Document:

RECEIVABLES PURCHASE AGREEMENT

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

  

 RECEIVABLES PURCHASE
AGREEMENT 
 Dated as of June 1, 2007 
  

 TABLE OF CONTENTS 
  

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

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

 RECEIVABLES PURCHASE AGREEMENT 
 This Receivables Purchase Agreement, dated as of June 1, 2007, is between CarMax Business Services, LLC, a Delaware limited liability company
(“CarMax”), as seller (the “Seller”), and CarMax Auto Funding LLC, a Delaware limited liability company (“CarMax Funding”), as purchaser (the “Purchaser”). 
 WHEREAS, in the regular course of business, CarMax Auto Superstores, Inc., a Virginia corporation (“CarMax Auto”), and certain
affiliates of CarMax Auto originate motor vehicle retail installment sale contracts secured by new and used motor vehicles; 
 WHEREAS, the
Seller intends to convey all of its right, title and interest in and to contracts having an aggregate outstanding principal balance of $760,000,003.95 as of the close of business on May 31, 2007 (the “Receivables”) to the
Purchaser and, concurrently with its purchase of the Receivables, the Purchaser intends to convey all of its right, title and interest in and to the Receivables to CarMax Auto Owner Trust 2007-2, as issuer (the “Issuer”), pursuant
to a Sale and Servicing Agreement, dated as of June 1, 2007 (the “Sale and Servicing Agreement”), among the Issuer, CarMax Funding, as depositor, and CarMax, as servicer; and 
 WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant to which the Receivables are to be sold by the Seller to the Purchaser;

 NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 SECTION 1.1 Definitions.
Whenever used in this Agreement, the following words and phrases shall have the following meanings: 
 “Agreement” shall mean
this Receivables Purchase Agreement and all amendments hereof and supplements hereto. 
 “Base Prospectus” shall mean the
prospectus, dated May 18, 2007, of the Purchaser relating to the public offering by the Purchaser of the Notes. 
 “Bill of
Sale” shall mean the Bill of Sale and Assignment, substantially in the form attached as Exhibit A. 
 “CarMax”
shall mean CarMax Business Services, LLC, a Delaware limited liability company, and its successors. 
 “CarMax Auto” shall
mean CarMax Auto Superstores, Inc., a Virginia corporation, and its successors. 

 “CarMax Funding” shall mean CarMax Auto Funding LLC, a Delaware limited liability
company, and its successors. 
 “CarMax Funding II” shall mean CarMax Funding II, LLC, a Delaware limited liability company,
and its successors. 
 “Class A Notes” shall mean the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes issued pursuant to the Indenture. 
 “Class B Notes” shall mean the Class B Notes issued
pursuant to the Indenture. 
 “Class C Notes” shall mean the Class C Notes issued pursuant to the Indenture. 
 “Closing Date” shall mean June 5, 2007. 
 “Cutoff Date” shall mean May 31, 2007. 
 “Delaware Trustee” shall
mean The Bank of New York (Delaware), a Delaware banking corporation, as Delaware trustee under the Trust Agreement, and its successors in such capacity. 
 “Depositor” shall mean CarMax Funding, in its capacity as Depositor under the Trust Agreement, and its successors in such capacity. 
 “Indenture” shall mean the Indenture, dated as of June 1, 2007, between the Issuer and the Indenture Trustee, as amended,
supplemented or otherwise modified and in effect from time to time. 
 “Indenture Trustee” shall mean Wells Fargo Bank,
National Association, a national banking association, as indenture trustee under the Indenture, and its successors in such capacity. 
 “Initial Reserve Account Deposit” shall mean $3,800,000. 
 “Issuer” shall mean CarMax Auto Owner
Trust 2007-2, a Delaware statutory trust, and its successors. 
 “Noteholders” shall mean the registered holders of the
Notes. 
 “Notes” shall mean the Class A Notes, the Class B Notes and the Class C Notes. 
 “Owner Trustee” shall mean The Bank of New York, a New York banking corporation, as owner trustee under the Trust Agreement, and its
successors in such capacity. 
 “Prospectus Supplement” shall mean the final prospectus supplement, dated May 23, 2007,
of the Purchaser relating to the public offering by the Purchaser of the Notes. 
 “Prospectus” shall mean the Prospectus
Supplement and the Base Prospectus. 
  

