedies such as injunctive relief or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any mediation or arbitration.

 

11.3 Inconsistency

 

.  To the extent any provision of the Alternative Dispute Resolution Agreement is inconsistent with the other terms of this Agreement, the terms of the Alternative Dispute Resolution Agreement shall prevail.

 

	
12.  

	
MISCELLANEOUS

 

 

 

 

12.1 Complete Agreement; Modification of Agreement

 

.  This Agreement and the other Loan Documents constitute the complete agreement among the parties with respect to the subject matter hereof and thereof, supersede all prior agreements, commitments, understandings or inducements (oral or written, expressed or implied), and may not be modified, altered or amended except by a written agreement signed by Agent, Lenders, Borrower and each other Person executing this Agreement or any other Loan Document, as applicable.

 

12.2 Reimbursement and Expenses

 

.  Borrower will promptly pay:

 

12.2.1 without regard for whether any Loans are made, all reasonable out-of-pocket expenses of Agent in connection with the preparation, negotiation, execution, and delivery of this Agreement, the Notes and the other Loan Documents, including all due diligence, all post-closing matters, syndication, and the transactions contemplated hereunder and thereunder and the making of the Loans, including, recording and filing fees, and the reasonable attorneys' fees and disbursements of counsel for Agent;

 

12.2.2 all reasonable out-of-pocket expenses of Agent in connection with the administration or monitoring of the Loans, the Collateral, this Agreement and the other Loan Documents in accordance with the provisions thereof, the restructuring and refinancing of the transaction herein contemplated, and in connection with the preparation, negotiation, execution, and delivery of any waiver, amendment, or consent by Agent relating to this Agreement or the other Loan Documents, including, auditing costs and expenses with respect to the Collateral and the reasonable attorneys' fees and expenses of counsel;

 

12.2.3 all of Agent' out-of-pocket costs and expenses of obtaining performance under this Agreement or the other Loan Documents, of collection of the Obligations, in any arbitration, mediation, legal action or proceeding (including any case under the Bankruptcy Code or similar laws), which, in each case, shall include reasonable fees and expenses of counsel for Agent and each Lender;

 

12.2.4 all Charges levied on, or assessed, placed or made against any Collateral, the Notes or the other Loan Documents or the Obligations; and

 

12.2.5 whenever Agent or any Lender sustains or incurs any losses or out-of-pocket expenses in connection with (1) the failure by Borrower to borrow or reborrow any LIBOR Loan, or reborrow any Revolving Loan as a LIBOR Loan, in each case, after having given notice of its intention to borrow in accordance with Section 2.1.5 (whether by the election of Borrower not to proceed or the failure to satisfy of any of the conditions set forth in Section 4), or (2) prepayment of any LIBOR Loan in whole or in part, Borrower shall pay to Agent and each Lender, upon the earlier of Agent's and/or each Lender's demand or the Maturity Date an amount sufficient to compensate Agent and each Lender for all such losses and out-of-pocket expenses.  Agent's and each Lender's good faith determination of the amount of such losses and out-of-pocket expenses, shall, absent manifest error, be deemed final, binding and conclusive upon Borrower.  Losses subject to reimbursement under this Agreement shall include expenses incurred by any Lender or any participant of any Lender permitted under this Agreement in connection with the re-employment of funds prepaid, repaid, not borrowed, or paid, as the case may be, and any lost profit of any Lender or any participant of any Lender over the remainder of the LIBOR Loan Period for such prepaid LIBOR Loan.

 

12.3 Indemnity

 

.

 

12.3.1 Borrower shall indemnify and hold each Indemnified Person harmless from and against any Claim which may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended or not extended under this Agreement and the other Loan Documents or otherwise in connection with or arising out of the transactions contemplated hereunder or thereunder, including any Claim for Environmental Liabilities and Costs and legal costs and expenses of disputes between the parties to this Agreement; provided, that Borrower shall not be liable for indemnification of an Indemnified Person to the extent that (a) such Claim is brought by any Indemnified Person against Borrower and Borrower is the prevailing party thereunder or (b) any such Claim is finally determined by a court of competent jurisdiction to have resulted from such Indemnified Person's gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED OR NOT EXTENDED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

 

12.3.2 In any suit, proceeding or action brought by Agent or any Lender relating to any item of Collateral or any amount owing hereunder, or to enforce any provision of any item of Collateral, Borrower shall save, indemnify and keep Agent and each Lender harmless from and against all expense, loss or damage suffered by reason of such action or any defense, setoff, or counterclaim asserted for any reason by the other party or parties to such litigation and however arising unless (a) such suit, proceeding or action is brought by Agent or any Lender against Borrower and Borrower is the prevailing party thereunder, or (b) any such suit, proceeding or action is finally determined by a court of competent jurisdiction to have resulted from Agent's or any Lender's gross negligence or willful misconduct.  All obligations of Borrower with respect to any item of Collateral shall be and remain enforceable against, and only against, Borrower and shall not be enforceable against Agent or any Lender.  This Section 12.3.2 shall survive the Termination Date.

 

12.4 No Waiver

 

.  Neither Agent's nor any Lender's failure, at any time or times, to require strict performance by Borrower of any provision of any Loan Document, nor Agent's or any Lender's failure to exercise, nor any delay in exercising, any right, power or privilege under this Agreement, (a) shall waive, affect or diminish any right of such Agent or any Lender thereafter to demand strict compliance and performance therewith, or (b) shall operate as a waiver thereof.  Any suspension or waiver of a Default, Event of Default, or other provision under the Loan Documents must be in writing signed by an authorized employee of Agent or any Lender to be effective and shall not suspend, waive or affect any other Default or Event of Default, whether the same is prior or subsequent thereto and whether of the same or of a different type, and shall not be construed as a bar to any right or remedy which Agent or any Lender would otherwise have had on any future occasion.

 

  

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12.5 Severability; Drafting

 

.  Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of any Loan Document shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of such Loan Document.  Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon Borrower and all rights of Agent and Lender, all as contained in the Loan Documents, shall not terminate or expire, but rather shall survive such termination or cancellation and shall continue in full force and effect until the Termination Date; provided, that the reimbursement and expense provisions of Section 12.2, the indemnity provisions of Section 12.2.5, the governing law and venue provisions of Section 12.14 and the Alternative Dispute Resolution Agreement referred in Sections 11 and 12.15 shall all survive the Termination Date.  In the event of a dispute between any of the parties hereto over the meaning of this Agreement, all parties shall be deemed to have been the drafter hereof, and any Applicable Law that states that contracts are construed against the drafter shall not apply.

 

12.6 Conflict of Terms

 

.  Except as otherwise provided in any Loan Document by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any other Loan Document, the provision contained in this Agreement shall govern and control.

 

12.7 Notices

 

.

 

12.7.1 All notices and other communications under this Agreement and the other Loan Documents shall be in writing and shall be deemed to have been given three (3) days after deposit in the mail, first class mail, postage prepaid, or one (1) day after being entrusted to a reputable commercial overnight delivery service, or when sent out by facsimile transmission addressed to the party to which such notice is directed at its address determined as provided in this Section 12.7.1.  All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:

 

(a) If to Borrower:

 

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA 94010-4011

Telephone No.:  (650) 340-1888

Facsimile No.:  (650) 696-3929

(b) If to Agent:

 

Union Bank, N.A.

Transportation, Aerospace and Defense Group

400 California Street, 8th Floor

San Francisco, CA 94104

 

with a copy to:

 

Union Bank, N.A.

Attn:  Shane Johnson

   Vice President

445 South Figueroa Street 13th Floor

Angeles, CA 90071

Telephone No.:  (213) 236-5622

Facsimile No.:  (213) 236-7209

 

and:

 

Sheppard Mullin Richter & Hampton LLP

Four Embarcadero Center, 17th Floor

San Francisco, CA 94111-4106

Attn:  Juliette M. Ebert, Esq.

Telephone No.:  (415) 434-9100

Facsimile No.:  (415) 434-3947

12.7.2 Any party to this Agreement may change the address to which notices shall be directed under this Section 12.7.2 by giving ten (10) days' written notice of such change to the other parties.

 

  

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12.8 Binding Effect; Assignment

 

.

 

12.8.1 This Agreement and the other Loan Documents to which Borrower is a party will be binding upon and inure to the benefit of Borrower, Agent, each of Lenders, and their respective successors and assigns, except that Borrower may not assign its rights hereunder or thereunder or any interest herein or therein without the prior written consent of all Lenders.  Each Lender represents that it is not acquiring its Note with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (subject to any requirement that disposition of such Note must be within the control of such Lender).  Any Lender may at any time pledge its Note or any other instrument evidencing its rights as a lender under this Agreement to a Federal Reserve Bank, but no such pledge shall release that lender from its obligations hereunder or grant to such Federal Reserve Bank the rights of a Lender hereunder absent foreclosure of such pledge.

 

12.8.2 From time to time following the Closing Date, each Lender may assign to one or more Eligible Assignees all or any portion of its Pro Rata Share of the Revolving Commitment; provided that (i) such Eligible Assignee, if not then a Lender or an Affiliate of the assigning Lender, shall be approved by Agent and, provided no Default or Event of Default then exists, Borrower, which approval(s) shall not be unreasonably withheld, conditioned or delayed; (ii) such assignment shall be evidenced by a Commitment Assignment and Acceptance, a copy of which shall be furnished to Agent as provided below; (iii) except in the case of an assignment (a) to an Affiliate of the assigning Lender or to another Lender or (b) of the entire remaining Revolving Commitment of the assigning Lender, the assignment shall not assign a Pro Rata Share of the Revolving Commitment that is equivalent to less than $5,000,000.00; (iv) the effective date of any such assignment shall be as specified in the Commitment Assignment and Acceptance, but not earlier than the date which is five (5) Business Days after the date Agent has received the Commitment Assignment and Acceptance; and (v) such Eligible Assignee shall execute an Alternative Dispute Resolution Agreement, in form and substance satisfactory to Agent.  Upon the effective date of such Commitment Assignment and Acceptance, the Eligible Assignee named therein shall be a Lender for all purposes of this Agreement, with the Pro Rata Share of the Revolving Commitment therein set forth and, to the extent of such Pro Rata Share, the assigning Lender shall be released from its further obligations under this Agreement.  Borrower agrees that it shall execute and deliver (against delivery by the assigning Lender to Borrower of its Note(s)) to such assignee Lender, Note(s) evidencing that assignee Lender's Pro Rata Share of the Revolving Commitment, and to the assigning Lender, Note(s) evidencing the Pro Rata Share retained by the assigning Lender.

 

12.8.3 By executing and delivering a Commitment Assignment and Acceptance, the Eligible Assignee thereunder acknowledges and agrees that:  (i) other than the representation and warranty that it is the legal and beneficial owner of the Pro Rata Share of the Revolving Commitment being assigned thereby free and clear of any adverse claim, the assigning Lender has made no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement or any other Loan Document; (ii) the assigning Lender has made no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance by Borrower of the Obligations; (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Commitment Assignment and Acceptance; (iv) it will, independently and without reliance upon Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) it appoints and authorizes Agent to take such action and to exercise such powers under this Agreement as are delegated to Agent by this Agreement; and (vi) it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

12.8.4 Agent shall maintain at Agent's Office a copy of each Commitment Assignment and Acceptance delivered to it and a register (the "Register") of the names and address of each of the Lenders and the Pro Rata Share of the Commitments held by each Lender, giving effect to each Commitment Assignment and Acceptance.  The Register shall be available during normal business hours for inspection by Borrower or any Lender upon reasonable prior notice to Agent.  After receipt of a completed Commitment Assignment and Acceptance executed by any Lender and an Eligible Assignee, and receipt of a non-refundable assignment fee of Three Thousand Five Hundred Dollars ($3,500.00) from such Lender or Eligible Assignee, Agent shall, promptly following the effective date thereof, provide to Borrower and the Lenders a revised Schedule 2.1 giving effect thereto.  Borrower, Agent and the Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the Pro Rata Share of the Revolving Commitment listed therein for all purposes hereof, and no assignment or transfer of any such Pro Rata Share of the Revolving Commitment shall be effective, in each case unless and until a Commitment Assignment and Acceptance effecting the assignment or transfer thereof shall have been accepted by Agent and recorded in the Register as provided above.  Prior to such recordation, all amounts owed with respect to the applicable Pro Rata Share of the Revolving Commitment shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Pro Rata Share of the Revolving Commitment.

 

12.8.5 Each Lender may from time to time grant participations to one or more banks or other financial institutions in a portion of its Pro Rata Share of the Revolving Commitment; provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iii) the participating banks or other financial institutions shall not be a Lender hereunder for any purpose except, if the participation agreement so provides, for the purposes of Section 12.2.5 but only to the extent that the cost of such benefits to Borrower does not exceed the cost which Borrower would have incurred in respect of such Lender absent the participation; (iv) Borrower, Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement; (v) the participation interest shall be expressed as a percentage of the granting Lender's Pro Rata Share of the Revolving Commitment as it then exists or in the granting Lender's Pro Rata Share of the Revolving Commitment, so long as the amount of the participation interest is not affected thereby; and (vi) the consent of the holder of such participation interest shall not be required for amendments or waivers of provisions of the Loan Documents other than those which (A) extend the Maturity Date or any other date upon which any payment of money is due to the Lenders, (B) reduce the rate of interest on the Notes, any fee or any other monetary amount payable to the Lenders, (C) reduce the amount of any installment of principal due under the Notes, or (D) release any material Collateral from the Lien of the Collateral Documents, except if such release of material Collateral occurs in connection with a disposition permitted under this Agreement in which case such release shall not require the consent of any of the Lenders or of any holder of a participation interest in the Revolving Commitment.

 

12.9 Right of Setoff

 

.  If an Event of Default has occurred and is continuing, Agent or any Lender (but in each case only with the consent of the Requisite Lenders) may exercise its rights under Article 9 of the Uniform Commercial Code and other Applicable Law and, to the extent permitted by Applicable Law, apply any funds in any deposit account maintained with it by Borrower and/or any Property of Borrower in its possession against the Obligations.

 

12.10 Sharing of Setoffs

 

.  Each Lender severally agrees that if it, through the exercise of any right of setoff, banker's lien or counterclaim against Borrower, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means, receives in payment of the Obligations held by that Lender, then, subject to Applicable Law:  (a) the Lender exercising the right of setoff, banker's lien or counterclaim or otherwise receiving such payment shall purchase, and shall be deemed to have simultaneously purchased, from each of the other Lenders a participation in the Obligations held by the other Lenders and shall pay to the other Lenders a purchase price in an amount so that the share of the Obligations held by each Lender after the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of the Lenders share any payment obtained in respect of the Obligations ratably in accordance with each Lender's share of the Obligations immediately prior to, and without taking into account, the payment; provided that, if all or any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker's lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by Borrower or any Person claiming through or succeeding to the rights of Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest.  Each Lender that purchases a participation in the Obligations pursuant to this Section 12.10 shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.  Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased pursuant to this Section 12.10 may exercise any and all rights of setoff, banker's lien or counterclaim with respect to the participation as fully as if the Lender were the original owner of the Obligation purchased.

 

  

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12.11 Section Titles

 

.  The Section titles and Table of Contents contained in this Agreement and any other Loan Document are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

12.12 Counterparts

 

.  Each Loan Document may be executed in any number of identical counterparts, which shall constitute an original and collectively and separately constitute a single instrument or agreement.

 

12.13 Time of the Essence

 

.  Time is of the essence for payment and performance of the Obligations.

 

12.14 GOVERNING LAW; VENUE

 

.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.  BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN SAN FRANCISCO, CALIFORNIA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND ANY LENDER PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF SAN FRANCISCO, CALIFORNIA; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT OR ANY LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH AGENT OR LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 12.7.1 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE BORROWER'S ACTUAL RECEIPT THEREOF.

 

12.15 WAIVER OF JURY TRIAL

 

.  AS SET FORTH IN THE ALTERNATIVE DISPUTE RESOLUTION AGREEMENT, BORROWER, AGENT AND EACH LENDER WAIVE ITS RIGHT TO A TRIAL BY JURY AND AGREES TO HAVE ANY DISPUTE BETWEEN OR AMONG ANY OTHER PARTY(IES)  RESOLVED PURSUANT TO THE TERMS OF THE ALTERNATIVE DISPUTE RESOLUTION AGREEMENT.

 

12.16 Amendments; Consents

 

.  No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to any departure by Borrower or any other party therefrom, may in any event be effective unless in writing signed by Agent with the written approval of the Requisite Lenders (and, in the case of any amendment, modification or supplement of or to any Loan Document to which Borrower is a party, signed by Borrower, and, in the case of any amendment, modification or supplement to Section 13, signed by Agent, respectively), and then only in the specific instance and for the specific purpose given; and, without the approval in writing of all the Lenders, no amendment, modification, supplement, termination, waiver or consent may be effective:

 

12.16.1 To amend or modify the principal of, or the amount of principal (other than in accordance with Sections 2.8 or 2.18), principal prepayments or the rate of interest payable on, any Note, or the amount of the Revolving Commitment or the Pro Rata Share of any Lender or the amount of any commitment fee payable to any Lender, or any other fee or amount payable to any Lender under the Loan Documents or to waive an Event of Default consisting of the failure of Borrower to pay when due principal, interest or any fee;

 

12.16.2 To postpone any date fixed for any payment of principal of, prepayment of principal of or any installment of interest on, any Note or any installment of any fee, or to extend the term of the Revolving Commitment;

 

12.16.3 To amend the provisions of the definition of the following:  "Borrowing Base", "Eligible Collateral", "Eligible Lease", "Equipment", "Maturity Date", and "Requisite Lenders";

 

12.16.4 To release any material Collateral from the Lien of the Collateral Documents;

 

12.16.5 To amend or waive Section 4 or this Section 12.16 or any part thereof;

 

12.16.6 To amend any of the covenants in Section 6.15, 6.19, or to modify any of the definition of the terms contained therein, or to waive any violation of any such covenants or to modify any cure periods in connection therewith;

 

12.16.7 To amend any provision of this Agreement that expressly requires the consent or approval of all or a specified portion of the Lenders or

 

12.16.8 To amend or modify the depreciation policy as set forth in Schedule 5.22.

 

Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section 12.16 shall apply equally to, and shall be binding upon, all the Lenders and Agent.

 

  

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12.17 Foreign Lenders and Participants

 

.  Each Lender that is incorporated or otherwise organized under the Applicable Law of a jurisdiction other than the United States of America or any State thereof or the District of Columbia shall deliver to Borrower (with a copy to Agent), on or before the Closing Date (or on or before accepting an assignment or receiving a participation interest herein pursuant to Section 12.7.2, if applicable) two duly completed copies, signed by an authorized officer, of either Form 1001 (relating to such Lender and entitling it to a complete exemption from withholding on all payments to be made to such Lender by Borrower pursuant to this Agreement) or Form W-8BEN (relating to all payments to be made to such Lender by the Borrower pursuant to this Agreement) of the United States Internal Revenue Service or such other evidence (including, if reasonably necessary, Form W-9) satisfactory to Borrower and Agent that no withholding under the federal income tax laws is required with respect to such Lender.  Thereafter and from time to time, each such Lender shall (a) promptly submit to Borrower (with a copy to Agent), such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to Borrower and Agent of any available exemption from, United States withholding taxes in respect of all payments to be made to such Lender by Borrower pursuant to this Agreement and (b) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re designation of its LIBOR lending office, if any) to avoid any requirement of Applicable Law that Borrower make any deduction or withholding for taxes from amounts payable to such Lender.  In the event that Borrower or Agent become aware that a participation has been granted pursuant to Section 12.8.5 to a financial institution that is incorporated or otherwise organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia, then, upon request made by Borrower or Agent to the Lender which granted such participation, such Lender shall cause such participant financial institution to deliver the same documents and information to Borrower and Agent as would be required under this Section if such financial institution were a Lender.

 

	
13.  

	
AGENT

 

13.1 Appointment and Authorization

 

.  Subject to Section 12.7.28, each Lender hereby irrevocably appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof or are reasonably incidental, as determined by Agent, thereto.  This appointment and authorization is intended solely for the purpose of facilitating the servicing of the Loans and does not constitute appointment of Agent as trustee for any Lender or as representative of any Lender for any other purpose and, except as specifically set forth in the Loan Documents to the contrary, Agent shall take such action and exercise such powers only in an administrative and ministerial capacity.

 

13.2 Lenders' Credit Decisions

 

.  Each Lender agrees that it has, independently and without reliance upon Agent, any other Lender or the directors, officers, Agent, employees or attorneys of the foregoing parties, and instead in reliance upon information supplied to it by or on behalf of Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement.  Each Lender also agrees that it shall, independently and without reliance upon Agent, any other Lender or the directors, officers, Agent, employees or attorneys of the foregoing parties, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents.

 

13.3 Agent and Affiliates

 

.  Union Bank, N.A. (and each successor Agent) has the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not Agent, and the term "Lender" or "Lenders" includes Union Bank, N.A. in its individual capacity.  Union Bank, N.A. (and each successor Agent) and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with Borrower or any Affiliate of Borrower, as if it were not Agent and without any duty to account therefor to Lenders.  Union Bank, N.A. (and each successor Agent) need not account to any other Lender for any monies received by it in its capacity as a Lender hereunder.  Agent shall not be deemed to hold a fiduciary relationship with any Lender and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against Agent.

 

13.4 Proportionate Interest in any Collateral

 

.  Agent, on behalf of Lenders, shall hold in accordance with the Loan Documents all items of any Collateral or interests therein to be received or held by Agent.  Subject to Agent's and Lenders' rights to reimbursement for their costs and expenses hereunder (including reasonable attorneys' fees and disbursements and other professional services and the reasonably allocated costs of attorneys employed by Agent or a Lender) and subject to the application of payments in accordance with Section 9.4, each Lender shall have an interest in such collateral or interests therein in the same proportion that the aggregate obligations owed such Lender, under the Loan Documents and/or any Interest Rate Protection Agreement, as applicable, bears to the aggregate obligations owed under the Loan Documents and all Interest Rate Protection Agreements, without priority or preference among Lenders.

 

  

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13.5 Action by Agent

 

.

 

13.5.1 Absent actual knowledge of Agent of the existence of a Default, Agent may assume that no Default has occurred and is continuing, unless Agent (or the Lender that is then Agent) has received notice from Borrower stating the nature of the Default or has received notice from a Lender stating the nature of the Default and that such Lender considers the Default to have occurred and to be continuing.

 

13.5.2 Agent has only those obligations under the Loan Documents as are expressly set forth therein.

 

13.5.3 Except for any obligation expressly set forth in the Loan Documents and as long as Agent may assume that no Event of Default has occurred and is continuing, Agent may, but shall not be required to, exercise its discretion to act or not act, except that Agent shall be required to act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16) and those instructions shall be binding upon Agent and all Lenders, provided that Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to Applicable Law or would result, in the reasonable judgment of Agent, in substantial risk of liability to Agent.

 

13.5.4 If Agent has received a notice specified in Section 13.5.1, Agent shall immediately give notice thereof to Lenders and shall act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16), provided that Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to Applicable Law or would result, in the reasonable judgment of Agent, in substantial risk of liability to Agent, and except that if the Requisite Lenders fail, for five (5) Business Days after the receipt of notice from Agent, to instruct Agent, then Agent, in its sole discretion, may act or not act as it deems advisable for the protection of the interests of Lenders.

 

13.5.5 Agent shall have no liability to any Lender for acting, or not acting, as instructed by the Requisite Lenders, notwithstanding any other provision hereof.

 

13.6 Liability of Agent

 

.  Neither Agent nor any of its directors, officers, Agent, employees or attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, except for their own gross negligence or willful misconduct.  Without limitation on the foregoing, Agent and its directors, officers, Agent, employees and attorneys:

 

13.6.1 May treat the payee of any Note as the holder thereof until Agent receives notice of the assignment or transfer thereof, signed by the payee, and may treat each Lender as the owner of that Lender's interest in the Obligations for all purposes of this Agreement until Agent receives notice of the assignment or transfer thereof, signed by that Lender;

 

13.6.2 May consult with legal counsel (including in-house legal counsel), accountants (including in-house accountants) and other professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for Borrower or Lenders, and shall not be liable for any action taken or not taken by it in good faith in accordance with any advice of such legal counsel, accountants or other professionals or experts selected by it with reasonable care;

 

13.6.3 Shall not be responsible to any Lender for any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents except for those expressly made by it;

 

13.6.4 Except to the extent expressly set forth in the Loan Documents, shall have no duty to ask or inquire as to the performance or observance by Borrower of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or any Property, books or records of Borrower;

 

13.6.5 Will not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency or value of any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith, or any collateral; and

 

13.6.6 Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing reasonably believed by it to be genuine and signed or sent by the proper party or parties.

 

13.7 Indemnification

 

.  Each Lender shall, ratably in accordance with its proportion of the aggregate Indebtedness then evidenced by the Notes, indemnify and hold Agent and its directors, officers, Agent, employees and attorneys harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable attorneys' fees and disbursements and allocated costs of attorneys employed by Agent) that may be imposed on, incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other than losses incurred by reason of the failure of Borrower to pay the Indebtedness represented by the Notes) or any action taken or not taken by it as Agent thereunder, except such as result from its own gross negligence or willful misconduct.  Without limitation on the foregoing, each Lender shall reimburse Agent upon demand for that Lender's Pro Rata Share of any out of pocket cost or expense incurred by Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (including a bankruptcy reorganization), enforcement or attempted enforcement of the Loan Documents, to the extent that Borrower or any other party is required by Section 12.2 to pay that cost or expense but fails to do so upon demand.  Nothing in this Section 13.7 shall entitle Agent or any indemnitee referred to above to recover any amount from Lenders if and to the extent that such amount has theretofore been recovered from Borrower.  To the extent that Agent or any indemnitee referred to above is later reimbursed such amount by Borrower, it shall return the amounts paid to it by Lenders in respect of such amount.

 

  

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13.8 Successor Agent

 

.  Agent may, and at the request of the Requisite Lenders shall, resign as Agent upon reasonable notice to Lenders and Borrower effective upon acceptance of appointment by a successor Agent.  If Agent shall resign as Agent under this Agreement, the Requisite Lenders shall appoint from among Lenders a successor Agent for Lenders, which successor Agent shall be approved by Borrower (and such approval shall not be unreasonably withheld or delayed).  If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Borrower, a successor Agent from among Lenders.  Upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated.  After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 13, and Section 12.2.5, shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  Notwithstanding the foregoing, if (a) Agent has not been paid those fees referenced in Section 2.4.2 or has not been reimbursed for any expense reimbursable to it under Sections 12.2 or 12.2.5, in either case for a period of at least one (1) year and (b) no successor Agent has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided for above.

 

13.9 No Obligations of Borrower

 

.  Nothing contained in this Section 13 shall be deemed to impose upon Borrower any obligation in respect of the due and punctual performance by Agent of its obligations to Lenders under any provision of this Agreement, and Borrower shall have no liability to Agent or any of Lenders in respect of any failure by Agent or any Lender to perform any of its obligations to Agent or Lenders under this Agreement.

 

	
14.  

	
COMMITMENT COSTS AND RELATED MATTERS.

 

14.1 Eurodollar Costs and Related Matters

 

.

 

14.1.1 In the event that any Governmental Authority imposes on any Lender any reserve or comparable requirement (including any emergency, supplemental or other reserve) with respect to the Eurodollar liabilities (as defined in Regulation D or any comparable regulation of any Governmental Authority having jurisdiction over any Lender) of any Lender, Borrower shall pay such lender within five (5) Business Days after demand all amounts necessary to compensate such Lender (determined as though such lender's LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market) in respect of the imposition of such reserve requirements (provided, that Borrower shall not be obligated to pay any such amount which arose prior to the date which is ninety (90) days preceding the date of such demand or is attributable to periods prior to the date which is ninety (90) days preceding the date of such demand).  Such Lender's determination of such amount shall be conclusive in the absence of manifest error.

 

14.1.2 If, after the date hereof, the existence or occurrence of any Special Eurodollar Circumstance:

 

(a) shall subject any Lender or its LIBOR lending office to any tax, duty or other charge or cost with respect to any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans, or shall change the basis of taxation of payments to any Lender attributable to the principal of or interest on any LIBOR Loan or any other amounts due under this Agreement in respect of any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans, excluding taxes imposed on or measured in whole or in part by its overall net income by (A) any jurisdiction (or political subdivision thereof) in which it is organized or maintains its principal office or LIBOR lending office or (B) any jurisdiction (or political subdivision thereof) in which it is "doing business";

 

(b) shall impose, modify or deem applicable any reserve not applicable or deemed applicable on the date hereof (including any reserve imposed by the Board of Governors of the Federal Reserve System, special deposit, capital or similar requirements against assets of, deposits with or for the account of, or credit extended by, any Lender or its LIBOR lending office); or

 

(c) shall impose on any Lender or its LIBOR lending office or the Designated Eurodollar Market any other condition affecting any LIBOR Loan, its Note evidencing such LIBOR Loan(s), its obligation to make LIBOR Loans or this Agreement, or shall otherwise affect any of the same;

 

and the result of any of the foregoing, as determined in good faith by any Lender, increases the cost to any Lender or its LIBOR lending office of making or maintaining any LIBOR Loan or in respect of any LIBOR Loan, any Note evidencing LIBOR Loans or its obligation to make LIBOR Loans or reduces the amount of any sum received or receivable by any Lender or its LIBOR lending office with respect to any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans (assuming such Lender's LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market), then, within five (5) Business Days after demand by such lender (with a copy to Agent), Borrower shall pay to such Lender such additional amount or amounts as will compensate such lender for such increased cost or reduction (determined as though such Lender's LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market); provided, that Borrower shall not be obligated to pay any such amount which arose prior to the date which is ninety (90) days preceding the date of such demand or is attributable to periods prior to the date which is ninety (90) days preceding the date of such demand.  A statement of Lender claiming compensation under this subsection shall be conclusive in the absence of manifest error.

 

14.1.3 If, after the date hereof, the existence or occurrence of any Special Eurodollar Circumstance shall, in the good faith opinion of Lender, make it unlawful or impossible for Lender or its LIBOR lending office to make, maintain or fund its portion of any LIBOR Loan, or materially restrict the authority of Lender to purchase or sell, or to take deposits of, Dollars in the Designated Eurodollar Market, or to determine or charge interest rates based upon the LIBOR Basis, and Lender shall so notify Agent, then such Lender's obligation to make LIBOR Loans shall be suspended for the duration of such illegality or impossibility and Lender forthwith shall give notice thereof to the other Lenders and Borrower.  Upon receipt of such notice, the outstanding principal amount of such Lender's LIBOR Loans, together with accrued interest thereon, automatically shall be converted to Base Rate Loans on either (1) the last day of the LIBOR Loan Period(s) applicable to such LIBOR Loans if such lender may lawfully continue to maintain and fund such LIBOR Loans to such day(s) or (2) immediately if such lender may not lawfully continue to fund and maintain such LIBOR Loans to such day(s), provided that in such event the conversion shall not be subject to payment of a prepayment fee under Section 2.6.5.  Lenders agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge, occurring after the Closing Date, which will cause any Lender to notify Agent under this Section, and agrees to designate a different LIBOR lending office if such designation will avoid the need for such notice and will not, in the good faith judgment of such lender, otherwise be materially disadvantageous to such lender.  In the event that any Lender is unable, for the reasons set forth above, to make, maintain or fund its portion of any LIBOR Loan, such Lender shall fund such amount as a Base Rate Loan for the same period of time, and such amount shall be treated in all respects as a Base Rate Loan.  Any Lender whose obligation to make LIBOR Loans has been suspended under this Section shall promptly notify Agent and Borrower of the cessation of the Special Eurodollar Circumstance which gave rise to such suspension. Borrower shall have the right to terminate the Revolving Commitment of any Lender for which the funding of LIBOR Loans becomes unlawful or impossible, as set forth above, and to substitute a new Lender into this Agreement subject to the provisions of Section 12.7.28 of this Agreement.

