CARVANA CO. (Form: 10-Q, Received: 11/07/2017 16:38:47)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2017

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission File Number: 001-38073

CARVANA CO.

(Exact name of registrant as specified in its charter)



Delaware		81-4549921
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1930 W. Rio Salado Parkway, Tempe, Arizona		85281
(Address of principal executive offices)		(Zip Code)

(602) 852-6604

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ý (Do not check if a smaller reporting company)	Smaller reporting company ¨
Emerging growth company ý
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý No

As of November 3, 2017, the registrant had 15,908,195 shares of Class A common stock outstanding and 116,824,383 shares of Class B common stock outstanding.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	4
	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2017	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	45

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)



	September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	103,454		$	39,184
Restricted cash	11,755			10,266
Accounts receivable, net	11,639			5,692
Finance receivables held for sale, net	37,519			24,771
Vehicle inventory	192,242			185,506
Other current assets	9,598			9,822
Total current assets	366,207			275,241
Property and equipment, net	125,996			60,592
Other assets	2,969			—
Total assets	$	495,172		$	335,833
LIABILITIES, TEMPORARY EQUITY & STOCKHOLDERS' EQUITY / MEMBERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	43,813		$	28,164
Accounts payable due to related party	2,142			1,884
Floor plan facility	195,083			165,313
Current portion of long-term debt	3,375			1,057
Total current liabilities	244,413			196,418
Long-term debt, excluding current portion	16,363			4,404
Other liabilities	6,920			—
Total liabilities	267,696			200,822
Commitments and contingencies (Note 13)
Temporary equity - Class C redeemable preferred units - 0 and 43,089 units authorized and outstanding as of September 30, 2017 and December 31, 2016, respectively	—			250,972
Stockholders' equity / members' deficit:
Members' deficit	—			(115,961		)
Preferred stock, $.01 par value - 50,000 shares authorized, none issued and outstanding as of September 30, 2017	—			—
Class A common stock, $0.001 par value - 500,000 shares authorized, 15,513 shares issued and outstanding as of September 30, 2017	16			—
Class B common stock, $0.001 par value - 125,000 shares authorized, 117,236 shares issued and outstanding as of September 30, 2017	117			—
Additional paid in capital	35,447			—
Accumulated deficit	(7,419		)	—
Total stockholders' equity / members' deficit attributable to Carvana Co.	28,161			(115,961		)
Non-controlling interests	199,315			—
Total stockholders' equity / members’ deficit	227,476			(115,961		)
Total liabilities, temporary equity & stockholders' equity / members’ deficit	$	495,172		$	335,833

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Sales and operating revenues:
Used vehicle sales, net	$	208,113		$	92,115		$	550,442		$	241,098
Wholesale vehicle sales	7,459			2,870			21,003			6,904
Other sales and revenues, including $2,414, $0, $6,070 and $0, respectively, from related parties	9,807			3,859			22,372			10,319
Net sales and operating revenues	225,379			98,844			593,817			258,321
Cost of sales	204,963			92,078			547,616			241,561
Gross profit	20,416			6,766			46,201			16,760
Selling, general and administrative expenses	58,676			27,995			156,595			71,971
Interest expense, including $0, $0, $1,382 and $0, respectively, to related parties	838			725			5,404			2,231
Other expense (income), net	671			31			1,280			(24		)
Net loss before income taxes	(39,769		)	(21,985		)	(117,078		)	(57,418		)
Income tax provision	—			—			—			—
Net loss	(39,769		)	(21,985		)	(117,078		)	(57,418		)
Less: net loss attributable to non-controlling interests	(35,389		)	—			(59,717		)	—
Net loss attributable to Carvana Co.	$	(4,380	)	$	(21,985	)	$	(57,361	)	$	(57,418	)

Net loss per share of Class A common stock, basic and diluted ⁽¹⁾	$	(0.29	)	$	(0.16	)	$	(0.86	)	$	(0.42	)
Weighted-average shares of Class A common stock, basic and diluted ⁽¹⁾⁽²⁾	15,045			15,000			15,024			15,000

(1) Amounts for periods prior to the initial public offering have been retrospectively adjusted to give effect to 15.0 million shares of Class A common stock issued in the initial public offering and the Organizational Transactions described in Note 1 .

(2) Weighted-average shares of Class A common stock outstanding have been adjusted for unvested restricted stock awards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY / MEMBERS' DEFICIT

(Unaudited)

(In thousands)



				Class A				Class B
	Members' Deficit			Shares		Amount		Shares	Amount		Additional Paid-in Capital			Accumulated Deficit			Non-controlling Interests			Total Stockholders' Equity
Balance, December 31, 2016	$	(115,961	)	—		$	—	—	$	—	$	—		$	—		$	—		$	—
Equity-based compensation expense prior to Organizational Transactions	158			—		—		—	—		—			—			—			—
Accrued return on Class C Redeemable Preferred Units prior to Organizational Transactions	(9,439		)	—		—		—	—		—			—			—			—
Net loss prior to Organizational Transactions	(49,942		)	—		—		—	—		—			—			—			—
Conversion of Class C Redeemable Preferred Units for Class A Units	260,411			—		—		—	—		—			—			—			—
Effect of Organizational Transactions	(85,227		)	—		—		117,236	117		(174,255		)	—			259,365			85,227
Issuance of Class A common stock sold in initial public offering, net of underwriters' discounts and commissions and offering expenses	—			15,000		15		—	—		205,910			—			—			205,925
Net loss subsequent to Organizational Transactions	—			—		—		—	—		—			(7,419		)	(59,717		)	(67,136		)
Adjustments to non-controlling interests	—			—		—		—	—		333			—			(333		)	—
Issuance of restricted stock awards, net of forfeitures	—			538		1		—	—		(1		)	—			—			—
Restricted stock surrendered in lieu of withholding taxes	—			(27	)	—		—	—		(399		)	—			—			(399		)
Options exercised				2							28									28
Equity-based compensation expense recognized subsequent to Organizational Transactions	—			—		—		—	—		3,831			—			—			3,831
Balance, September 30, 2017	$	—		15,513		$	16	117,236	$	117	$	35,447		$	(7,419	)	$	199,315		$	227,476