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 “Purchaser” shall mean CarMax Funding, in its capacity as purchaser of the Receivables
under this Agreement, and its successors in such capacity. 
 “Receivables” shall mean the motor vehicle retail installment
sale contracts sold by the Seller to the Purchaser pursuant to this Agreement and identified on the Receivables Schedule. 
 “Receivables Purchase Price” shall mean $782,800,000.00. 
 “Receivables Schedule” shall mean the
schedule of receivables attached as Schedule A, as amended, supplemented or otherwise modified and in effect from time to time. 
 “Representative” shall mean Banc of America Securities LLC, a Delaware corporation, as representative of the Underwriters. 
 “Sale and Servicing Agreement” shall have the meaning specified in the recitals. 
 “Seller” shall mean CarMax, in its capacity as seller of the Receivables under this Agreement, and its successors in such capacity. 
 “State” shall mean any of the 50 states of the United States or the District of Columbia. 
 “Transaction Documents” shall mean this Agreement, the Trust Agreement, the Sale and Servicing Agreement, the Indenture, the Administration Agreement and the other documents and certificates delivered in connection
therewith, in each case as amended, supplemented or otherwise modified and in effect from time to time. 
 “Trust Agreement”
shall mean the Trust Agreement, dated as of April 5, 2007, among CarMax Funding, the Delaware Trustee and the Owner Trustee, as amended and restated by the Amended and Restated Trust Agreement, dated as of June 1, 2007, among CarMax
Funding, the Delaware Trustee and the Owner Trustee. 
 “Trustee” shall mean either the Owner Trustee or the Indenture
Trustee, as the context requires. 
 “UCC” shall mean the Uniform Commercial Code as in effect in the applicable
jurisdiction. 
 “Underwriters” shall mean the underwriters named in Schedule A to the Underwriting Agreement.

 “Underwriting Agreement” shall mean the Underwriting Agreement, dated May 23, 2007, among CarMax Funding, CarMax and
the Representative, relating to the purchase of the Notes by the Underwriters from CarMax Funding. 
  

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

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

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

  

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including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property; all accounts, general intangibles, chattel
paper, instruments, documents, money, investment property, deposit accounts, letters of credit, letter-of-credit rights, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations; and all other
property which at any time constitutes all or part of or is included in the proceeds of any of the foregoing. 
 (b) The parties hereto
intend that the conveyance of the Receivables and related property hereunder be a sale and not a loan. In the event that the conveyance hereunder is not for any reason considered a sale, the Seller hereby grants to the Purchaser a first priority
perfected security interest in all of the Seller’s right, title and interest in, to and under the Receivables and all other property conveyed hereunder and listed in this Section and all proceeds of any of the foregoing. The parties intend
that this Agreement constitute a security agreement under applicable law. Such grant is made to secure the payment of all amounts payable hereunder, including the Receivables Purchase Price. If such conveyance is for any reason considered to be a
loan and not a sale, the Seller consents to the Purchaser transferring such security interest in favor of the Indenture Trustee and transferring the obligations secured thereby to the Indenture Trustee. 
 (c) The Seller agrees to treat the transfer of the Receivables and the related property contemplated by this Section for all purposes (including tax
and financial accounting purposes) as an absolute transfer on all relevant books, records, tax returns, financial statements and other applicable documents. 
 SECTION 2.2 Receivables Purchase Price; Payments on the Receivables. 
 (a) On the Closing Date, in
exchange for the Receivables and other assets described in Section 2.1, the Purchaser shall pay to the Seller the Receivables Purchase Price. An amount equal to $754,487,049.48 of the Receivables Purchase Price shall be paid by the Purchaser to
the Seller in cash or immediately available funds. The remainder of the Receivables Purchase Price shall be paid by crediting the Seller with a contribution to the capital of the Purchaser. The Purchaser shall deposit, from funds it receives from
the issuance of the Notes, an amount equal to the Initial Reserve Account Deposit into the Reserve Account, which amount shall be an asset of the Issuer. 
 (b) The Purchaser shall be entitled to, and shall convey such right to the Owner Trustee pursuant to the Sale and Servicing Agreement, all payments of principal and interest on or in respect of the Receivables
received after the Cutoff Date. 
 SECTION 2.3 Transfer of Receivables. Pursuant to the Sale and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in, to and under the Receivables and other assets described in Section 2.1 to the Issuer. The parties hereto acknowledge that the Issuer will pledge its rights in, to and under the Receivables
and other assets described in Section 2.1 to the Indenture Trustee pursuant to the Indenture. The Purchaser has the right to assign its interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement,
without the consent of the Seller, and the Owner Trustee as assignee shall succeed to the rights and obligations hereunder of the Purchaser. 
  

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

  

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reasonable judgment of the Purchaser would materially and adversely affect the performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement or the Receivables. 
 SECTION 3.2 Representations and Warranties of the Seller. 
 (a) The Seller hereby makes the following representations and warranties to the Purchaser as of the date of this Agreement and as of the Closing Date:

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

 (v) No Tax Liens. The Seller is not aware of any material judgment or tax lien filings against the Seller.