 

14.1.4 If, with respect to any proposed LIBOR Loan, any Lender:

 

(a) reasonably determines that, by reason of circumstances affecting the Designated Eurodollar Market generally that are beyond the reasonable control of such lender, deposits in Dollars (in the applicable amounts) are not being offered to lender in the Designated Eurodollar Market for the applicable LIBOR Loan Period; or

 

(b) LIBOR Basis as determined by such lender (i) does not represent the effective pricing to lender for deposits in Dollars in the Designated Eurodollar Market in the relevant amount for the applicable LIBOR Loan Period, or (ii) will not adequately and fairly reflect the cost to such lender of making the applicable LIBOR Loans;

 

then lender forthwith shall give notice thereof to Borrower and Agent, whereupon until such lender notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of Lender to make any future LIBOR Loans shall be suspended.

 

14.1.5 Each Lender agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge, occurring after the Closing Date, which will entitle any Lender to compensation pursuant to this Section, and agrees to designate a different LIBOR lending office if such designation will avoid the need for or reduce the amount of such compensation and will not, in the good faith judgment of such lender, otherwise be materially disadvantageous to lender.  Any request for compensation by any Lender under this Section shall set forth the basis upon which it has been determined that such an amount is due from Borrower, a calculation of the amount due, and a certification that the corresponding costs have been incurred by such lender.

 

  

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14.2 Capital Adequacy

 

.  If, after the date hereof, any Lender (or any Affiliate of any Lender) shall have reasonably determined that the adoption of any Applicable Law, governmental rule, regulation or order regarding the capital adequacy of banks or bank holding companies, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any Affiliate of any Lender) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of Lender (or any Affiliate of Lender) as a consequence of any of such Lender's obligations hereunder to a level below that which it could have achieved but for such adoption, change or compliance (taking into consideration the policies of any Lender (or Affiliate of any Lender) with respect to capital adequacy immediately before such adoption, change or compliance and assuming that the capital of such Lender (or Affiliate of such Lender) was fully utilized prior to such adoption, change or compliance), then, upon demand by such Lender, Borrower shall immediately pay to such lender such additional amounts as shall be sufficient to compensate such lender for any such reduction actually suffered; provided, that there shall be no duplication of amounts paid to any Lender pursuant to this sentence and Section 14.1.  For purposes of this Section 14.2, a change in Applicable Law, governmental rule, regulation or order shall include, without limitation, (x) any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith, regardless of the date enacted, adopted, issued or promulgated, whether before or after the Closing Date and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III.  Such Lender's determination of the amount to be paid to such lender by Borrower as a result of any event referred to in this Section 14.2 shall, absent manifest error, be deemed final, binding and conclusive upon Borrower.

 

14.3 Federal Reserve System/Wire Transfers

 

.  The obligation of any Lender to make any loan by wire transfer to Borrower or any other Person shall be subject to all Applicable Law, including the policy of the Board of Governors of the Federal Reserve System on Reduction of Payments System Risk as in effect from time to time.  Borrower acknowledges that such laws, regulations and policy may delay the transmission of any funds to Borrower.

 

14.4 Assignment of Commitments Under Certain Circumstances; Duty to Mitigate

 

.  In the event (i) any Lender requests compensation pursuant to Section 14.1 or 14.2, above, (ii) any Lender delivers a notice described in Section 14.1 or 14.2, above, (iii) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by any Borrower and which amendment, waiver or other modification is required under this Agreement for such amendment, waiver or other modification, or (iv) any Lender defaults in its obligations to make Loans or other extensions of credit hereunder, Borrower may, at its sole expense and effort (including with respect to the assignment fee referred to in Section 12.7.2), upon notice to such Lender and Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 12.7.2), all of its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such assigned obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) Borrower shall have received the prior written consent of Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Borrower or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender, respectively, affected by such assignment plus all fees and other amounts accrued for the account of such Lender hereunder; provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender's claim for compensation or notice, as referred to above in (i) and (ii) of this Section 14.4, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 14.1 or 14.2, above, or cease to result in amounts being payable under Section 14.1 or 14.2, as the case may be, or if such Lender shall waive its right to claim or notice under Section 14.1 or 14.2, as applicable in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder.  Each Lender hereby grants to Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Commitment Assignment and Acceptance necessary to effectuate any assignment of such Lender's interests hereunder in the circumstances contemplated by this paragraph.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such filing or assignment, delegation and transfer.

 

  

- 46 -

  

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

BORROWER:

AEROCENTURY CORP.,

a Delaware corporation

By:             _________________________

Name:             _________________________

Title:             _________________________

AGENT, LENDER AND SWING LINE LENDER:

	
  

	
UNION BANK, N.A.

 

By:               _________________________

Name:               Kevin Sullivan

Title:               Senior Vice President

LENDER:

	
  

	
CALIFORNIA BANK AND TRUST

 

By:               _________________________

Name:               _________________________

Title:               _________________________

 

LENDER:

	
  

	
FIRST BANK

 

By:               _________________________

Name:               _________________________

Title:               _________________________

LENDER:

U.S. BANK NATIONAL ASSOCIATION

By:               _________________________

Name:               _________________________

Title:               _________________________

LENDER:

UMPQUA BANK

By:               _________________________

Name:               _________________________

Title:               _________________________

LENDER:

CATHAY BANK

By:               _________________________

Name:               _________________________

Title:               _________________________

  

- 47 -

  

EXHIBIT A

 

Form of Borrowing Base Certificate

 

BORROWING BASE CERTIFICATE

 

To:           UNION BANK, as Agent

 

This Borrowing Base Certificate ("Certificate") is executed and delivered by AeroCentury Corp., a Delaware corporation ("Borrower"), to Union Bank, N.A. ("Agent") pursuant to that certain Second Amended and Restated Loan and Security Agreement dated as of May 30, 2014, among Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the "Lenders") and Union Bank, N.A., as Agent and Swing Line Lender (as amended, extended, renewed, supplemented or otherwise modified from time to time, the "Loan Agreement").  Any terms used herein and not defined herein shall have the meanings set forth for such terms in the Loan Agreement.  This Certificate covers the calendar month ending ___________, 20___ (the "Determination Date"), and is delivered to Agent pursuant to Section 8.1.5 of the Loan Agreement.

 

As of the Determination Date, all Equipment subject to an Eligible Lease are listed on Schedule 1 attached hereto.  Attached hereto as Schedule 2 is a list of all Equipment acquired and all Equipment sold by the Borrower since the date of the last Borrowing Base Certificate delivered to Agent.  Attached hereto as Schedule 3 is Borrower's leasing receivables aging report as of the Determination Date, which covers both Leases under which the Lessees are current and Leases under which the Lessees are delinquent, in either case as of such date.

 

The following calculations determine the Borrowing Base and the Borrowing Base Availability as of the Determination Date under the Revolving Commitment described in the Loan Agreement and related Loan Documents.  Such calculations are derived from the Books and Records of Borrower in accordance with the relevant definitions of financial terms set forth in the Loan Agreement:

 

	
I. BORROWING BASE

 

	  
	
Borrower's Borrowing Base as of the Determination Date is $___________, calculated as:

	  
	
1. Bombardier Aircraft, Embraer Aircraft and ATR Aircraft

 

	  
	
(i) the aggregate Appraised Value of Bombardier Aircraft, Embraer Aircraft and ATR Aircraft subject to an Eligible Lease or not subject to an Eligible Lease for 270 days or less

	
$                      

	
(ii) times 75%

	
×               .75

	
(a) Advance Rate of Bombardier Aircraft, Embraer Aircraft and ATR Aircraft subject to Eligible Lease [(i) × (ii)]

	
$                      

	
(iii) the aggregate Appraised Value of Bombardier Aircraft, Embraer Aircraft and ATR Aircraft not subject to an Eligible Lease for more than 270 days

	
$                      

	
(iv) times 40%

	
×               .40

	
(b) Advance Rate of Bombardier Aircraft, EmbraerAircraft and ATR Aircraft not subject to Eligible Lease [(iii) × (iv)]

	
$                      

	
Total Borrowing Base Amount for Bombardier Aircraft, Embraer Aircraft and ATR Aircraft [(a) + (b)]

	
$                      

	
2. Engines

 

	  
	
(i) the aggregate Appraised Value of Leased Spare Engines subject to an Eligible Lease or not subject to an Eligible Lease for 180 days or less

	
$                      

	
(ii) times 70%

	
×               .70

	
(a) Advance Rate of Leased Spare Engines subject to Eligible Lease [(i) × (ii)]

	
$                      

	
(iii) the aggregate Appraised Value of Leased Spare Engines not subject to an Eligible Lease for more than 180 days

	
$                      

	
(iv) times 35%

	
×               .35

	
(b) Advance Rate of Leased Spare Engines not subject to Eligible Lease [(iii) × (iv)]

	
$                      

	
Total Borrowing Base Amount for Leased Spare Engines [(a) + (b)]

	
$                      

	
3. Saab 340B Plus Aircraft

 

	  
	
(i) the aggregate Net Book Value of Saab 340B Plus Aircraft subject to an Eligible Lease or not subject to an Eligible Lease for 180 days or less

	
$                      

	
(ii) times 65%

	
×               .65

	
Total Borrowing Base Amount for Saab 340B Plus Aircraft [(i) x (ii)]

	
$                      

	
4. All Other Saab Aircraft

 

	  
	
(i) the aggregate Net Book Value of Other Saab Aircraft subject to an Eligible Lease or not subject to an Eligible Lease for 180 days or less

	
$                      

	
(ii) times 60%

	
×               .60

	
Total Borrowing Base Amount for Other Saab Aircraft [(i) x (ii)]

	
$                      

	
5. Fokker 50 Aircraft

 

	  
	
(i) the aggregate Appraised Value of Fokker 50 Aircraft subject to an Eligible Lease or not subject to an Eligible Lease for 180 days or less

	
$                      

	
(ii) times 50%

	
×               .50

	
Total Borrowing Base Amount for Fokker 50 Aircraft [(i) x (ii)]

	
$                      

	
6. Fokker 100 Aircraft

 

	  
	
(i) the aggregate Appraised Value of Fokker 100 Aircraft subject to an Eligible Lease

	
$                      

	
(ii) times 30%

	
×               .30

	
Total Borrowing Base Amount for Fokker 100 Aircraft [(i) x (ii)]

	
$                      

	
BORROWING BASE:  [1+2+3+4+5+6]:

	
$                      

	
II. BORROWING AVAILABILITY

 

	  
	
Borrower's Borrowing Availability under the Revolving Commitment as of the Determination Date is $___________, calculated as the lesser of the following (1 or 2):

	  
	
1. Maximum Amount ($180,000,000.00 subject to

 

Sections 2.8 and 2.18 of the Loan Agreement)

	
$                      

	
or

	  
	
2. Borrowing Base Availability

 

	  
	
(i) Borrowing Base (above)

	
$                      

	
(ii) less amount outstanding as of the Determination Date under the Credit Facility

	
-    $                      

	
(iii) less the total amount of deferred rent and maintenance reserves due to the Borrower from any Lessee or former Lessee

	
-    $                      

	
(iv) less the lesser of (a) $5,000,000 or (b) the amount reflected on Borrower’s balance sheet as “Maintenance Reserves and Accrued Costs”

	
-    $                      

	
BORROWING BASE AVAILABILITY

	
$                      

	
BORROWING AVAILABILITY [Lesser of 1 or 2 above]:

	
$                      

 

This Certificate is executed on __________, 20__, by the _____________of Borrower, an Authorized Signatory.  The undersigned hereby further certifies that each and every matter contained herein is derived from the Books and Records of Borrowers and is true and correct in all material respects.

 

	  	
 

AEROCENTURY CORP.,

a Delaware corporation

 

[Printed name]

  

- 48 -

  

SCHEDULE 1

 

TO BORROWING BASE CERTIFICATE

 

Eligible Equipment subject to an Eligible Lease

	
SMRH:420426074.4

	
-

	
Form of Borrowing Base Certificate

	  	  	
0A22-152811

  

- 49 -

  

SCHEDULE 2

 

TO BORROWING BASE CERTIFICATE

 

 

Part 1

 

Equipment Acquired

 

 

	
SMRH:420426074.4

	
A-

	
Form of Borrowing Base Certificate

	  	  	
0A22-152811

  

- 50 -

  

SCHEDULE 2

 

TO BORROWING BASE CERTIFICATE

 

 

Part 2

 

Equipment Sold

 

 

[TO BE APPENDED]

 

 

 

	
SMRH:420426074.4

	
A-

	
Form of Borrowing Base Certificate

	  	  	
0A22-152811

  

- 51 -

  

SCHEDULE 3

 

TO BORROWING BASE CERTIFICATE

 

Leasing Receivables Aging Report

 

 

[TO BE APPENDED]

 

 

 

  

- 52 -

 

  

 

	
SMRH:420426074.4

	
A-

	
Form of Borrowing Base Certificate

	  	  	
0A22-152811

 

 

  

- 53 -

  

EXHIBIT B

 

Form of Borrowing Notice

 

BORROWING NOTICE

 

1. This BORROWING NOTICE is executed and delivered by AeroCentury Corp., a Delaware corporation ("Borrower"), to Union Bank, N.A. ("Agent") pursuant to that certain Second Amended and Restated Loan and Security Agreement dated as of  May 30, 2014, among Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the "Lenders") and Union Bank, N.A., as Agent and Swing Line Lender (as amended, extended, renewed, supplemented or otherwise modified from time to time, the "Loan Agreement").  Any terms used herein and not defined herein shall have the meanings set forth for such terms in the Loan Agreement.

 

2. Borrower hereby requests a Loan pursuant to the Loan Agreement as follows:

 

(a) AMOUNT OF REQUESTED LOAN:1  $______________

 

(b) DATE OF REQUESTED LOAN:  ___________________

 

(c) TYPE OF REQUESTED LOAN (Check one box):

 

	
  

	 	
BASE RATE LOAN

 

	
  

	 	
LIBOR RATE LOAN, FOR A LIBOR LOAN PERIOD OF ________ MONTHS2

 

3. In connection with this request, Borrower certifies that:

 

(a) After giving effect to such Loan, no Overadvance shall have occurred (the aggregate amount of all Loans then outstanding shall not exceed the lesser of the (i) Maximum Amount or (ii) the Borrowing Base Availability).

 

(b) Now and as of the date of the requested Loan, except (i) for representations and warranties which expressly relate to a particular date or which are no longer true and correct as a result of a change permitted by the Loan Agreement or the other Loan Documents, or (ii) as disclosed by Borrower and approved in writing by Agent, each representation and warranty made by Borrower in Section 5 of the Loan Agreement will be true and correct in all material respects, both immediately before and after giving effect to such Loan, as though such representations and warranties were made on and as of that date;

 

(c) No circumstance or event has occurred that constitutes a Material Adverse Effect since the Closing Date;

 

(d) Other than matters described in Schedule 5.10 (Litigation) to the Loan Agreement or not required as of the Closing Date to be described therein or disclosed by Borrower and approved in writing by the Lender, there is no action, suit, proceeding or investigation pending or, to the best knowledge of Borrower (on behalf of Borrower and its Subsidiaries, if any), threatened against or affecting Borrower or any Subsidiary or any Property of any of them before any Governmental Authority; and

 

(e) No Default or Event of Default presently exists or will have occurred and be continuing as a result of the Borrowing requested hereunder.

 

4. This Borrowing Notice is executed on _____________, 20__, by an Authorized Signatory of Borrower.  The undersigned, in such capacity, hereby certifies, on behalf of Borrower, each and every matter contained herein to be true and correct.

 

AEROCENTURY CORP.,

a Delaware corporation

By:                                                      

Name:                                                                

Title:                                                      

 

 

 

 

  

1  Each LIBOR Loan must be in a principal amount of at least $5,000,000.00 and in an integral multiple of $100,000.   Each Base Rate loan must be in a principal amount of at least $250,000.00 and in an integral multiple of $25,000.  A maximum of 5 tranches of Base Rate Loans and LIBOR Loans collectively may be outstanding at once.

 

  

2  Specify whether 1, 2, 3 or 6-month Libor Loan Period.

 

	
SMRH:420426074.4

	
B-

	
AeroCentury – Second Amended and Restated Loan and Security Agreement

	  	  	
0A22-152811

  

- 54 -

  

Exhibit C

 

Form of Commitment Assignment and Acceptance

 

COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") dated as of _______________, 20__ is made between _______________________ (the "Assignor") and _______________________ (the "Assignee").

 

RECITALS

 

WHEREAS, the Assignor is party to that certain Second Amended and Restated Loan and Security Agreement dated as of May 30, 2014 (as amended, restated, modified or supplemented from time to time, the "Loan Agreement"), among Borrower, Union Bank, N.A., together with any other Lenders from time to time (collectively, the "Lenders") and Union Bank, N.A., as Agent and Swing Line Lender.  All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Loan Agreement.

 

WHEREAS, as provided under the Loan Agreement, the Assignor has committed to making Revolving Loans (the "Committed Loans") to the Borrower for Assignor's Pro Rata Share of the Revolving Commitment in an aggregate amount not to exceed $___________ (the "Commitment").

 

WHEREAS, [the Assignor has made Committed Loans in the aggregate principal amount of $_____________ to the Borrower] [no Committed Loans are outstanding under the Loan Agreement].

 

WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Loan Agreement in respect of its Commitment, in an amount equal to $____________ (the "Assigned Amount") on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

 

1.           Assignment and Acceptance.

 

(a)           Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance) ___% (the "Assignee's Percentage Share") of (A) the Commitment of the Assignor, and (B) all related rights, benefits, security interest, obligations, liabilities and indemnities of the Assignor under and in connection with the Loan Agreement and the Loan Documents.  This Assignment shall not constitute a novation of any of the rights and obligations under the Loan Agreement.

 

(b)           With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall be a party to the Loan Agreement and succeed to all of the rights and the benefits (including the benefit of any security interest) and be obligated to perform all of the obligations of a Lender under the Loan Agreement, with a Commitment in an amount equal to the Assigned Amount.  The Assignee agrees that it will perform in accordance with their terms all of the obligations which it is required to perform as a Lender under the Loan Agreement.  It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the Loan Agreement to the extent such obligations have been assumed by the Assignee; provided, however, the Assignor shall not relinquish its rights under Sections 12.2 (Reimbursement and Expenses) and 12.3 (Indemnity) of the Loan Agreement to the extent such rights relate to the time prior to the Effective Date.

 

(c)           After giving effect to the assignment and acceptance set forth herein, on the Effective Date the Assignor's Commitment will be $__________ (an amount equal to ____% of the Revolving Commitment).

 

(d)           After giving effect to the assignment and acceptance set forth herein, on the Effective Date the Assignee's Commitment will be $__________(an amount equal to ____% of the Revolving Commitment).

 

2.           Payments.

 

(a)           As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing the Assignee's Percentage Share of the Principal amount of all Committed Loans.

 

(b)           The [Assignor] [Assignee] further agrees to pay to Agent an administrative fee in the amount specified in Section 12.8.4 of the Loan Agreement.

 

(c)           Agent shall retain all additional amounts paid by the Borrower as a commitment fee or as interest on the Committed Loans outstanding to the Borrower with respect to the Assignee's Commitment.

 

3.           Reallocation of Payments.  Any interest, fees and other payments accrued to the Effective Date with respect to the Commitment shall be for the account of the Assignor.  Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount shall be for the account of the Assignee.  Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

 

4.           Independent Credit Decision.  The Assignee (a) acknowledges that it has received a copy of the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in the Loan Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Loan Agreement.

 

5.           Effective Date; Notices.

 

(a)           As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be __________, 20__ (the "Effective Date"); provided that the following conditions precedent have been satisfied on or before the Effective Date:

 

(i)        this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee and a copy shall have been delivered to Agent;

 

(ii)       the consent of Agent and Borrower (as applicable) required for an effective assignment of the Assigned Amount by the Assignor to the Assignee under the Loan Agreement shall have been duly obtained and shall be in full force and effect as of the Effective Date;

 

(iii)           the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance;

 

(iv)           the Assignee shall have complied with all terms and conditions for such assignment and otherwise as set forth in the Loan Agreement;

 

(v)           the administrative fee referred to in Section 12.8.4 of the Loan Agreement shall have been paid to Agent; and

 

(vi)           the Assignor shall have assigned and the Assignee shall have assumed a percentage equal to the Assignee's Pro Rata Share of the rights and obligations of the Assignor under the Loan Agreement.

 

(b)           Notwithstanding the foregoing, the Effective Date of this Assignment and Acceptance shall not be earlier than five (5) Business Days after the date on which Agent receives a copy of the Assignment and Acceptance as set forth above.

 

[6.           Agent.  [INCLUDE ONLY IF THE ASSIGNOR IS AGENT]

 

(a)           The Assignee hereby appoints and authorizes the Assignor to take such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated to Agent by the Lenders pursuant to the terms of the Loan Agreement.

 

(b)           The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Loan Agreement.]

 

7.           Withholding Tax.  The Assignee (a) represents and warrants to the Lenders, Agent and the Borrower that under applicable law and treaties no tax will be required to be withheld by the Lenders with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any state thereof) to Agent and the Borrower prior to the time that Agent or the Borrower is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax an all payments hereunder) and agrees to provide new Forms W-8BEN or 1001 upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

 

8.           Representations and Warranties.

 

(a)           The Assignor represents and warrants to the Assignee that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles.

 

(b)           The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto.  The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Borrower, or the performance or observance by the Borrower, of any of its respective obligations under the Loan Agreement or any other instrument or document furnished in connection therewith.

 

(c)           The Assignee represents and warrants to the Assignor that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee.

 

9.           Further Assurances.  The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and to take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Borrower or Agent, which may be required in connection with the assignment and acceptance contemplated hereby.

 

10.           Miscellaneous.

 

(a)           Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto.  No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof.

 

(b)           All payments made hereunder shall be made without any set-off or counterclaim.

 

(c)           The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance.

 

(d)           This Assignment and Acceptance may be executed in any number of counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

(e)           THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  The Assignor and the Assignee each irrevocably submit to the non-exclusive jurisdiction of any State or Federal court sitting in California over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such California State or Federal court.  Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

 

(f)           THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER ORAL OR WRITTEN).

 

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written.

 

[ASSIGNOR]

 

 

By:           _______________________________________

 

Title:           _______________________________________

 

By:           _______________________________________

 

Title:           _______________________________________

 

Address:

 

[ASSIGNEE]

 

By:           _______________________________________

 

Title:           _______________________________________

 

By:           _______________________________________

 

Title:           _______________________________________

 

Address:

 

 

 

	
SMRH:420426074.4

	
C-

	
Form of Commitment Acceptance & Assignment

	  	  	
0A22-152811

  

- 55 -

  

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

 

 

To:           UNION BANK, N.A., AGENT

 

This Compliance Certificate (this "Certificate") is executed and delivered by AeroCentury Corp., a Delaware corporation ("Borrower"), to Union Bank, N.A. ("Agent") pursuant to that certain Second Amended and Restated Loan and Security Agreement dated as of May 30, 2014, among Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the "Lenders") and Union Bank, N.A., as Agent and Swing Line Lender (as amended, extended, renewed, supplemented or otherwise modified from time to time, the "Loan Agreement").  Any terms used herein and not defined herein shall have the meanings set forth for such terms in the Loan Agreement.

 

This Certificate is delivered in accordance with Section 8.1 of the Loan Agreement by an Authorized Signatory of Borrower.  This Certificate is delivered with respect to the Fiscal [Quarter/Year] ended _________________, 20__ ("Determination Date").  Computations and other information indicating compliance with respect to the covenants contained in Sections 6.15.1, 6.15.2, 6.15.3, 6.15.4, 6.15.5, 6.15.6 and 6.15.7 of the Loan Agreement are set forth below:

 

 

	
1.  Section 6.15.1:  Maximum Leverage Ratio

	  	  
	  	
 

 

A ratio of Recourse Funded Debt to Adjusted Tangible Net Worth of not more than 3.75:1.00 ("Maximum Leverage Ratio") as of Determination Date

	  	  
	  	
Funded Debt means all indebtedness, liabilities, and obligations, now existing or hereafter arising, for money borrowed by Borrower whether or not evidenced by any note, indenture, or agreement (including, without limitation, the Notes and any indebtedness for money borrowed from an Affiliate), as determined in accordance with GAAP, consistently applied

	  	
 $

	  	  	  	  
	  	
Tangible Net Worth means the following with respect to Borrower and its Subsidiaries (taking into account Permitted Aircraft Disposition Charges):

	  	  
	  	
(a) total assets

	
$

	  
	  	
(b) less total liabilities

	
$

	  
	  	
(c) less intangibles (excluding gains and losses from fair value of derivatives charges whether or not included in other comprehensive income or net income)

	
$

	  
	  	
(d)plus Permitted Aircraft Disposition Charges (if any)

	  	  
	  	  	  	  
	  	
Tangible Net Worth

	  	
 $

	  	  	  	  
	  	
Ratio of Total Recourse Debt to Tangible Net Worth

	  
	  	  	  	  
	  	  	  	  

 

  

- 56 -

  

	
2.  Section 6.15.2:  Interest Coverage Ratio

	  	  
	  	
As of the Determination Date an Interest Coverage Ratio of at least 2.75 to 1.00 means the sum of the following:

	  	  
	  	  	  	  
	  	
EBITDA equal to the sum of the following (calculated on a twelve month trailing basis) (taking into account Permitted Aircraft Disposition Charges):

	  	  
	  	
(a)Net income (loss)

	
$

	  
	  	
(b)plus Interest Expense equal to the sum of:

	  	  
	  	
(i) Interest expense

	  	  
	  	
(ii) plus the gain (or less the loss) from the fair value of derivatives charges whether or not included in other comprehensive income or net income

	  	  
	  	
Total Interest Expense

	
$

	  
	  	
(ii)plus taxes 

	
$

	  
	  	
(iii)plus depreciation 

	
$

	  
	  	
(iv) plus amortization 

	
$

	  
	  	
(v) plus Permitted Aircraft Disposition Charges (if any)

	  	  
	  	  	  	  
	  	
EBITDA

	  	
$ 

	  	  	  	  
	  	
Divided by Total Interest Expense (as calculated above)

	  	
$ 

	  	  	  	  
	  	
Ratio of EBITDA to Interest Expense

	  	  
	  	  	  	  

 

	
3.  Section 6.15.3:  Debt Service Coverage Ratio

	  	  	  
	  	
 

A Debt Service Coverage Ratio of at least 1.05 to 1.00 

	  	  	  
	  	
(calculated on a twelve month trailing basis)

	  	  	  
	  	
Adjusted EBITDA equal to the sum of the following (calculated on a twelve month trailing basis):

	  	  	  
	  	
(i)EBITDA  (as calculated for Section 6.15.2 above)

	
$ 

	  	  
	  	
(ii)less taxes paid in cash

	  	  	  
	  	
(iii)plus Maintenance Expense

	  	  	  
	  	
(iv)plus Pro Forma EBITDA*

	  	  	  
	  	  	  	  	  
	  	
EBITDA as adjusted

	  	
$ 

	  
	  	  	  	  	  
	  	
Total Debt Service equal to the sum of:

	  	  	  
	  	
(i)Phantom amortization equal to ten percent (10%) of Funded Debt

	
$

	  	  
	  	
(ii) plus Interest Expense (as calculated for Section 6.15.2)

	
$

	  	  
	  	
(iii)plus Maintenance Expense

	
$ 

	  	  
	  	  	  	  	  
	  	
Total Debt Service

	  	
$

	  
	  	  	  	  	  
	  	
Ratio of EBITDA as adjusted to Total Debt Service

	  	  	  
	  	
* Pro Forma EBITDA relates to the following Aircraft:

	  	  	  
	
  

 

 

 

	  	
  

 

 

 

	  	  
	  	
4.  Section 6.15.4:  Minimum Tangible Net Worth

	  	  
	  	  	  	  	  
	  	  	
Tangible Net Worth as calculated in Section 6.15.1

	  	
$ 

	  	  	  	  	  
	  	  	
Minimum Tangible Net Worth equal to the sum of:

	  	  
	  	  	
(i)   85% of Tangible Net Worth at December 31, 2013 

	
$ 

	  
	  	  	
(ii)  plus 50% of Net Income reported in each successive Fiscal Quarter with no deduction for any losses

	
$ 

	  
	  	  	
(iii) plus 100% of net proceeds from any additional equity offering in excess of $5,000,000

	
$

	  
	  	  	
(iv)  plus 50% of any incremental additive equity associated with any Acquisition

	
$

	  
	  	  	
Total Minimum Tangible Net Worth

	  	
$ 

	  	  	  	  	  
	  	  	
Excess (deficient) Tangible Net Worth Compared to Total Minimum Tangible Net Worth

	  	
$ 

	  	
5.  Section 6.15.5:  No Net Loss

	  	  
	  	  	
No net loss as of the end of any Fiscal Quarter

	  	  
	  	  	  	  	  
	  	  	
Net income calculated according to GAAP on a twelve (12) month trailing basis.*

	  	
$ 

	  	  	
*No adjustment for Permitted Aircraft Disposition Charges are to be included in this amount

	  	  

  

- 57 -

  

	
6.  Section 6.15.6:  Utilization

	  	  
	  	
 

Utilization Rate shall be at least 75% calculated on a twelve month trailing basis.

	  	  
	  	  	  	  
	  	
Utilization Rate equals:

	  	  
	  	
(i)Number of days each item of Equipment is subject to an Eligible Lease during the measuring period multiplied by such Equipment’s Appraised Value

	  	  
	  	
(ii)divided by the number of days such item of Equipment is owned multiplied by such Equipment’s Appraised Value

	  	  
	  	
Utilization Rate

	  	  

	
7.  Section 6.15.7:  Revenue Concentration Limit

	  	  
	  	
 

No more than 25% of Borrower’s annual operating lease revenue may be from any one Lessee nor may more than 40% of Borrower’s annual operating lease revenue be from any two Lessees, calculated on a twelve month trailing basis**

	  	  
	  	  	  	  
	  	
Revenue Concentration from One Lessee equals:

	  	  
	  	
(i)Borrower’s annual operating lease revenue (excluding maintenance reserves) from largest grossing Lessee

	
$

	  
	  	
(ii)divided by total annual operating lease revenue (excluding maintenance reserves)

	
$

	  
	  	
Revenue Concentration from One Lessee

	  	  
	  	  	  	  
	  	
Revenue Concentration from Two Lessees equals:

	  	  
	  	
(i)Borrower’s annual operating lease revenue (excluding maintenance reserves) from two largest grossing Lessees

	
$

	  
	  	
(ii)divided by total annual operating lease revenue (excluding maintenance reserves)

	
$

	  
	  	
Revenue Concentration from Two Lessees

	  	  
	  	
** Enclosed herewith is the revenue concentration calculation for each Lessee

	  	  

8.           A review of the activities of Borrower during the fiscal period covered by this Certificate has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all of its Obligations.  To the best knowledge of the undersigned, during the fiscal period covered by this Certificate, all covenants and conditions have been so performed and observed and no Default or Event of Default has occurred and is continuing, with the exceptions set forth below in response to which Borrower has taken or proposes to take the following actions (if none, so state).

 

9.           The undersigned a Senior Officer of Borrower certifies that the calculations made and the information contained herein are derived from the books and records of Borrower, as applicable, and that each and every matter contained herein correctly reflects those books and records.

 

10.           To the best knowledge of the undersigned no event or circumstance has occurred that constitutes a Material Adverse Effect since the date the most recent Compliance Certificate was executed and delivered, with the exceptions set forth below (if none, so state).