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



	Nine Months Ended September 30,
	2017			2016
Cash Flows from Operating Activities:
Net loss	$	(117,078	)	$	(57,418	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	7,746			3,020
Loss on disposal of property and equipment	882			—
Provision for bad debt and valuation allowance	805			1,299
Gain on loan sales	(14,982		)	(6,169		)
Equity-based compensation expense	3,989			421
Amortization and write-off of debt issuance costs	1,407			—
Originations of finance receivables	(361,265		)	(160,713		)
Proceeds from sale of finance receivables	361,659			228,480
Proceeds from sale of finance receivables to related party	—			1,531
Purchase of finance receivables from related party	—			(74,589		)
Changes in assets and liabilities:
Accounts receivable	(6,159		)	(1,509		)
Prepayment to related parties	—			(1,404		)
Vehicle inventory	(5,962		)	(62,335		)
Other current assets	(1,206		)	(3,449		)
Other assets	(1,722		)	—
Accounts payable and accrued liabilities	8,694			9,493
Accounts payable to related party	258			(21,436		)
Other liabilities	6,920			—
Net cash used in operating activities	(116,014		)	(144,778		)
Cash Flows from Investing Activities:
Purchases of property and equipment	(59,408		)	(21,021		)
Change in restricted cash	(1,489		)	(2,299		)
Net cash used in investing activities	(60,897		)	(23,320		)
Cash Flows from Financing Activities:
Proceeds from floor plan facility	674,411			246,880
Payments on floor plan facility	(644,641		)	(200,870		)
Proceeds from Verde Credit Facility	35,000			—
Payments on Verde Credit Facility	(35,000		)	—
Proceeds from long-term debt	7,596			—
Payments on long-term debt	(1,137		)	(107		)
Payments of debt issuance costs, including $1,000 and $0 to related parties, respectively	(1,000		)	(228		)
Proceeds from exercise of stock options	28			—
Tax withholdings related to restricted stock awards	(399		)	—
Proceeds from issuance of Class C redeemable preferred units	—			159,725
Class C redeemable preferred units issuance costs	—			(82		)
Net proceeds from initial public offering	206,323			—
Net cash provided by financing activities	241,181			205,318
Net increase in cash and cash equivalents	64,270			37,220
Cash and cash equivalents at beginning of period	39,184			43,134
Cash and cash equivalents at end of period	$	103,454		$	80,354

Supplemental cash flow information:
Cash payments for interest to third parties	$	4,668		$	1,844
Cash payments for interest to related parties	$	382		$	30
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	11,006		$	3,284
Capital expenditures financed through long-term debt	$	7,988		$	2,328
Accrual of return on Class C redeemable preferred units	$	9,439		$	13,224
Conversion of Class C redeemable preferred units to Class A units	$	260,411		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BUSINESS ORGANIZATION

Description of Business

Carvana Co. and its wholly-owned subsidiary Carvana Co. Sub (collectively, "Carvana Co.") together with its consolidated subsidiaries (the “Company”) is a leading eCommerce platform for buying used cars. The Company is transforming the used car buying experience by giving consumers a wide selection, great value and quality, transparent pricing and a simple, no pressure transaction. Using the Company’s website, consumers can research and identify a vehicle, inspect it using the Company’s proprietary 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle, and schedule delivery or pick-up, all from their desktop or mobile devices.

Organization and Initial Public Offering

Carvana Co. is a holding company that was formed as a Delaware corporation on November 29, 2016 for the purpose of completing an initial public offering ("IPO") and related transactions in order to operate the business of Carvana Group, LLC and its subsidiaries (collectively, "Carvana Group"). Substantially all of the Company’s assets and liabilities represent the assets and liabilities of Carvana Group.

Carvana Group was formed as a limited liability company by DriveTime Automotive Group, Inc. (together with its subsidiaries and affiliates “DriveTime”) and commenced operations in 2012. Prior to November 1, 2014, Carvana Group was a wholly-owned subsidiary of DriveTime. On November 1, 2014 (the “Distribution Date”), DriveTime distributed its member units in Carvana Group to the unit holders of DriveTime on a pro rata basis (the “Distribution”). Carvana Group accounted for the Distribution as a spinoff transaction in accordance with ASC 505-60, Equity — Spinoffs and Reverse Spinoffs and reflected assets and liabilities before and after the Distribution Date at their historical basis.

On May 3, 2017 , Carvana Co. completed its IPO of 15.0 million shares of Class A common stock at a public offering price of $15.00 per share. Carvana Co. received approximately $205.9 million in proceeds, net of underwriting discounts and commissions and offering expenses, which it used to purchase approximately 18.8 million newly-issued membership interests of Carvana Group at a price per unit equal to 0.8 times the initial public offering price less underwriting discounts and commissions and offering expenses.

Also in connection with the IPO, the Company completed the following organizational transactions (the “Organizational Transactions”):

•

Carvana Group amended and restated its limited liability company operating agreement (the "LLC Agreement") to, among other things, (i) eliminate a class of preferred membership interests, (ii) provide for two classes of common ownership interests in Carvana Group held by the then-existing holders of LLC units (the "Existing LLC Unitholders") consisting of Class B common units (the “Class B Units”) and Class A common units (the “Class A Units”), and (iii) appoint Carvana Co. as the sole manager of Carvana Group;

•

Carvana Co. amended and restated its certificate of incorporation to authorize (i) 50.0 million shares of Preferred Stock, par value $0.01 per share, (ii) 500.0 million shares of Class A common stock, par value $0.001 per share, and (iii) 125.0 million shares of Class B common stock, par value $0.001 per share. Each share of Class A common stock generally entitles its holder to one vote on all matters to be voted on by stockholders. Each share of Class B common stock held by Ernest Garcia, II, Ernie Garcia, III and entities controlled by one or both of them (collectively, the "Garcia Parties") generally entitles its holder to ten votes on all matters to be voted on by stockholders. All other shares of Class B common stock generally entitle their holders to one vote per share on all matters to be voted on by stockholders;


•	Carvana Group converted its outstanding Class C redeemable preferred units into approximately 43.1 million Class A Units;


•	Carvana Co. issued approximately 117.2 million shares of Class B common stock to holders of Class A Units, on a four -to- five basis with the number of Class A Units they owned, for nominal consideration; and,

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)


•	Carvana Co. transferred approximately 0.2 million Class A Units to Ernest Garcia, II in exchange for his 0.1% ownership interest in Carvana, LLC, a majority-owned subsidiary of Carvana Group.