 (b) The Seller hereby makes the following representations and warranties to the Purchaser as of the date of this Agreement and as of the
Closing Date, which representations 

  

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

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 (v) No Government Obligor. No Receivable is due from the United States or any
State or from any agency, department or instrumentality of the United States or any State. 
 (vi) Security Interest in
Financed Vehicles. Immediately prior to the transfer of the Receivables by the Seller to the Depositor, each Receivable was secured by a valid, binding and enforceable first priority perfected security interest in favor of the Seller in the
related Financed Vehicle, which security interest has been validly assigned by the Seller to the Depositor. The Servicer has received, or will receive within 180 days after the Closing Date, the original certificate of title for each Financed
Vehicle (other than any Financed Vehicle that is subject to a certificate of title statute or motor vehicle registration law that does not require that the original certificate of title for such Financed Vehicle be delivered to the Seller).

 (vii) Receivables in Force. No Receivable has been satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released in whole or in part from the Lien granted by the related Receivable. 
 (viii) No Waiver. No
provision of any Receivable has been waived in such a manner that such Receivable fails to meet all of the representations and warranties made by the Seller in this Section 3.2(b) with respect thereto. 
 (ix) No Defenses. No Receivable is subject to any right of rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of any Receivable, or the exercise of any right thereunder, will not render such Receivable unenforceable in whole or in part or subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and the Seller has no knowledge of any such right of rescission, setoff, counterclaim or defense being asserted or threatened with respect to any Receivable. 
 (x) No Liens. The Seller has no knowledge of any liens or claims that have been filed, including liens for work, labor or materials
or for unpaid State or federal taxes, relating to any Financed Vehicle that are prior to, or equal or coordinate with, the security interest in such Financed Vehicle created by the related Receivable. 
 (xi) No Default. Except for payment defaults continuing for a period of not more than 30 days, the Seller has no knowledge that any
default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred or that any continuing condition that with notice or the lapse of time or both would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has arisen, and the Seller has not waived any such event or condition. 
 (xii) Title. The Seller intends that the transfer of the Receivables contemplated by Section 2.1 constitute a sale of the Receivables from the Seller to the Depositor and that the beneficial interest in, and title to, the
Receivables not be part of the 

  

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

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 (xvii) Principal Balance. Each Receivable had an original Principal Balance of not
more than $65,000 and a remaining Principal Balance as of the Cutoff Date of not less than $500. 
 (xviii) No Bankrupt
Obligors. As of the Cutoff Date, no Receivable was due from an Obligor that was the subject of a proceeding under the Bankruptcy Code of the United States or was bankrupt. 
 (xix) New and Used Vehicles. As of the Cutoff Date, approximately 2.91% of the Pool Balance related to Receivables secured by new
Financed Vehicles and approximately 97.09% of the Pool Balance related to Receivables secured by used Financed Vehicles. 
 (xx) Origination. Each Receivable was originated after September 8, 2001. 
 (xxi) Term to
Maturity. Each Receivable had an original term to maturity of not more than 72 months and not less than 12 months and a remaining term to maturity as of the Cutoff Date of not more than 71 months and not less than three months. 
 (xxii) Weighted Average Remaining Term to Maturity. As of the Cutoff Date, the weighted average remaining term to maturity of the
Receivables was approximately 58.78 months. 
 (xxiii) Annual Percentage Rate. Each Receivable has an APR of at least
4.45% and not more than 25.00%. 
 (xxiv) Location of Receivable Files. The Receivable Files are maintained at the
location listed in Schedule 2 to the Sale and Servicing Agreement. 
 (xxv) Simple Interest Method. All payments with
respect to the Receivables have been allocated consistently in accordance with the Simple Interest Method. 
 (xxvi) No
Delinquent Receivables. As of the Cutoff Date, no payment due under any Receivable was more than 30 days past due. 
 (xxvii) Insurance. Each Obligor has obtained or agreed to obtain physical damage insurance (which insurance shall not be force placed insurance) covering the related Financed Vehicle in accordance with the Seller’s normal
requirements. 
 (xxviii) Fair Market Value. The Receivables Purchase Price represents the fair market value of the
Receivables. 
  

 11 

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

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

 12 

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

 13 

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

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

 14 

 (b) Payment of Receivables Purchase Price. In consideration of the sale of the
Receivables from the Seller to the Purchaser as provided in Section 2.1, on the Closing Date the Purchaser shall have paid to the Seller the Receivables Purchase Price. 
 (c) Opinions of Purchaser. An opinion or opinions of counsel for the Purchaser addressed to the Seller and the Underwriters shall
have been delivered. 
 ARTICLE V 
 COVENANTS OF THE SELLER 
 SECTION 5.1 Protection of Right, Title and Interest in, to and Under the Receivables. 