 

	
Dated: ____________________

	
 

 

Printed Name and Title of Senior Officer of AeroCentury Corp.

 

 

 

 

	
SMRH:420426074.4

	
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0A22-152811

  

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Exhibit E

 

Form of Mortgage

 

 

[TO BE APPENDED]

 

 

 

	
SMRH:420426074.4

	
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0A22-152811

  

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Exhibit F

 

Form of Beneficial Interest Pledge Agreement

 

 

[TO BE APPENDED]

 

 

 

	
SMRH:420426074.4

	
F-

	
AeroCentury – Second Amended and Restated Loan and Security Agreement

	  	  	
0A22-152811

  

- 60 -

  

Exhibit G

 

Form of Owner Trustee Mortgage

 

 

[TO BE APPENDED]

 

 

	
SMRH:420426074.4

	
G-

	
AeroCentury – Second Amended and Restated Loan and Security Agreement

	  	  	
0A22-152811

  

- 61 -

  

Exhibit H

 

Form of  Owner Trustee Guaranty

 

 

[TO BE APPENDED]

 

 

	
SMRH:420426074.4

	
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0A22-152811

  

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Exhibit I

 

Form of Placard

 

 

Placard to be used for items of Equipment owned by Owner Trustee:

 

THIS AIRCRAFT/ENGINE IS OWNED BY AND LEASED FROM ________________, AS OWNER TRUSTEE, AND IS SUBJECT TO A FIRST PRIORITY SECURITY INTEREST IN FAVOR OF ONE OR MORE FINANCIAL INSTITUTIONS.

 

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA 94010-4011

Placard to be used for items of Equipment owned by Borrower:

 

THIS AIRCRAFT/ENGINE IS OWNED BY AEROCENTURY CORPORATION, OR AN AFFILIATE, AND IS SUBJECT TO A FIRST PRIORITY SECURITY INTEREST IN FAVOR OF ONE OR MORE FINANCIAL INSTITUTIONS.

 

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA 94010-4011

 

	
SMRH:420426074.4

	
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0A22-152811

  

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Schedule 1.1a

 

Eligible Leases

 

	
Serial

	  	  
	
number

	
Model

	
Lessee

	
012

	
Saab 340A

	
[****]

	
236 

	
Bombardier Dash-8-311

	
[****]

	
238 

	
Bombardier Dash-8-311

	
[****]

	
310 

	
Saab 340B

	
[****]

	
325 

	
Bombardier Dash-8-311

	
[****]

	
404 

	
Bombardier Dash-8-311

	
[****]

	
406 

	
Bombardier Dash-8-Q311

	
[****]

	
407 

	
Bombardier Dash-8-Q311

	
[****]

	
410 

	
Bombardier Dash-8-311

	
[****]

	
422 

	
Saab 340B Plus

	
[****]

	
423 

	
Saab 340B Plus

	
[****]

	
426`

	
Saab 340B Plus

	
[****]

	
453

	
Saab S340B Plus

	
[****]

	
454

	
Saab S340B Plus

	
[****]

	
449

	
Saab 340B Plus

	
[****]

	
546 

	
Bombardier Dash-8-Q315**

	
[****]

	
4019

	
Bombardier Dash-8-Q402

	
[****]

	
4020

	
Bombardier Dash-8-Q402

	
[****]

	
4021

	
Bombardier Dash-8-Q402

	
[****]

	
20122  (*)

	
Fokker 50

	
[****]

	
10165

	
Bombardier CRJ700

	
[****]

	
10171

	
Bombardier CRJ700

	
[****]

	
10178

	
Bombardier CRJ700

	
[****]

	
11313 (*)

	
Fokker 100

	
[****]

	
15055

	
Bombardier CRJ 705

	
[****]

	
20177  (*)

	
Fokker 50

	
[****]

	
20192  (*)

	
Fokker 50

	
[****]

	
20202  (*)

	
Fokker 50

	
[****]

	
20261 

	
Fokker 50

	
[****]

	
20282 

	
Fokker 50

	
[****]

	
193115 

	
GE CF34-8E engine

	
[****]

	
785291

	
CT7-9B engine

	
[****]

	
785287

	
CT7-9B engine

	
[****]

 (*) Not subject to an Eligible Lease as a result of past due lease payments, but included in Borrowing Base at reduced Advance Rate

 

(**) was upgraded to -315 model type after lease commencement

 

Confidential treatment requested. Omitted portions are marked with [****] and have been filed separately with the SEC.

 

	
SMRH:420426074.4

	
Schedule 1.1a — Page 

	
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Schedule 1.1b

 

Equipment

 

	
Manufacturer

	
Model

	 	
Serial number

	 	 	
Engine 1

	 	 	
Engine 2

	 
	  	  	 	 	 	 	 	 	 	 	 
	
Bombardier

	
Dash 8-Q311

	 	 	406	 	 	
PCE-123161

	 	 	
AE0065

	 
	
Bombardier

	
Dash 8-300

	 	 	546	 	 	
AW0008

	 	 	
AW0007

	 
	
Bombardier

	
Dash 8-Q402

	 	 	4019	 	 	
FA0137

	 	 	
FA0123

	 
	
Bombardier

	
Dash 8-Q402

	 	 	4020	 	 	
FA0041

	 	 	
FA0064

	 
	
Bombardier

	
Dash 8-Q402

	 	 	4021	 	 	
FA0071

	 	 	
FA0138

	 
	
Bombardier

	
Dash 8-311

	 	 	250	 	 	
PCE123306

	 	 	
PCE123114

	 
	
Bombardier

	
Dash 8-311

	 	 	325	 	 	
PCE 123206

	 	 	
PCE123207

	 
	
Bombardier

	
Dash 8-311

	 	 	404	 	 	
PCE 123276

	 	 	
PCE123272

	 
	
Bombardier

	
Dash 8-311

	 	 	410	 	 	
PCE123292

	 	 	
AW0173

	 
	
Bombardier

	
Dash 8-311

	 	 	238	 	 	
PCE 123085

	 	 	
PCE123098

	 
	
Bombardier

	
Dash 8-311

	 	 	236	 	 	
PCE 123111

	 	 	
PCE123086

	 
	
Bombardier

	
Dash 8-Q311

	 	 	407	 	 	
PCE123296

	 	 	
PCE123250

	 
	
Bombardier

	
CRJ 705

	 	 	15055	 	 	 	194345	 	 	 	194346	 
	
Bombardier

	
CRJ 700

	 	 	10165	 	 	
GE-E965565

	 	 	
GE-E965566

	 
	
Bombardier

	
CRJ 700

	 	 	10171	 	 	
GE-E965579

	 	 	
GE-E965580

	 
	
Bombardier

	
CRJ 700

	 	 	10178	 	 	
GE-E965575

	 	 	
GE-E965568

	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Fokker

	
Fokker 50

	 	 	20261	 	 	
PCE 125200

	 	 	
PCE124061

	 
	
Fokker

	
Fokker 50

	 	 	20282	 	 	
PCE 124099

	 	 	
PCE 125109

	 
	
Fokker

	
Fokker 50

	 	 	20122	 	 	
PCE 125042

	 	 	
PCE 124125

	 
	
Fokker

	
Fokker 50

	 	 	20177	 	 	
PCE 124005

	 	 	
PCE 125201

	 
	
Fokker

	
Fokker 50

	 	 	20192	 	 	
PCE 124021

	 	 	
PCE 125032

	 
	
Fokker

	
Fokker 50

	 	 	20202	 	 	
PC-E124337

	 	 	
PC-E124204

	 
	
Fokker

	
Fokker 50

	 	 	20112	 	 	
PC-E124034

	 	 	
PC-E124087

	 
	
Fokker

	
Fokker 50

	 	 	20116	 	 	
PC-E124029

	 	 	
PC-E124017

	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Fokker

	
Fokker 100

	 	 	11310	 	 	 	17264	 	 	 	17269	 
	
Fokker

	
Fokker 100

	 	 	11331	 	 	 	17346	 	 	 	17206	 
	
Fokker

	
Fokker 100

	 	 	11337	 	 	 	17315	 	 	 	17339	 
	
Fokker

	
Fokker 100

	 	 	11303	 	 	 	17211	 	 	 	17266	 
	
Fokker

	
Fokker 100

	 	 	11308	 	 	 	17442	 	 	 	17246	 
	
Fokker

	
Fokker 100

	 	 	11313	 	 	 	17240	 	 	 	17261	 
	
Fokker

	
Fokker 100

	 	 	11333	 	 	 	17252	 	 	 	17404	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CF34-8E

	 	 	193117	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CF34-8E

	 	 	193208	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CF34-8E

	 	 	193115	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CT7-9B

	 	 	785291	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CT7-9B

	 	 	785287	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CT7-5A2

	 	 	367195	 	 	 	 	 	 	 	 	 
	
General Electric Engine

	
CT7-5A2

	 	 	367193	 	 	 	 	 	 	 	 	 
	
Saab

	
340B

	 	 	310	 	 	
GE-E-785271

	 	 	
GE-E-785507

	 
	
Saab

	
340B Plus

	 	 	426	 	 	
GE-E-785721

	 	 	
GE-E-785724

	 
	
Saab

	
340B Plus

	 	 	422	 	 	
GE-E-785713

	 	 	
GE-E-785297

	 
	
Saab

	
340B Plus

	 	 	423	 	 	
GE-E-785714

	 	 	
GE-E-785715

	 
	
Saab

	
340B Plus

	 	 	449	 	 	
GE-E-785772

	 	 	
GE-E-785737

	 
	
Saab

	
340B Plus

	 	 	453	 	 	
GE-E-785775

	 	 	
GE-E-785780*

	 
	
Saab

	
340B Plus

	 	 	454	 	 	
GE-E-785784

	 	 	
GE-E-785783

	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Tay Engine

	
650 -15 Engine

	 	 	17617	 	 	 	 	 	 	 	 	 

 

* Engine swap in progress

 

 

	
SMRH:420426074.4

	
Schedule 1.1b — Page 

	
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Schedule 1.1c

 

Material Contracts

 

 

Amended and Restated Management Agreement, dated April 23, 1998, between the Company and JetFleet Management Corp.

 

Amended and Restated Loan and Security Agreement dated as of March 13, 2013,  between, Company, Agent and Lenders.

Securities Purchase Agreement between Satellite Fund II, LP, Satellite Fund IV, LP, The Apogee Group LLC, and Satellite Fund V, LLC (collectively the "Subordinated Lenders”), dated April 17, 2007, as amended by the Amendment to Securities Purchase Agreement between the Subordinated Lenders and the Company, dated June 19, 2008, and the Second Amendment to Securities Purchase Agreement between the Subordinated Lenders and the Company dated July 21, 2008

 

Investors Rights Agreement between the Company and the Subordinated Lenders, dated April 17, 2007

 

 Rights Agreement by and between the Company and Continental Stock Transfer & Trust Company dated December 1, 2009

 

Eligible Leases as listed on Schedule 1.1a

 

	
SMRH:420426074.4

	
Schedule 1.1c — Page 

	
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0A22-152811

  

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Schedule 1.1d

 

Permitted Indebtedness

 

 

See Schedule 7.13

 

 

	
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Schedule 1.1e

 

Liens of Record

 

None.

 

 

 

	
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Schedule 1.1e — Page 

	
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Schedule 1.1f

 

Schedule of Documents

 

Second Amended Loan and Security Agreement

Second Amended and Restated Mortgage and Security Agreement

Borrowing Base Certificate

Compliance Certificate

	
  

	
Second Amended and Restated Revolving Note for:

Union Bank, N.A.

California Bank & Trust

U.S. Bank National Association

Umpqua Bank

First Bank

Swing Line Note for:

Union Bank, N.A.

Revolving Note for:

Cathay Bank

Alternative Dispute Resolution, executed by Cathay Bank

	
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Schedule 1.1f — Page 

	
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Schedule 2.1

 

Revolving Commitment

 

 

	
Commitment

	 	
Lender

	 	
Pro Rata Share

	 
	$	65,000,000.00	 	
Union Bank, N.A.

	 	 	36.111111111	%
	$	30,000,000.00	 	
California Bank & Trust

	 	 	16.666666667	%
	$	30,000,000.00	 	
U.S. Bank National Association

	 	 	16.666666667	%
	$	25,000,000.00	 	
Umpqua Bank

	 	 	13.888888889	%
	$	20,000,000.00	 	
First Bank

	 	 	11.111111111	%
	$	10,000,000.00	 	
Cathay Bank

	 	 	5.555555556	%

 

 

 

	
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Schedule 2.1 — Page 

	
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Schedule 5.2

 

Executive Offices; Corporate or Other Names; Conduct of Business

 

 

Executive Officers:

 

Neal D. Crispin, President, & CEO

 

Toni M. Perazzo, Sr. Vice President – Finance, Secty. & CFO

 

Corporate Headquarters, Principal Office and Location of Records re: Collateral

 

1440 Chapin Avenue, Suite 310, Burlingame, CA 94010

 

 

 

	
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Schedule 5.2 — Page 

	
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Schedule 5.7

 

No Other Liabilities; No Material Adverse Changes

 

None.

 

 

	
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Schedule 5.9

 

Trade Names

 

 

None.

 

 

	
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Schedule 5.9 — Page 

	
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Schedule 5.10

 

Litigation

 

 

Mechanic’s Lien Action by Embraer Aircraft Maintenance Services

In April 2012, the Company received notice of a statutory mechanic’s lien being placed upon its Saab 340B, MSN 242, Registration No N242CJ under Tennessee state law.  The lien arises from unpaid overhaul work performed by Embraer Aircraft Maintenance Services (“Embraer”) and completed on January 25, 2012 under a contract with Colgan Air.  Colgan Air was a lessee of the aircraft from the Company, which filed for bankruptcy in April 2012. Embraer’s claim is for approximately $351,000. On January 25, 2013, Embraer filed suit against the Company to enforce the mechanics lien in Tennessee state court.  The Company has engaged Tennessee local counsel and has contested the basis for the Company’s liability for the amount claimed, as well as the validity of claimed amount of the lien. [****].

 

 

Confidential treatment requested. Omitted portions are marked with [****] and have been filed separately with the SEC.

 

	
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Schedule 5.10 — Page 

	
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Schedule 5.17

 

Hazardous Materials

 

 

None.

 

 

	
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Schedule 5.17 — Page 

	
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Schedule 5.19

 

Insurances

 

 

	  	
Name of Lessee

	
Insurer

	
Type of Insurance

	
012, 310

	
[****]

	
Howden

	
Hull/ All Risks

Liability

War Risk

	
236, 238

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	
325, 404, 410

	
[****]

	
Willis

	
Hull/ All Risks

Liability

War Risk

	
406

	
[****]

	
Fred Black Insurance Brokers, Ltd

	
Hull/ All Risks

Liability

War Risk

	
407

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	
422, 423, 426, 449, 453, 454

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	
546

	
[****]

	
Aon

	
Hull/ All Risks

Liability

War Risk

	
4019, 4020, 4021

 

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	
10165, 10171, 10178

	
[****]

	
Willis

	
Hull/ All Risks

Liability

War Risk

	
11313

	
[****]

	
Crystal & Company

	
Hull/ All Risks

Liability

War Risk

	
Confidential treatment requested. Omitted portions are marked with [****] and have been filed separately with the SEC.

15055

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	
20122, 20177, 20192, 20202

	
[****]

	
Aon

	
Hull/ All Risks

Liability

War Risk

	
20261, 20282

	
[****]

	
Willis

	
Hull/ All Risks

Liability

War Risk

	
193115

	
[****]

	
Albatros

 

	
Hull/ All Risks

Liability

War Risk

	
GE-E785291, GE-E785297

	
[****]

	
Marsh

	
Hull/ All Risks

Liability

War Risk

	  	  	  	  
	
ACY Off-lease

Assets

	
JetFleet Management Corp and AeroCentury Corp

	
Crystal and Company

	
Possessed, Spares and Equipment

Hull/ Liability

	
ACY

Company Policy

	
JetFleet Management Corp and AeroCentury Corp

	
Crystal and Company

	
Premises and Products Liability

	
ACY

Company Policy

	
AeroCentury Corp.

	
National Fire Insurance Company of Pittsburg and Hudson Insurance Company

	
Directors’ and Officers’ Liability Insurance

Confidential treatment requested. Omitted portions are marked with [****] and have been filed separately with the SEC.

 

	
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Schedule 5.22

 

Depreciation Policies

 

The Company’s interests in aircraft and aircraft engines are recorded at cost, which includes acquisition costs.  Since inception, the Company has purchased only used aircraft and aircraft engines.  It is the Company’s policy to hold aircraft for approximately twelve years unless market conditions dictate otherwise.  Therefore, depreciation of aircraft is initially computed using the straight-line method over the twelve-year period to an estimated residual value based on appraisal.  For an aircraft engine held for lease as a spare, the Company estimates the length of time that it will hold the aircraft engine based upon estimated usage, repair costs and other factors, and depreciates it to the appraised residual value over such period using the straight-line method.

 

The Company periodically reviews plans for lease or sale of its aircraft and aircraft engines and changes, as appropriate, the remaining expected holding period for such assets.  Estimated residual values are reviewed and adjusted periodically, based upon updated estimates obtained from an independent appraiser.  Decreases in the fair value of aircraft could affect not only the current value but also the estimated residual value.

 

 

	
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Schedule 5.22 — Page 

	
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Schedule 6.4

 

Insurance as of the Closing Date

 

See Schedule 5.19

 

 

	
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Schedule 6.4 — Page 

	
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Schedule 7.13

 

Indebtedness and Guaranteed Indebtedness existing on the Closing Date

 

 

	
·  

	
Other Miscellaneous payables:

 

	
As of March 31, 2014

	 	 	 
	  	 	 	 
	
Accounts payable and accrued expenses

	 	$	1,043,900	 
	
Maintenance reserves and accrued costs

	 	 	16,494,100	 
	
Security deposits

	 	 	7,379,200	 
	
Unearned revenues

	 	 	1,950,000	 
	
Deferred taxes

	 	 	14,727,600	 
	
Taxes payable

	 	 	800	 

 

 

 

	
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Schedule 7.13 — Page 

	
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Schedule 7.19

 

Investments Existing as of the Closing Date

 

None.

 

 

	
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Schedule 7.19 — Page 

	
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0A22-152811Indenture

 Exhibit 4.1 

CARMAX AUTO OWNER TRUST 2014-3, 

as Issuer, 
 and 

WELLS FARGO BANK, NATIONAL ASSOCIATION, 

as Indenture Trustee 
  

 
 INDENTURE 

Dated as of August 1, 2014 
  

 
 $172,000,000
0.19000% Class A-1 Asset-backed Notes 
 $330,000,000 0.55% Class A-2 Asset-backed Notes 

$330,000,000 1.16% Class A-3 Asset-backed Notes 

$111,500,000 1.73% Class A-4 Asset-backed Notes 

$12,000,000 2.04% Class B Asset-backed Notes 

$22,500,000 2.29% Class C Asset-backed Notes 

$22,000,000 2.79% Class D Asset-backed Notes 

 CROSS REFERENCE TABLE (1) 

 

							
	 TIA

Section
	  	 	  	 	  	 Indenture

Section

				
	310	  	(a)(1)	  		  	Section 6.11
		  	(a)(2)	  		  	Section 6.11
		  	(a)(3)	  		  	Section 6.10
		  	(a)(4)	  		  	N.A.
		  	(a)(5)	  		  	Section 6.11
		  	(b)	  		  	Section 6.8; Section 6.11
		  	(c)	  		  	N.A.
	311	  	(a)	  		  	Section 6.12
		  	(b)	  		  	Section 6.12
		  	(c)	  		  	N.A.
	312	  	(a)	  		  	Section 7.1
		  	(b)	  		  	Section 7.2
		  	(c)	  		  	Section 7.2
	313	  	(a)	  		  	Section 7.4
		  	(b)(1)	  		  	Section 7.4
		  	(b)(2)	  		  	Section 7.4; Section 11.5
		  	(c)	  		  	Section 7.4
		  	(d)	  		  	Section 7.3
	314	  	(a)	  		  	Section 7.3
		  	(b)	  		  	Section 11.15
		  	(c)(1)	  		  	Section 11.1
		  	(c)(2)	  		  	Section 11.1
		  	(c)(3)	  		  	Section 11.1
		  	(d)	  		  	Section 11.1
		  	(e)	  		  	Section 11.1
		  	(f)	  		  	Section 11.1
	315	  	(a)	  		  	Section 6.1
		  	(b)	  		  	Section 6.5; Section 11.5
		  	(c)	  		  	Section 6.1
		  	(d)	  		  	Section 6.1
		  	(e)	  		  	Section 5.13
	316	  	(a)(last sentence)	  		  	Section 1.1
		  	(a)(1)(A)	  		  	Section 5.11
		  	(a)(1)(B)	  		  	Section 5.12
		  	(a)(2)	  		  	N.A.
		  	(b)	  		  	Section 5.7
		  	(c)	  		  	N.A.
	317	  	(a)(1)	  		  	Section 5.3
		  	(a)(2)	  		  	Section 5.3
		  	(b)	  		  	Section 3.3
	318	  	(a)	  		  	Section 11.7

  

  
 i 

	(1)	Note: This Cross Reference Table shall not, for any purpose, be deemed to be part of this Indenture. 

	(2)	N.A. means Not Applicable. 

  
 ii 

 TABLE OF CONTENTS 

 

							
	ARTICLE I	 
	DEFINITIONS AND INCORPORATION BY REFERENCE	  
			
	 Section 1.1
	  	 Definitions
	  	 	2	  
	 Section 1.2
	  	 Incorporation by Reference of Trust Indenture Act
	  	 	12	  
	 Section 1.3
	  	 Rules of Construction
	  	 	12	  
	
	ARTICLE II	  
	THE NOTES	  
			
	 Section 2.1
	  	 Form
	  	 	13	  
	 Section 2.2
	  	 Execution, Authentication and Delivery
	  	 	13	  
	 Section 2.3
	  	 Temporary Notes
	  	 	14	  
	 Section 2.4
	  	 Tax Treatment
	  	 	14	  
	 Section 2.5
	  	 Registration; Registration of Transfer and Exchange
	  	 	15	  
	 Section 2.6
	  	 Mutilated, Destroyed, Lost or Stolen Notes
	  	 	16	  
	 Section 2.7
	  	 Persons Deemed Owners
	  	 	17	  
	 Section 2.8
	  	 Payments
	  	 	18	  
	 Section 2.9
	  	 Cancellation
	  	 	22	  
	 Section 2.10
	  	 Release of Collateral
	  	 	22	  
	 Section 2.11
	  	 Book-Entry Notes
	  	 	23	  
	 Section 2.12
	  	 Notices to Clearing Agency
	  	 	24	  
	 Section 2.13
	  	 Definitive Notes
	  	 	24	  
	 Section 2.14
	  	 Authenticating Agents
	  	 	24	  
	
	ARTICLE III	  
	COVENANTS	  
			
	 Section 3.1
	  	 Payment of Principal and Interest
	  	 	25	  
	 Section 3.2
	  	 Maintenance of Office or Agency
	  	 	25	  
	 Section 3.3
	  	 Money for Payments To Be Held in Trust
	  	 	25	  
	 Section 3.4
	  	 Existence
	  	 	27	  
	 Section 3.5
	  	 Protection of Trust Estate
	  	 	27	  
	 Section 3.6
	  	 Opinions as to Trust Estate
	  	 	28	  
	 Section 3.7
	  	 Performance of Obligations; Servicing of Receivables
	  	 	28	  
	 Section 3.8
	  	 Negative Covenants
	  	 	30	  
	 Section 3.9
	  	 Annual Statement as to Compliance
	  	 	31	  
	 Section 3.10
	  	 Issuer May Consolidate, etc., Only on Certain Terms
	  	 	31	  
	 Section 3.11
	  	 Successor or Transferee
	  	 	33	  
	 Section 3.12
	  	 No Other Business
	  	 	33	  
	 Section 3.13
	  	 No Borrowing
	  	 	33	  
	 Section 3.14
	  	 Servicer’s Obligations
	  	 	34	  
	 Section 3.15
	  	 Guarantees, Loans, Advances and Other Liabilities
	  	 	34	  
	 Section 3.16
	  	 Capital Expenditures
	  	 	34	  
	 Section 3.17
	  	 Restricted Payments
	  	 	34	  

  
 iii 

							
	 Section 3.18
	  	 Notice of Events of Default
	  	 	34	  
	 Section 3.19
	  	 Removal of Administrator
	  	 	34	  
	 Section 3.20
	  	 Further Instruments and Acts
	  	 	34	  
	 Section 3.21
	  	 Sales Finance Company Licenses
	  	 	34	  
	 Section 3.22
	  	 Representations and Warranties by the Issuer to the Indenture Trustee
	  	 	34	  
	
	ARTICLE IV	  
	SATISFACTION AND DISCHARGE	  
			
	 Section 4.1
	  	 Satisfaction and Discharge of Indenture
	  	 	35	  
	 Section 4.2
	  	 Satisfaction, Discharge and Defeasance of the Notes
	  	 	36	  
	 Section 4.3
	  	 Application of Trust Money
	  	 	37	  
	 Section 4.4
	  	 Repayment of Monies Held by Paying Agent
	  	 	37	  
	
	ARTICLE V	  
	REMEDIES	  
			
	 Section 5.1
	  	 Events of Default
	  	 	37	  
	 Section 5.2
	  	 Acceleration of Maturity; Rescission and Annulment
	  	 	39	  
	 Section 5.3
	  	 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee
	  	 	39	  
	 Section 5.4
	  	 Remedies; Priorities
	  	 	42	  
	 Section 5.5
	  	 Optional Preservation of the Receivables
	  	 	45	  
	 Section 5.6
	  	 Limitation of Suits
	  	 	45	  
	 Section 5.7
	  	 Unconditional Rights of Noteholders to Receive Principal and Interest
	  	 	46	  
	 Section 5.8
	  	 Restoration of Rights and Remedies
	  	 	46	  
	 Section 5.9
	  	 Rights and Remedies Cumulative
	  	 	46	  
	 Section 5.10
	  	 Delay or Omission Not a Waiver
	  	 	46	  
	 Section 5.11
	  	 Control by Noteholders of the Controlling Class
	  	 	46	  
	 Section 5.12
	  	 Waiver of Past Defaults
	  	 	47	  
	 Section 5.13
	  	 Undertaking for Costs
	  	 	47	  
	 Section 5.14
	  	 Waiver of Stay or Extension Laws
	  	 	48	  
	 Section 5.15
	  	 Action on Notes
	  	 	48	  
	 Section 5.16
	  	 Performance and Enforcement of Certain Obligations
	  	 	48	  
	
	ARTICLE VI	  
	THE INDENTURE TRUSTEE	  
			
	 Section 6.1
	  	 Duties of Indenture Trustee
	  	 	49	  
	 Section 6.2
	  	 Rights of Indenture Trustee
	  	 	51	  
	 Section 6.3
	  	 Individual Rights of Indenture Trustee
	  	 	51	  
	 Section 6.4
	  	 Indenture Trustee’s Disclaimer
	  	 	52	  
	 Section 6.5
	  	 Notice of Defaults
	  	 	52	  
	 Section 6.6
	  	 Reports by Indenture Trustee to Holders
	  	 	52	  
	 Section 6.7
	  	 Compensation and Indemnity
	  	 	52	  

  
 iv 

							
	 Section 6.8
	  	 Replacement of Indenture Trustee
	  	 	53	  
	 Section 6.9
	  	 Successor Indenture Trustee by Merger
	  	 	54	  
	 Section 6.10
	  	 Appointment of Co-Indenture Trustee or Separate Indenture Trustee
	  	 	54	  
	 Section 6.11
	  	 Eligibility; Disqualification
	  	 	55	  
	 Section 6.12
	  	 Preferential Collection of Claims Against Issuer
	  	 	56	  
	 Section 6.13
	  	 Communications Regarding Demands to Purchase Receivables
	  	 	56	  
	
	ARTICLE VII	  
	NOTEHOLDERS’ LISTS AND REPORTS	  
			
	 Section 7.1
	  	 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders
	  	 	57	  
	 Section 7.2
	  	 Preservation of Information; Communications to Noteholders
	  	 	57	  
	 Section 7.3
	  	 Reports by Issuer
	  	 	57	  
	 Section 7.4
	  	 Reports by Indenture Trustee
	  	 	58	  
	
	ARTICLE VIII	  
	ACCOUNTS, DISBURSEMENTS AND RELEASES	  
			
	 Section 8.1
	  	 Collection of Money
	  	 	58	  
	 Section 8.2
	  	 Trust Accounts
	  	 	58	  
	 Section 8.3
	  	 General Provisions Regarding Accounts
	  	 	59	  
	 Section 8.4
	  	 Release of Trust Estate
	  	 	60	  
	 Section 8.5
	  	 Opinion of Counsel
	  	 	60	  
	
	ARTICLE IX	  
	SUPPLEMENTAL INDENTURES	  
			
	 Section 9.1
	  	 Supplemental Indentures Without Consent of Noteholders
	  	 	61	  
	 Section 9.2
	  	 Supplemental Indentures with Consent of Noteholders
	  	 	62	  
	 Section 9.3
	  	 Execution of Supplemental Indentures
	  	 	64	  
	 Section 9.4
	  	 Effect of Supplemental Indenture
	  	 	64	  
	 Section 9.5
	  	 Conformity with Trust Indenture Act
	  	 	64	  
	 Section 9.6
	  	 Reference in Notes to Supplemental Indentures
	  	 	64	  
	
	ARTICLE X	  
	REDEMPTION OF NOTES	  
			
	 Section 10.1
	  	 Redemption
	  	 	65	  
	 Section 10.2
	  	 Form of Redemption Notice
	  	 	65	  
	 Section 10.3
	  	 Notes Payable on Redemption Date
	  	 	66	  
	
	ARTICLE XI	  
	MISCELLANEOUS	  
			
	 Section 11.1
	  	 Compliance Certificates and Opinions, etc.
	  	 	66	  
	 Section 11.2
	  	 Form of Documents Delivered to Indenture Trustee
	  	 	67	  

  
 v 

							
	 Section 11.3
	  	 Acts of Noteholders
	  	 	68	  
	 Section 11.4
	  	 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies
	  	 	69	  
	 Section 11.5
	  	 Notices to Noteholders; Waiver
	  	 	70	  
	 Section 11.6
	  	 Alternate Payment and Notice Provisions
	  	 	70	  
	 Section 11.7
	  	 Conflict with Trust Indenture Act
	  	 	70	  
	 Section 11.8
	  	 Effect of Headings and Table of Contents
	  	 	71	  
	 Section 11.9
	  	 Successors and Assigns
	  	 	71	  
	 Section 11.10
	  	 Severability
	  	 	71	  
	 Section 11.11
	  	 Benefits of Indenture
	  	 	71	  
	 Section 11.12
	  	 Legal Holiday
	  	 	71	  
	 Section 11.13
	  	 GOVERNING LAW
	  	 	71	  
	 Section 11.14
	  	 Counterparts
	  	 	71	  
	 Section 11.15
	  	 Recording of Indenture
	  	 	71	  
	 Section 11.16
	  	 Trust Obligation
	  	 	72	  
	 Section 11.17
	  	 No Petition
	  	 	72	  
	 Section 11.18
	  	 Inspection
	  	 	72	  
	 Section 11.19
	  	 Third-Party Beneficiaries
	  	 	72	  
	 Section 11.20
	  	 Limitation on Recourse to CarMax Funding
	  	 	72	  

 APPENDICES 
  

			
	APPENDIX A	  	Additional Representations and Warranties

 EXHIBITS 
  

			
	EXHIBIT A-1	  	Form of Class A-1 Note
	EXHIBIT A-2	  	Form of Class A-2 Note
	EXHIBIT A-3	  	Form of Class A-3 Note
	EXHIBIT A-4	  	Form of Class A-4 Note
	EXHIBIT B	  	Form of Class B Note
	EXHIBIT C	  	Form of Class C Note
	EXHIBIT D	  	Form of Class D Note
	EXHIBIT E	  	Form of Opinion of Counsel

  
 vi 

 INDENTURE, dated as of August 1, 2014 (as amended, supplemented or otherwise modified and in
effect from time to time, this “Indenture”), between CARMAX AUTO OWNER TRUST 2014-3, a Delaware statutory trust (the “Issuer”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as indenture trustee (in such capacity, the “Indenture Trustee”). 
 Each party agrees as
follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Issuer’s 0.19000% Class A-1 Asset-backed Notes (the “Class A-1 Notes”), 0.55% Class A-2 Asset-backed Notes (the
“Class A-2 Notes”), 1.16% Class A-3 Asset-backed Notes (the “Class A-3 Notes”), 1.73% Class A-4 Asset-backed Notes (the “Class A-4 Notes” and, collectively with the Class A-1 Notes,
the Class A-2 Notes and the Class A-3 Notes, the “Class A Notes”), 2.04% Class B Asset-backed Notes (the “Class B Notes”), 2.29% Class C Asset-backed Notes (the “Class C Notes”) and 2.79%
Class D Asset-backed Notes (the “Class D Notes” and, collectively with the Class A Notes, the Class B Notes and the Class C Notes, the “Notes”): 

GRANTING CLAUSE 
 The Issuer
hereby Grants to the Indenture Trustee on the Closing Date, as Indenture Trustee for the benefit of the Holders of the Notes, all of the Issuer’s right, title and interest in, to and under, whether now owned or existing or hereafter acquired or
arising (i) the Receivables; (ii) all amounts received on or in respect of the Receivables 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 Issuer in such Financed Vehicles; (iv) all proceeds from claims on or refunds of premiums with respect to any physical damage, theft, GAP, credit life or credit disability insurance policies relating to the Financed Vehicles or
the Obligors; (v) the Receivable Files; (vi) the Collection Account, the Note Payment Account and the Reserve Account and all amounts, securities, financial assets, investments and other property deposited in or credited to any of the
foregoing and all proceeds thereof; (vii) all rights of the Depositor under the Receivables Purchase Agreement, including the right to require the Seller to repurchase Receivables from the Depositor; (viii) all rights of the Issuer under
the Sale and Servicing Agreement, including the right to require the Servicer to purchase Receivables from the Issuer; (ix) 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 (x) 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 (collectively, the “Collateral”). 