In accordance with the LLC Agreement, Carvana Co. has all management powers over the business and affairs of Carvana Group and conducts, directs and exercises full control over the activities of Carvana Group. Class A Units and Class B Units (the "LLC Units") do not hold voting rights which results in Carvana Group being considered a variable interest entity ("VIE"). Due to Carvana Co.'s power to control and its significant economic interest in Carvana Group, it is considered the primary beneficiary of the VIE and the Company consolidates the financial results of Carvana Group.

The Organizational Transactions described above are considered transactions between entities under common control. As a result, the financial statements for periods prior to the IPO and Organizational Transactions have been adjusted to combine the previously separate entities for presentation purposes.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2016 included in the final prospectus for Carvana Co.’s IPO filed April 28, 2017 pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the SEC.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of September 30, 2017 , its results of operations for the three and nine months ended September 30, 2017 and 2016 , its cash flows for the nine months ended September 30, 2017 and 2016 , and the changes in its stockholders' equity for the nine months ended September 30, 2017 . The Company discloses all material changes in its members’ equity for the nine months ended September 30, 2016 throughout the accompanying notes, and, therefore, does not separately present a statement of changes in members’ equity for this period in its unaudited condensed consolidated financial statements. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

As discussed in Note 1 — Business Organization , Carvana Group is considered a VIE and Carvana Co. consolidates its financial results due to the determination that it is the primary beneficiary. The Company reviews subsidiaries and affiliates, as well as other entities, to determine if it should be considered variable interest entities, and whether it should change the consolidation determinations based on changes in its characteristics. The Company considers an entity a VIE if its equity investors own an interest therein that lacks the characteristics of a controlling financial interest or if such investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or if the entity is structured with non-substantive voting interests. To determine whether or not the entity is consolidated with the Company’s results, the Company also evaluates which interests are variable interests in the VIE and which party is the primary beneficiary of the VIE.

Liquidity

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. From inception, the Company has funded operations through the sale of Class A Units, its IPO completed on May 3, 2017 for net proceeds of approximately $205.9 million , the sale of Class C Redeemable Preferred Units, capital contributions from DriveTime and short-term funding from the Company’s majority owner. The Company has historically funded vehicle inventory purchases through its Floor Plan Facility, described in further detail in Note 7 — Debt Instruments , and has approximately $79.9 million available under the Floor Plan Facility to fund future vehicle inventory purchases as of September 30, 2017 . The Company has also funded some of its capital expenditures through long-term financing with third parties as described in further detail in Note 7 —

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Debt Instruments . Management believes that current working capital and expected continued capital expenditure financing is sufficient to fund operations for at least one year from the financial statement issuance date.

Use of Estimates

The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Comprehensive Loss

During the three and nine months ended September 30, 2017 and 2016 , the Company did not have any other comprehensive income and, therefore, the net loss and comprehensive loss were the same for all periods presented.

Restricted Cash

The restricted cash includes the deposit required under the Company's Floor Plan Facility, which is 5% of the outstanding floor plan facility principal balance, as explained in Note 7 — Debt Instruments and amounts held as restricted cash as required under letter of credit agreements, as explained in Note 13 — Commitments and Contingencies .

Income Taxes

The Company accounts for income taxes pursuant to the asset and liability method, which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. A valuation allowance is recognized if the Company determines it is more likely than not that all or a portion of a deferred tax asset will not be recognized.

Adoption of New Accounting Standards

In October 2016, the FASB issued ASU 2016-17, Interests Held through Related Parties That Are Under Common Control ("ASU 2016-17"), which updates the consolidation requirements when evaluating whether or not the entity is the primary beneficiary of a VIE with regard to interests held by related parties under common control. Under ASU 2016-17, entities will consider all indirect economic interests in a VIE held by related parties on a proportionate basis regardless of whether or not the related parties are under common control. The update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. Since the Company has adopted ASU 2015-02, ASU 2016-17 requires retrospective application to all periods presented. The Company adopted ASU 2016-17 on January 1, 2017 and it did not have an impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations ("ASU 2017-01"), which narrows the definition of a business and assists entities to evaluate whether transactions should be accounted for as acquisitions of assets or businesses. Under ASU 2017-01, when substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the purchase of the assets are not deemed to comprise a business. The update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company adopted ASU 2017-01 on January 1, 2017 and it did not have a material impact on its consolidated financial statements.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Accounting Standards Issued But Not Yet Adopted

Since May 2014, the FASB has issued several accounting standards updates related to revenue recognition including ASC 606, Revenue from Contracts with Customers ("ASC 606"), which amends the guidance in ASC 605, Revenue Recognition ("ASC 605"), and provides a single, comprehensive revenue recognition model for all contracts with customers. ASC 606 contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The entity will recognize revenue to reflect the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. ASC 606 addresses how entities should identify goods and services being provided to a customer, the unit of account for a principal versus agent assessment, how to evaluate whether a good or service is controlled before being transferred to a customer and how to assess whether an entity controls services performed by another party. ASC 606 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. The Company will adopt ASC 606 for interim and annual periods beginning January 1, 2018 and plans to use the modified retrospective method.

The Company is continuing to evaluate all potential impacts of ASC 606. Thus far, the Company's assessment has included gaining an understanding of the new standard, inventorying its revenue streams, analyzing and mapping contract features to revenue streams and considering the enhancement of disclosures related to revenue. While the Company has not completed its evaluation, it expects similar performance obligations to result under ASC 606 as compared with deliverables and separate units of accounting currently identified under ASC 605. The Company expects adoption of ASC 606 to impact the presentation of returns on its consolidated balance sheet. Based on the evaluation to date and the manner in which the Company recognizes revenue, the Company does not anticipate a material impact on the amount or timing of its revenue recognition as a result of adopting ASC 606.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) related to the accounting for leases. This ASU introduces a lessee model that requires a right-of-use asset and lease obligation to be presented on the balance sheet for all leases, whether operating or financing. The ASU eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. Expense recognition on the income statement remains similar to current lease accounting guidance. The ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The Company plans to adopt this ASU for its fiscal year beginning January 1, 2019. The adoption of this ASU will require the recognition of a right-of-use asset and a lease obligation for the Company’s leases (see Note 13 — Commitments and Contingencies ).