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

  

 15 

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

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

  

 16 

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

  

 17 

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

  

 18 

 
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights, remedies, powers and privileges provided by law. 
 SECTION 6.8 Counterparts. This Agreement may be executed in two or more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and the same instrument. 
 SECTION 6.9 Third-Party
Beneficiaries. This Agreement will inure to the benefit of and be binding upon the parties hereto, the Issuer and the Indenture Trustee for the benefit of the Noteholders, who shall be considered to be third-party beneficiaries hereof. Except as
otherwise provided in this Agreement, no other Person will have any right or obligation hereunder. 
 SECTION 6.10 Headings and Table of
Contents. The Table of Contents and headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof. 
 SECTION 6.11 Representations, Warranties and Agreements to Survive. The respective agreements, representations, warranties and other statements by
the Seller and by the Purchaser set forth in or made pursuant to this Agreement shall remain in full force and effect and will survive the closing hereunder of the transfers and assignments by the Seller to the Purchaser and by the Purchaser to the
Issuer and shall inure to the benefit of the Purchaser, the Trustees and the Noteholders. 
 SECTION 6.12 No Proceedings. The Seller
covenants and agrees that so long as this Agreement is in effect, and for one year plus one day following its termination, it will not file any involuntary petition or otherwise institute any bankruptcy, reorganization arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or State bankruptcy law or similar law against the Issuer or the Owner Trustee. 
 SECTION 6.13 Accountant’s Letters. 
 (a) The Seller shall cause a firm of independent certified public accountants (who
may also render other services to the Seller) to perform certain procedures regarding the characteristics of the Receivables described in the Receivables Schedule and to compare those characteristics to the information with respect to the
Receivables contained in the Prospectus. The Seller shall cooperate with the Purchaser and such accountants in making available all information and taking all steps reasonably necessary to permit such accountants to complete such procedures and to
deliver the letters required of them under the Underwriting Agreement. 
 (b) The Seller shall cause a firm of independent certified public
accountants (who may also render other services to the Seller) to deliver to the Purchaser a letter dated May 18, 2007 and a letter dated June 5, 2007, each in the form previously agreed to by the Seller and the Purchaser, with respect to
the financial and statistical information contained in the Prospectus under the caption “CarMax—Delinquency, Credit Loss and Recovery Information” and with respect to such other information as may be agreed in the forms of such
letters. 
  

 19 

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

 20 

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

			
	CARMAX BUSINESS SERVICES, LLC,
	    as Seller
		
	By:	 	 /s/ Keith D. Browning

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

		
	By:	 	 /s/ Thomas W. Reedy

	Name:	 	Thomas W. Reedy
	Title:	 	Treasurer

  

 S-1Employment Agreement

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this 31st day of May, 2007 is
entered into by Central Garden & Pet Company, a Delaware corporation (the “Company”), and James V. Heim (“Executive”). 
 WHEREAS, Executive is a current executive of the Company with an employment agreement that terminates July 9, 2007; 
 WHEREAS, the Company
desires to continue employing Executive after the expiration of his employment agreement and Executive desires to continue to be employed by the Company after the expiration of his employment agreement; 
 THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows: 
  

	1.	Effective Date: This Agreement shall become effective on July 9, 2007 concurrent with the expiration of Executive’s employment agreement currently in effect
(“Effective Date”). 

  

	2.	Term of Employment: Executive will be employed by the Company for an indefinite term, subject to termination as set forth below. 

  

	3.	Position: Executive shall serve as President of the Pet Products Group. He shall perform those duties and responsibilities consistent with such position that are assigned to
him by the Chief Executive Officer of the Company. Executive’s position and related terms and conditions of employment may from time to time be modified by the Company in its discretion. 

  

	4.	Full Time Performance of Duties: During the Term of Employment, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of
absence, Executive agrees to devote substantially all his business time, attention, skill, and efforts to the faithful and loyal performance of his duties under this Agreement and shall not during his employment with the Company engage in any other
business activities, duties or pursuits, render any services of a business, commercial, or professional nature to any other person or organization, whether for compensation or otherwise, without the prior written consent of Company. However, the
expenditure of reasonable amounts of time for educational, charitable, or professional activities for which Executive will not receive additional compensation from the Company, shall not be considered a breach of this Agreement if those activities
do not materially interfere with the services required of Executive under this Agreement. 

	5.	Salary: The Company will pay Executive an annualized salary of $415,000 in accordance with the Company’s payroll practices for executives. Executive will be eligible for
periodic salary reviews consistent with the Company’s salary review practices for executives. 

  

	6.	Bonus: Executive will be eligible for a bonus each year during the Term of Employment targeted at 50% of base compensation with a maximum pay out of 100%. Actual payout will
be based upon both the Executive’s and the Company’s performance 

  

	7.	Options: From time to time, at the discretion of the Company, Executive will be eligible for grants of non-qualified stock options to purchase shares of Common Stock of the
Company. These options shall vest and become exercisable consistent with the terms of the Central Garden & Pet Company 2003 Omnibus Equity Incentive Plan. 