The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture. 

 The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the Notes, acknowledges
such Grant, accepts the trusts under this Indenture in accordance with the provisions of this Indenture and agrees to perform its duties required in this Indenture to the best of its ability to the end that the interests of the Holders of the Notes
may be adequately and effectively protected. 
 ARTICLE I 

DEFINITIONS AND INCORPORATION BY REFERENCE 

Section 1.1 Definitions. 

(a) Except as otherwise specified herein or as the context may otherwise require, the following terms shall have the respective meanings set
forth below for all purposes of this Indenture. 
 “Accrual Period” shall mean (i) in the case of the Class A-1
Notes, each period from and including a Distribution Date to but excluding the following Distribution Date (or, in the case of the initial Accrual Period, the period from and including the Closing Date to but excluding the initial Distribution Date)
and (ii) in the case of the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes, each period from and including the 15th day of a month to but excluding the 15th
day of the following month (or, in the case of the initial Accrual Period, the period from and including the Closing Date to but excluding September 15, 2014). 

“Act” shall have the meaning specified in Section 11.3(a). 

“Administration Agreement” shall mean the Administration Agreement, dated as of August 1, 2014, among the Administrator,
the Issuer and the Indenture Trustee. 
 “Administrator” shall mean CarMax, or any successor Administrator under the
Administration Agreement. 
 “Authenticating Agent” shall have the meaning specified in Section 2.14(a). 

“Authorized Officer” shall mean, with respect to the Issuer, any officer of the Owner Trustee who is authorized to act for or
on behalf of the Owner Trustee in matters relating to the Issuer and who is identified on the list of Authorized Officers or authorized signatories delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter) and, for so long as the Administration Agreement is in full force and effect, any officer of the Administrator who is authorized to act for the Administrator in matters relating to the Issuer
and to be acted upon by the Administrator pursuant to the Administration Agreement. 

  
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 “Book-Entry Notes” shall mean a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.11. 
 “Business
Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in New York, New York, Chicago, Illinois. Wilmington, Delaware, Minneapolis, Minnesota or Richmond, Virginia are authorized or
obligated by law, executive order or governmental decree to remain closed. 
 “CarMax” shall mean CarMax Business Services,
LLC, a Delaware limited liability company. 
 “Certificate of Trust” shall have the meaning specified in the Trust
Agreement. 
 “Class” shall mean a class of Notes, which may be the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes or the Class D Notes. 
 “Class A
Noteholders” shall mean, collectively, the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders. 

“Class A-1 Final Distribution Date” shall mean the August 17, 2015 Distribution Date. 

“Class A-1 Noteholder” shall mean the Person in whose name a Class A-1 Note is registered on the Note Register. 

“Class A-1 Notes” shall mean the 0.19000% Class A-1 Asset-backed Notes issued by the Issuer pursuant to this Indenture
in the initial aggregate principal amount of $172,000,000. 
 “Class A-1 Rate” shall mean 0.19000% per annum. 

“Class A-2 Final Distribution Date” shall mean the August 15, 2017 Distribution Date. 

“Class A-2 Noteholder” shall mean the Person in whose name a Class A-2 Note is registered on the Note Register. 

“Class A-2 Notes” shall mean the 0.55% Class A-2 Asset-backed Notes issued by the Issuer pursuant to this Indenture in
the initial aggregate principal amount of $330,000,000. 
 “Class A-2 Rate” shall mean 0.55% per annum. 

“Class A-3 Final Distribution Date” shall mean the June 17, 2019 Distribution Date. 

“Class A-3 Noteholder” shall mean the Person in whose name a Class A-3 Note is registered on the Note Register. 

  
 3 

 “Class A-3 Notes” shall mean the 1.16% Class A-3 Asset-backed Notes issued
by the Issuer pursuant to this Indenture in the initial aggregate principal amount of $330,000,000. 
 “Class A-3 Rate”
shall mean 1.16% per annum. 
 “Class A-4 Final Distribution Date” shall mean the February 18, 2020 Distribution
Date. 
 “Class A-4 Noteholder” shall mean the Person in whose name a Class A-4 Note is registered on the Note
Register. 
 “Class A-4 Notes” shall mean the 1.73% Class A-4 Asset-backed Notes issued by the Issuer pursuant to this
Indenture in the initial aggregate principal amount of $111,500,000. 
 “Class A-4 Rate” shall mean 1.73% per annum.

 “Class B Final Distribution Date” shall mean the March 16, 2020 Distribution Date. 

“Class B Noteholder” shall mean the Person in whose name a Class B Note is registered on the Note Register. 

“Class B Notes” shall mean the 2.04% Class B Asset-backed Notes issued by the Issuer pursuant to this Indenture in the
initial aggregate principal amount of $12,000,000. 
 “Class B Rate” shall mean 2.04% per annum. 

“Class C Final Distribution Date” shall mean the June 15, 2020 Distribution Date. 

“Class C Noteholder” shall mean the Person in whose name a Class C Note is registered on the Note Register. 

“Class C Notes” shall mean the 2.29% Class C Asset-backed Notes issued by the Issuer pursuant to this Indenture in the
initial aggregate principal amount of $22,500,000. 
 “Class C Rate” shall mean 2.29% per annum. 

“Class D Final Distribution Date” shall mean the February 16, 2021 Distribution Date. 

“Class D Noteholder” shall mean the Person in whose name a Class D Note is registered on the Note Register. 

“Class D Notes” shall mean the 2.79% Class D Asset-backed Notes issued by the Issuer pursuant to this Indenture in the
initial aggregate principal amount of $22,000,000. 
 “Class D Rate” shall mean 2.79% per annum. 

  
 4 

 “Class Final Distribution Date” shall mean all or any of the Class A-1
Final Distribution Date, the Class A-2 Final Distribution Date, the Class A-3 Final Distribution Date, the Class A-4 Final Distribution Date, the Class B Final Distribution Date, the Class C Final Distribution Date and the Class D
Final Distribution Date, as the context requires. 
 “Clearing Agency” shall mean an organization registered as a
“clearing agency” pursuant to Section 17A of the Exchange Act. 
 “Clearing Agency Participant” shall mean a
broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. 

“Closing Date” shall mean August 13, 2014. 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated
thereunder. 
 “Collateral” shall have the meaning specified in the Granting Clause of this Indenture. 

“Collection Period” shall mean each calendar month during the term of this Agreement or, in the case of the initial
Collection Period, the period from but excluding the Cutoff Date to and including August 31, 2014. 
 “Commission”
shall mean the Securities and Exchange Commission. 
 “Controlling Class” shall mean (i) the Class A Notes so
long as any Class A Notes are outstanding, (ii) thereafter the Class B Notes so long as any Class B Notes are outstanding, (iii) thereafter the Class C Notes so long as any Class C Notes are outstanding and (iv) thereafter the
Class D Notes. 
 “Corporate Trust Office” shall mean the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office at date of execution of this Indenture is located at Sixth and Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota 55479, Attention: Asset Backed Securities
Department, or at such other address as the Indenture Trustee may designate from time to time by written notice to the Noteholders and the Issuer, or the principal corporate trust office of any successor Indenture Trustee at the address designated
by such successor Indenture Trustee by written notice to the Noteholders and the Issuer. 
 “Default” shall mean any event
that, with notice or the lapse of time or both, would become an Event of Default. 
 “Definitive Notes” shall have the
meaning specified in Section 2.11. 
 “Depositor” shall mean CarMax Auto Funding LLC, a Delaware limited liability
company. 

  
 5 

 “Distribution Date” shall mean the 15th day of each month or, if such 15th day
is not a Business Day, the following Business Day, commencing on September 15, 2014. 
 “Event of Default” shall have
the meaning specified in Section 5.1. 
 “Excess Collections” shall have the meaning specified in
Section 2.8(a)(xv). 
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

“Executive Officer” shall mean, with respect to any corporation or limited liability company, as applicable, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Secretary or the Treasurer of such corporation, depository institution or
limited liability company, and, with respect to any partnership, any general partner of such partnership. 
 “FATCA” shall
mean Sections 1471 through 1474 of the Code, commonly referred to as the Foreign Account Tax Compliance Act. 
 “FATCA Withholding
Tax” shall mean any withholding or deduction pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations or agreements thereunder or
official interpretations thereof. 
 “Grant” shall mean to mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and to grant a lien upon and a security interest in and right of set-off against, and to deposit, set over and confirm pursuant to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments
in respect of the Collateral and all other monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting
party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto. 

“Holder” or “Noteholder” shall mean the Person in whose name a Note is registered in the Note Register. 

“Indenture Trustee” shall mean Wells Fargo Bank, National Association, a national banking association, not in its individual
capacity but solely as Indenture Trustee under this Indenture, and any successor Indenture Trustee under this Indenture. 

“Independent” shall mean, when used with respect to any specified Person, that such Person (i) is in fact independent of
the Issuer, any other obligor on the Notes, the Depositor, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (ii) does not have any direct financial interest or any material indirect financial interest in the Issuer,
any such other obligor, the Depositor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons 

  
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and (iii) is not connected with the Issuer, any such other obligor, the Depositor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar functions. 
 “Independent Certificate”
shall mean a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1, made by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of “Independent” in this Indenture and that the
signer is Independent within the meaning thereof. 
 “Insolvency Event” shall mean, with respect to any Person,
(i) the making by such Person of a general assignment for the benefit of creditors, (ii) the filing by such Person of a voluntary petition in bankruptcy, (iii) such Person being adjudged bankrupt or insolvent, or having had entered
against such Person an order for relief in any bankruptcy or insolvency proceeding, (iv) the filing by such Person of a petition or answer seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, (v) the filing by such Person of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in any proceeding specified in clause
(vii) below, (vi) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of such Person or of all or any substantial part of the assets of such Person or (vii) the failure to obtain dismissal
within sixty (60) days of the commencement of any proceeding against such Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, or the entry of
any order appointing a trustee, liquidator or receiver of such Person of all or any substantial portion of the assets of such Person. 

“Issuer” shall mean CarMax Auto Owner Trust 2014-3 or any successor to CarMax Auto Owner Trust 2014-3 and, for purposes of
any provision contained herein and required by the TIA, each other obligor on the Notes. 
 “Issuer Order” shall mean a
written order signed in the name of the Issuer by an Authorized Officer of the Issuer and delivered to the Indenture Trustee by the Administrator, if signed by an officer of the Administrator, or at the written direction of the Depositor, if signed
by an officer of the Owner Trustee. 
 “Issuer Request” shall mean a written request signed in the name of the Issuer by an
Authorized Officer of the Issuer and delivered to the Indenture Trustee by the Administrator, if signed by an officer of the Administrator, or at the written direction of the Depositor, if signed by an officer of the Owner Trustee. 

“Maryland Code” shall mean Maryland Code Annotated, Financial Institutions §11-401 et seq. 

“Moody’s” shall mean Moody’s Investors Service, Inc. 

  
 7 

 “Note Balance” shall mean, at any time, the aggregate principal amount of all
Notes Outstanding at such time or the aggregate principal amount of all Notes of the Controlling Class Outstanding at such time, as the context requires. 

“Note Depository Agreement” shall mean the Letter of Representations dated as of the Closing Date, among the Issuer and The
Depository Trust Company, as the initial Clearing Agency, relating to the Notes. 
 “Note Owner” shall mean, with respect
to any Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). 
 “Note
Rate” shall mean, in the case of the Class A-1 Notes, the Class A-1 Rate; in the case of the Class A-2 Notes, the Class A-2 Rate; in the case of the Class A-3 Notes, the Class A-3 Rate; in the case of the
Class A-4 Notes, the Class A-4 Rate; in the case of the Class B Notes, the Class B Rate; in the case of the Class C Notes, the Class C Rate; and in the case of the Class D Notes, the Class D Rate. 

“Note Register” shall have the meaning specified in Section 2.5. 

“Note Registrar” shall have the meaning specified in Section 2.5. 

“Noteholder FATCA Information” means, with respect to any Noteholder or Note Owner, information sufficient to eliminate the
imposition of, or determine the amount of, U.S. withholding tax under FATCA. 
 “Noteholder Tax Identification Information”
means, with respect to any Noteholder or Note Owner, properly completed and signed tax certifications (generally, in the case of U.S. Federal Income Tax, IRS Form W-9 (or applicable successor form) in the case of a person that is a “United
States Person” within the meaning of Section 7701(a)(30) of the Code or the appropriate IRS Form W-8 (or applicable successor form) in the case of a person that is not a “United States Person” within the meaning of
Section 7701(a)(30) of the Code). 
 “Noteholders” shall mean the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class A-4 Noteholders, the Class B Noteholders, the Class C Noteholders and the Class D Noteholders. 

“Notes” shall mean the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes and the Class D Notes. 
 “Officer’s Certificate” shall mean a certificate signed
by an Authorized Officer of the Issuer and delivered to the Indenture Trustee, which certificate shall comply with the applicable requirements of Section 11.1. 

“Opinion of Counsel” shall mean one or more written opinions of counsel who may, except as otherwise expressly provided in
this Indenture, be an employee of, or outside 

  
 8 

 
counsel to, the Issuer, the Depositor, the Seller or the Servicer and who shall be acceptable to the Indenture Trustee, which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee, shall comply with any applicable requirements of Section 11.1 and shall be in form and substance satisfactory to the Indenture Trustee. 

“Outstanding” shall mean, as of the date of determination, all Notes theretofore authenticated and delivered under this
Indenture except: 
  

	 	(i)	Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for cancellation; 

  

	 	(ii)	Notes or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Notes; provided,
however, that if such Notes are to be redeemed, notice of such redemption must have been duly given pursuant to this Indenture or provision for such notice must have been made in a manner satisfactory to the Indenture Trustee; and

  

	 	(iii)	Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a
“protected purchaser” (as defined in the Relevant UCC); provided, however, that in determining whether the Holders of the requisite principal amount of the Notes Outstanding have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Transaction Document, Notes owned by the Issuer, any other obligor upon the Notes, the Depositor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible
Officer knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other obligor upon the Notes, the Depositor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons. 

“Owner Trustee” shall mean U.S. Bank Trust National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, and any successor Owner Trustee under the Trust Agreement. 

  
 9 

 “Paying Agent” shall mean the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 and is authorized by the Issuer to make payments to and distributions from the Collection Account and the Note Payment Account, including payment of principal of and
interest on the Notes, on behalf of the Issuer. 
 “Pennsylvania Motor Vehicle Sales Finance Company Act” shall mean 69
P.S. §601 et seq. 
 “Predecessor Note” shall mean, with respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such particular Note. Any Note authenticated and delivered under Section 2.6 in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed, for purposes of this
definition, to evidence the same debt as the mutilated, lost, destroyed or stolen Note. 
 “Proceeding” shall mean any suit
in equity, action at law or other judicial or administrative proceeding. 
 “Rating Agency” shall mean Moody’s or
Standard & Poor’s; provided, however, that if Moody’s or Standard & Poor’s cease to exist, Rating Agency shall mean any nationally recognized statistical rating organization or other comparable Person
designated by the Issuer, written notice of which designation shall have been given to the Depositor, the Servicer, the Indenture Trustee and the Owner Trustee. 

“Rating Agency Condition” shall mean, with respect to any action, a condition that is satisfied if the person requesting such
action (i) delivers a letter from each Rating Agency to the Depositor, the Seller, the Servicer, the Indenture Trustee and the Owner Trustee to the effect that such action will not result in a reduction or withdrawal of the then-current rating
assigned by such Rating Agency to any Class of Notes or (ii) provides ten (10) Business Days’ prior written notice of such action to each Rating Agency and such Rating Agency has not notified the Depositor, the Seller, the Servicer,
the Indenture Trustee and the Owner Trustee in writing that such action will result in a reduction or withdrawal of the then-current rating assigned by such Rating Agency to any Class of Notes. 

“Record Date” shall mean, with respect to any Distribution Date or Redemption Date, the close of business on the Business Day
preceding such Distribution Date or Redemption Date; provided, however, that if Definitive Notes have been issued pursuant to Section 2.13, Record Date shall mean, with respect to any Distribution Date or Redemption Date, the last
day of the preceding Collection Period. 
 “Redemption Date” shall mean the Distribution Date specified by the Servicer
pursuant to Section 10.1 on which date the Indenture Trustee shall withdraw any amounts remaining in the Reserve Account and deposit the portion of such amounts payable to the Noteholders in the Note Payment Account. 

“Redemption Price” shall mean, in the case of a redemption of Notes pursuant to Section 10.1, an amount equal to the
unpaid principal amount of the Notes redeemed plus accrued and unpaid interest thereon. 

  
 10 

 “Responsible Officer” shall mean any managing director, principal, vice
president, assistant vice president, assistant secretary, assistant treasurer or trust officer of the Indenture Trustee or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above
designated officers and, with respect to a particular corporate trust matter, any other officer of the Indenture Trustee to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. 

“Sale and Servicing Agreement” shall mean the Sale and Servicing Agreement, dated as of August 1, 2014, among the
Issuer, the Depositor and the Servicer. 
 “Seller” shall mean CarMax, in its capacity as seller of the Receivables under
the Receivables Purchase Agreement. 
 “Servicer” shall mean CarMax, in its capacity as servicer of the Receivables under
the Sale and Servicing Agreement, and its successors in such capacity (including the Indenture Trustee if the Indenture Trustee is appointed successor Servicer pursuant to Section 8.2(a)). 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a Standard &
Poor’s Financial Services LLC business. 
 “State” shall mean any of the 50 states of the United States or the
District of Columbia. 
 “Successor Servicer” shall have the meaning specified in Section 3.7(e). 

“Transaction Documents” shall mean the Receivables Purchase Agreement, the Trust Agreement, the Sale and Servicing Agreement,
the Certificate of Trust, this Indenture, the Administration Agreement, the Note Depository Agreement and the other documents and certificates delivered in connection therewith. 

“Trust Accounts” shall mean the Collection Account, the Note Payment Account, the Certificate Payment Account and the Reserve
Account. 
 “Trust Agreement” shall mean the Amended and Restated Trust Agreement, dated as of August 1, 2014, between
the Depositor and the Owner Trustee. 
 “Trust Estate” shall mean all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of this Indenture for the benefit of the Noteholders (including all property and interests Granted to the Indenture Trustee), including all proceeds thereof. 

“Trust Fiscal Year” shall mean the period commencing on March 1 of any year and ending on February 28 (or
February 29, if applicable) of the following year. 
 “Trust Indenture Act” or “TIA” shall mean the
Trust Indenture Act of 1939, as amended. 

  
 11 

 (b) Except as otherwise specified herein or as the context may otherwise require, capitalized
terms used but not otherwise defined herein have the respective meanings set forth in, or incorporated by reference into, the Sale and Servicing Agreement or the Trust Agreement for all purposes of this Indenture. 

Section 1.2 Incorporation by Reference of Trust Indenture Act. 

(a) Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following meanings: 
  

	 	(i)	“Indenture securities” shall mean the Notes. 

  

	 	(ii)	“Indenture security holder” shall mean a Noteholder. 

  

	 	(iii)	“Indenture to be qualified” shall mean this Indenture. 

  

	 	(iv)	“Indenture trustee” or “Institutional trustee” shall mean the Indenture Trustee. 

  

	 	(v)	“Obligor on the indenture securities” shall mean the Issuer and any other obligor on the Notes. 

  

	 	(vi)	All other TIA terms used in this Indenture that are defined in the TIA, defined by TIA reference to another statute or defined by Commission rule have the respective meanings assigned to them by such definitions.

 Section 1.3 Rules of Construction. 

(a) Unless the context otherwise requires: 
  

	 	(i)	a term has the meaning assigned to it; 

  

	 	(ii)	an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; 

 

	 	(iii)	“or” is not exclusive; 

  

	 	(iv)	“including” means including without limitation; 

  

	 	(v)	words in the singular include the plural and words in the plural include the singular; 

  

	 	(vi)	any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; 

  
 12 

	 	(vii)	references to a Person are also to its successors and permitted assigns; and 

  

	 	(viii)	Article, Section and Exhibit references contained in this Indenture are references to Articles, Sections and Exhibits in or to this Indenture unless otherwise specified. 

ARTICLE II 
 THE NOTES 

Section 2.1 Form. 

(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes, together with the Indenture Trustee’s certificates of authentication, shall be substantially in the form set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4, Exhibit B, Exhibit C and Exhibit D,
respectively, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on
the face of the Note. 
 (b) The Definitive Notes shall be typewritten, printed, lithographed or engraved, or produced by any combination of
these methods (with or without steel engraved borders), all as determined by the Authorized Officers executing such Notes, as evidenced by their execution of such Notes. 

(c) Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3,
Exhibit A-4, Exhibit B, Exhibit C and Exhibit D are part of the terms of this Indenture and are incorporated herein by reference. 

Section 2.2 Execution, Authentication and Delivery. 

(a) The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers. The signatures of any such Authorized Officer on
the Notes may be manual or facsimile. 
 (b) Notes bearing the manual or facsimile signature of individuals who were at any time Authorized
Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices on the date of such Notes. 

  
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 (c) The Indenture Trustee shall, upon Issuer Order, authenticate and deliver the Class A-1
Notes for original issue in an aggregate principal amount of $172,000,000, the Class A-2 Notes for original issue in an aggregate principal amount of $330,000,000, the Class A-3 Notes for original issue in an aggregate principal amount of
$330,000,000, the Class A-4 Notes for original issue in an aggregate principal amount of $111,500,000, the Class B Notes for original issue in an aggregate principal amount of $12,000,000, the Class C Notes for original issue in an aggregate
principal amount of $22,500,000 and the Class D Notes for original issue in an aggregate principal amount of $22,000,000. The aggregate principal amounts of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes and Class D Notes outstanding at any time may not exceed those respective amounts except as provided in Section 2.6. 

(d) Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered Notes in minimum denominations of
$5,000 and in integral multiples of $1,000 in excess thereof. 
 (e) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and
such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. 

Section 2.3 Temporary Notes. 

(a) Pending the preparation of Definitive Notes pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the
Indenture Trustee shall authenticate and deliver, temporary Notes that are printed, lithographed, typewritten, mimeographed or otherwise produced of the tenor of the Definitive Notes in lieu of which they are issued and with such variations not
inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of such Notes. 

(b) If temporary Notes are issued pursuant to Section 2.3(a), the Issuer shall cause Definitive Notes to be prepared without unreasonable
delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency of the Note Registrar to be maintained as provided in Section 3.2,
without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver in exchange therefor, a like principal amount of Definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes. 

Section 2.4 Tax Treatment. 

(a) The Issuer has entered into this Indenture, and the Notes shall be issued, with the intention that, for federal, State and local income
and franchise tax purposes, the Notes shall qualify as indebtedness of the Issuer secured by the Trust Estate. The Issuer, by entering 

  
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into this Indenture, and each Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance of an interest in the applicable Book-Entry Note), agree to treat the Notes as
indebtedness of the Issuer for federal, State and local income and franchise tax purposes. 
 (b) Each Noteholder or Note Owner, by its
acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent
FATCA Withholding Tax is applicable, the Noteholder FATCA Information. 
 (c) Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any corresponding gross-up) payable to a Noteholder or
holder of an interest in a Note that fails to comply with the requirements of Section 2.4(b). 
 Section 2.5
Registration; Registration of Transfer and Exchange. 
 (a) The Indenture Trustee initially shall be the registrar (the “Note
Registrar”) for the purpose of registering Notes and transfers of Notes as herein provided. The Note Registrar shall cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations as it
may prescribe, the Note Registrar shall provide for the registration of Notes and the registration of transfers of Notes. Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar. 
 (b) If a Person other than the Indenture Trustee is appointed by the Issuer as Note
Registrar, (i) the Issuer shall give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, or any change in the location, of the Note Register, (ii) the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies thereof and (iii) the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as
to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes. 
 (c) Upon surrender for
registration of transfer of any Note at the office or agency of the Issuer to be maintained as provided in Section 3.2, if the requirements of Section 8-401 or 8A-401, as applicable, of the Relevant UCC are met, the Issuer shall execute,
and the Indenture Trustee shall authenticate and deliver to the Noteholder making such surrender, in the name of the designated transferee or transferees, one or more new Notes of the same Class in any authorized denomination, of a like aggregate
principal amount. The Indenture Trustee may rely upon the Administrator with respect to the determination of whether the requirements of Section 8-401 or 8A-401, as applicable, of the Relevant UCC are met. 

(d) At the option of the Noteholder, Notes may be exchanged for other Notes of the same Class in any authorized denominations, of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, if the requirements of Section 8-401 or 8A-401, as applicable, of the

  
 15 

 
Relevant UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver to the Noteholder making such exchange, the Notes which such Noteholder is entitled to
receive. The Indenture Trustee may rely upon the Administrator with respect to the determination of whether the requirements of Section 8-401 or 8A-401, as applicable, of the Relevant UCC are met. 

(e) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. 

(f) All Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note Registrar. 
 (g) No service charge shall be made to a Holder for any registration of transfer or
exchange of Notes, but the Indenture Trustee may require payment by such Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or Section 9.6 not involving any transfer. 
 (h) The Issuer shall not be required to make, and
the Note Registrar need not register, transfers or exchanges of Notes selected for redemption or Notes with respect to which the due date for any payment will occur within fifteen (15) days. 

(i) Each Person who initially acquires a Note (or an interest therein) or to whom a Note (or an interest therein) is transferred will be
deemed to have represented and warranted, by its acceptance of the Note (or an interest therein), that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as
defined in Section 3(3) of ERISA) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement accounts and Keogh plans, that is subject to the
provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and holding of the Note (or an interest therein) will not
constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

(j) Any purported transfer of a Note not in accordance with this Section 2.5 shall be null and void and shall not be given effect for any
purpose whatsoever. 
 Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. 

(a) If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of

  
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notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a “protected purchaser” (as defined in the Relevant UCC), and provided that the
requirements of Section 8-405 or 8A-405, as applicable, of the Relevant UCC are met, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of the same Class; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven (7) days of the Indenture Trustee’s receipt of
evidence to its satisfaction of such destruction, loss or theft shall be due and payable, or shall have been called for redemption in whole pursuant to Section 10.1, instead of issuing a replacement Note of the same Class, the Issuer may pay
such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof. The Indenture Trustee may conclusively rely upon the Administrator with respect to the determination of whether the requirements of
Section 8-405 or 8A-405, as applicable, of the Relevant UCC are met. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a “protected
purchaser” (as defined in the Relevant UCC) of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note
(or such payment) from the Person to whom such replacement Note was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a “protected
purchaser” (as defined in the Relevant UCC), and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection
therewith. 
 (b) Upon the issuance of any replacement Note under this Section 2.6, the Issuer may require the payment by the Holder of
such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with such issuance and any other reasonable expenses (including the fees and expenses of the Indenture Trustee) related thereto. 

(c) Every replacement Note issued pursuant to this Section 2.6 in replacement of any mutilated, destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder. 
 (d) The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. 

Section 2.7 Persons Deemed Owners. Prior to due presentation of a Note for registration of transfer, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture Trustee may, subject to Section 2.6, treat the Person in whose name such Note is registered in the Note Register (as of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note shall be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be
affected by any notice to the contrary. 

  
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 Section 2.8 Payments. 

(a) Prior to any acceleration of the Notes pursuant to Section 5.2, on each Distribution Date, upon receipt of written instructions from
the Servicer pursuant to Section 4.6(d) of the Sale and Servicing Agreement, the Indenture Trustee (or, if the Indenture Trustee is not the Paying Agent, the Paying Agent) shall apply the Available Funds for such Distribution Date to make the
following payments and deposits in the following order of priority: 
  

	 	(i)	to the Servicer, the Total Servicing Fee for the preceding Collection Period and any Unreimbursed Servicer Advances for the preceding Collection Period; 

 

	 	(ii)	if the Indenture Trustee has become the Servicer pursuant to Section 8.2 of the Sale and Servicing Agreement, to the Indenture Trustee, (a) any amounts due in connection with indemnification of the Indenture
Trustee as Successor Servicer and not paid pursuant to Section 7.2 of the Sale and Servicing Agreement and (b) any unpaid Transition Costs due to the Indenture Trustee as Successor Servicer in connection with such transfer of servicing and
not paid pursuant to Section 8.2(b) of the Sale and Servicing Agreement; provided, however, that total payments pursuant to clauses (a) and (b) of this clause (ii) shall not exceed $175,000 in the aggregate;

  

	 	(iii)	to the Note Payment Account, for payment of interest on each Class of the Class A Notes, the Total Note Interest for each Class of the Class A Notes for such Distribution Date; 

 

	 	(iv)	to the Note Payment Account, for payment of principal of the Notes in the priority set forth in Section 2.8(d), the Priority Principal Distributable Amount, if any, for such Distribution Date; 

 

	 	(v)	to the Note Payment Account, for payment of interest on the Class B Notes, the Total Note Interest for the Class B Notes for such Distribution Date; 

 

	 	(vi)	to the Note Payment Account, for payment of principal of the Notes in the priority set forth in Section 2.8(d), the Secondary Principal Distributable Amount, if any, for such Distribution Date; 

 

	 	(vii)	to the Note Payment Account, for payment of interest on the Class C Notes, the Total Note Interest for the Class C Notes for such Distribution Date; 

  
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	 	(viii)	to the Note Payment Account, for payment of principal of the Notes in the priority set forth in Section 2.8(d), the Tertiary Principal Distributable Amount, if any, for such Distribution Date; 

 

	 	(ix)	to the Note Payment Account, for payment of interest on the Class D Notes, the Total Note Interest for the Class D Notes for such Distribution Date; 

 

	 	(x)	to the Note Payment Account, for payment of principal of the Notes in the priority set forth in Section 2.8(d), the Quaternary Principal Distributable Amount, if any, for such Distribution Date; 

 

	 	(xi)	to the Reserve Account, the Reserve Account Deficiency, if any, for such Distribution Date; 

  

	 	(xii)	to the Note Payment Account, for payment of principal of the Notes in the priority set forth in Section 2.8(d), the Regular Principal Distributable Amount, if any, for such Distribution Date; 

 

	 	(xiii)	if the Indenture Trustee or any other Successor Servicer has become the Servicer pursuant to Section 8.2 of the Sale and Servicing Agreement, to the Indenture Trustee or such other Successor Servicer, as
applicable, any Transition Costs due to the Indenture Trustee in connection with such transfer of servicing and not paid pursuant to Section 8.2(b) of the Sale and Servicing Agreement that are in excess of the cap described in clause
(ii) above plus any Transition Costs due to such other Successor Servicer in connection with such transfer of servicing and not paid pursuant to Section 8.2(b) of the Sale and Servicing Agreement plus the Additional Servicing
Fee, if any, for the preceding Collection Period; 

  

	 	(xiv)	to the Indenture Trustee, any amounts due in connection with indemnification of the Indenture Trustee if it has become the Successor Servicer and not paid pursuant to Section 7.2 of the Sale and Servicing Agreement
that are in excess of the cap described in clause (ii) above; and 

  

	 	(xv)	unless the Notes have been declared immediately due and payable following an Event of Default, to the Certificate Payment Account, for payment to the Certificateholders, or, if the Notes have been declared immediately
due and payable following an Event of Default, to the Note Payment Account, for payment to the Noteholders, any remaining Available Funds (the “Excess Collections”). 