NOTE 3 — PROPERTY AND EQUIPMENT, NET

The following table summarizes property and equipment, net as of September 30, 2017 and December 31, 2016 (in thousands):



	September 30, 2017			December 31, 2016
Land and site improvements	$	11,474		$	9,355
Buildings and improvements	52,458			14,750
Transportation fleet	29,262			16,520
Software	15,673			10,065
Furniture, fixtures and equipment	10,728			3,704
Total property and equipment excluding construction in progress	119,595			54,394
Less: accumulated depreciation and amortization	(16,391		)	(9,752		)
Property and equipment excluding construction in progress, net	103,204			44,642
Construction in progress	22,792			15,950
Property and equipment, net	$	125,996		$	60,592

Depreciation and amortization expense was approximately $3.1 million and $1.2 million for the three months ended September 30, 2017 and 2016 , respectively, and approximately $7.7 million and $3.0 million for the nine months ended September 30, 2017 and 2016 , respectively. These amounts primarily relate to assets associated with selling, general and

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

administrative activities and are included as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

The Company capitalized internal use software costs totaling approximately $7.7 million and $2.9 million during the nine months ended September 30, 2017 and 2016 , respectively, which is included in software and construction in progress in the table above. The Company capitalized approximately $1.9 million and $1.1 million for the three months ended September 30, 2017 and 2016 , respectively, and approximately $5.5 million and $2.4 million for the nine months ended September 30, 2017 and 2016 , respectively, of payroll and payroll-related costs for employees who are directly associated with and who devote time to the development of software products for internal use.

NOTE 4 — ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The following table summarizes accounts payable and other accrued liabilities as of September 30, 2017 and December 31, 2016 (in thousands):



	September 30, 2017		December 31, 2016
Accounts payable	$	11,543	$	6,208
Accrued property and equipment	9,749		3,045
Sales taxes and vehicle licenses and fees	7,635		4,265
Accrued compensation and benefits	2,419		3,398
Accrued inventory costs	2,173		3,480
Accrued advertising costs	1,689		1,281
Other accrued liabilities	8,605		6,487
Total accounts payable and other accrued liabilities	$	43,813	$	28,164

NOTE 5 — RELATED PARTY TRANSACTIONS

Shared Services Agreement with DriveTime

In November 2014, the Company and DriveTime entered into a shared services agreement whereby DriveTime provided certain accounting and tax, legal and compliance, information technology, telecommunications, benefits, insurance, real estate, equipment, corporate communications, software and production and other services to facilitate the transition of these services to the Company on a standalone basis (the “Shared Services Agreement”). The Shared Services Agreement was most recently amended and restated in April 2017 and operates on a year-to-year basis after February 2019, with the Company having the right to terminate any or all services with 30 days' prior written notice and DriveTime having the right terminate certain services effective December 2017 and other services effective July 2018, in each case with 90 days' prior written notice. DriveTime provides the Company with certain benefits, tax reporting and compliance, telecommunications and information technology services under the amended agreement. Charges allocated to the Company are based on the Company’s actual use of the specific services detailed in the Shared Services Agreement. Total expenses related to the shared services agreement were approximately $0.0 million and $0.1 million for the three months ended September 30, 2017 and 2016 , respectively, and approximately $0.1 million and $0.5 million for the nine months ended September 30, 2017 and 2016 , respectively, which are included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Aircraft Time Sharing Agreement

The Company entered into an agreement to share usage of two aircraft operated by Verde Investments, Inc., an affiliate of DriveTime, (“Verde”) on October 22, 2015, and the agreement was subsequently amended on May 15, 2017. Pursuant to the agreement, the Company agreed to reimburse Verde for actual expenses for each of its flights. The original agreement was for 12 months, with perpetual 12 -month automatic renewals. Either the Company or Verde can terminate the agreement with 30 days’ prior written notice. The Company reimbursed Verde approximately $0.0 million and $0.1 million under this agreement during the three months ended September 30, 2017 and 2016 , respectively, and approximately $0.4 million and $0.3 million under this agreement during the nine months ended September 30, 2017 and 2016 , respectively.

Lease Agreements

In November 2014, the Company and DriveTime entered into a lease agreement that governs the Company’s access to and utilization of temporary storage, reconditioning, office, and parking space at various DriveTime inspection and reconditioning centers ("IRCs") and retail facilities (the "DriveTime Lease Agreement"). The DriveTime Lease Agreement was most recently amended in August 2017. Lease duration varies by location, with the earliest expiration occurring in 2017. Most delivery hubs have two -year terms and the Company is entitled to exercise up to two consecutive one -year renewal options at up to ten of these locations. The DriveTime Lease Agreement provides that the Company may take over DriveTime's leases for the inspection and reconditioning centers that the Company uses as IRCs in their entirety on July 31, 2018, subject to the Company obtaining releases of DriveTime's liability under the applicable leases and causing DriveTime to be paid for any unamortized costs.

Under the DriveTime Lease Agreement, the Company pays a monthly rental fee related to its pro rata utilization of space at each facility plus a pro rata share of each facility’s actual insurance costs and real estate taxes. The Company is additionally responsible for paying for any tenant improvements it requires to conduct its operations and its share of estimated costs incurred by DriveTime related to preparing these sites for use. As it relates to locations where the Company reconditions vehicles, the Company’s share of facility and shared reconditioning supplies expenses are calculated monthly by multiplying the actual costs for operating the inspection centers by the Company’s pro rata share of total reconditioned vehicles and parking spaces at such inspection centers in a given month. Management has determined that the costs allocated to the Company are based on a reasonable methodology.