  

	8.	Benefits: Executive shall receive fringe benefits, including 401(k) and life insurance at one times base compensation (additional term life insurance may be purchased by the
Executive) and shall participate in other benefit programs on substantially the same terms and conditions as are generally available to other senior executives of the Company. Such benefits shall include an automobile allowance of $1000 per month
and shall otherwise be generally comparable to the benefits currently offered to senior executives of the Company. Additionally, the Executive will be eligible for four (4) weeks vacation annually. Executive’s maximum vacation accrual will
be six (6) weeks. Once Executive has accrued six (6) weeks vacation, he will cease earning vacation until he has taken vacation and reduced his accrual below six (6) weeks. 

  

	9.	Reimbursement of Expenses: The Company will reimburse Executive for all reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection
with, or related to, the performance of his duties, responsibilities or services under this Agreement in accordance with the Company’s policies, upon presentation by Executive of documentation, expense statements, vouchers, and/or other
supporting information as the Company may request. 

  

	10.	Incapacity: In the event that Executive becomes physically or mentally disabled or incapacitated such that it is the reasonable, good faith opinion of the Company that
Executive is unable to perform the services required under this Agreement with or without reasonable accommodation, then after four (4) months of continuous physical or mental disability, this Agreement will terminate; provided however, that
during this four (4) month period, Executive shall be entitled to the continuation of his compensation as provided by this Agreement; however such continued payments by the Company shall be integrated with any disability, workers’
compensation, or other insurance payments received, such that the total amount does not exceed the compensation as provided by this Agreement. For purposes of this Agreement, physical or mental disability does not include any disability arising from
current use of alcohol, drugs or related issues. 

	11.	Termination by the Company For Cause: The Company may terminate Executive for cause. If Executive is terminated for cause, he will receive only his compensation earned pro
rata to the date of his termination. All other benefits will cease on the date of Executive’s termination. Cause it shall be defined as: 

  

	 	(a)	Fraud, theft or embezzlement of Company assets, criminal conduct or any other act of moral turpitude by which is materially injurious to the Company 

  

	 	(b)	An act or omission constituting negligence or misconduct which is materially injurious to the Company; 

  

	 	(c)	A material violation of this Agreement by Executive, which is not cured within 30 days after written notice thereof; 

  

	 	(d)	The abuse of alcohol or drugs; 

  

	 	(e)	Failure to comply with the lawful directives of the Board of Directors; 

  

	 	(f)	A material violation of any securities law, regulation or compliance policy of the Company; 

  

	 	(g)	Executive’s death or incapacity exceeding four (4) months as provided in section 11 above. 

  

	12.	Termination By Executive For Cause: Executive may also terminate this Agreement for cause by giving thirty (30) days written notice to the Company’s Vice President
of Human Resources of an alleged material breach of this Agreement by the Company, (relocating Executive’s primary office location outside a 50 mile radius surrounding Napa, California shall be considered a material breach of this Agreement)
provided such breach is not cured by the Company within the thirty (30) day notice period. 

  

	13.	Termination By The Company Without Cause: The Company may terminate Executive’s employment under this Agreement at any time without cause by giving Executive thirty
(30) days written notice of termination. If the Company terminates Executive under this section, Company will pay Executive a severance consisting of a continuation of Executive’s base salary for a one (1) year period, subject to
applicable payroll deductions. Such severance payments shall be Executive’s sole and exclusive remedy in the event of a termination of this Agreement by the Company without cause. At its option, the Company may pay Executive thirty
(30) days additional salary and benefits provided in this Agreement in lieu of giving Executive the thirty (30) days notice as provided above. 

  

	14.	 Termination by Executive Without Cause: Executive may terminate his employment without cause by giving the Company thirty (30) days written notice of
termination. If 

	 	 
Executive terminates his employment without cause under this section, he will receive only his salary and benefits earned pro rata to the date of his
termination. All other salary and benefits will cease on the date of Executive’s termination. At its option, the Company may pay Executive his salary and benefits provided in this Agreement through the effective date of his written notice of
termination and immediately accept his termination. 

  

	15.	Confidential Business Information: The Company has and will continue to spend significant time, effort and money to develop proprietary information which is vital to the
Company’s business. During Executive’s employment with the Company, Executive has and will have access to the Company’s confidential, proprietary and trade secret information including but not limited to information and strategy
relating to the Company’s products and services including customer lists and files, product description and pricing, information and strategy regarding profits, costs, marketing, purchasing, sales, customers, suppliers, contract terms,
employees, salaries; product development plans; business, acquisition and financial plans and forecasts and marketing and sales plans and forecasts (collectively called “Company Confidential Information”) Executive will not, during his
employment with the Company or thereafter, directly or indirectly disclose to any other person or entity, or use for Executive’s own benefit or for the benefit of others besides Company, any Company Confidential Information. Upon termination of
this Agreement, Executive agrees to promptly return all Company Confidential Information. 