(b) Notwithstanding any other provision of this Section 2.8 and except as provided in Section 5.5, following the occurrence and
during the continuation of an Event of Default which has resulted in an acceleration of the Notes, the Indenture Trustee shall apply all Available Funds pursuant to Section 5.4(b). 

  
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 (c) If the amount on deposit in the Note Payment Account (including any portion of the Reserve
Account Draw Amount) on any Distribution Date is less than the amount described in clause (iii) above for such Distribution Date, the Indenture Trustee shall pay the available amount to the Holders of each Class of Class A Notes pro rata
based on the Total Note Interest payable to such Class on such Distribution Date. 
 (d) The principal of each Note shall be payable in
installments on each Distribution Date in an aggregate amount (unless the Notes have been declared immediately due and payable following an Event of Default) for all Classes of Notes equal to the sum of the Priority Principal Distributable Amount,
the Secondary Principal Distributable Amount, the Tertiary Principal Distributable Amount, the Quaternary Principal Distributable Amount and the Regular Principal Distributable Amount, in each case for such Distribution Date. On each Distribution
Date (unless the Notes have been declared immediately due and payable following an Event of Default), upon receipt of instructions from the Servicer pursuant to Section 4.6(d) of the Sale and Servicing Agreement, the Indenture Trustee (or, if
the Indenture Trustee is not the Paying Agent, the Paying Agent) shall apply or cause to be applied the amount on deposit in the Note Payment Account on such Distribution Date in respect of the Priority Principal Distributable Amount, the Secondary
Principal Distributable Amount, the Tertiary Principal Distributable Amount, the Quaternary Principal Distributable Amount and the Regular Principal Distributable Amount, in each case for such Distribution Date, to make the following payments in the
following order of priority: 
  

	 	(i)	to the Class A-1 Noteholders until the principal amount of the Class A-1 Notes has been paid in full; 

  

	 	(ii)	to the Class A-2 Noteholders until the principal amount of the Class A-2 Notes has been paid in full; 

  

	 	(iii)	to the Class A-3 Noteholders until the principal amount of the Class A-3 Notes has been paid in full; 

  

	 	(iv)	to the Class A-4 Noteholders until the principal amount of the Class A-4 Notes has been paid in full; 

  

	 	(v)	to the Class B Noteholders until the principal amount of the Class B Notes has been paid in full; 

  

	 	(vi)	to the Class C Noteholders until the principal amount of the Class C Notes has been paid in full; and 

  

	 	(vii)	to the Class D Noteholders until the principal amount of the Class D Notes has been paid in full. 

(e) The unpaid principal amount of the Class A-1 Notes, to the extent not previously paid, shall be due and payable on the Class A-1
Final Distribution Date, the principal 

  
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amount of the Class A-2 Notes, to the extent not previously paid, shall be due and payable on the Class A-2 Final Distribution Date, the principal amount of the Class A-3 Notes, to
the extent not previously paid, shall be due and payable on the Class A-3 Final Distribution Date, the principal amount of the Class A-4 Notes, to the extent not previously paid, shall be due and payable on the Class A-4 Final
Distribution Date, the principal amount of the Class B Notes, to the extent not previously paid, shall be due and payable on the Class B Final Distribution Date, the principal amount of the Class C Notes, to the extent not previously paid, shall be
due and payable on the Class C Final Distribution Date and the principal amount of the Class D Notes, to the extent not previously paid, shall be due and payable on the Class D Final Distribution Date. 

(f) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes shall accrue interest during each Accrual Period at the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate, the Class A-4 Rate, the Class B Rate, the Class C Rate and the Class D Rate,
respectively, and such interest shall be due and payable on each Distribution Date. Interest on the Class A-1 Notes shall be calculated on the basis of the actual number of days elapsed and a 360-day year. Interest on the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes shall be calculated on the basis of a 360-day year of twelve 30-day months. Subject to Section 3.1, any installment of interest or
principal, if any, payable on any Note that is punctually paid or duly provided for on the applicable Distribution Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the related Record Date
by check mailed first-class postage prepaid to such Person’s address as it appears on the Note Register on such Record Date or by wire transfer in immediately available funds to the account designated in writing to the Indenture Trustee by such
Person at least five Business Days prior to the related Record Date; provided, however, that, unless Definitive Notes have been issued pursuant to Section 2.13, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by such Person, and except for the final installment of principal
payable with respect to such Note on a Distribution Date or on the related Class Final Distribution Date (and except for the Redemption Price for any Note called for redemption in whole pursuant to Section 10.1(a) or Section 10.2(b)),
which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3. The Indenture Trustee (or, if the Indenture Trustee is not the Paying Agent, the Paying Agent)
shall pay all Total Note Interest for any Distribution Date to the Holders of the Notes on the related Record Date even if a portion of such Total Note Interest relates to an earlier Distribution Date. 

(g) All principal and interest payments on each Class of Notes shall be made pro rata to the Holders of such Class. The
Indenture Trustee shall, before the Distribution Date on which the Issuer expects to pay the final installment of principal of and interest on any Note, notify the Holder of such Note as of the related Record Date of such final installment. Such
notice shall be mailed or transmitted by facsimile and shall specify that such final installment shall be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemption of Notes shall be mailed to Noteholders as provided in Section 10.2. 

  
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 (h) Notwithstanding the foregoing, the unpaid principal amount of the Notes shall be due and
payable, to the extent not previously paid, on the date on which the Notes have been declared immediately due and payable following an Event of Default. On each Distribution Date following acceleration of the Notes, upon receipt of instructions from
the Servicer pursuant to Section 4.6(d) of the Sale and Servicing Agreement, the Indenture Trustee (or, if the Indenture Trustee is not the Paying Agent, the Paying Agent) shall apply or cause to be applied the amount on deposit in the Note
Payment Account on such Distribution Date in respect of principal together with all Excess Collections, if any, to make the following payments in the following order of priority: 

 

	 	(i)	to the Class A-1 Noteholders until the principal amount of the Class A-1 Notes has been paid in full; 

  

	 	(ii)	to the Holders of each Class of the remaining Class A Notes, pro rata based on the outstanding principal amount of such Class as of such Distribution Date, until the principal amount of each such
Class of the remaining Class A Notes has been paid in full; 

  

	 	(iii)	to the Class B Noteholders until the principal amount of the Class B Notes has been paid in full; 

  

	 	(iv)	to the Class C Noteholders until the principal amount of the Class C Notes has been paid in full; and 

  

	 	(v)	to the Class D Noteholders until the principal amount of the Class D Notes has been paid in full. 

(i) The Indenture Trustee (or, if the Indenture Trustee is not the Paying Agent, the Paying Agent) shall transfer amounts from the Reserve
Account and deposit amounts transferred from the Reserve Account, in each case at the written direction of the Servicer and on behalf of the Noteholders, in accordance with the Sale and Servicing Agreement. 

Section 2.9 Cancellation. All Notes surrendered for payment, registration of transfer, exchange or redemption in whole pursuant to
Section 10.1(a) or Section 10.2(b) shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to
the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 2.9, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it, provided that such Issuer Order is timely and the Notes have not been previously disposed
of by the Indenture Trustee. 
 Section 2.10 Release of Collateral. Subject to Section 11.1 and the terms of the
Transaction Documents, the Indenture Trustee shall release property from the lien of this 

  
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Indenture only upon receipt of an Issuer Request (which shall include delivery instructions and other relevant information) accompanied by an Officer’s Certificate, an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates. If the Commission shall
issue an exemptive order under TIA Section 304(d) modifying the Indenture Trustee’s obligations under TIA Sections 314(c) and 314(d)(1), the Indenture Trustee shall release property from the lien of this Indenture in accordance with the
conditions and procedures set forth in such exemptive order. 
 Section 2.11 Book-Entry Notes. The Notes, upon original
issuance, shall be issued in the form of typewritten Notes representing Book-Entry Notes, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be such Notes
registered initially or from time to time on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner thereof shall receive a definitive Note representing such Note Owner’s interest in
such Note, except as provided in Section 2.13. Unless and until definitive, fully registered Notes (the “Definitive Notes”) have been issued to such Note Owners pursuant to Section 2.13: 

 

	 	(i)	the provisions of this Section 2.11 shall be in full force and effect; 

  

	 	(ii)	the Note Registrar and the Indenture Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and shall have no obligation to the Note Owners; 

  

	 	(iii)	to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control; 

 

	 	(iv)	the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Note Depository Agreement; unless and until Definitive Notes are issued pursuant to Section 2.13, the initial Clearing Agency shall make book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such Clearing Agency Participants; and 

  

	 	(v)	 whenever this Indenture requires or permits actions to be taken based upon written instructions or directions of Holders of Notes (or Holders of Notes
of any Class thereof, including the Controlling Class) evidencing a specified percentage of the principal amount of the Notes or any Class of Notes Outstanding, the Clearing Agency shall be deemed to represent such percentage

  
 23 

	 	
only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the
beneficial interest in the Notes or such Class of Notes and has delivered such instructions to the Indenture Trustee. 

Section 2.12 Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under this
Indenture, unless and until Definitive Notes shall have been issued to such Note Owners pursuant to Section 2.13, the Indenture Trustee shall give all such notices and communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to such Note Owners. 
 Section 2.13 Definitive Notes. If (i) the
Administrator or the Servicer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Notes and the Indenture Trustee or the
Administrator is unable to locate a qualified successor or (ii) after the occurrence of an Event of Default or an Event of Servicing Termination, Note Owners of the Book-Entry Notes representing beneficial interests aggregating not less than
51% of the principal amount of such Notes advise the Indenture Trustee and the Clearing Agency in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of such Note Owners, then the
Clearing Agency shall notify all Note Owners and the Indenture Trustee in writing of the occurrence of such event and of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer, at its own expense, shall execute and deliver the Definitive Notes to the Indenture Trustee and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders. 

Section 2.14 Authenticating Agents. 

(a) The Indenture Trustee may appoint one or more Persons (each, an “Authenticating Agent”) with power to act on its behalf
and subject to its direction in the authentication of Notes in connection with issuance, transfers and exchanges under Section 2.2, Section 2.3, Section 2.5 and Section 2.6, as fully to all intents and purposes as though each
such Authenticating Agent had been expressly authorized by those Sections to authenticate such Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this Section 2.14 shall be deemed to be
the authentication of Notes “by the Indenture Trustee”. 
 (b) Any entity into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any entity succeeding to all or substantially all of the corporate trust
business of any Authenticating Agent, 

  
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shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any document or any further act on the part of the parties hereto or such Authenticating Agent or
such successor entity. 
 (c) Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture
Trustee and the Owner Trustee. The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Owner Trustee. Upon receiving such notice of
resignation or upon such a termination, the Indenture Trustee may appoint a successor Authenticating Agent and shall give written notice of any such appointment to the Owner Trustee. 

(d) The Administrator agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services. The provisions of
Section 2.9 and Section 6.4 shall be applicable to any Authenticating Agent. 
 ARTICLE III 

COVENANTS 
 Section 3.1
Payment of Principal and Interest. The Issuer shall duly and punctually pay the principal of and interest, if any, on the Notes in accordance with the terms of the Notes and this Indenture. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture. 

Section 3.2 Maintenance of Office or Agency. The Note Registrar shall maintain in the Borough of Manhattan, The City of New York,
an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Note Registrar in respect of the Notes and this Indenture may be served. The Note Registrar shall give prompt
written notice to the Issuer, the Depositor and the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If, at any time, the Issuer and the Note Registrar shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive
all such surrenders, notices and demands. 
 Section 3.3 Money for Payments To Be Held in Trust. 

(a) As provided in Section 8.2, all payments of amounts due and payable with respect to the Notes that are to be made from amounts
withdrawn from the applicable Trust Accounts shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the applicable Trust Accounts shall be paid over to the Issuer, except as
provided in this Section 3.3. 
 (b) On or before each Distribution Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Payment Account an aggregate sum sufficient to pay the amounts then becoming due under the Notes, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee of its action or failure so to act. 

  
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 (c) The Issuer shall cause each Paying Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.3, that such
Paying Agent shall: 
  

	 	(i)	hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided; 

  

	 	(ii)	give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes;

  

	 	(iii)	at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; 

 

	 	(iv)	immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for payment of the Notes if at any time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and 

  

	 	(v)	comply with all requirements of the Code and any State or local tax law with respect to the withholding from any payments made by it on the Notes of any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith. 

 (d) The Issuer may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which such sums were held by such Paying Agent, and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such sums. 

(e) Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for two (2) years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Request, and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such
trust money shall 

  
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thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense and direction of the
Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer. The Indenture Trustee shall also adopt and employ, at the
expense and direction of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for redemption in whole pursuant to
Section 10.1 or whose right to or interest in monies due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent at the last address of record for each such Holder). 

Section 3.4 Existence. The Issuer shall keep in full effect its existence, rights and franchises as a statutory trust under the
laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States, in which case the Issuer shall keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement included in the Trust Estate. 
 Section 3.5 Protection
of Trust Estate. 
 (a) The Issuer shall from time to time authorize, execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action, necessary or advisable to: 
  

	 	(i)	maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof; 

 

	 	(ii)	perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; 

  

	 	(iii)	enforce any of the Collateral; or 

  

	 	(iv)	preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the Noteholders in the Trust Estate against the claims of all Persons. 

(b) The Issuer hereby authorizes the Indenture Trustee to file any financing statement or continuation statement required pursuant to this
Section 3.5 and designates the Indenture Trustee as its agent and attorney-in-fact to execute any other instrument required to be executed pursuant to this Section 3.5. The Issuer further hereby authorizes the Indenture Trustee to file any
financing statement and amendments thereto that indicate the Collateral (A) as all assets of the Issuer, all personal property of the Issuer or words of similar effect, regardless of whether any particular asset included in the Collateral falls
within the scope of Article 9 of the Relevant UCC, or (B) as being of an equal or lesser scope or with greater detail. 

  
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 Section 3.6 Opinions as to Trust Estate. 

(a) On the Closing Date, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel substantially in the form attached as Exhibit
E. 
 (b) On or before March 31 of each year (commencing with the year 2015), the Issuer shall deliver to the Depositor and the
Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any
other requisite documents and with respect to the authorization and filing of any financing statements and continuation statements as is necessary to maintain the lien and security interest created by this Indenture and reciting the details of such
action or stating that, in the opinion of such counsel, no such action is necessary to maintain such lien and security interest. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the authorization and filing of any financing statements and continuation statements that shall, in the opinion of such counsel, be required to maintain the lien and security
interest of this Indenture until March 31 in the following year. 
 Section 3.7 Performance of Obligations; Servicing of
Receivables. 
 (a) The Issuer shall not take any action and shall use its best efforts not to permit any action to be taken by others
that would release any Person from any of such Person’s material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture and the other Transaction Documents. 

(b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer’s Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture. 
 (c) The Issuer shall punctually perform and observe all of its obligations and agreements contained in this
Indenture, the other Transaction Documents and the instruments and agreements included in the Trust Estate, including filing or causing to be filed all financing statements and continuation statements required to be filed under the Relevant UCC by
the terms of this Indenture and the Sale and Servicing Agreement in accordance with and within the time periods provided for herein and therein. 

(d) If the Issuer shall have knowledge of the occurrence of an Event of Servicing Termination, the Issuer shall promptly notify the Depositor,
the Indenture Trustee, the Rating Agencies and the Administrator in writing of such event and shall specify in such notice the action, if any, the Issuer is taking in respect of such default. If an Event of Servicing

  
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Termination shall arise from the failure of the Servicer to perform any of its duties or obligations under the Sale and Servicing Agreement with respect to the Receivables, the Issuer shall take
all reasonable steps available to it to remedy such failure. 
 (e) As promptly as possible after the giving of notice of termination to the
Servicer of the Servicer’s rights and powers pursuant to Section 8.1 of the Sale and Servicing Agreement, the Issuer may (subject to the rights of the Indenture Trustee to direct such appointment pursuant to Section 8.2 of the Sale
and Servicing Agreement) appoint a successor servicer (the “Successor Servicer”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Indenture Trustee. In the event that a
Successor Servicer has not been appointed or has not accepted its appointment at the time when the Servicer ceases to act as Servicer, the Indenture Trustee, without further action, shall be the successor to the Servicer in all respects in
accordance with Section 8.2 of the Sale and Servicing Agreement. The Indenture Trustee may resign as the Servicer by giving written notice of such resignation to the Issuer and in such event shall be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a servicing agreement with the Issuer as provided below. Upon delivery of any such notice to the Issuer, the Issuer shall obtain a new servicer as the Successor Servicer
under the Sale and Servicing Agreement. Any Successor Servicer (other than the Indenture Trustee) shall (i) be an established financial institution having a net worth of not less than $50,000,000 and whose regular business includes the
servicing of motor vehicle installment sale contracts and (ii) enter into a servicing agreement with the Issuer having substantially the same provisions as the provisions of the Sale and Servicing Agreement applicable to the Servicer. If,
within thirty (30) days after the delivery of the notice referred to above, the Issuer shall not have obtained such a new servicer, the Indenture Trustee may appoint, or may petition a court of competent jurisdiction to appoint, a Successor
Servicer. In connection with any such appointment, the Indenture Trustee may make such arrangements for the compensation of such successor as it and such successor shall agree, subject to the limitations set forth below and in the Sale and Servicing
Agreement, and, in accordance with Section 8.2 of the Sale and Servicing Agreement, the Issuer shall enter into an agreement with such successor for the servicing of the Receivables (such agreement to be in form and substance satisfactory to
the Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer’s duties as servicer of the Receivables as provided herein, it shall do so in its individual capacity and not in its capacity as Indenture Trustee and, accordingly,
the provisions of Article VI shall be inapplicable to the Indenture Trustee in its duties as the successor to the Servicer and the servicing of the Receivables. In case the Indenture Trustee shall become successor to the Servicer under the Sale and
Servicing Agreement, the Indenture Trustee shall be entitled to appoint as Servicer any one of its Affiliates; provided, however, that the Indenture Trustee, in its capacity as the Servicer, shall be fully liable for the actions and omissions of
such Affiliate in such capacity as Successor Servicer. Notwithstanding any other provisions of this Indenture to the contrary, in no event shall the Indenture Trustee be liable for any servicing fee or for any differential in the amount of the
servicing fee paid under the Sale and Servicing Agreement and the amount necessary to induce any Successor Servicer to act as Successor Servicer under the Sale and Servicing Agreement. 

(f) Upon any termination of the Servicer’s rights and powers pursuant to Section 8.1 of the Sale and Servicing Agreement, the Issuer
shall promptly notify the Depositor, the Indenture Trustee, the Administrator and the Rating Agencies in writing of such termination. 

  
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Upon any appointment of a Successor Servicer by the Issuer, the Issuer shall promptly notify the Depositor, the Indenture Trustee, the Administrator and the Rating Agencies in writing of such
appointment, specifying in such notice the name and address of such Successor Servicer. 
 (g) The Issuer shall not waive timely performance
by the Depositor, the Seller or the Servicer of their respective obligations under the Transaction Documents if such waiver would reasonably be expected to materially adversely affect the interests of the Noteholders. 

Section 3.8 Negative Covenants. 

(a) If any Notes are Outstanding, the Issuer shall not: 
  

	 	(i)	except as expressly permitted by this Indenture, the Trust Agreement, the Receivables Purchase Agreement or the Sale and Servicing Agreement, sell, transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate, unless directed to do so in writing by the Indenture Trustee; 

  

	 	(ii)	claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder by reason of the payment of taxes levied or assessed upon the Issuer; 

  

	 	(iii)	dissolve or liquidate in whole or in part; 

  

	 	(iv)	(A) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any lien (including any lien arising in connection with any tax imposed under HB3), charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than
tax liens, mechanics’ liens and other liens that arise by operation of law, in each case on any of the Financed Vehicles and arising solely as a result of an action or omission of the related Obligor) or (C) permit the lien of this
Indenture not to constitute a valid and perfected first priority (other than with respect to any such tax, mechanics’ or other lien) security interest in the Trust Estate; 

 

	 	(v)	 engage in any activities other than financing, acquiring, owning, pledging and managing the Receivables as contemplated by the

  
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Receivables Purchase Agreement, the Trust Agreement, the Sale and Servicing Agreement and this Indenture and activities incidental to such activities; or 

 

	 	(vi)	incur, assume or guarantee any indebtedness other than the indebtedness evidenced by the Notes or indebtedness otherwise permitted by the Receivables Purchase Agreement, the Trust Agreement, the Sale and Servicing
Agreement or this Indenture. 

 Section 3.9 Annual Statement as to Compliance. 

(a) On or before May 31 of each year (commencing with the year 2015), the Issuer shall deliver to the Depositor and the Indenture Trustee
an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that: 
  

	 	(i)	a review of the activities of the Issuer during the preceding Trust Fiscal Year (or, in the case of the Officer’s Certificate to be delivered in the year 2015, during the period beginning on the Closing Date and
ending on February 28, 2015) and of its performance under this Indenture has been made under such Authorized Officer’s supervision; and 

  

	 	(ii)	to the best of such Authorized Officer’s knowledge, based on such review, the Issuer has complied in all material respects with all conditions and covenants under this Indenture throughout such preceding Trust
Fiscal Year (or, in the case of the Officer’s Certificate to be delivered in the year 2015, during the period beginning on the Closing Date and ending on February 28, 2015) or, if there has been a default in its compliance with any such
condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof. 

Section 3.10 Issuer May Consolidate, etc., Only on Certain Terms. 

(a) The Issuer shall not consolidate or merge with or into any other Person, unless: 

 

	 	(i)	the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall be a Person organized and existing under the laws of the United States or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Depositor and the Indenture Trustee, the due and punctual payment of the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein; 

  
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	 	(ii)	immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; 

  

	 	(iii)	the Rating Agency Condition shall have been satisfied with respect to such transaction; 

  

	 	(iv)	the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse tax consequence to the
Issuer, any Noteholder or any Certificateholder; 

  

	 	(v)	any action that is necessary to maintain the lien and security interest created by this Indenture shall have been taken; and 

  

	 	(vi)	the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation or merger and such supplemental indenture comply with this Article
III and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with (including any filing required by the Exchange Act). 

(b) Other than as specifically contemplated by the Transaction Documents, the Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any other Person, unless: 
  

	 	(i)	the Person that acquires by conveyance or transfer the properties or assets of the Issuer the conveyance or transfer of which is hereby restricted (A) shall be a United States citizen or a Person organized and
existing under the laws of the United States or any State, (B) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein, (C) shall expressly agree
by means of such supplemental indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of the Holders of the Notes, (D) unless otherwise provided in such supplemental indenture,
shall expressly agree to indemnify, defend and hold harmless the Issuer against and from any loss, liability or expense arising under or related to this Indenture and the Notes and (E) shall expressly agree by means of such supplemental
indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the Notes; 

  
 32 

	 	(ii)	immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; 

  

	 	(iii)	the Rating Agency Condition shall have been satisfied with respect to such transaction; 

  

	 	(iv)	the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee and the Depositor) to the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder; 

  

	 	(v)	any action that is necessary to maintain the lien and security interest created by this Indenture shall have been taken; and 

  

	 	(vi)	the Issuer shall have delivered to the Indenture Trustee and the Depositor an Officer’s Certificate and an Opinion of Counsel each stating that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with (including any filing required by the Exchange Act). 

Section 3.11 Successor or Transferee. 

(a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. 

(b) Upon any conveyance or transfer of all the properties and assets of the Issuer in accordance with Section 3.10(b), CarMax Auto Owner
Trust 2014-3 shall be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Notes immediately upon the delivery of written notice to the Indenture Trustee and the
Depositor stating that CarMax Auto Owner Trust 2014-3 is to be so released. 
 Section 3.12 No Other Business. The Issuer shall
not engage in any business other than financing, acquiring, owning and pledging the Receivables in the manner contemplated by this Indenture and the other Transaction Documents, issuing the Notes pursuant to the terms hereof and the Certificate
pursuant to the terms of the Trust Agreement and activities incidental thereto. 
 Section 3.13 No Borrowing. The Issuer shall
not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Notes. 

  
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 Section 3.14 Servicer’s Obligations. The Issuer shall cause the Servicer to
comply with the Sale and Servicing Agreement. 
 Section 3.15 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture and the other Transaction Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or
performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. 

Section 3.16 Capital Expenditures. The Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for
capital assets (either realty or personalty). 
 Section 3.17 Restricted Payments. The Issuer shall not, directly or indirectly,
(i) make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, distributions as contemplated by, and to the extent funds are available for such purpose under the Sale and Servicing Agreement, the Trust
Agreement or this Indenture. The Issuer shall not, directly or indirectly, make payments to or distributions from the Collection Account, the Note Payment Account, the Certificate Payment Account or the Reserve Account except in accordance with this
Indenture and the other Transaction Documents. 
 Section 3.18 Notice of Events of Default. The Issuer shall give the Indenture
Trustee, the Depositor, the Rating Agencies and the Administrator prompt written notice of each Event of Default hereunder, each default on the part of the Depositor or the Servicer of its obligations under the Sale and Servicing Agreement and each
default on the part of the Seller or the Depositor of its obligations under the Receivables Purchase Agreement. 
 Section 3.19
Removal of Administrator. For so long as any Notes are Outstanding, the Issuer shall not remove the Administrator without cause unless the Rating Agency Condition shall have been satisfied with respect to such removal. 

Section 3.20 Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute and deliver such
further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. 

Section 3.21 Sales Finance Company Licenses. The Issuer shall take such action as, in its reasonable judgment, shall be necessary
to maintain the effectiveness of all sales finance company licenses required under the Maryland Code and all licenses required under the Pennsylvania Motor Vehicle Sales Finance Company Act in connection with this Indenture and the transactions
contemplated hereby until the lien and security interest of this Indenture shall no longer be in effect in accordance with the terms hereof. 

Section 3.22 Representations and Warranties by the Issuer to the Indenture Trustee. The Issuer hereby represents and warrants to
the Indenture Trustee that the representations and warranties regarding creation, perfection and priority of security interests in the Receivables, which are attached to this Indenture as Appendix A, are true and correct to the extent they are
applicable. 

  
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 ARTICLE IV 

SATISFACTION AND DISCHARGE 

Section 4.1 Satisfaction and Discharge of Indenture. 

(a) This Indenture shall cease to be of further effect with respect to the Notes, except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Section 3.3, Section 3.4, Section 3.5,
Section 3.8, Section 3.10, Section 3.12, Section 3.13, Section 3.16 and Section 3.17, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture Trustee under Section 4.3) and (vi) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of
them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when either: 

 

	 	(i)	all Notes of all Classes theretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.6 and
(ii) Notes for whose payment money has theretofore been irrevocably deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.3) have been
delivered to the Indenture Trustee for cancellation; or 

  

	 	(ii)	all Notes not theretofore delivered to the Indenture Trustee for cancellation have become due and payable and the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or, if
the Indenture Trustee is not the Paying Agent, the Paying Agent), in trust, cash or direct obligations of or obligations guaranteed by the United States (which will mature prior to the date needed), in an amount sufficient to pay and discharge the
entire indebtedness on such Notes when due on the applicable Class Final Distribution Date or Redemption Date (if Notes shall have been called for redemption pursuant to Section 10.1(a)), as the case may be; and 

 

	 	(iii)	the Issuer has paid or caused to be paid all other sums payable by the Issuer hereunder and under the other Transaction Documents. 

  
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 Section 4.2 Satisfaction, Discharge and Defeasance of the Notes. 

(a) Upon satisfaction of the conditions set forth in Section 4.2(b) below, the Issuer shall be deemed to have paid and discharged the
entire indebtedness on all the Notes Outstanding, and the provisions of this Indenture, as it relates to such Notes, shall no longer be in effect (and the Indenture Trustee, at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except as to: 
  

	 	(i)	the rights of the Noteholders to receive, from the trust funds described in Section 4.2(b)(i), payment of the principal of and interest on the Notes Outstanding at maturity of such principal or interest;

  

	 	(ii)	the obligations of the Issuer with respect to the Notes under Section 2.5, Section 2.6, Section 3.2 and Section 3.3; 

 

	 	(iii)	the obligations of the Issuer to the Indenture Trustee under Section 6.7; and 

  

	 	(iv)	the rights, powers, trusts and immunities of the Indenture Trustee hereunder and the duties of the Indenture Trustee hereunder. 

(b) The satisfaction, discharge and defeasance of the Notes pursuant to Section 4.2(a) is subject to the satisfaction of all of the
following conditions: 
  

	 	(i)	the Issuer has deposited or caused to be deposited irrevocably (except as provided in Section 4.4) with the Indenture Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of the Notes, which, through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day prior to the due date of any payment referred to below, money in an
amount sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge the entire indebtedness on the Notes
Outstanding, for principal thereof and interest thereon to the date of such deposit (in the case of Notes that have become due and payable) or to the maturity of such principal and interest, as the case may be; 

 

	 	(ii)	such deposit will not result in a breach or violation of, or constitute an event of default under, any Transaction Document or other agreement or instrument to which the Issuer is bound; 

  
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	 	(iii)	no Event of Default has occurred and is continuing on the date of such deposit or on the ninety-first (91st) day after such date; 

 

	 	(iv)	the Issuer has delivered to the Depositor and the Indenture Trustee an Opinion of Counsel to the effect that the satisfaction, discharge and defeasance of the Notes pursuant to this Section 4.2 will not cause any
Noteholder to be treated as having sold or exchanged any of its Notes for purposes of Section 1001 of the Code; and 

  

	 	(v)	the Issuer has delivered to the Depositor and the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to the
defeasance contemplated by this Section 4.2 have been complied with. 

 Section 4.3 Application of Trust
Money. All monies deposited with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by the Indenture Trustee, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly
or through any Paying Agent, to the Holders of the Notes for the payment or redemption of which such monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest, but such monies need
not be segregated from other funds except to the extent required herein or in the Sale and Servicing Agreement or required by law. 