Separate from the DriveTime Lease Agreement, in December 2016, the Company entered into a lease agreement related to a vehicle inspection and reconditioning center in Tolleson, Arizona, with Verde, with an initial term of approximately 15 years. The lease agreement requires monthly rental payments and can be extended for four additional five -year periods. In February 2017, the Company also entered into a lease with DriveTime for sole occupancy of a fully-operational inspection and reconditioning center in Winder, Georgia, where the Company previously maintained partial occupancy. The lease has an initial term of eight years, subject to the Company's ability to exercise three renewal options of five years each. The base rent for both of these leases will be subject to adjustment each year beginning January 1, 2018, increasing in an amount equal to the percentage increase in the Consumer Price Index, which amount shall not exceed 5% and shall not be less than 2% .

Expenses related to these lease agreements are allocated based on usage to inventory and selling, general and administrative expenses in the accompanying unaudited condensed consolidated balance sheets and statements of operations. Costs allocated to inventory are recognized as cost of sales when the inventory is sold. During the three months ended September 30, 2017 , total costs related to these lease agreements were approximately $1.8 million with approximately $0.6 million and $1.2 million allocated to inventory and selling, general, and administrative expenses, respectively. During the nine months ended September 30, 2017 , total costs related to these lease agreements were approximately $5.2 million with approximately $1.8 million and $3.4 million allocated to inventory and selling, general and administrative expenses, respectively. During the three months ended September 30, 2016 , total costs related to these lease agreements were approximately $0.7 million with approximately $0.4 million and $0.3 million allocated to inventory and selling, general and administrative expenses, respectively. During the nine months ended September 30, 2016 , total costs related to these lease agreements were approximately $1.8 million with approximately $1.1 million and $0.7 million allocated to inventory and selling, general and administrative expenses, respectively.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Corporate Office Leases

In November 2015, the Company entered into a lease agreement with Verde for its then corporate headquarters. The rent expense incurred related to this lease for the three and nine months ended September 30, 2016 was approximately $0.2 million and $0.6 million . In December 2016, Verde sold the building and assigned the lease to a third party.

During the first quarter of 2017, the Company subleased additional office space at DriveTime’s corporate headquarters in Tempe, Arizona. Pursuant to this arrangement, the Company incurred rent of approximately $0.1 million during the three and nine months ended September 30, 2017 . This arrangement terminated in March 2017.

As discussed in Note 13 — Commitments and Contingencies , in September 2016, the Company entered into a lease with a third party for the second floor of its corporate headquarters in Tempe, Arizona. DriveTime guarantees up to $0.5 million of the Company's rent payments under that lease through September 2019 . In connection with that lease, the Company entered into a sublease with DriveTime for the use of the first floor of the same building. Pursuant to this sublease, which has a term of 83 months and is co-terminus with DriveTime's master lease, subject to the right to exercise three five -year extension options, the Company will pay DriveTime rent equal to the amounts due under DriveTime's master lease. During the three and nine months ended September 30, 2017 , the rent expense incurred related to this first floor sublease was approximately $0.2 million and $0.5 million , respectively.

Vehicle Inventory Purchases

Through September 2016, the Company selected vehicle inventory and used DriveTime's auction numbers to facilitate purchases under a non-interest bearing agreement requiring periodic repayments. Vehicles purchased under this agreement were acquired by the Company at DriveTime's cost of the vehicles purchased with no markup. Beginning October 1, 2016, the Company purchased its vehicle inventory independently and made the payments itself through its vehicle inventory financing and security agreement. See Note 7 — Debt Instruments for further information.

Repurchase of Finance Receivables from DriveTime

On January 20, 2016, the Company repurchased approximately $72.4 million of finance receivables from DriveTime related to loans the Company originated and previously sold under the terms of the DriveTime receivable purchase agreement (the “DriveTime Receivable Purchase Agreement”) discussed below for a price of approximately $74.6 million . Such receivables were immediately sold by the Company to third party purchasers under the transfer and note purchase and security agreements for the same price of approximately $74.6 million .

DriveTime Receivable Purchase Agreement

In June 2014, the Company entered into the DriveTime Receivable Purchase Agreement pursuant to which the Company may sell to DriveTime and DriveTime may purchase from the Company finance receivables that the Company originates in conjunction with the sale of vehicles. As of September 30, 2017 and December 31, 2016 , the Company did not have any receivables due from DriveTime for the sales of such receivables. As of September 30, 2017 , DriveTime is not obligated to make any additional purchases under the agreement.

Master Dealer Agreement

In December 2016, the Company entered into a master dealer agreement with DriveTime, pursuant to which the Company may sell certain ancillary products, including vehicle service contracts ("VSCs"), to customers purchasing a vehicle from the Company through its transaction platform. The Company earns a commission on each VSC sold to its customers and DriveTime subsequently administers the VSCs. The Company collects the retail purchase price of the VSCs from its customers and remits the net fee to DriveTime on a periodic basis. During the three and nine months ended September 30, 2017 , the Company recognized approximately $2.4 million and $6.1 million , respectively, of commissions earned on VSCs sold to its customers and administered by DriveTime. The commission earned on the sale of these VSCs is included in other sales and revenues in the accompanying unaudited condensed consolidated statement of operations.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Credit Facility with Verde

On February 27, 2017, the Company entered into a credit facility with Verde for an amount up to $50.0 million (the "Verde Credit Facility"). The Company could draw up to five loans in minimum amounts of $10.0 million each during the term of the agreement. Amounts outstanding accrued interest at a rate of 12.0% per annum, compounding semi-annually and payable in kind and scheduled to mature in August 2018. Upon execution of the agreement, the Company paid Verde a commitment fee of $1.0 million . Immediately prior to the Company's IPO, the outstanding balance under the Verde Credit Facility was $35.0 million . The outstanding principal balance of $35.0 million and accrued interest of approximately $0.4 million were repaid in full and the Verde Credit Facility agreement terminated in connection with the IPO completed on May 3, 2017 .