  

	16.	Non-Solicitation of Employees: While Executive is employed by the Company, or retained as a consultant, and for eighteen (18) months after such employment and/or
consulting relationship terminates, Executive will not (acting either directly or indirectly, or through any other person, firm, or corporation) induce or attempt to induce or influence any employee of the Company to terminate employment with the
Company when the Company desires to retain that person’s services. 

  

	17.	Non Competition: During term of this Agreement, any time Executive is receiving severance from the Company and/or during any post-termination consulting agreement with the
Company, Executive agrees that he will not, nor will he permit any entity or other person under his control, to directly or indirectly, hold, manage operate or control, or participate in the ownership, management, operation or control of, or be
connected with or have any interest in, as a shareholder, director, officer, employee, agent, consultant, partner, creditor or otherwise, any business or activity which engages in developing, producing, marketing, distributing or selling lawn,
garden, animal health or pet related products or activity which would otherwise conflict with his obligations to the Company. 

  

	18.	Separability: Each provision of this Agreement is separable and independent of the other provisions. If any part of this Agreement is found to be invalid, the remainder shall
be given full force and effect as permitted by law. 

	19.	Complete Agreement: This Agreement constitutes the entire agreement between Executive and the Company regarding the subjects covered by this Agreement. No other agreement,
understanding, statement or promise other than those contained in this Agreement is part of their employment agreement or will be effective. Any modification of this Agreement will be effective only if it is in writing and signed by the parties.

  

	20.	Notice: All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (except as may otherwise be
specifically provided herein to the contrary) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or mailed by certified or registered mail with postage prepaid:

  

					
	(a)	  	If to the Company to:	 	Central Garden & Pet Company
		  		 	 1340 Treat Blvd., Suite 600
 Walnut Creek, CA
94597

		  		 	Attention: Glenn W. Novotny, President/CEO
			
		  	with a copy to:	 	Orrick, Herrington & Sutcliffe LLP
		  		 	 405 Howard Street
 San Francisco, CA
94105-2669

		  		 	Attention: John F. Seegal, Esq.
			
	(b)	  	If to the Executive to:	 	James V. Heim
		  		 	 760 La Salle Way
 Napa, CA 94559

	21.	Related Agreements: As an inducement to the Executive and to the Company to enter into this Agreement, Executive has executed Exhibit A Post Employment Consulting Agreement
and Exhibit B Agreement to Protect Confidential Information, Intellectual Property and Business Relationships, all attached and incorporated by reference. Exhibits A and B shall survive the termination of this Employment Agreement.

 IN WITNESS WHEREOF, the parties hereto have executed this agreement the day and year referenced above. 
  

			
	James V. Heim
	
	 /s/ James V. Heim

	
	Central Garden & Pet Company
		
	By	 	 /s/ Glenn W. Novotny

		 	 Glenn W. Novotny, President and Chief
 Executive
Officer

 EXHIBIT A 
 POST EMPLOYMENT CONSULTING AGREEMENT 
 James V. Heim 
 This Agreement is made this 31st day of May, 2007(the “Effective Date”) by and between Central Garden & Pet Company (“the
Company”) and James V. Heim (“Executive”). 
 WHEREAS, Executive recognizes that in his capacity as a key executive with the
Company he provides unique services that will be exceedingly difficult to replace after termination of his employment; 
 WHEREAS, Executive
recognizes that the Company desires continued access to Executive’s unique services, knowledge and a reasonable transition after the termination of Executive’s employment; 
 WHEREAS, Executive recognizes that he has been provided adequate consideration for entering into this Consulting Agreement (“Agreement”);

 THEREFORE, in consideration of the Employment Agreement provided to Executive to which this Consulting Agreement is attached and
incorporated into and the additional consideration provided herein, Executive and the Company agree to the following: 
  

	1.	Consulting Services: Executive will provide continuing strategic advice and counsel related to the business issues and projects Executive was involved in while employed by
the Company (“Consulting Services”). Executive will be available to provide approximately twenty (20) hours of such Consulting Services per month in a manner that will not unduly interfere with any other employment Executive may then
have. 

  

	2.	Term of Agreement: Executive will provide Consulting Services effective upon termination of Executive’s employment with the Company and continuing thereafter for a
period of twenty four (24) months. (“Term of Agreement”) 

  

	3.	Compensation: In addition to the consideration provided by the Employment Agreement mentioned above, Executive shall be paid five thousand dollars ($5,000) per month
(“Consulting Fee”) during the Term of Agreement. This Consulting Fee shall increase two percent (2%) each year following signature of this Agreement. Such 2% annual increase shall continue during the Term of Agreement.”

  

	4.	Expenses: During the Term of Agreement, Executive will be reimbursed by the Company for all expenses necessarily incurred in the performance of this Agreement.