Section 4.4 Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all monies then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.3, and thereupon such Paying Agent shall be released from all further liability with respect to such monies. 

ARTICLE V 
 REMEDIES 

Section 5.1 Events of Default. 

(a) “Event of Default” means the occurrence of any one of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 

 

	 	(i)	default in the payment of any interest on any Note of the Controlling Class when the same becomes due and payable and such default shall continue for a period of five (5) or more Business Days; 

 

	 	(ii)	default in the payment of any principal due and payable on any Class of Notes on the related Class Final Distribution Date; 

  
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	 	(iii)	material default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement a default in the observance or performance of which is specifically
dealt with elsewhere in this Section 5.1), and such default shall continue or not be cured for a period of sixty (60) days after there shall have been given, by registered or certified mail, to the Issuer by the Depositor or the Indenture
Trustee or to the Issuer, the Depositor and the Indenture Trustee by the Holders of Notes evidencing not less than 25% of the Note Balance of the Controlling Class, a written notice specifying such default and requiring it to be remedied and stating
that such notice is a notice of Default hereunder; 

  

	 	(iv)	any representation or warranty of the Issuer made in this Indenture or in any certificate delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when
the same shall have been made, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured for a period of thirty (30) days after there shall have been
given, by registered or certified mail, to the Issuer by the Depositor or the Indenture Trustee or to the Issuer, the Depositor and to the Indenture Trustee by the Holders of Notes evidencing not less than 25% of the Note Balance of the Controlling
Class, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder; 

 

	 	(v)	the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust Estate in an involuntary case under any applicable federal or State
bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or ordering
the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; and 

 

	 	(vi)	 the commencement by the Issuer of a voluntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter
in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general 

  
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assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of any action by the Issuer in furtherance of any of the
foregoing. 

 (b) The Issuer shall deliver to the Indenture Trustee and the Depositor, within five (5) days after the
occurrence of any event that, with notice or the lapse of time or both, would become an Event of Default under clause (iii) or (iv), written notice of such Default in the form of an Officer’s Certificate, the status of such Default and
what action the Issuer is taking or proposes to take with respect to such Default. 
 Section 5.2 Acceleration of Maturity;
Rescission and Annulment. 
 (a) If an Event of Default shall have occurred and be continuing, the Indenture Trustee or the Holders of
Notes evidencing not less than 51% of the Note Balance of the Controlling Class may, upon prior written notice to the Administrator (who shall promptly forward such notice to each Rating Agency), declare the Notes to be immediately due and payable
by written notice to the Issuer (and to the Indenture Trustee if given by Noteholders), the Depositor and the Servicer, and upon any such declaration the unpaid principal amount of the Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable. 
 (b) If the Notes have been declared immediately due and payable
following an Event of Default, before a judgment or decree for payment of the amount due has been obtained by the Indenture Trustee as hereinafter provided in this Article V, the Holders of Notes evidencing not less than 51% of the Note Balance of
the Controlling Class, by written notice to the Issuer, the Depositor, the Indenture Trustee and the Administrator (who shall promptly forward such notice to each Rating Agency), may rescind and annul such declaration of acceleration and its
consequences if: 
  

	 	(i)	the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay all principal of and interest on the Notes and all other amounts that would then be due hereunder or upon the Notes if the Event of
Default giving rise to such acceleration had not occurred; and 

  

	 	(ii)	all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12. 

(c) No such rescission shall affect any subsequent default or impair any right consequent thereto. 

Section 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. 

(a) If (i) default is made in the payment of any interest on any Note when the same becomes due and payable, and such default continues
for a period of five (5) Business Days, or (ii) default is made in the payment of the principal of any Note when the same becomes 

  
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due and payable, the Issuer shall, upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders of the Notes, the amount then due and payable on the Notes
for principal and interest, with interest upon the overdue principal at the applicable Note Rate and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest at the applicable Note Rate and
in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel and other
amounts due and owing to the Indenture Trustee pursuant to Section 6.7. 
 (b) If the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce
the same against the Issuer or any other obligor upon the Notes and collect in the manner provided by law out of the property of the Issuer or such other obligor, wherever situated, the monies adjudged or decreed to be payable. 

(c) If an Event of Default shall have occurred and be continuing, the Indenture Trustee may, as more particularly provided in
Section 5.4, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law.

 (d) If there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or State bankruptcy, insolvency or other similar law, or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or if there shall be pending any other comparable judicial Proceedings relative to the
Issuer or any other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.3, shall be entitled and empowered, by intervention in such Proceedings or otherwise: 

 

	 	(i)	to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents and attorneys, and all other amounts due and owing to the Indenture
Trustee pursuant to Section 6.7) and of the Noteholders allowed in such Proceedings; 

  
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	 	(ii)	unless prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings;

  

	 	(iii)	to collect and receive any monies or other property payable or deliverable on any such claims and to pay all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their behalf;
and 

  

	 	(iv)	to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Noteholders allowed in any judicial proceedings relative to the
Issuer, its creditors and its property; 

  

	 	(v)	and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of the Noteholders to make payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of payments directly to the Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents and attorneys, and all other amounts due and owing to the Indenture Trustee pursuant to Section 6.7. 

(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. 
 (f) All rights of action and of
asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action
or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes. 

(g) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any Noteholder a party to any such Proceedings. 

  
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 Section 5.4 Remedies; Priorities. 

(a) If the Notes have been declared immediately due and payable following an Event of Default, the Indenture Trustee may, or at the written
direction of the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class shall, take one or more of the following actions as so directed (subject to Section 5.5): 

 

	 	(i)	institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other obligor upon the Notes monies adjudged due; 

  

	 	(ii)	institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate; 

  

	 	(iii)	exercise any remedies of a secured party under the Relevant UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Noteholders; and 

 

	 	(iv)	sell the Trust Estate or any portion thereof or rights or interest therein at one or more public or private sales called and conducted in any manner permitted by law; provided, however, that the Indenture
Trustee may not sell or otherwise liquidate the Trust Estate at the direction of the Holders following an Event of Default, other than an Event of Default described in Section 5.1 (i) or (ii), unless (A) the Holders of 100% of the
Note Balance consent thereto, (B) the proceeds of such sale or liquidation will be sufficient to pay in full the Note Balance and all accrued but unpaid interest on the Outstanding Notes or (C) the Indenture Trustee determines that the
Trust Estate will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared immediately due and payable, and the Indenture Trustee obtains the
consent of the Holders of Notes evidencing not less than 66 2/3% of the Note Balance of the Controlling Class. In determining such sufficiency or insufficiency with respect to clauses (B) and (C) above, the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. 

(b) Notwithstanding the provisions of Section 2.8 or Section 8.2, if the Indenture Trustee collects any money or property pursuant
to this Section 5.4 and the Notes have been accelerated, it (or, if the Indenture Trustee is not the Paying Agent, the Paying Agent) shall pay out such money or property (and other amounts, including all amounts held on deposit in the Reserve
Account) in the following order of priority: 
  

	 	(i)	first, to the Servicer, the Total Servicing Fee for the preceding Collection Period and any Unreimbursed Servicer Advances for the preceding Collection Period; 

  
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	 	(ii)	second, on a pro rata basis, (A) if the Indenture Trustee has become the Servicer pursuant to Section 8.2 of the Sale and Servicing Agreement, any amounts due in connection with indemnification of the
Indenture Trustee as Successor Servicer and not paid pursuant to Section 7.2 of the Sale and Servicing Agreement plus any Transition Costs due in connection with such transfer of servicing and not paid pursuant to Section 8.2(b) of
the Sale and Servicing Agreement and (B) to the Indenture Trustee, all amounts due to the Indenture Trustee as compensation pursuant to Section 6.7 not previously paid by the Administrator, and to the Owner Trustee, all amounts due to the
Owner Trustee pursuant to Sections 8.1 and 8.2 of the Trust Agreement not previously paid by the Servicer; 

  

	 	(iii)	third, on a pro rata basis, to the Class A Noteholders, the Total Note Interest for each Class of the Class A Notes; 

  

	 	(iv)	fourth, if an Event of Default described in Section 5.1 (i), (ii), (v) or (vi) has occurred, in the following order of priority: 

 

	 	(A)	to the Class A-1 Noteholders until the principal amount of the Class A-1 Notes has been paid in full; 

  

	 	(B)	to the Holders of each Class of the remaining Class A Notes, pro rata based on the outstanding principal amount of such Class of Class A Notes as of such Distribution Date, until the principal
amount of each such Class of the remaining Class A Notes has been paid in full; 

  

	 	(C)	to the Class B Noteholders, the Total Note Interest for the Class B Notes; 

  

	 	(D)	to the Class B Noteholders, until the principal amount of the Class B Notes has been paid in full; 

  

	 	(E)	to the Class C Noteholders, the Total Note Interest for the Class C Notes; 

  

	 	(F)	to the Class C Noteholders, until the principal amount of the Class C Notes has been paid in full; 

  
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	 	(G)	to the Class D Noteholders, the Total Note Interest for the Class D Notes; 

  

	 	(H)	to the Class D Noteholders, until the principal amount of the Class D Notes has been paid in full; 

  

	 	(v)	fifth, if an Event of Default described in Section 5.1 (iii) or (iv) has occurred, in the following order of priority: 

 

	 	(A)	to the Class B Noteholders, the Total Note Interest for the Class B Notes; 

  

	 	(B)	to the Class C Noteholders, the Total Note Interest for the Class C Notes; 

  

	 	(C)	to the Class D Noteholders, the Total Note Interest for the Class D Notes; 

  

	 	(D)	to the Class A-1 Noteholders until the principal amount of the Class A-1 Notes has been paid in full; 

  

	 	(E)	to the Holders of each Class of the remaining Class A Notes, pro rata based on the outstanding principal amount of such Class of Class A Notes as of such Distribution Date, until the principal
amount of each such Class of the remaining Class A Notes has been paid in full; 

  

	 	(F)	to the Class B Noteholders, until the principal amount of the Class B Notes has been paid in full; 

  

	 	(G)	to the Class C Noteholders, until the principal amount of the Class C Notes has been paid in full; 

  

	 	(H)	to the Class D Noteholders, until the principal amount of the Class D Notes has been paid in full; 

  

	 	(vi)	sixth, if the Indenture Trustee or any other Successor Servicer has become the Servicer pursuant to Section 8.2 of the Sale and Servicing Agreement, to such Successor Servicer, any Transition Costs due in
connection with such transfer of servicing and not paid pursuant to Section 8.2(b) of the Sale and Servicing Agreement plus the Additional Servicing Fee, if any, for the preceding Collection Period; and 

 

	 	(vii)	seventh, to the Certificateholders, any remaining amounts. 

 (c) Prior to an acceleration of
the Notes following an Event of Default, if the Indenture Trustee collects any money or property pursuant to this Article V, such amounts shall be deposited in the Collection Account and distributed in accordance with Section 2.8 and
Section 8.2. 
 (d) The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this
Section 5.4. At least five (5) days before such record date, the Indenture Trustee on behalf of the Issuer shall mail to each Noteholder a notice that states the record date, the payment date and the amount to be paid. 

  
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 Section 5.5 Optional Preservation of the Receivables. If the Notes have been declared
immediately due and payable following an Event of Default, and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of the Trust Estate and apply proceeds
as if there had been no declaration of acceleration; provided, however, that the Available Funds shall be applied in accordance with such declaration of acceleration in the manner specified in Section 4.6(d) of the Sale and
Servicing Agreement. It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In determining whether to maintain possession of the Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. 

Section 5.6 Limitation of Suits. 

(a) No Holder of any Note shall have any right to institute any Proceeding with respect to this Indenture or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless: 
  

	 	(i)	such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default; 

  

	 	(ii)	the Holders of Notes evidencing not less than 25% of the Note Balance of the Controlling Class have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder; 

  

	 	(iii)	such Holder or Holders have offered to the Indenture Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request; 

 

	 	(iv)	the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and 

 

	 	(v)	no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class.

  
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 (b) It is understood and intended that no one or more Holders of Notes shall have any right in
any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders of Notes or
to enforce any right under this Indenture, except in the manner herein provided. 
 (c) In the event the Indenture Trustee shall receive
conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes, each evidencing less than 51% of the Note Balance of the Controlling Class, the Indenture Trustee in its sole discretion may determine what action, if
any, shall be taken, notwithstanding any other provisions of this Indenture. 
 Section 5.7 Unconditional Rights of Noteholders to
Receive Principal and Interest. Notwithstanding any other provisions of this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Note
on the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the
consent of such Holder. 
 Section 5.8 Restoration of Rights and Remedies. If the Indenture Trustee or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or such Noteholder, then and in every such
case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been instituted. 
 Section 5.9 Rights and Remedies
Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. 
 Section 5.10 Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or any
acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or the Noteholders, as
the case may be. 
 Section 5.11 Control by Noteholders of the Controlling Class. 

(a) The Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided, however, that: 

 

	 	(i)	such direction shall not be in conflict with any rule of law or with this Indenture; 

  
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	 	(ii)	subject to the express terms of Section 5.4, any written direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by the Holders of Notes evidencing not less than 100% of the Note Balance;

  

	 	(iii)	if the conditions set forth in Section 5.5 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to such section, then any written direction to the Indenture Trustee by the
Holders of Notes evidencing less than 100% of the Note Balance to sell or liquidate the Trust Estate shall be of no force and effect; and 

  

	 	(iv)	the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction. 

(b) Notwithstanding the rights of Noteholders set forth in this Section 5.11, subject to Section 6.1, the Indenture Trustee need not
take any action that it reasonably believes might involve it in costs, expenses and liabilities for which it will not be adequately indemnified or might materially adversely affect the rights of any Noteholders not consenting to such action. 

Section 5.12 Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Notes as provided in
Section 5.2, the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, may, on behalf of all Noteholders, waive any past Default or Event of Default and its consequences except a Default or Event of Default
(i) in the payment of principal of or interest on any of the Notes or (ii) in respect of a covenant or provision hereof that cannot be amended, supplemented or modified without the consent of all the Noteholders. Upon any such waiver, the
Issuer, the Indenture Trustee and the Noteholders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent
thereto. Upon any such waiver, such Default or Event of Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. 

Section 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by such Holder’s
acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered
or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs,

  
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including reasonable attorney’s fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section 5.13 shall not apply to (i) any suit instituted by the Indenture Trustee, (ii) any suit instituted by any Noteholder or group of Noteholders, in each case holding
Notes evidencing in the aggregate more than 10% of the Note Balance (or, in the case of any suit which is instituted by the Controlling Class, more than 10% of the Note Balance of the Controlling Class) or (iii) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date). 

Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this
Indenture, and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 
 Section 5.15 Action
on Notes. The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon
any portion of the Trust Estate or upon any of the assets of the Issuer. Any money or property collected by the Indenture Trustee shall be applied in accordance with Section 5.4(b). 

Section 5.16 Performance and Enforcement of Certain Obligations. 

(a) Promptly following a request from the Indenture Trustee to do so, and at the Administrator’s expense (or, if the Indenture Trustee is
then acting as the Administrator, at the expense of CarMax), the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Depositor and the Servicer of their respective
obligations to the Issuer under or in connection with the Sale and Servicing Agreement or by the Seller of its obligations under or in connection with the Receivables Purchase Agreement, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the Sale and Servicing Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Depositor
or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Depositor and the Servicer of their respective obligations thereunder. 

(b) If an Event of Default shall have occurred and be continuing, the Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the Holders of Notes evidencing not less than 66 2/3% of the Note Balance of the Controlling Class shall (subject to Section 6.2(f)), exercise all

  
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rights, remedies, powers, privileges and claims of the Issuer against the Depositor or the Servicer under or in connection with the Sale and Servicing Agreement or against the Seller under or in
connection with the Receivables Purchase Agreement, including the right or power to take any action to compel or secure performance or observance by the Depositor or the Servicer, as the case may be, of its obligations to the Issuer thereunder and
to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement or the Receivables Purchase Agreement, as the case may be, and any right of the Issuer to take such action shall be suspended. 

(c) Promptly following a request from the Indenture Trustee to do so and at the Administrator’s expense, the Issuer agrees to take all
such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Seller of its obligations to the Depositor under or in connection with the Receivables Purchase Agreement in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Receivables Purchase Agreement to the extent and in the manner directed by the Indenture Trustee, including
the transmission of notices of default on the part of the Depositor thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller of its obligations under the Receivables Purchase
Agreement. 
 (d) If an Event of Default shall have occurred and be continuing, the Indenture Trustee may, and at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly thereafter)) of the Holders of Notes evidencing not less than 66 2/3% of the Note Balance of the Controlling Class shall (subject to Section 6.2(f)), exercise all
rights, remedies, powers, privileges and claims of the Depositor against the Seller under or in connection with the Receivables Purchase Agreement, including the right or power to take any action to compel or secure performance or observance by the
Seller of its obligations to the Depositor thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Receivables Purchase Agreement, and any right of the Depositor to take such action shall be suspended.

 ARTICLE VI 
 THE INDENTURE
TRUSTEE 
 Section 6.1 Duties of Indenture Trustee. 

(a) If an Event of Default shall have occurred and be continuing, the Indenture Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such Person’s own affairs. 

(b) Except during the continuance of an Event of Default: 
  

	 	(i)	the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and 

  
 49 

	 	(ii)	in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to
the Indenture Trustee and, if required by the terms of this Indenture, conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture. 

 (c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 
  

	 	(i)	this paragraph does not limit the effect of paragraph (b) of this Section 6.1; 

  

	 	(ii)	the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and

  

	 	(iii)	the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.11. 

(d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing
with the Issuer. 
 (e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required
by law or the terms of this Indenture or the Sale and Servicing Agreement. 
 (f) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers hereunder if the Indenture Trustee shall have reasonable grounds to
believe that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured or provided to it. 
 (g)
Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.1 and the TIA. 

(h) The Indenture Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer shall have
actual knowledge of such Event of Default or (ii) written notice of such Event of Default shall have been given to the Indenture Trustee in accordance with the provisions of this Indenture. 

(i) The Indenture Trustee shall be required to carry out its duties as specified in Sections 4.1, 4.7, 4.9, 7.4(c), 8.1, 8.2, 8.3(a), 8.4,
10.12 and 10.14 of the Sale and Servicing 

  
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Agreement. In furtherance of the foregoing, Sections 4.1, 4.7, 4.9, 7.4(c), 8.1, 8.2, 8.3(a), 8.4, 10.12 and 10.14 of the Sale and Servicing Agreement are hereby incorporated by reference into
this Indenture to the extent that they refer to obligations of the Indenture Trustee. 
 Section 6.2 Rights of Indenture
Trustee. 
 (a) The Indenture Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. 
 (b) Before the Indenture Trustee acts or refrains from acting, it may request and shall be entitled to
receive an Officer’s Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel unless it is proved
that the Indenture Trustee was negligent in such reliance. 
 (c) The Indenture Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such
agent, attorney, custodian or nominee appointed with due care by it hereunder. 
 (d) The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that such action or omission by the Indenture Trustee does not constitute willful misconduct,
negligence or bad faith. 
 (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal
matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of
such counsel. 
 (f) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Indenture Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction. 
 (g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Indenture Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the
Issuer, personally or by agent or attorney. 
 Section 6.3 Individual Rights of Indenture Trustee. The Indenture Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and may otherwise 

  
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deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying agent hereunder may do the
same with like rights. 
 Section 6.4 Indenture Trustee’s Disclaimer. The Indenture Trustee (i) shall not be
responsible for, and makes no representation as to, the validity or adequacy of this Indenture or the Notes and (ii) shall not be accountable for the Issuer’s use of the proceeds from the Notes or responsible for any statement of the
Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee’s certificate of authentication. 

Section 6.5 Notice of Defaults. If a Default occurs and is continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder and the Administrator notice of such Default within ninety (90) days after it occurs. Except in the case of a Default in payment of principal of or interest on any Note (including
payments pursuant to the mandatory redemption provisions of such Note), the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests
of Noteholders. 
 Section 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver, within a reasonable
period of time after the end of each calendar year, to each Person who at any time during such calendar year was a Noteholder, such information furnished to the Indenture Trustee as may be required to enable such Person to prepare its federal and
State income tax returns. 
 Section 6.7 Compensation and Indemnity. 

(a) The Administrator, on behalf of the Issuer, shall pay to the Indenture Trustee from time to time reasonable compensation for its services.
The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Administrator, on behalf of the Issuer, shall reimburse the Indenture Trustee for all expenses, advances and
disbursements reasonably incurred or made by it, including costs of collection, in addition to the compensation for its services; provided, however, that the Administrator need not reimburse the Indenture Trustee for any expense
incurred through the Indenture Trustee’s willful misconduct, negligence, or bad faith. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants
and experts. The Administrator, on behalf of the Issuer, shall indemnify the Indenture Trustee for, and hold it and its officers, directors, employees, representatives and agents, harmless against, any and all loss, liability or expense (including
reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of its duties hereunder; provided, however, that the Administrator need not indemnify the Indenture
Trustee for, or hold it harmless against, any such loss, liability or expense incurred through the Indenture Trustee’s willful misconduct, negligence, or bad faith. The Indenture Trustee shall notify the Issuer and the Administrator promptly of
any claim for which it may seek indemnity. Any failure by the Indenture Trustee to so notify the Issuer and the Administrator shall not, however, relieve the Administrator of its obligations hereunder. The Administrator, on behalf of the Issuer,
shall defend any such claim. The Indenture Trustee may 

  
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have separate counsel in connection with the defense of any such claim, and the Administrator, on behalf of the Issuer, shall pay the fees and expenses of such counsel. If the Indenture Trustee
is then acting as Administrator, all payment obligations to the Indenture Trustee pursuant to this Section 6.7 shall be paid by CarMax. 

(b) The payment obligations to the Indenture Trustee pursuant to this Section 6.7 shall survive the resignation or removal of the
Indenture Trustee and the discharge of this Indenture. 
 (c) When the Indenture Trustee incurs fees or expenses after the occurrence of a
Default specified in Section 5.1(a)(v) or Section 5.1(a)(vi) with respect to the Issuer, such fees and expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable
federal or State bankruptcy, insolvency or similar law. 
 Section 6.8 Replacement of Indenture Trustee. 

(a) No resignation or removal of the Indenture Trustee, and no appointment of a successor Indenture Trustee, shall become effective until the
acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee may resign at any time by so notifying the Issuer, the Administrator, the Depositor and the Noteholders. The Holders of Notes
evidencing not less than 51% of the Note Balance of the Controlling Class, may remove the Indenture Trustee without cause by notifying the Indenture Trustee (with a copy to the Issuer, the Administrator, the Depositor and the Rating Agencies) of
such removal and, following such removal, may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if: 
  

	 	(i)	the Indenture Trustee fails to comply with Section 6.11; 

  

	 	(ii)	the Indenture Trustee is adjudged to be bankrupt or insolvent; 

  

	 	(iii)	a receiver or other public officer takes charge of the Indenture Trustee or its property; or 

  

	 	(iv)	the Indenture Trustee otherwise becomes incapable of acting. 

 (b) If the Indenture Trustee
resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Administrator shall promptly appoint a successor
Indenture Trustee. 
 (c) Any successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture
Trustee, the Issuer, the Administrator and the Depositor. Upon delivery of such written acceptance, the resignation or removal of the retiring Indenture Trustee shall become effective and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to the Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture
Trustee to the successor Indenture Trustee. 

  
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 (d) If a successor Indenture Trustee does not take office within sixty (60) days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee. If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee. 
 (e) Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.8, the
Administrator’s obligations under Section 6.7 shall continue for the benefit of the retiring Indenture Trustee. 

Section 6.9 Successor Indenture Trustee by Merger. 

(a) If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or
assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that such corporation
or banking association must be otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall provide the Rating Agencies, the Administrator and the Depositor with prior written notice of any such transaction. 

(b) If at the time such successor or successors by consolidation, merger or conversion to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Notes so authenticated,
and in case at that time any of the Notes shall not have been authenticated, any such successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor trustee or in the name of the successor to the Indenture
Trustee. In all such cases such certificates shall have the full force which the Notes or this Indenture provide that the certificate of the Indenture Trustee shall have. 

Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee. 

(a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver an instrument to appoint one or more Persons to act as a co-trustee or co-trustees, jointly with the Indenture
Trustee, or separate trustee or separate trustees, of all or any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Trust Estate, or any part hereof, and,
subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee under this Indenture shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no notice of the appointment of any co-trustee or separate trustee shall be required under Section 6.8. 

  
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 (b) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and
act subject to the following provisions and conditions: 
  

	 	(i)	all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee shall not be authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee; 

 

	 	(ii)	no trustee under this Indenture shall be personally liable by reason of any act or omission of any other trustee under this Indenture; and 

 

	 	(iii)	the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. 

(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Each such instrument shall be filed with the Indenture Trustee. 

(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee its agent or attorney-in-fact with full power and
authority, to the extent permitted by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. 

Section 6.11 Eligibility; Disqualification. 

(a) The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Indenture Trustee or its parent shall
have a combined capital and surplus of 

  
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at least $50,000,000 as set forth in its most recent published annual report of condition and shall have a long-term debt rating acceptable to each of the Rating Agencies. The Indenture Trustee
shall comply with TIA Section 310(b). 
 (b) Within 90 days after ascertaining the occurrence of an Event of Default which shall not
have been cured or waived, unless authorized by the Commission, the Indenture Trustee shall resign with respect to the Class A Notes, the Class B Notes, the Class C Notes or the Class D Notes in accordance with Section 6.8, and the Issuer
shall appoint a successor Indenture Trustee for one or more of such Classes, as applicable, so that there will be separate Indenture Trustees for the Class A Notes, the Class B Notes, the Class C Notes or the Class D Notes. In the event the
Indenture Trustee fails to comply with the terms of the preceding sentence, the Indenture Trustee shall comply with clauses (ii) and (iii) of TIA Section 310(b). 

(c) In the case of the appointment pursuant to this Section 6.11 of a successor Indenture Trustee with respect to any Class of Notes, the
Issuer, the retiring Indenture Trustee and the successor Indenture Trustee with respect to such Class of Notes shall execute and deliver an indenture supplemental hereto wherein each successor Indenture Trustee shall accept such appointment and
which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, the successor Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to
the Notes of the Class to which the appointment of such successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is not retiring with respect to all Classes of Notes, shall contain such provisions as shall be deemed necessary
or desirable to confirm that all rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes of each Class as to which the retiring Indenture Trustee is not retiring shall continue to be vested in the Indenture
Trustee and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Indenture Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Indenture Trustees co-trustees of the same trust and that each such Indenture Trustee shall be a trustee of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Indenture Trustee; and upon the removal of the retiring Indenture Trustee shall become effective to the extent provided herein. 

Section 6.12 Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. 

Section 6.13 Communications Regarding Demands to Purchase Receivables. The Indenture Trustee agrees to cooperate in good faith
with any reasonable request by the Depositor for information which is required in order to enable the Depositor to comply with the provisions of Items 1104(e) and 1121(c) of Regulation AB and Rule 15Ga-1 under the Exchange Act as it relates to the
Indenture Trustee or to the Indenture Trustee’s obligations under this Agreement. The Indenture Trustee shall provide the Depositor with notification, as soon as practicable and in any event within five (5) Business Days, of all demands
communicated to the Indenture Trustee for the repurchase or replacement of any Receivable. 

  
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 ARTICLE VII 

NOTEHOLDERS’ LISTS AND REPORTS 

Section 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders. If and so long as the Indenture Trustee is not
the Note Registrar, the Issuer shall furnish or cause to be furnished to the Indenture Trustee (i) not more than five (5) days after each Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date and (ii) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that, with respect to Notes issued as Book-Entry Notes, no such list shall be required to be furnished. 

Section 7.2 Preservation of Information; Communications to Noteholders. 

(a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of the Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. 
 (b) Noteholders may communicate
pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. 
 (c) The
Issuer, the Indenture Trustee and the Note Registrar shall have the protection of TIA Section 312(c). 
 Section 7.3 Reports by
Issuer. 
 (a) The Issuer shall: 
  

	 	(i)	file with the Indenture Trustee, within fifteen (15) days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;

  

	 	(ii)	file with the Indenture Trustee and the Commission in accordance with the rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and 

  
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	 	(iii)	supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section (a) and by the rules and regulations prescribed from time to time by the Commission. 

(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall correspond to the Trust Fiscal Year. 

Section 7.4 Reports by Indenture Trustee. 

(a) If required by TIA Section 313(a), within sixty (60) days after each March 31, beginning with March 31, 2015, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief report dated as of such date that complies with TIA Section 313(a). The Indenture Trustee shall also comply with TIA Section 313(b). 

(b) The Indenture Trustee shall file with the Commission and each stock exchange, if any, on which the Notes are listed a copy of each report
mailed to Noteholders pursuant to this Indenture. The Issuer shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange. 

ARTICLE VIII 
 ACCOUNTS,
DISBURSEMENTS AND RELEASES 
 Section 8.1 Collection of Money. Except as otherwise expressly provided herein, the Indenture
Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture and the Sale and Servicing Agreement. The Indenture Trustee shall apply all such money received by it as provided in this Indenture and the Sale and Servicing Agreement. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

 Section 8.2 Trust Accounts. 

(a) On or before the Closing Date, the Issuer shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and the Certificateholders, the Collection Account as provided in Section 4.1(a) of the Sale and Servicing Agreement. On or before each Distribution Date, the Servicer shall deposit in the Collection Account all
amounts required to be deposited therein with respect to the preceding Collection Period as provided in Section 4.2 of the Sale and Servicing Agreement. 

  
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 (b) On or before the Closing Date, the Issuer shall cause the Servicer to establish and maintain,
in the name of the Indenture Trustee, for the benefit of the Noteholders, the Reserve Account as provided in Section 4.7 of the Sale and Servicing Agreement. On each Distribution Date, upon receipt of instructions from the Servicer pursuant to
Section 4.6(b) of the Sale and Servicing Agreement, the Indenture Trustee shall withdraw from the Reserve Account (up to the amount on deposit in the Reserve Account) and deposit in the Collection Account the amount, if any, by which the
Required Payment Amount for such Distribution Date exceeds the Available Collections for such Distribution Date. 
 (c) [RESERVED]. 

(d) On each Distribution Date, the Indenture Trustee shall apply or cause to be applied the amount on deposit in the Collection Account on
such Distribution Date in accordance with Section 2.8(a). 
 (e) On or before the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee, for the exclusive benefit of the Noteholders, the Note Payment Account as provided in Section 4.1(b) of the Sale and Servicing Agreement. On each Distribution Date, the Indenture
Trustee shall apply or cause to be applied the amount on deposit in the Note Payment Account on such Distribution Date in accordance with Section 2.8 (a) or (d), as applicable. 

Section 8.3 General Provisions Regarding Accounts. 

(a) So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Trust Accounts shall
be invested by the Indenture Trustee at the written direction of the Servicer in Permitted Investments as provided in Sections 4.1 and 4.7 of the Sale and Servicing Agreement. All income or other gain (net of losses and investment expenses) from
investments of monies deposited in the Trust Accounts shall be withdrawn by the Indenture Trustee from such accounts and distributed (but only under the circumstances set forth in the Sale and Servicing Agreement) as provided in Sections 4.1 and 4.7
of the Sale and Servicing Agreement. The Servicer shall not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in any of the Trust Accounts unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if
requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. 

(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any of the
Trust Accounts resulting from any loss on any Permitted Investment included therein, except for losses attributable to the Indenture Trustee’s failure to make payments on such Permitted Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with their terms. 