IP License Agreement

In February 2017, the Company entered into a license agreement that governs the rights of certain intellectual property owned by the Company and the rights of certain intellectual property owned by DriveTime. The license agreement generally provides that each party grants to the other certain limited exclusive (other than with respect to the licensor party and its affiliates) and non-exclusive licenses to use certain of its intellectual property and each party agrees to certain covenants not to sue the other party, its affiliates and certain of its service providers in connection with various patent claims. The exclusive license to DriveTime is limited to the business that is primarily of subprime used car sales to retail customers. However, upon a change of control of either party, both parties’ license rights as to certain future improvements to licensed intellectual property and all limited exclusivity rights are terminated. The agreement does not provide a license to any of the Company's patents, trademarks, logos, customers’ personally identifiable information or any intellectual property related to the Company's vending machine, automated vehicle photography or certain other elements of the Company's brand.

Accounts Payable Due to Related Party

Amounts payable to DriveTime and Verde under the agreements explained above, as well as invoices DriveTime initially paid on behalf of the Company for vehicle reconditioning costs and general and administrative expenses, are included in accounts payable to related party in the accompanying unaudited condensed consolidated balance sheets. As of September 30, 2017 and December 31, 2016 , approximately $2.1 million and $1.9 million , respectively, was due to related parties primarily related to lease agreements, shared service fees, net VSC fees collected from customers and repayments to DriveTime for invoices paid on behalf of the Company.

NOTE 6 — FINANCE RECEIVABLE SALE AGREEMENTS

Transfer Agreements and Note Purchase and Security Agreements

In January 2016, the Company entered into transfer agreements pursuant to which it sold finance receivables meeting certain underwriting criteria to certain third party purchasers who engage DriveTime as servicer of such receivables. Pursuant to certain note purchase and security agreements, entered into in connection with the transfer agreements, such third party purchasers of receivables issued notes to certain parties, including Delaware Life Insurance Company (“Delaware Life”), in which Mark Walter has a substantial ownership interest. Mark Walter also indirectly controls CVAN Holdings, LLC, an Existing LLC Unitholder, and has non-controlling ownership interests in the other note purchasers under the note purchase and security agreements. On February 27, 2017, Delaware Life sold its interest in the notes under the note purchase and security agreements to an unrelated third party, but remains the administrative agent and paying agent for the note purchasers. Pursuant to the note purchase and security agreements, Delaware Life advanced $63.0 million through December 31, 2016 to the trusts that purchased the Company's automotive finance receivables. Under this agreement through September 30, 2016 , the Company had sold $220.0 million of finance receivables, including approximately $72.4 million of finance receivables repurchased from DriveTime. The Company recognized gain on loan sales of approximately $2.4 million and $6.2 million during the three and nine months ended September 30, 2016 , respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2017 , there was no unused capacity under the note purchase and security agreements.

Master Purchase and Sale Agreement and Master Transfer Agreement

In December 2016, the Company entered into a master purchase and sale agreement (the "Purchase and Sale Agreement") and a master transfer agreement (the "Master Transfer Agreement") pursuant to which it sells finance receivables meeting

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

certain underwriting criteria to certain third party purchasers, including Ally. DriveTime is the servicer of finance receivables sold under both agreements. Under the Purchase and Sale Agreement and the Master Transfer Agreement, the Company can sell up to an aggregate of $375.0 million , and $292.2 million , respectively, in principal balances of finance receivables subject to adjustment as described in the respective agreements. During the nine months ended September 30, 2017 , the Company sold approximately $241.3 million in principal balances of finance receivables under the Purchase and Sale Agreement, and approximately $106.6 million in principal balances of finance receivables under the Master Transfer Agreement. As of September 30, 2017 , there was approximately $112.4 million and $177.1 million of unused capacity under the Purchase and Sale Agreement and the Master Transfer Agreement, respectively.

In December 2016, the Company incurred approximately $0.9 million of costs directly attributable to establishing the Purchase and Sale Agreement and the Master Transfer Agreement. These costs are included as a component of other assets on the accompanying unaudited condensed consolidated balance sheets and are expensed as a component of selling, general and administrative expenses over the period the Company sells finance receivables under these agreements.

The total gain on loan sales related to finance receivables sold to third parties under these agreements during the three and nine months ended September 30, 2017 was approximately $6.6 million and $15.0 million , which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

NOTE 7 — DEBT INSTRUMENTS

Floor Plan Facility

The Company has a floor plan facility with a third party to finance its used vehicle inventory, which is secured by substantially all of its assets, other than the Company's interests in real property (the "Floor Plan Facility"). The Company most recently amended the Floor Plan Facility in August 2017 to, among other things, extend the maturity date to December 31, 2018 , and increase the available credit to $275.0 million through December 31, 2017 and to $350.0 million from January 1, 2018 through December 31, 2018 . The Company is required to make monthly interest payments at a rate per annum equal to one-month LIBOR plus 3.65% , effective August 1, 2017. The Floor Plan Facility requires that at least 5% of the total principal amount owed to the lender is held as restricted cash.

Repayment in an amount equal to the amount of the advance or loan must be made within five business days of selling or otherwise disposing of the underlying vehicle inventory. For sales involving financing originated by the Company and sold under either the Purchase and Sale Agreement or the Master Transfer Agreement as mentioned in Note 6 — Finance Receivable Sale Agreements , the lender has extended repayment to the earlier of fifteen business days after the sale of the used vehicle or one day following the sale of the related finance receivable. Outstanding balances related to vehicles held in inventory for more than 180 days require monthly principal payments equal to 10% of the original principal amount of that vehicle until the remaining outstanding balance is the lesser of i) 50% of the original principal amount or ii) 50% of the wholesale value. Prepayments may be made without incurring a premium or penalty. Additionally, the Company is permitted to make prepayments to the lender to be held as principal payments under the Floor Plan Facility and subsequently re-borrow such amounts.