	5.	Termination: Notwithstanding the Term of Agreement specified above, this Agreement shall terminate under any of the following circumstances: (a) in the event Executive
dies, this Agreement shall terminate immediately; (b) if, due to physical or mental disability, Executive is unable to perform the services called for under this Agreement with or without reasonable accommodation, either the Company or
Executive may terminate this Agreement by providing thirty (30) days written notice; (c) the parties may terminate this Agreement by mutual written agreement. 

  

	6.	Non-Competition: Executive acknowledges and agrees that during the term of this Agreement he will not render executive, managerial, market research, advice or consulting
services, either directly or indirectly, to any business engaged in or about to be engaged in developing, producing, marketing, distributing or selling lawn, garden, animal health or pet related products or which would otherwise conflict with his
obligations to the Company. 

  

	7.	Confidential Information or Materials: During the Term of Agreement, Executive will have access to the Company’s confidential, proprietary and trade secret information
including but not limited to customer lists and files, product description and pricing, information and strategy regarding the Company’s products, processes, services, profits, costs, marketing, purchasing, sales, customers, suppliers, contract
terms, employees, salaries; product development plans; business, acquisition and financial plans and forecasts and marketing and sales plans and forecasts (collectively called “Company Confidential Information”) Executive will not, during
the Term of Agreement or thereafter, directly or indirectly disclose to any other person or entity, or use for Executive’s own benefit or for the benefit of others besides Company, any Company Confidential Information. Upon termination of this
Agreement, Executive agrees to promptly return all Company Confidential Information. 

  

	8.	Remedies: Executive understands and acknowledges that Company’s remedies at law for any material breach of this Agreement by Executive are inadequate and that any such
breach will cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such other remedies which may be available, including the return of consideration paid for this Agreement, Executive
agrees that the Company shall have the right to seek specific performance and injunctive relief. It is also expressly agreed that, in the event of such a breach, Company shall also be entitled to recover all of its costs and expenses (including
attorneys’ fees) incurred in enforcing its rights hereunder. 

  

	9.	Independent Contractor Status: For all purposes, during the Term of Agreement, Executive shall be deemed to be an independent contractor, and not an employee or agent of the
Company. Accordingly, Executive shall not be entitled to any rights or benefits to which any employee of Company may be entitled. 

  

	10.	 Intellectual Property Rights: Company shall have sole ownership of and all right, title and interest, to all data, drawings, designs, analyses, graphs,
reports, products, tooling, 

	 	 
physical property, computer programs, software code, trade secrets and all inventions, discoveries and improvements or other items or concepts, whether
patentable or not, (collectively, “Intellectual Property”) which are conceived or reduced to practice during the term of this Agreement and arising out of or relating to the services performed hereunder or using the equipment or resources
of the Company. To the extent any such Intellectual Property qualifies as a “work for hire” under the United States Copyright Act (17 U.S.C. Sec. 101), Executive agrees that the Company is the author for copyright purposes. To the extent
that any Intellectual Property is not a work for hire, Executive agrees to assign, and hereby does assign, its entire right, title and interest in such Intellectual Property, including the right to sue for past infringements.

  

	11.	No Authority to Bind Company: During the Term of Agreement, Executive will not have any authority to commit or bind Company to any contractual or financial obligations
without the Company’s prior written consent. 

  

	12.	Assignment: This is a personal services agreement and Executive may not assign this Agreement, or any interest herein, without the prior written consent of the Company.

  

	13.	Entire Agreement: This Agreement constitutes the entire understanding of the parties on the subjects covered. It cannot be modified or waived except in a writing signed by
both parties. 

  

	14.	Agreement Enforceable to Full Extent Possible: If any restriction set forth in this agreement is found by a court to be unenforceable for any reason, the court is empowered
and directed to interpret the restriction to extend only so broadly as to be enforceable in that jurisdiction. 

 The parties
agree to each of the terms and conditions set forth above. 
  

							
	Dated:	 	May 31, 2007	 	 	 	 /s/ James V. Heim

		 		 		 	James V. Heim
				
	Dated:	 	May 31, 2007	 		 	 /s/ Glenn W. Novotny

		 		 		 	for Central Garden & Pet Company

 EXHIBIT B 
 AGREEMENT TO PROTECT CONFIDENTIAL INFORMATION, INTELLECTUAL 
 PROPERTY AND BUSINESS RELATIONSHIPS

 James V. Heim 
 I RECOGNIZE that
during my employment as a key executive with Central Garden and Pet Company and/or any of its wholly owned subsidiaries, successors and assigns (collectively called “the Company”), I have had and will continue to have access to Company
Confidential Information as defined below and the Company’s valuable competitive information and business relationships. 
 I RECOGNIZE that my
employment in certain capacities with a competitor would involve the use or disclosure of Company Confidential Information and/or competitive information and business relationships of the Company. 
 THEREFORE, in consideration for the compensation provided to me under the Employment Agreement into which this Agreement is incorporated and to prevent the use or
disclosure of Company Confidential Information, and to protect the valuable competitive information and business relationships of the Company, I agree to the following: 
  

	1.	I will not at any time and engage in or prepare to engage in developing, producing, marketing, distributing or selling lawn, garden, animal health or pet related products for any
business entity if that activity in any way involves the use or disclosure of Company Confidential Information. 