  
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 (c) If (i) the Servicer shall have failed to give written investment directions for any
funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00 A.M. (New York City time) (or such other time as may be agreed upon by the Issuer and Indenture Trustee), on the Business Day preceding each Distribution Date, (ii) a
Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared immediately due and payable pursuant to Section 5.2 or (iii) the Notes shall have been declared
immediately due and payable following an Event of Default, amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.4 as if there had not been such a declaration, then the Indenture Trustee shall, to
the fullest extent practicable, invest and reinvest funds in the Trust Accounts in one or more Permitted Investments. 
 Section 8.4
Release of Trust Estate. 
 (a) Subject to the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee
may, and when required by the provisions of this Indenture shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the
satisfaction of any conditions precedent or see to the application of any monies. 
 (b) The Indenture Trustee shall, at such time as there
are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 have been paid in full, release any remaining portion of the Trust Estate that secured the Notes from the lien of this Indenture and release to the Issuer
or any other Person entitled thereto any funds then on deposit in the Trust Accounts. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section (b) only upon receipt of an Issuer Request accompanied
by an Officer’s Certificate, an Opinion of Counsel addressed to the Indenture Trustee and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.1. 
 Section 8.5 Opinion of Counsel. The Indenture Trustee shall receive at least seven (7) days notice
when requested by the Issuer to take any action pursuant to Section 8.4(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, except in connection with any action contemplated by
Section 8.4(b), as a condition to such action, an Opinion of Counsel, addressed to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete such action, and concluding that all conditions
precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. 

  
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 ARTICLE IX 

SUPPLEMENTAL INDENTURES 

Section 9.1 Supplemental Indentures Without Consent of Noteholders. 

(a) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, without the consent of the Holders of any Notes, with prior
written notice to the Rating Agencies and the Administrator, at any time and from time to time, enter into one or more indentures supplemental hereto, in form satisfactory to the Indenture Trustee, for any of the following purposes: 

 

	 	(i)	to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property; 

  

	 	(ii)	to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Notes
contained; 

  

	 	(iii)	to add to the covenants of the Issuer, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Issuer; 

 

	 	(iv)	to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee; 

  

	 	(v)	to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or in any offering document
used in connection with the initial offer and sale of the Notes or to add any provisions to or change in any manner or eliminate any of the provisions of this Indenture which will not be inconsistent with other provisions of this Indenture;

  

	 	(vi)	to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or 

  

	 	(vii)	to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and
to add to this Indenture such other provisions as may be expressly required by the TIA; 

  
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 provided, however, that (i) no such supplemental indenture may materially adversely affect the
interests of any Noteholder, and (ii) no such supplemental indenture will be permitted unless an Opinion of Counsel is delivered to the Indenture Trustee to the effect that such supplemental indenture will not cause the Issuer to be
characterized for federal income tax purposes as an association taxable as a corporation or otherwise have any material adverse impact on the federal income taxation of any Notes Outstanding or any Noteholder. A supplemental indenture shall be
deemed not to materially adversely affect the interests of any Noteholder if (i) the Person requesting such supplemental indenture obtains and delivers to the Indenture Trustee an Opinion of Counsel to that effect or (ii) the Rating Agency
Condition is satisfied. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained. 

Section 9.2 Supplemental Indentures with Consent of Noteholders. 

(a) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, with the consent of the Holders of Notes evidencing not
less than 51% of the Note Balance of the Controlling Class and with prior notice to the Rating Agencies and the Administrator, by Act of such Holders delivered to the Issuer and the Indenture Trustee, at any time and from time to time, enter into
one or more indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that (i) no such supplemental indenture may materially adversely affect the interests of any Noteholder and (ii) no such supplemental indenture will be permitted unless an Opinion of Counsel is
delivered to the Indenture Trustee to the effect that such supplemental indenture will not cause the Issuer to be characterized for federal income tax purposes as an association taxable as a corporation or otherwise have any material adverse impact
on the federal income taxation of any Notes Outstanding or any Noteholder; and, provided further, that no such supplemental indenture may, without the consent of the Holder of each Outstanding Note affected by such supplemental indenture: 

 

	 	(i)	change any Class Final Distribution Date or the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the Note Rate applicable thereto or the Redemption
Price with respect thereto, change the provisions of this Indenture relating to the application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or interest on the Notes, or change any place of payment
where, or the coin or currency in which, any Note or the interest thereon is payable; 

  

	 	(ii)	impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of available funds, as provided in Article V, to the payment of any amount due on the Notes on or
after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); 

  
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	 	(iii)	reduce the percentage of the Note Balance or the Note Balance of the Controlling Class the consent of the Holders of which is required for any such supplemental indenture or for any waiver of compliance with the
provisions of this Indenture or of defaults hereunder and their consequences as provided in this Indenture; 

  

	 	(iv)	modify or alter (A) the provisions of the second proviso to the definition of the term “Outstanding” or (B) the definition of the term “Note Balance” or the definition of the term
“Controlling Class”; 

  

	 	(v)	reduce the percentage of the Note Balance the consent of the Holders of which is required to direct the Indenture Trustee to sell or liquidate the Trust Estate pursuant to Section 5.4 if the proceeds of such sale
would be insufficient to pay in full the principal amount of and accrued but unpaid interest on the Notes; 

  

	 	(vi)	reduce the percentage of the Note Balance of the Controlling Class the consent of the Holders of which is required for any such supplemental indenture amending the provisions of this Indenture which specify the
applicable percentage of the Note Balance of the Controlling Class the consent of which is required for such supplemental indenture or the amendment of any other Transaction Document; 

 

	 	(vii)	affect the calculation of the amount of interest on or principal of the Notes payable on any Distribution Date, including the calculation of any of the individual components of such calculation; 

 

	 	(viii)	modify any of the provisions of this Indenture in such a manner as to affect the rights of the Holders of the Notes to the benefit of any provisions for the mandatory redemption of the Notes; or 

 

	 	(ix)	permit the creation of any Lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein, terminate the lien
of this Indenture on any such collateral at any time subject hereto or deprive the Holder of any Note of the security provided by the lien of this Indenture. 

(b) It shall not be necessary for any Act of Noteholders under this Section 9.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.2, the Indenture

  
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Trustee shall mail to the Holders of the Notes to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. 

Section 9.3 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive and, subject to Section 6.1 and Section 6.2, shall be fully protected in relying
upon an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that all conditions precedent in this Indenture to the execution and delivery of such supplemental indenture have
been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.
Notwithstanding anything in this Indenture to the contrary, no supplemental indenture shall be effective without the prior written consent of the Owner Trustee if the supplemental indenture would adversely modify the amount or timing of
distributions to be made to the Owner Trustee under this Indenture. 
 Section 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and shall be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 

Section 9.5 Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. 

Section 9.6 Reference in Notes to Supplemental Indentures. Any Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes. 

  
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 ARTICLE X 

REDEMPTION OF NOTES 

Section 10.1 Redemption. 

(a) The Notes are subject to redemption in whole, but not in part, at the direction of the Servicer, pursuant to Section 9.1(a) of the
Sale and Servicing Agreement, on any Distribution Date on which the Servicer exercises its option to purchase the assets of the Issuer pursuant to such Section 9.1(a), and the amount paid by the Servicer shall be treated as collections in
respect of the Receivables and applied to pay all amounts due to the Servicer under the Sale and Servicing Agreement and the unpaid principal amount of the Notes plus all accrued and unpaid interest (including any overdue interest) thereon. If the
Notes are to be redeemed pursuant to this Section 10.1(a), the Issuer shall furnish or cause the Servicer to furnish notice of such redemption to the Depositor, the Indenture Trustee, the Owner Trustee, the Rating Agencies and the Administrator
not later than ten (10) days prior to the Redemption Date and the Issuer shall deposit the Redemption Price of the Notes to be redeemed in the Note Payment Account by 10:00 A.M. (New York City time) on the Redemption Date, whereupon all such
Notes shall be due and payable on the Redemption Date. 
 (b) In the event that the assets of the Issuer are purchased by the Servicer
pursuant to Section 9.1(a) of the Sale and Servicing Agreement, all amounts on deposit in the Note Payment Account shall be paid to the Noteholders up to the unpaid principal amount of the Notes and all accrued and unpaid interest thereon. If
such amounts are to be paid to Noteholders pursuant to this Section 10.1(b), the Issuer shall, to the extent practicable, furnish or cause the Servicer to furnish notice of such event to the Depositor, the Indenture Trustee, the Rating Agencies
and the Administrator not later than ten (10) days prior to the Redemption Date, whereupon all such amounts shall be payable on the Redemption Date. 

Section 10.2 Form of Redemption Notice. 

(a) Notice of redemption of the Notes under Section 10.1(a) shall be given by the Indenture Trustee by first-class mail, postage prepaid,
or by facsimile mailed or transmitted promptly following receipt of notice from the Issuer or the Servicer pursuant to Section 10.1(a), but not later than ten (10) days prior to the applicable Redemption Date, to each Holder of the Notes
as of the close of business on the second Record Date preceding the applicable Redemption Date, at such Holder’s address or facsimile number appearing in the Note Register. 

(b) All notices of redemption shall state: 
  

	 	(i)	the Redemption Date; 

  

	 	(ii)	the Redemption Price; and 

  

	 	(iii)	the place where the Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Issuer to be maintained as provided in Section 3.2). 

(c) Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. Any failure to
give notice of redemption, or any defect therein, to any Holder of any Note shall not, however, impair or affect the validity of the redemption of any other Note. 

  
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 Section 10.3 Notes Payable on Redemption Date. The Notes to be redeemed shall,
following notice of redemption as required by Section 10.2 (in the case of redemption pursuant to Section 10.1(a)), become due and payable on the Redemption Date at the Redemption Price and (unless the Issuer shall default in the payment
of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating the Redemption Price. 

ARTICLE XI 
 MISCELLANEOUS 

Section 11.1 Compliance Certificates and Opinions, etc. 

(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section 11.1, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or
opinion need be furnished. 
 (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this
Indenture shall include: 
  

	 	(i)	a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto; 

 

	 	(ii)	a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 

 

	 	(iii)	a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such
covenant or condition has been complied with; and 

  

	 	(iv)	a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with. 

(c) Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in this Indenture, deliver to the Indenture Trustee an Officer’s
Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such deposit) to the Issuer of the Collateral or other property or securities to be so deposited. 

  
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 (d) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s
Certificate certifying or stating the opinion of any signer thereof as to the matters described in Section 11.1(c), the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value to
the Issuer of the property or securities to be so deposited and of all other such property or securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the
certificates furnished pursuant to Section 11.1(c) and this Section 11.1(d), is 10% or more of the Note Balance, but such a certificate need not be furnished with respect to any property or securities so deposited if the fair value thereof
to the Issuer as set forth in the related Officer’s Certificate is less than $25,000 or less than 1% of the Note Balance. 
 (e)
Whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as
to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in
contravention of the provisions hereof. 
 (f) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s
Certificate certifying or stating the opinion of any signer thereof as to the matters described in Section 11.1(e), the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of
the property or securities and of all other property, other than property as contemplated by Section 11.1(g) or securities released from the lien of this Indenture since the commencement of the then-current calendar year, as set forth in the
certificates required by Section 11.1(e) and this Section 11.1(f), is 10% or more of the Note Balance, but such a certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth
in the related Officer’s Certificate is less than $25,000 or less than 1% of the Note Balance. 
 (g) Notwithstanding Section 2.10
or any other provisions of this Section 11.1, the Issuer may, without compliance with the requirements of the other provisions of this Section 11.1, (i) collect, liquidate, sell or otherwise dispose of Receivables and Financed
Vehicles as and to the extent permitted or required by the Transaction Documents and (ii) make cash payments out of the Trust Accounts as and to the extent permitted or required by the Transaction Documents. 

Section 11.2 Form of Documents Delivered to Indenture Trustee. 

(a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 

  
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 (b) Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters
upon which such officer’s certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more officers of the Depositor, the Seller, the Servicer, the Administrator or the Issuer, stating that the information with respect to such factual matters is in the possession of the Depositor, the Seller, the Servicer,
the Administrator or the Issuer, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. 

(c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 
 (d) Whenever in this Indenture,
in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with
any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such
case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon
the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. 
 Section 11.3 Acts of
Noteholders. 
 (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by the Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by the Noteholders in person or by agents duly appointed in writing, and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 11.3. 

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient. 
 (c) The ownership of Notes shall be proved by the Note Register. 

  
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 (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the
Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Note. 
 Section 11.4 Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies. 
 (a) Any request, demand, authorization, direction, notice, instruction, consent, waiver, Act of Noteholders or
other document provided or permitted by this Indenture shall be in writing and if such request, demand, authorization, direction, notice, instruction, consent, waiver, Act of Noteholders or other document is to be made upon, given or furnished to or
filed with: 
  

	 	(i)	the Indenture Trustee by any Noteholder or by the Issuer, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office;

  

	 	(ii)	the Issuer by the Indenture Trustee or by any Noteholder, shall be sufficient for every purpose hereunder if in writing and sent by first-class mail, postage prepaid, or overnight courier to the Issuer addressed to:
CarMax Auto Owner Trust 2014-3, in care of U.S. Bank Trust National Association, at its Corporate Trust Office as defined in the Trust Agreement, with a copy to the Administrator at 12800 Tuckahoe Creek Parkway, Richmond, Virginia 23238, Attention:
Treasury Department, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer or the Administrator; 

  

	 	(iii)	the Depositor by the Indenture Trustee, the Servicer or any Noteholder, shall be sufficient for every purpose hereunder if in writing and sent by first-class mail, postage prepaid, or overnight courier to the Depositor
addressed to CarMax Auto Funding LLC at 12800 Tuckahoe Creek Parkway, Suite 400, Richmond, Virginia 23238, Attention: Treasurer; or 

  

	 	(iv)	the Administrator by the Indenture Trustee, the Issuer, the Servicer, the Depositor or any Noteholder, shall be sufficient for every purpose hereunder if in writing and sent by first-class mail, postage prepaid, or
overnight courier to the Administrator addressed to CarMax Business Services, LLC at 12800 Tuckahoe Creek Parkway, Richmond, Virginia 23238, Attention: Treasury Department. 

(b) Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, telecopied or mailed by certified mail, return receipt requested, to (i) in the case of Moody’s, at the following 

  
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address: Moody’s Investors Service, Inc., ABS Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007 and (ii) in the case of
Standard & Poor’s, at the following address: Standard & Poor’s Ratings Services, a division of Standard & Poor’s Financial Services LLC, 55 Water Street,
43rd Floor, New York, New York, 10041, Attention: Asset Backed Surveillance Department. 

Section 11.5 Notices to Noteholders; Waiver. 

(a) Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at its address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. 

(b) Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver. 
 (c) If, by reason of the suspension of regular mail service as a result of a strike, work
stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to
the Indenture Trustee shall be deemed to be a sufficient giving of such notice. 
 (d) Where this Indenture provides for notice to the
Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default. 

Section 11.6 Alternate Payment and Notice Provisions. Notwithstanding any other provisions of this Indenture or any of the Notes
to the contrary, the Issuer may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer shall furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee shall cause payments to be made and notices to be given in accordance with such agreements. 

Section 11.7 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision
hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. The provisions of TIA Sections 310 through 317 that impose duties on any Person (including the
provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. 

  
 70 

 Section 11.8 Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. 

Section 11.9 Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors, co-trustees and agents. 

Section 11.10 Severability. If any provision of this Indenture or the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions of this Indenture and the Notes shall not in any way be affected or impaired thereby. 

Section 11.11 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the Noteholders, any other party secured hereunder and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture. 
 Section 11.12 Legal Holiday. If the date on which any payment is due shall not be a Business Day,
then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date. 
 Section 11.13 GOVERNING LAW. THIS INDENTURE SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS INDENTURE SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

Section 11.14 Counterparts. This Indenture may be executed in any number of counterparts, each of which counterparts when so
executed shall be deemed to be an original, and all of which counterparts shall together constitute but one and the same instrument. 

Section 11.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording office, such
recording shall be effected by the Issuer at its expense and shall be accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. 

  
 71 

 Section 11.16 Trust Obligation. No recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith against (i) the Indenture Trustee
or the Owner Trustee in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in
its individual capacity, of any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacities), and except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI, Article VII and Article VIII of the Trust Agreement. 

Section 11.17 No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder or Note Owner, by accepting
a Note or beneficial interest in a Note, as the case may be, hereby covenant and agree that they will not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, or cooperate with
or encourage others to institute against the Depositor or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any United States federal or State bankruptcy or similar law in
connection with any obligations relating to the Notes, this Indenture or any of the other Transaction Documents. 
 Section 11.18
Inspection. The Issuer shall, with reasonable prior notice, permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine the books of account, records, reports and other papers of the Issuer,
to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. 

Section 11.19 Third-Party Beneficiaries. This Indenture shall inure to the benefit of and be binding upon the parties hereto, the
Owner Trustee, the Noteholders, the Certificateholders and their respective successors and permitted assigns. Except as otherwise provided in this Article XI, no other Person shall have any right or obligation hereunder. 

Section 11.20 Limitation on Recourse to CarMax Funding. Notwithstanding anything to the contrary contained herein, the Depositor
shall only be required to pay (i) any fees, expenses, indemnities or other liabilities that it may incur under the Transaction Documents from funds available pursuant to, and in accordance with, the applicable payment priorities set forth in
the 

  
 72 

 
Transaction Documents and (ii) to the extent the Depositor has additional funds available (other than funds described in the preceding clause (i)) that would be in excess of amounts that
would be necessary to pay the debt and other obligations of the Depositor in accordance with the Depositor’s certificate of formation, operating agreement and all financing documents to which the Depositor is a party. The agreement set forth in
the preceding sentence shall constitute a subordination agreement for purposes of Section 510(a) of the Bankruptcy Code. In addition, no amount owing by the Depositor under any Transaction Document in excess of liabilities that it is required
to pay in accordance with the preceding sentence shall constitute a “claim” (as defined in Section 101(5) of the Bankruptcy Code) against it. 

[SIGNATURE PAGE FOLLOWS] 

  
 73 

 IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly
executed by their respective officers, thereunto duly authorized and duly attested, all as of the day and year first above written. 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	 /s/ Edwin J. Janis

	Name:	 	Edwin J. Janis
	Title:	 	Vice President
	
	 WELLS FARGO BANK, NATIONAL ASSOCIATION,

not in its individual capacity but solely as Indenture Trustee

		
	By:	 	 /s/ Tara H. Anderson

	Name:	 	Tara H. Anderson
	Title:	 	Vice President

 Indenture (CAOT 2014-3) 

 APPENDIX A 

Additional Representations and Warranties 
  

	1.	This Indenture creates a valid and continuing “security interest” (as defined in the Relevant UCC) in the Receivables in favor of the Indenture Trustee, which security interest is prior to all other Liens and
is enforceable as such as against creditors of and purchasers from the Issuer. 

  

	2.	With respect to each Receivable, the Issuer has taken all steps necessary to perfect its security interest against the related Obligor in the related Financed Vehicle. 

 

	3.	The Receivables constitute “tangible chattel paper” (as defined in the Relevant UCC). 

  

	4.	The Issuer owns and has good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person. 

 

	5.	The Issuer has caused or will cause prior to the Closing Date the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law necessary to perfect the
security interest in the Receivables granted to the Indenture Trustee under this Indenture. 

  

	6.	Other than the security interest granted to the Indenture Trustee under the Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables. The Issuer
has not authorized the filing of and is not aware of any financing statements against the Seller, the Depositor or the Issuer that include a description of collateral covering the Receivables other than the financing statements relating to the
security interests granted to the Depositor, the Issuer and the Indenture Trustee under the Transaction Documents or any financing statement that has been terminated. The Issuer is not aware of any judgment or tax lien filings against the Seller,
the Depositor or the Issuer. 

  

	7.	All financing statements filed or to be filed against the Issuer in favor of the Indenture Trustee in connection herewith describing the Receivables contain a statement 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.” 

  
 App. A 

 Exhibit A-1 

Form of Class A-1 Note 
 UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]    
		
	NO. [    ]	  	CUSIP NO. 14313TAA7        

 CARMAX AUTO OWNER TRUST 2014-3 

0.19000% CLASS A-1 ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [        ] DOLLARS payable on each Distribution Date in an amount
equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class A-1 Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended, supplemented or otherwise
modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the “Indenture
Trustee”); provided, however, that, if not paid prior to such date, the unpaid principal amount of this Class A-1 Note shall be due and payable on the earlier of the August 17, 2015 Distribution Date (the
“Class A-1 Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains rules
as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this Class A-1 Note at the rate per annum shown
above on each Distribution Date, until the principal of this Class A-1 Note is paid or made available for payment, on the principal amount of this Class A-1 Note outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on such preceding Distribution Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Class A-1 Note shall accrue for each Distribution Date from and including the

  
 Ex. A-1-1 

 
preceding Distribution Date (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing Date) to but excluding such Distribution Date.
Interest shall be computed on the basis of actual days elapsed and a 360-day year. Interest on this Class A-1 Note on each Distribution Date shall equal the product of (i) the rate per annum shown above, (ii) the principal amount of
this Class A-1 Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date) and (iii) the actual number of days in the applicable interest period divided by
360; provided, however, that the interest payable on this Class A-1 Note on September 15, 2014 shall equal $[        ]. The principal of and interest on this Class A-1 Note shall
be paid in the manner specified on the reverse hereof. 
 “Distribution Date” means the 15th day of each month or, if such
15th day is not a Business Day, the following Business Day, commencing on September 15, 2014. 
 The principal of and interest on this
Class A-1 Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class A-1 Note shall be
applied first to interest due and payable on this Class A-1 Note as provided above and then to the unpaid principal of this Class A-1 Note. 

Reference is hereby made to the further provisions of this Class A-1 Note set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if fully set forth on the face of this Class A-1 Note. 
 Unless the certificate of
authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile signature, this Class A-1 Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose.

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. A-1-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class A-1 Note to be duly executed as of the
date set forth below. 
 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class A-1 Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	not in its individual capacity but solely as Indenture Trustee
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. A-1-3 

 [REVERSE OF CLASS A-1 NOTE] 

This Class A-1 Note is one of a duly authorized issue of Notes of the Issuer, designated as its 0.19000% Class A-1 Asset-backed
Notes, which, together with the 0.55% Class A-2 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.04% Class B Asset-backed Notes, the 2.29% Class C Asset-backed Notes and the
2.79% Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 

The Class A-1 Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-2 Notes, Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes are subordinated to the Class A-1 Notes to the extent set forth in the Indenture and the Sale and
Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class A-1 Note shall be due and payable on the
earlier of the Class A-1 Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than 51% of the Note
Balance of the Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-1 Notes shall be made pro rata to the Holders entitled
thereto if the Notes have been declared immediately due and payable. 
 Payments of interest on this Class A-1 Note due and payable on
any Distribution Date, together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class A-1 Note, shall be made by check mailed to the Person whose name appears as
the Holder of this Class A-1 Note (or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the account
designated in writing to the Indenture Trustee by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class A-1 Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of such Record Date without requiring that this Class A-1 Note be submitted for notation of payment. Any reduction in the principal amount of this Class A-1 Note (or any one or
more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A-1 Note and of any Class A-1 Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A-1 Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the 

  
 Ex. A-1-4 

 
Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and
the amount then due and payable shall be payable only upon presentation and surrender of this Class A-1 Note at the Indenture Trustee’s Corporate Trust Office or at the office of the Indenture Trustee’s agent appointed for such
purposes located in the Borough of Manhattan, The City of New York. 
 The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Rate to the extent lawful. 
 As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the
manner and to the extent described in the Indenture and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to
certain limitations set forth therein, the transfer of this Class A-1 Note may be registered on the Note Register upon surrender of this Class A-1 Note for registration of transfer at the office or agency designated by the Issuer pursuant
to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature
guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, and thereupon one or more new Class A-1 Notes in any authorized denomination and in the same aggregate principal amount will be issued
to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class A-1 Note, but the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration of transfer or exchange. 
 Each Noteholder or Note Owner,
by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or any successor or assign of the Indenture Trustee or the Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. A-1-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class A-1 Note is issued with the intention that, for federal, State and local income,
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to
treat the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to
the due presentment for registration of transfer of this Class A-1 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A-1 Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A-1 Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such
agent shall be affected by notice to the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf
of the Issuer, and the Indenture Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51%
of the Note Balance of the Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling

  
 Ex. A-1-6 

 
Class or the Holder of this Class A-1 Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future Holders of this Class A-1 Note and of
any Class A-1 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A-1 Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS A-1 NOTE AND THE INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class A-1 Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class A-1 Note or the performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class A-1 Note. 

  
 Ex. A-1-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto              

 
  
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

	
	                                      
                                         
                    */
	
	Signature Guaranteed:
	
	                                      
                                         
                    */

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. A-1-8 

 Exhibit A-2 

Form of Class A-2 Note 
 UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]    
		
	NO. [    ]	  	CUSIP NO. 14313TAB5

 CARMAX AUTO OWNER TRUST 2014-3 

0.55% CLASS A-2 ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [        ] DOLLARS payable on each Distribution Date in an amount
equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class A-2 Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended, supplemented or otherwise
modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the “Indenture
Trustee”); provided, however, that principal of this Class A-2 Note will not be due and payable until the Class A-1 Notes have been paid in full; and, provided further, that, if not paid prior to such
date, the unpaid principal amount of this Class A-2 Note shall be due and payable on the earlier of the August 15, 2017 Distribution Date (the “Class A-2 Final Distribution Date”) and the Redemption Date, if any, pursuant
to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains rules as to construction that shall be applicable hereto. 

The Issuer shall pay interest on this Class A-2 Note at the rate per annum shown above on each Distribution Date, until the principal of
this Class A-2 Note is paid or made available for payment, on the principal amount of this Class A-2 Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution
Date), subject to certain limitations contained in Section 3.1 of the Indenture. 

  
 Ex. A-2-1 

 
Interest on this Class A-2 Note shall accrue for each Distribution Date from and including the 15th day of the preceding month (or, in the case of the initial Distribution Date or if no
interest has been paid, from and including the Closing Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on
this Class A-2 Note on each Distribution Date shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the principal amount of this Class A-2 Note outstanding on the preceding Distribution Date (after
giving effect to all payments of principal made on such preceding Distribution Date); provided, however, that the interest payable on this Class A-2 Note on September 15, 2014 shall equal
$[        ]. The principal of and interest on this Class A-2 Note shall be paid in the manner specified on the reverse hereof. 

“Distribution Date” means the 15th day of each month or, if such 15th day is not a Business Day, the following Business Day,
commencing on September 15, 2014. 
 The principal of and interest on this Class A-2 Note are payable in such coin or currency of
the United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class A-2 Note shall be applied first to interest due and payable on this Class A-2
Note as provided above and then to the unpaid principal of this Class A-2 Note. 
 Reference is hereby made to the further provisions
of this Class A-2 Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth on the face of this Class A-2 Note. 

Unless the certificate of authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile
signature, this Class A-2 Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. A-2-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class A-2 Note to be duly executed as of the
date set forth below. 
 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class A-2 Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	not in its individual capacity but solely as Indenture Trustee
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. A-2-3 

 [REVERSE OF CLASS A-2 NOTE] 

This Class A-2 Note is one of a duly authorized issue of Notes of the Issuer, designated as its 0.55% Class A-2 Asset-backed Notes,
which, together with the 0.19000% Class A-1 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.04% Class B Asset-backed Notes, the 2.29% Class C Asset-backed Notes and the 2.79%
Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class A-2 Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class A-2 Notes are subordinated to the Class A-1 Notes to the extent set forth in the
Indenture and the Sale and Servicing Agreement. The Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes are subordinated to the Class A-2 Notes to the extent set forth in the Indenture and
the Sale and Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class A-2 Note shall be due and
payable on the earlier of the Class A-2 Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than
51% of the Note Balance of the Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes shall be made pro rata to the
Holders entitled thereto if the Notes have been declared immediately due and payable. 
 Payments of interest on this Class A-2 Note
due and payable on any Distribution Date, together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class A-2 Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Class A-2 Note (or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the
account designated in writing to the Indenture Trustee by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class A-2 Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of such Record Date without requiring that this Class A-2 Note be submitted for notation of payment. Any reduction in the principal amount of this Class A-2 Note (or any one
or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A-2 Note and of any Class A-2 Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A-2

  
 Ex. A-2-4 

 
Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Class A-2 Note at the Indenture Trustee’s
Corporate Trust Office or at the office of the Indenture Trustee’s agent appointed for such purposes located in the Borough of Manhattan, The City of New York. 

The Issuer shall pay interest on overdue installments of interest at the Class A-2 Rate to the extent lawful. 

As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations set forth therein, the transfer of
this Class A-2 Note may be registered on the Note Register upon surrender of this Class A-2 Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor
institution” meeting the requirements of the Note Registrar, and thereupon one or more new Class A-2 Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer or exchange of this Class A-2 Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any
successor or assign of the Indenture Trustee or the Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. A-2-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class A-2 Note is issued with the intention that, for federal, State and local income,
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to
treat the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to
the due presentment for registration of transfer of this Class A-2 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A-2 Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A-2 Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such
agent shall be affected by notice to the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf
of the Issuer, and the Indenture Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51%
of the Note Balance of the Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on 

  
 Ex. A-2-6 

 
behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling Class or the Holder of this Class A-2 Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future
Holders of this Class A-2 Note and of any Class A-2 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A-2 Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS A-2 NOTE AND THE INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class A-2 Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class A-2 Note or the performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or in this Class A-2 Note. 

  
 Ex. A-2-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

	
	                                      
                                         
                    */
	
	Signature Guaranteed:
	
	                                      
                                         
                    */

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. A-2-8 

 Exhibit A-3 

Form of Class A-3 Note 
 UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]    
		
	NO. [    ]	  	CUSIP NO. 14313TAC3

 CARMAX AUTO OWNER TRUST 2014-3 

1.16% CLASS A-3 ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [        ] DOLLARS payable on each Distribution Date in an amount
equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class A-3 Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended, supplemented or otherwise
modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the “Indenture
Trustee”); provided, however, that, except under certain limited circumstances described in the Indenture, principal of this Class A-3 Note will not be due and payable until the Class A-1 Notes and the Class A-2
Notes have been paid in full; and, provided further, that, if not paid prior to such date, the unpaid principal amount of this Class A-3 Note shall be due and payable on the earlier of the June 17, 2019 Distribution Date (the
“Class A-3 Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains rules
as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this Class A-3 Note at the rate per annum shown
above on each Distribution Date, until the principal of this Class A-3 Note is paid or made available for payment, on the principal amount of this Class A-3 Note outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on such preceding 

  
 Ex. A-3-1 

 
Distribution Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Class A-3 Note shall accrue for each Distribution Date from and including
the 15th day of the preceding month (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest
shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on this Class A-3 Note on each Distribution Date shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the
principal amount of this Class A-3 Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date); provided, however, that the interest payable on
this Class A-3 Note on September 15, 2014 shall equal $[        ]. The principal of and interest on this Class A-3 Note shall be paid in the manner specified on the reverse hereof. 

“Distribution Date” means the 15th day of each month or, if such 15th day is not a Business Day, the following Business Day,
commencing on September 15, 2014. 
 The principal of and interest on this Class A-3 Note are payable in such coin or currency of
the United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class A-3 Note shall be applied first to interest due and payable on this Class A-3
Note as provided above and then to the unpaid principal of this Class A-3 Note. 
 Reference is hereby made to the further provisions
of this Class A-3 Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth on the face of this Class A-3 Note. 