As of September 30, 2017 , the interest rate on the Floor Plan Facility was approximately 4.88% , the Company had an outstanding balance under this facility of approximately $195.1 million , borrowing capacity available of approximately $79.9 million and held approximately $9.8 million in restricted cash related to this facility. As of December 31, 2016 , the Company held approximately $8.4 million in restricted cash related to this facility.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Notes Payable

From time to time, the Company enters into promissory note agreements to finance equipment for its transportation fleet. The assets financed with the proceeds from these notes serve as the collateral for each note and certain security agreements related to these assets have cross collateralization and cross default provisions with respect to one another. Each note has a fixed annual interest rate, five -year term and requires monthly payments. As of September 30, 2017 , the outstanding principal of these notes had a weighted-average interest rate of 5.8% and totaled approximately $16.7 million , of which approximately $3.4 million is due within the next twelve months and is included as current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Other Long-Term Debt

The Company has financed certain purchases of its property and equipment through a sale and leaseback transaction which is treated as a financing transaction in accordance with applicable accounting guidance. As of September 30, 2017 , the liability associated with this arrangement is approximately $3.0 million and is included in long-term debt in the accompanying unaudited condensed consolidated balance sheet.

NOTE 8 — STOCKHOLDERS' EQUITY

Organizational Transactions

Immediately prior to the IPO, Carvana Co. amended and restated its certificate of incorporation to, among other things authorize (i) 50.0 million shares of Preferred Stock, par value $0.01 per share, (ii) 500.0 million shares of Class A common stock, par value $0.001 per share, and (iii) 125.0 million shares of Class B common stock, par value $0.001 per share. Each share of Class A common stock generally entitles its holder to one vote on all matters to be voted on by stockholders. Each share of Class B common stock held by the Garcia Parties generally entitles its holder to ten votes on all matters to be voted on by stockholders, for so long as the Garcia Parties maintain direct or indirect beneficial ownership of at least 25% of the outstanding shares of Carvana Co.'s Class A common stock determined on an as-exchanged basis assuming that all of the Class A Units and Class B common stock were exchanged for Class A common stock. All other shares of Class B common stock generally entitle their holders to one vote per share on all matters to be voted on by stockholders. Holders of Class B common stock are not entitled to receive dividends and would not be entitled to receive any distributions upon the liquidation, dissolution or winding down of the Company. Holders of Class A and Class B common stock vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by applicable law.

As described in Note 1 — Business Organization , Carvana Group amended and restated its LLC Agreement to, among other things, provide for two classes of common ownership interests in Carvana Group. Carvana Group’s two remaining classes of membership interests are Class A Units and Class B Units. Carvana Co. is required to, at all times, maintain (i) a four -to- five ratio between the number of shares of Class A common stock issued by Carvana Co. and the number of Class A Units owned by Carvana Co. (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities and subject to adjustment as set forth in the exchange agreement (the "Exchange Agreement") further discussed below, and taking into account Carvana Sub’s 0.1% ownership interest in Carvana, LLC) and (ii) a four -to- five ratio between the number of shares of Class B common stock owned by the Existing LLC Unitholders and the number of Class A Units owned by the Existing LLC Unitholders. The Company may issue shares of Class B common stock only to the extent necessary to maintain these ratios. Shares of Class B common stock are transferable only together with an equal number of LLC Units if Carvana Co., at the election of an Existing LLC Unitholder, exchanges LLC Units for shares of Class A common stock.

As part of the Organizational Transactions, Carvana Co. issued approximately 117.2 million shares of Class B common stock to holders of Class A Units on a four -to- five basis with the number of Class A Units they owned.

As of September 30, 2017 , there were approximately 165.8 million and 5.6 million Class A Units and Class B Units (as adjusted for the participation thresholds), respectively, issued and outstanding. As discussed in Note 10 — Equity-Based Compensation , Class B Units are issued under the Company’s Equity Incentive Plan (the “Equity Incentive Plan”) and are subject to a participation threshold and are earned over the requisite service period.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Initial Public Offering

As described in Note 1 — Business Organization , on May 3, 2017, Carvana Co. completed its IPO of 15.0 million shares of Class A common stock at a public offering price of $15.00 per share. Carvana Co. received approximately $205.9 million in proceeds, net of underwriting discounts and commissions and offering expenses. Carvana Co. used the proceeds to purchase approximately 18.8 million newly-issued membership interests of Carvana Group at a price per unit equal to 0.8 times the initial public offering price less underwriting discounts and commissions. In connection with the IPO, Carvana Co. transferred approximately 0.2 million Class A Units to Ernest Garcia, II in exchange for his 0.1% ownership interest in Carvana, LLC, a majority-owned subsidiary of Carvana Group. After the transfer Carvana Co. owned approximately 18.6 million Class A Units.

The Company incurred approximately $4.7 million of legal, accounting, printing and other professional fees directly related to the IPO, including $1.3 million incurred during 2016, of which $0.4 million were paid during 2016. Upon completion of the IPO, the total costs incurred for the IPO were charged against additional paid-in capital.

Exchange Agreement

Carvana Co. and the Existing LLC Unitholders entered into an Exchange Agreement under which each Existing LLC Unitholder (and certain permitted transferees thereof) may exchange their LLC Units for shares of the Company's Class A common stock on a four -to- five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications and similar transactions and subject to vesting and the respective participation threshold for Class B Units. To the extent such owners also hold Class B common stock, they will be required to deliver to Carvana Co. a number of shares of Class B common stock equal to the number of shares of Class A common stock being exchanged for. Any shares of Class B common stock so delivered will be canceled. The number of exchangeable Class B Units is determined based on the value of Carvana Co.'s Class A common stock and the applicable participation threshold.

Class C Redeemable Preferred Units

On July 27, 2015, the Company authorized the issuance of and sold approximately 14.1 million Class C Redeemable Preferred Units to CVAN Holdings, LLC, for approximately $65.0 million . On April 27, 2016 , the Company authorized the issuance of and sold approximately 18.3 million Class C Redeemable Preferred Units for approximately $100.0 million to Mr. Garcia. On July 12, 2016 , the Company authorized the issuance of and sold approximately 8.6 million Class C Redeemable Preferred Units to CVAN Holdings, LLC, and approximately 1.7 million Class C Redeemable Preferred Units to GV Auto I, LLC for approximately $50.0 million and $9.7 million , respectively. On December 9, 2016, the Company authorized the issuance of and sold approximately 0.5 million Class C Redeemable Preferred Units to the Fidel Family Trust for approximately $2.7 million . The Company recorded the issuance and sale of Class C Redeemable Preferred Units at fair value, net of issuance costs.