  

	2.	For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, I will not directly or
indirectly, in any capacity whatsoever (other than as the holder of not more than one percent (1%) of the total outstanding stock of a publicly held company), (1) engage in or prepare to engage in developing, producing, marketing,
distributing or selling lawn, garden, animal health or pet related products for the business entities, the product lines, brands, or any divisions of the business entities listed on Exhibit 1 or their successors (collectively called “Key
Competitors”). I understand and agree that the nine (9) Key Competitors listed on Exhibit 1, which is incorporated herein by reference, may be periodically updated by the Company providing me with a written revision of Exhibit 1; however,
the number of Key Competitors designated on Exhibit 1 shall not exceed nine (9) Key Competitors. This paragraph shall apply in those jurisdictions where restrictions such as contained in this paragraph are enforceable. 

 

	3.	 For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, I will not
render executive, managerial, market research, advice or consulting services, either directly or indirectly, to any business engaged in or about to be engaged in developing, producing, 

	 	 
marketing, distributing or selling lawn, garden, animal health or pet related products in the geographic markets for which I acquired Company Confidential
Information about the Company’s customers or strategies or for which I developed business relations on behalf of the Company or for which I had responsibility while employed by the Company. This paragraph shall apply in those jurisdictions
where restrictions such as contained in this paragraph are enforceable. 

  

	4.	For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, I will not solicit or
service, directly or indirectly, any customer I solicited or serviced while in the employ or service of the Company. This paragraph shall apply in those jurisdictions where restrictions such as contained in this paragraph are enforceable.

  

	5.	For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, I will not divert or attempt
to divert any business or customers from the Company using Company Confidential Information. 

  

	6.	For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, I will not recruit, solicit
or induce, or attempt to recruit, solicit or induce, any employee of the Company to terminate their employment with the Company or otherwise cease their relationship with the Company. 

  

	7.	For eighteen (18) months after the termination of my employment with the Company and/or any post-termination consulting agreement with the Company, before I accept employment
with any person or organization that is engage in or about to be engaged in developing, producing, marketing, distributing or selling lawn, garden or pet related products, I agree (1) to advise that prospective employer about the existence of
this Agreement; (2) to provide that potential employer a copy of this Agreement; and (3) to advise the Company’s Vice President of Human Resources in writing, within five (5) business days, to whom I have provided a copy of this
Agreement. 

  

	8.	If any restriction set forth in this agreement is found by a court to be unenforceable for any reason, the court is empowered and directed to interpret the restriction to extend
only so broadly as to be enforceable in that jurisdiction. 

  

	9.	“Company Confidential Information” as used in this Agreement refers to the Company’s confidential, proprietary and trade secret information including but not limited
to customer lists and files, product description and pricing, information and strategy regarding the Company’s products, processes, services, profits, costs, marketing, purchasing, sales, customers, suppliers, contract terms, employees,
salaries; product development plans; business, acquisition and financial plans and forecasts and marketing and sales plans and forecasts. 

	10.	I understand that the restrictions contained in this Agreement are necessary and reasonable for the protection of the Company’s business, goodwill and its Company Confidential
Information. I understand that any breach of this Agreement will cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such other remedies which may be available, including the return of
consideration paid for this Agreement, I agree that the Company shall have the right to seek specific performance and injunctive relief. Any business entity that employees me in a capacity in which I violate this agreement shall be liable for
damages and injunctive relief. 

  

	11.	Courts should treat each numbered paragraph as a separate and severable contractual obligation intended to protect the legitimate interests of the Company and to which I intend to
be bound. 

  

	12.	I agree that the Company’s determination not to enforce this or similar agreements as to specific violations shall not operate as a waiver or release of my obligations under
this Agreement. 

  

	13.	This Agreement is in addition to any fiduciary duty and obligation that may exist under statutory or common law. 

  

	14.	This Agreement constitutes the entire understanding of the parties on the subjects covered. It cannot be modified or waived except in a writing signed by me and the Chief Executive
Officer of the Company. I enter into this Agreement voluntarily. 

  

					
	Signed the 31st day of May, 2007	 	 	 	 
			
	AGREED AND ACCEPTED BY:	 		 	
			
	 /s/ James V. Heim
	 		 	
	James V. Heim	 		 	
			
	 /s/ Glenn W. Novotny
	 		 	 Chief Executive Officer and President

	For Central Garden & Pet Company	 		 	Title

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