Unless the certificate of authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile
signature, this Class A-3 Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. A-3-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class A-3 Note to be duly executed as of the
date set forth below. 
 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class A-3 Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	not in its individual capacity but solely as Indenture Trustee
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. A-3-3 

 [REVERSE OF CLASS A-3 NOTE] 

This Class A-3 Note is one of a duly authorized issue of Notes of the Issuer, designated as its 1.16% Class A-3 Asset-backed Notes,
which, together with the 0.19000% Class A-1 Asset-backed Notes, the 0.55% Class A-2 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.04% Class B Asset-backed Notes, the 2.29% Class C Asset-backed Notes and the 2.79%
Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class A-3 Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class A-3 Notes are subordinated to the Class A-1 Notes and the Class A-2 Notes to the
extent set forth in the Indenture and the Sale and Servicing Agreement. The Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes are subordinated to the Class A-3 Notes to the extent set forth in the Indenture and
the Sale and Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class A-3 Note shall be due and
payable on the earlier of the Class A-3 Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than
51% of the Note Balance of the Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-3 Notes shall be made pro rata to the
Holders entitled thereto if the Notes have been declared immediately due and payable. 
 Payments of interest on this Class A-3 Note
due and payable on any Distribution Date, together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class A-3 Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Class A-3 Note (or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the
account designated in writing to the Indenture Trustee by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class A-3 Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of such Record Date without requiring that this Class A-3 Note be submitted for notation of payment. Any reduction in the principal amount of this Class A-3 Note (or any one
or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A-3 Note and of any Class A-3 Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A-3

  
 Ex. A-3-4 

 
Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Class A-3 Note at the Indenture Trustee’s
Corporate Trust Office or at the office of the Indenture Trustee’s agent appointed for such purposes located in the Borough of Manhattan, The City of New York. 

The Issuer shall pay interest on overdue installments of interest at the Class A-3 Rate to the extent lawful. 

As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations set forth therein, the transfer of
this Class A-3 Note may be registered on the Note Register upon surrender of this Class A-3 Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor
institution” meeting the requirements of the Note Registrar, and thereupon one or more new Class A-3 Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer or exchange of this Class A-3 Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any
successor or assign of the Indenture Trustee or the Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. A-3-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class A-3 Note is issued with the intention that, for federal, State and local income,
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to
treat the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to
the due presentment for registration of transfer of this Class A-3 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A-3 Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A-3 Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such
agent shall be affected by notice to the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf
of the Issuer, and the Indenture Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51%
of the Note Balance of the Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on 

  
 Ex. A-3-6 

 
behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling Class or the Holder of this Class A-3 Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future
Holders of this Class A-3 Note and of any Class A-3 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A-3 Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS A-3 NOTE AND THE INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class A-3 Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class A-3 Note or the performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or in this Class A-3 Note. 

  
 Ex. A-3-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

	
	                                      
                                         
                    */
	
	Signature Guaranteed:
	
	                                      
                                         
                    */

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. A-3-8 

 Exhibit A-4 

Form of Class A-4 Note 
 UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]  
		
	NO. [    ]	  	CUSIP NO. 14313TAD1

 CARMAX AUTO OWNER TRUST 2014-3 

1.73% CLASS A-4 ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [        ] DOLLARS payable on each Distribution Date in an amount
equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class A-4 Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended, supplemented or otherwise
modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the “Indenture
Trustee”); provided, however, that, except under certain limited circumstances described in the Indenture, principal of this Class A-4 Note will not be due and payable until the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes have been paid in full; and, provided further, that, if not paid prior to such date, the unpaid principal amount of this Class A-4 Note shall be due and payable on the earlier of the
February 18, 2020 Distribution Date (the “Class A-4 Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article
I of the Indenture, which also contains rules as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this
Class A-4 Note at the rate per annum shown above on each Distribution Date, until the principal of this Class A-4 Note is paid or made available for payment, on the principal amount of this Class A-4 Note outstanding on the preceding

  
 Ex. A-4-1 

 
Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date), subject to certain limitations contained in Section 3.1 of the Indenture.
Interest on this Class A-4 Note shall accrue for each Distribution Date from and including the 15th day of the preceding month (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing
Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on this Class A-4 Note on each Distribution Date
shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the principal amount of this Class A-4 Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on
such preceding Distribution Date); provided, however, that the interest payable on this Class A-4 Note on September 15, 2014 shall equal $[        ]. The principal of and interest on
this Class A-4 Note shall be paid in the manner specified on the reverse hereof. 
 “Distribution Date” means the 15th
day of each month or, if such 15th day is not a Business Day, the following Business Day, commencing on September 15, 2014. 
 The
principal of and interest on this Class A-4 Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this
Class A-4 Note shall be applied first to interest due and payable on this Class A-4 Note as provided above and then to the unpaid principal of this Class A-4 Note. 

Reference is hereby made to the further provisions of this Class A-4 Note set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if fully set forth on the face of this Class A-4 Note. 
 Unless the certificate of
authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile signature, this Class A-4 Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose.

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. A-4-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class A-4 Note to be duly executed as of the date
set forth below. 
 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class A-4 Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	 WELLS FARGO BANK, NATIONAL ASSOCIATION,

not in its individual capacity but solely as Indenture Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. A-4-3 

 [REVERSE OF CLASS A-4 NOTE] 

This Class A-4 Note is one of a duly authorized issue of Notes of the Issuer, designated as its 1.73% Class A-4 Asset-backed Notes,
which, together with the 0.19000% Class A-1 Asset-backed Notes, the 0.55% Class A-2 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 2.04% Class B Asset-backed Notes, the 2.29% Class C Asset-backed Notes and the 2.79%
Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class A-4 Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class A-4 Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes to the extent set forth in the Indenture and the Sale and Servicing Agreement. The Class B Notes, the Class C Notes and the Class D Notes are subordinated to the Class A-4 Notes to the extent set forth in the Indenture and
the Sale and Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class A-4 Note shall be due and
payable on the earlier of the Class A-4 Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than
51% of the Note Balance of the Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-4 Notes shall be made pro rata to the
Holders entitled thereto if the Notes have been declared immediately due and payable. 
 Payments of interest on this Class A-4 Note
due and payable on any Distribution Date, together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class A-4 Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Class A-4 Note (or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the
account designated in writing to the Indenture Trustee by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class A-4 Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of such Record Date without requiring that this Class A-4 Note be submitted for notation of payment. Any reduction in the principal amount of this Class A-4 Note (or any one
or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A-4 Note and of any Class A-4 Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A-4

  
 Ex. A-4-4 

 
Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Class A-4 Note at the Indenture Trustee’s
Corporate Trust Office or at the office of the Indenture Trustee’s agent appointed for such purposes located in the Borough of Manhattan, The City of New York. 

The Issuer shall pay interest on overdue installments of interest at the Class A-4 Rate to the extent lawful. 

As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations set forth therein, the transfer of
this Class A-4 Note may be registered on the Note Register upon surrender of this Class A-4 Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor
institution” meeting the requirements of the Note Registrar, and thereupon one or more new Class A-4 Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer or exchange of this Class A-4 Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any
successor or assign of the Indenture Trustee or the Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. A-4-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class A-4 Note is issued with the intention that, for federal, State and local income,
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to
treat the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to
the due presentment for registration of transfer of this Class A-4 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A-4 Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A-4 Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such
agent shall be affected by notice to the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf
of the Issuer, and the Indenture Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51%
of the Note Balance of the Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on 

  
 Ex. A-4-6 

 
behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling Class or the Holder of this Class A-4 Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future
Holders of this Class A-4 Note and of any Class A-4 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A-4 Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS A-4 NOTE AND THE INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class A-4 Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class A-4 Note or the performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or in this Class A-4 Note. 

  
 Ex. A-4-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

			
	  
	 	*/
	
	Signature Guaranteed:
		
	  
	 	*/

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. A-4-8 

 Exhibit B 

Form of Class B Note 
 UNLESS THIS NOTE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]  
		
	NO. [    ]	  	CUSIP NO. 14313TAE9

 CARMAX AUTO OWNER TRUST 2014-3 

2.04% CLASS B ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [            ] DOLLARS payable on each
Distribution Date in an amount equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class B Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended,
supplemented or otherwise modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the
“Indenture Trustee”); provided, however, that principal of this Class B Note will not be due and payable until the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
have been paid in full; and, provided further, that, if not paid prior to such date, the unpaid principal amount of this Class B Note shall be due and payable on the earlier of the March 16, 2020 Distribution Date (the
“Class B Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains rules
as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this Class B Note at the rate per annum shown above
on each Distribution Date, until the principal of this Class B Note is paid or made available for payment, on the principal amount of this Class B Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal
made on such preceding Distribution Date), 

  
 Ex. B-1 

 
subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Class B Note shall accrue for each Distribution Date from and including the 15th day of the
preceding month (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest shall be computed on
the basis of a 360-day year consisting of twelve 30-day months. Interest on this Class B Note on each Distribution Date shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the principal amount of this
Class B Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date); provided, however, that the interest payable on this Class B Note on
September 15, 2014 shall equal $[        ]. The principal of and interest on this Class B Note shall be paid in the manner specified on the reverse hereof. 

“Distribution Date” means the 15th day of each month or, if such 15th day is not a Business Day, the following Business Day,
commencing on September 15, 2014. 
 The principal of and interest on this Class B Note are payable in such coin or currency of the
United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class B Note shall be applied first to interest due and payable on this Class B Note as provided
above and then to the unpaid principal of this Class B Note. 
 Reference is hereby made to the further provisions of this Class B Note set
forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth on the face of this Class B Note. 

Unless the certificate of authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile
signature, this Class B Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. B-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class B Note to be duly executed as of the date
set forth below. 
 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class B Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	 WELLS FARGO BANK, NATIONAL ASSOCIATION,

not in its individual capacity but solely as Indenture Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. B-3 

 [REVERSE OF CLASS B NOTE] 

This Class B Note is one of a duly authorized issue of Notes of the Issuer, designated as its 2.04% Class B Asset-backed Notes, which,
together with the 0.19000% Class A-1 Asset-backed Notes, the 0.55% Class A-2 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.29% Class C Asset-backed Notes and the 2.79%
Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class B Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class B Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes to the extent set forth in the Indenture and the Sale and Servicing Agreement. The Class C Notes and the Class D Notes are subordinated to the Class B Notes to the extent set forth in the Indenture and the Sale and
Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class B Note shall be due and payable on the earlier
of the Class B Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than 51% of the Note Balance of the
Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class B Notes shall be made pro rata to the Holders entitled thereto if the Notes
have been declared immediately due and payable. 
 Payments of interest on this Class B Note due and payable on any Distribution Date,
together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class B Note, shall be made by check mailed to the Person whose name appears as the Holder of this Class B Note
(or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the account designated in writing to the Indenture Trustee
by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class B Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note
Register as of such Record Date without requiring that this Class B Note be submitted for notation of payment. Any reduction in the principal amount of this Class B Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class B Note on a 

  
 Ex. B-4 

 
Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such Distribution Date
by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Class B Note at the Indenture Trustee’s Corporate Trust Office or at
the office of the Indenture Trustee’s agent appointed for such purposes located in the Borough of Manhattan, The City of New York. 

The Issuer shall pay interest on overdue installments of interest at the Class B Rate to the extent lawful. 

As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations set forth therein, the transfer of
this Class B Note may be registered on the Note Register upon surrender of this Class B Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note Registrar, and thereupon one or more new Class B Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will
be charged for any registration of transfer or exchange of this Class B Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of
transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest
in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in
connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any successor or assign of the Indenture Trustee or the
Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. B-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class B Note is issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat
the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to the due
presentment for registration of transfer of this Class B Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class B Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class B Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to
the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture Trustee, with certain exceptions
therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51% of the Note Balance of the
Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling 

  
 Ex. B-6 

 
Class or the Holder of this Class B Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future Holders of this Class B Note and of any Class B
Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class B Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS B NOTE AND THE INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF
WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class B Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class B Note or the performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder shall have no
claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this Class B Note. 

  
 Ex. B-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

			
	  
	 	*/
	
	Signature Guaranteed:
		
	  
	 	*/

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. B-8 

 Exhibit C 

Form of Class C Note 
 UNLESS THIS NOTE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]    
		
	NO. [    ]	  	CUSIP NO. 14313TAF6

 CARMAX AUTO OWNER TRUST 2014-3 

2.29% CLASS C ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [            ] DOLLARS payable on each
Distribution Date in an amount equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class C Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended,
supplemented or otherwise modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the
“Indenture Trustee”); provided, however, that principal of this Class C Note will not be due and payable until the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and
the Class B Notes have been paid in full; and, provided further, that, if not paid prior to such date, the unpaid principal amount of this Class C Note shall be due and payable on the earlier of the June 15, 2020 Distribution Date
(the “Class C Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this Class C Note at the rate per annum shown
above on each Distribution Date, until the principal of this Class C Note is paid or made available for payment, on the principal amount of this Class C Note outstanding on the preceding Distribution Date (after giving effect to all payments of
principal made on such preceding Distribution Date), 

  
 Ex. C-1 

 
subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Class C Note shall accrue for each Distribution Date from and including the 15th day of the
preceding month (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest shall be computed on
the basis of a 360-day year consisting of twelve 30-day months. Interest on this Class C Note on each Distribution Date shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the principal amount of this
Class C Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date); provided, however, that the interest payable on this Class C Note on
September 15, 2014 shall equal $[        ]. The principal of and interest on this Class C Note shall be paid in the manner specified on the reverse hereof. 

“Distribution Date” means the 15th day of each month or, if such 15th day is not a Business Day, the following Business Day,
commencing on September 15, 2014. 
 The principal of and interest on this Class C Note are payable in such coin or currency of the
United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class C Note shall be applied first to interest due and payable on this Class C Note as provided
above and then to the unpaid principal of this Class C Note. 
 Reference is hereby made to the further provisions of this Class C Note set
forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth on the face of this Class C Note. 

Unless the certificate of authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile
signature, this Class C Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. C-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class C Note to be duly executed as of the date
set forth below. 
  

					
	Dated: August 13, 2014	 	CARMAX AUTO OWNER TRUST 2014-3
			
		 	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

			
		 	By:	 	  

		 	Name:	 	
		 	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class C Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	 WELLS FARGO BANK, NATIONAL ASSOCIATION,

not in its individual capacity but solely as Indenture Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. C-3 

 [REVERSE OF CLASS C NOTE] 

This Class C Note is one of a duly authorized issue of Notes of the Issuer, designated as its 2.29% Class C Asset-backed Notes, which,
together with the 0.19000% Class A-1 Asset-backed Notes, the 0.55% Class A-2 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.04% Class B Asset-backed Notes and the 2.79%
Class D Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class C Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class C Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B Notes to the extent set forth in the Indenture and the Sale and Servicing Agreement. The Class D Notes are subordinated to the Class C Notes to the extent set forth in the Indenture and the Sale and
Servicing Agreement. 
 As described above, the entire unpaid principal amount of this Class C Note shall be due and payable on the earlier
of the Class C Final Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than 51% of the Note Balance of the
Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class C Notes shall be made pro rata to the Holders entitled thereto if the Notes
have been declared immediately due and payable. 
 Payments of interest on this Class C Note due and payable on any Distribution Date,
together with the installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class C Note, shall be made by check mailed to the Person whose name appears as the Holder of this Class C Note
(or one or more Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the account designated in writing to the Indenture Trustee
by such Person at least five (5) Business Days prior to the related Record Date, except that with respect to Class C Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note
Register as of such Record Date without requiring that this Class C Note be submitted for notation of payment. Any reduction in the principal amount of this Class C Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class C Note on a 

  
 Ex. C-4 

 
Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such Distribution Date
by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Class C Note at the Indenture Trustee’s Corporate Trust Office or at
the office of the Indenture Trustee’s agent appointed for such purposes located in the Borough of Manhattan, The City of New York. 

The Issuer shall pay interest on overdue installments of interest at the Class C Rate to the extent lawful. 

As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations set forth therein, the transfer of
this Class C Note may be registered on the Note Register upon surrender of this Class C Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note Registrar, and thereupon one or more new Class C Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will
be charged for any registration of transfer or exchange of this Class C Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of
transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest
in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in
connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any successor or assign of the Indenture Trustee or the
Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. C-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class C Note is issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat
the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to the due
presentment for registration of transfer of this Class C Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class C Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class C Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to
the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture Trustee, with certain exceptions
therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51% of the Note Balance of the
Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling 

  
 Ex. C-6 

 
Class or the Holder of this Class C Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future Holders of this Class C Note and of any Class C
Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class C Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 This Class C Note and the Indenture shall be construed in
accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws without giving effect to the conflicts of laws provisions thereof
which may require the application of the laws of any other jurisdiction (other than Section 5-1401 of the New York General Obligations Law). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class C Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class C Note or the performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder shall have no
claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this Class C Note. 

  
 Ex. C-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

			
	  
	 	*/
	
	Signature Guaranteed:
		
	  
	 	*/

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. C-8 

 Exhibit D 

Form of Class D Note 
 UNLESS THIS NOTE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH IN THE INDENTURE (AS DEFINED BELOW). THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  

			
	REGISTERED	  	$[        ]    
		
	NO. [    ]	  	CUSIP NO. 14313TAG4

 CARMAX AUTO OWNER TRUST 2014-3 

2.79% CLASS D ASSET-BACKED NOTE 

CarMax Auto Owner Trust 2014-3, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the
“Issuer”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of [            ] DOLLARS payable on each
Distribution Date in an amount equal to the aggregate amount, if any, payable from the Note Payment Account in respect of principal on the Class D Notes pursuant to Section 2.8 of the Indenture dated as of August 1, 2014 (as amended,
supplemented or otherwise modified and in effect from time to time, the “Indenture”) between the Issuer and Wells Fargo Bank, National Association, a national banking association, as Indenture Trustee (in such capacity, the
“Indenture Trustee”); provided, however, that principal of this Class D Note will not be due and payable until the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class B Notes and the Class C Notes have been paid in full; and, provided further, that, if not paid prior to such date, the unpaid principal amount of this Class D Note shall be due and payable on the earlier of the February 16,
2021 Distribution Date (the “Class D Final Distribution Date”) and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture,
which also contains rules as to construction that shall be applicable hereto. 
 The Issuer shall pay interest on this Class D Note at the
rate per annum shown above on each Distribution Date, until the principal of this Class D Note is paid or made available for payment, on the principal amount of this Class D Note outstanding on the preceding Distribution Date (after giving effect to
all payments of principal made on such preceding Distribution Date), 

  
 Ex. D-1 

 
subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Class D Note shall accrue for each Distribution Date from and including the 15th day of the
preceding month (or, in the case of the initial Distribution Date or if no interest has been paid, from and including the Closing Date) to but excluding the 15th day of the month in which such Distribution Date occurs. Interest shall be computed on
the basis of a 360-day year consisting of twelve 30-day months. Interest on this Class D Note on each Distribution Date shall equal one-twelfth of the product of (i) the rate per annum shown above and (ii) the principal amount of this
Class D Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on such preceding Distribution Date); provided, however, that the interest payable on this Class D Note on
September 15, 2014 shall equal $[        ]. The principal of and interest on this Class D Note shall be paid in the manner specified on the reverse hereof. 

“Distribution Date” means the 15th day of each month or, if such 15th day is not a Business Day, the following Business Day,
commencing on September 15, 2014. 
 The principal of and interest on this Class D Note are payable in such coin or currency of the
United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class D Note shall be applied first to interest due and payable on this Class D Note as provided
above and then to the unpaid principal of this Class D Note. 
 Reference is hereby made to the further provisions of this Class D Note set
forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth on the face of this Class D Note. 

Unless the certificate of authentication hereon has been executed by an authorized officer of the Indenture Trustee, by manual or facsimile
signature, this Class D Note shall not entitle the Holder hereof to any benefit under the Indenture or be valid for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 Ex. D-2 

 IN WITNESS WHEREOF, the Issuer has caused this Class D Note to be duly executed as of the date set forth below.

 Dated: August 13, 2014 
  

			
	CARMAX AUTO OWNER TRUST 2014-3
		
	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION,
 not in
its individual capacity but solely as Owner Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Class D Notes designated above and referred to in the within-mentioned Indenture. 

Dated: August 13, 2014 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	not in its individual capacity but solely as Indenture Trustee
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 Ex. D-3 

 [REVERSE OF CLASS D NOTE] 

This Class D Note is one of a duly authorized issue of Notes of the Issuer, designated as its 2.79% Class D Asset-backed Notes, which,
together with the 0.19000% Class A-1 Asset-backed Notes, the 0.55% Class A-2 Asset-backed Notes, the 1.16% Class A-3 Asset-backed Notes, the 1.73% Class A-4 Asset-backed Notes, the 2.04% Class B Asset-backed Notes and the 2.29%
Class C Asset-backed Notes (collectively, the “Notes”), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are subject to all terms of the Indenture. 
 The
Class D Notes are and shall be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class D Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes and the Class C Notes to the extent set forth in the Indenture and the Sale and Servicing Agreement. 

As described above, the entire unpaid principal amount of this Class D Note shall be due and payable on the earlier of the Class D Final
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes, together with accrued and unpaid interest thereon through the date of
acceleration, shall be due and payable on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class have
declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class D Notes shall be made pro rata to the Holders entitled thereto if the Notes have been declared
immediately due and payable. 
 Payments of interest on this Class D Note due and payable on any Distribution Date, together with the
installment of principal, if any, due and payable on such Distribution Date, to the extent not in full payment of this Class D Note, shall be made by check mailed to the Person whose name appears as the Holder of this Class D Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the Record Date preceding such Distribution Date or by wire transfer in immediately available funds to the account designated in writing to the Indenture Trustee by such Person
at least five (5) Business Days prior to the related Record Date, except that with respect to Class D Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of such
Record Date without requiring that this Class D Note be submitted for notation of payment. Any reduction in the principal amount of this Class D Note (or any one or more Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Class D Note and of any Class D Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided
in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class D Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the 

  
 Ex. D-4 

 
Issuer, shall notify the Person who was the Holder hereof as of the Record Date preceding such Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and
the amount then due and payable shall be payable only upon presentation and surrender of this Class D Note at the Indenture Trustee’s Corporate Trust Office or at the office of the Indenture Trustee’s agent appointed for such purposes
located in the Borough of Manhattan, The City of New York. 
 The Issuer shall pay interest on overdue installments of interest at the Class
D Rate to the extent lawful. 
 As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the
extent described in the Indenture and the Sale and Servicing Agreement. 
 As provided in the Indenture, and subject to certain limitations
set forth therein, the transfer of this Class D Note may be registered on the Note Register upon surrender of this Class D Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible
guarantor institution” meeting the requirements of the Note Registrar, and thereupon one or more new Class D Notes in any authorized denomination and in the same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer or exchange of this Class D Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange. 
 Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any holder of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity, or any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or any
successor or assign of the Indenture Trustee or the Owner Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 

Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that such Noteholder or Note Owner shall not at any time institute against the Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Certificates, the Indenture or any of the other Transaction Documents. 

  
 Ex. D-5 

 Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a
beneficial interest in this Note, represents and warrants that either (a) it is not acquiring the Note (or an interest therein) with the plan assets of any (i) “employee benefit plan” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to the fiduciary requirements of ERISA, (ii) “plan” described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh plans, that is subject to the provisions of Section 4975 of the Code, or (iii) employee benefit plan or arrangement not subject to Title I of ERISA or Section 4975 of the Code; or (b) the acquisition and
holding of the Note will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any substantially similar applicable law. 

Each Noteholder or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees to
provide to the Indenture Trustee, any Paying Agent or the Issuer, upon its request, the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, the Noteholder FATCA Information. In addition, each Noteholder
or Note Owner, by its acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, agrees that the Indenture Trustee has the right to withhold any amounts of interest (properly withholdable under law and without any
corresponding gross-up) payable to a Noteholder or holder of an interest in a Note that fails to comply with the requirements of the preceding sentence. 

The Issuer has entered into the Indenture and this Class D Note is issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat
the Notes for federal, State and local income, single business and franchise tax purposes as indebtedness of the Issuer. 
 Prior to the due
presentment for registration of transfer of this Class D Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class D Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class D Note shall be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to
the contrary. 
 The Indenture permits the Owner Trustee, on behalf of the Issuer, and the Indenture Trustee, with certain exceptions
therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture without the consent of the Holders of the Notes. The Indenture also permits the Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee, with certain exceptions as therein provided, to amend or waive from time to time certain terms and conditions set forth in the Indenture with the consent of the Holders of Notes evidencing not less than 51% of the Note Balance of the
Controlling Class. The Indenture also permits the Holders of Notes evidencing not less than 51% of the Note Balance of the Controlling Class, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holders of not less than 51% of the Note Balance of the Controlling 

  
 Ex. D-6 

 
Class or the Holder of this Class D Note (or any one or more Predecessor Notes) shall be conclusive and binding on such Holder and on all future Holders of this Class D Note and of any Class D
Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class D Note. 

The term “Issuer”, as used in this Note, includes any successor to the Issuer under the Indenture. 

The Indenture permits the Issuer, under certain circumstances, to consolidate or merge with or into another Person, subject to the rights of
the Indenture Trustee and the Holders of Notes under the Indenture. 
 The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth. 
 THIS CLASS D NOTE AND THE INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF
WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 

No reference herein to the Indenture, and no provision of this Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Class D Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, none of Wells Fargo Bank, National
Association, in its individual capacity, U.S. Bank Trust National Association, in its individual capacity, any holder of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Class D Note or the performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note, by its acceptance hereof, agrees that, except as expressly provided in the Transaction Documents, in the case of an Event of Default under the Indenture, the Holder shall have no
claim against any of the foregoing for any deficiency, loss or claim resulting therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, or enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this Class D Note. 

  
 Ex. D-7 

 ASSIGNMENT 

SOCIAL SECURITY NUMBER 
 OR OTHER IDENTIFICATION 

NUMBER OF ASSIGNEE:                      

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto 
  

 
  

 
 (name and address of assignee) 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
                    , attorney, to transfer said Note on the Note Register, with full power of substitution in the premises. 

Dated: 
  

			
	  
	 	*/
	
	Signature Guaranteed:
		
	  
	 	*/

  

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar. 

  
 Ex. D-8 

 Exhibit E 

Form of Opinion of Counsel 
  

	 	1.	Pursuant to Sections 201(a), 204 and 206 of the Delaware Limited Liability Company Act, the Secretary of State of the State of Delaware is required to maintain a public record showing limited liability companies that
have been organized. Pursuant to Section 3810, Section 3811 and Section 3812 of the Delaware Statutory Trust Act, the Secretary of State of the State of Delaware is required to maintain a public record showing statutory trusts that
have been formed. Based solely on our review of (i) the Delaware Limited Liability Company Act as found in “Corporation: Covering Corporation Practice, Procedure, Law—Aspen Law & Business,” as supplemented through
July 15, 2014; (ii) the Delaware Statutory Trust Act as found in “Delaware Code Annotated, Volume 7A, 2007 Volume—Michie;” and (iii) as to each of CarMax, the Depositor and the Issuing Entity’s existence in the
State of Delaware, a copy of the certificate of formation of each of CarMax and the Depositor and a copy of the certificate of trust of the Issuing Entity, each as supplied to us by the Secretary of State of the State of Delaware, each of CarMax,
the Depositor and the Issuing Entity is a registered organization (as such term is defined in the New York UCC) formed under the laws of the State of Delaware. For the purposes of this opinion, we have assumed that each of CarMax, the Depositor and
the Issuing Entity is organized solely under the laws of the State of Delaware. Each of CarMax, the Depositor and the Issuing Entity is, therefore, located, for purposes of Article 9 of the New York UCC, in the State of Delaware and the local law of
Delaware governs perfection by the filing of a financing statement of a nonpossessory security interest in the Receivables granted by CarMax, the Depositor and the Issuing Entity. 

 

	 	2.	Assuming the Receivables are created under, and are evidenced solely by, retail installment sale contracts in the form attached to the Receivables Purchase Agreement as in the form attached to the opinion, and assuming
they are completed in their entirety and executed and there is nothing that would prevent them from being enforceable, then the Receivables will constitute “tangible chattel paper” as such term is defined in Article 9 of the New York UCC.

  

	 	3.	When each of the Receivables Purchase Agreement and the First Step Bill of Sale has been duly executed and delivered by all parties thereto and when value has been given as provided in Section 9-203(b)(1) of the
New York UCC with respect to the Receivables, the Depositor will have a valid and enforceable security interest in such Receivables and identifiable cash proceeds thereof. When, in addition to the foregoing, the First Step Financing Statement has
been duly filed in the office of the Secretary of State of the State of Delaware, the security interest in favor of the Depositor in such Receivables and identifiable cash proceeds thereof will be perfected. 

  
 Ex. E 

	 	4.	When each of the Receivables Purchase Agreement, the First Step Bill of Sale and the Sale and Servicing Agreement has been duly executed and delivered by all parties thereto and when value has been given as provided in
Section 9-203(b)(1) of the New York UCC with respect to the Receivables, the Issuing Entity will have a valid and enforceable security interest in such Receivables and the identifiable cash proceeds thereof. When, in addition to the foregoing,
the First Step Financing Statement and the Second Step Financing Statement has been duly filed in the office of the Secretary of State of the State of Delaware, the security interest in favor of the Issuing Entity in such Receivables and
identifiable cash proceeds thereof will be perfected. 

  

	 	5.	When each of the Basic Documents has been duly executed and delivered by all parties thereto and when value has been given as provided in Section 9-203(b)(1) of the New York UCC with respect to the Receivables, the
Indenture Trustee will have a valid and enforceable security interest in such Receivables and the identifiable cash proceeds thereof. When, in addition to the foregoing, all of the Financing Statements have been duly filed in the office of the
Secretary of State of the State of Delaware, the security interest in favor of the Indenture Trustee in such Receivables and identifiable cash proceeds thereof will be perfected. 

 

	 	6.	Under the New York UCC, a nonpossessory security interest in tangible chattel paper can be perfected by the filing of a financing statement only in the jurisdiction where the debtor is located. Because each of CarMax,
the Depositor and the Issuing Entity is located in Delaware for purposes of the New York UCC, Delaware is the only jurisdiction in which a financing statement could be filed to perfect a nonpossessory security interest in the rights of CarMax, the
Depositor and the Issuing Entity in the Receivables. Therefore, to the extent a financing statement was filed there, the office of the Secretary of State of the State of Delaware constitutes the only filing office from which UCC Search Reports must
be reviewed to determine whether another nonpossessory security interest in the rights of CarMax, the Depositor or the Issuing Entity in the Receivables exists which was perfected by filing. We have not reviewed any UCC search reports other than the
UCC Search Reports. 

  

	 	7.	Based solely on our review of the UCC Search Reports and assuming the Terminated Financing Statements are duly filed in the office of the Secretary of State of the State of Delaware, the respective security interests of
the Depositor, the Issuing Entity and the Indenture Trustee in the Receivables and identifiable cash proceeds thereof are subject to no equal or prior security interest perfected by filing a financing statement under the Delaware UCC. To the extent
the Receivables constitute “tangible chattel paper” under the New York UCC, the local law of the jurisdiction in which the Receivables are physically located governs the effect of perfection or non-perfection and the priority of a
nonpossessory security interest in the Receivables. For purposes of our opinion, we have assumed that the UCC provisions governing the effect of perfection or non-perfection and the priority of nonpossessory security interests in tangible chattel
paper as in effect in each jurisdiction in which the Receivables are physically located, and the interpretation of such provisions in each such jurisdiction, are identical to the corresponding provisions and interpretations under the New York UCC.

  
 Ex. E 

	 	8.	When each of the Basic Documents has been duly executed and delivered by all parties thereto, and value has been given as provided in Section 9-203(b)(1) of the New York UCC with respect to the
Collection Account and the Note Payment Account (collectively, the “Accounts”), the Indenture Trustee will have a valid and enforceable security interest in the Accounts and the identifiable cash proceeds thereof and such security
interest will be perfected under the New York UCC. For the purposes of this opinion, we have also assumed that each Account is a “deposit account” as defined in the New York UCC, that such Account is maintained with the Indenture Trustee
and that the Indenture Trustee is a “bank” as defined in the New York UCC. To the extent each Account constitutes a “securities account” as defined in the New York UCC, and when each of the Financing Statements has been duly
filed in the office of the Secretary of State of the State of Delaware, the security interest of the Indenture Trustee in the Accounts and identifiable cash proceeds thereof has been perfected. 

  
 Ex. E

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