In accordance with the Company’s Operating Agreement, the Class C Redeemable Preferred Units accrued a return (the “Class C Return”) at a coupon rate of 12.5% compounding annually on the aggregate amount of capital contributions made with respect to the Class C Redeemable Preferred Units.

On May 3, 2017 , the Company closed its IPO at a price such that the Company is no longer liable for the accrued Class C Return, and the outstanding Class C Redeemable Preferred Units converted to Class A Units on a one -to-one basis. As of September 30, 2017 , all Class C Redeemable Preferred Units had converted to Class A Units and the related balance became a component of permanent equity on the accompanying unaudited condensed consolidated balance sheet.

NOTE 9 — NON-CONTROLLING INTERESTS

As discussed in Note 1 — Business Organization , Carvana Co. consolidates the financial results of Carvana Group and reports a non-controlling interest related to the portion of Carvana Group owned by the Existing LLC Unitholders. Changes in the ownership interest in Carvana Group while Carvana Co. retains its controlling interest will be accounted for as equity transactions.

Future direct exchanges of LLC Units will result in a change in ownership and reduce the amount recorded as non-controlling interests and increase additional paid-in capital.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Upon the exercise of options issued by Carvana Co., or the issuance of other types of equity compensation by Carvana Co. such as the issuance of restricted or non-restricted stock, payment of bonuses in stock or settlement of stock appreciation rights in stock, Carvana Group is required to issue to Carvana Co. a number of Class A Units equal to 1.25 times the number of shares of Class A common stock being issued in connection with the exercise of such options or issuance of other types of equity compensation, subject to adjustment for stock splits, stock dividends, reclassifications and similar transactions. Activity related to the Company's equity compensation plans may result in a change in ownership which will impact the amount recorded as non-controlling interest and additional paid-in capital.

The non-controlling interest related to the Class B Units is determined based on the respective participation thresholds and the share price of Class A common stock on an as-converted basis. To the extent that the number of as-converted Class B Units change or Class B Units are forfeited, the resulting difference in ownership will be accounted for as equity transactions adjusting the non-controlling interest and additional paid-in capital.

For the three and nine months ended September 30, 2017 , the total adjustments related to equity compensation issued by Carvana Co., changes in the number of as-converted Class B Units and forfeitures of Class B Units was an increase in non-controlling interests and a corresponding decrease in additional paid-in capital of approximately $0.5 million and a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of approximately $0.3 million , respectively, which has been included in adjustments to the non-controlling interests in the accompanying unaudited condensed consolidated statement of stockholders' equity.

As of September 30, 2017 , Carvana Co. owned approximately 11% of Carvana Group with the Existing LLC Unitholders owning the remaining 89% . The non-controlling interests on the accompanying unaudited condensed consolidated statements of operations represents the portion of the loss attributable to the economic interest in Carvana Group held by the non-controlling Existing LLC Unitholders calculated based on the weighted average non-controlling interests' ownership during the periods presented.

The following table summarizes the effects of changes in ownership in Carvana Group on the Company's equity (in thousands):



	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Transfers (to) from non-controlling interests:
Decrease in additional paid-in capital as a result of the Organizational Transactions	$	—		$	(174,255	)
(Decrease) increase in additional paid-in capital as a result of adjustments to the non-controlling interests	(513		)	333
Total transfers to non-controlling interests	$	(513	)	$	(173,922	)

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

NOTE 10 — EQUITY-BASED COMPENSATION

Equity-based compensation expense is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures. A summary of equity-based compensation expense recognized during the three and nine months ended September 30, 2017 and September 30, 2016 is as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Class B Units	$	597	138		$	1,237	$	421
Restricted Stock Awards	823		—		1,973		—
Options	467		—		835		—
Total equity-based compensation expense	$	1,887	$	138	$	4,045	$	421

2017 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan"). Under the 2017 Incentive Plan 14.0 million shares of Class A common stock are available for issuance, which the Company may grant as stock options, stock appreciation rights, restricted stock, and other stock-based awards to employees, directors, officers and consultants. As of September 30, 2017 , approximately 12.9 million shares remain available for future equity award grants.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

During the three and nine months ended September 30, 2017 , the Company issued certain employees and consultants an aggregate of approximately 0.0 million and 0.6 million restricted shares of Class A common stock, respectively, pursuant to the terms of the 2017 Incentive Plan with a weighted-average grant-date fair value of $16.95 . During the three and nine months ended September 30, 2017 , the Company also awarded options to purchase an aggregate of approximately 0.1 million and 0.6 million shares of Class A common stock, respectively, to employees, consultants and directors, with a weighted-average grant-date fair value of $8.64 and $8.35 , respectively. The Company determined the grant-date fair value of the options using the Black-Scholes valuation model with the following weighted-average assumptions:



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Expected volatility ⁽¹⁾	63.0	%	63.0	%
Expected dividend yield	—	%	—	%
Expected term (in years) ⁽²⁾	6.25		6.26
Risk-free interest rate	1.9	%	1.9	%

(1) Measured using selected high-growth guideline companies and considering the risk factors that would influence the range of expected volatility because the Company does not have sufficient historical data to provide a reasonable basis upon which to estimate the expected volatility.

(2) Expected term represents the estimated period of time until an option is exercised and was determined using the simplified method because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

Class B Units

During the nine months ended September 30, 2017 , the Company issued an aggregate of approximately 0.8 million Class B Units to executive officers and certain other employees with a participation threshold of $12.00 and a grant-date fair value of $7.04 . There were no Class B Units issued during the three months ended September 30, 2017 . During the three and nine months ended September 30, 2016, the Company issued approximately 0.4 million and 0.9 million Class B Units, respectively. The Class B Units issued during the nine months ended September 30, 2016 have per unit participation thresholds of $4.8780 to $5.8114 and a grant-date fair value of $0.22 to $0.44 . The Company determined the grant-date fair value of the Class B Units using an option pricing valuation model with the following weighted-average assumptions:



	Three Months Ended September 30,			Nine Months Ended September 30,
	2017	2016		2017		2016
Expected volatility ⁽¹⁾	n/a	70.3	%	63.0	%	67.1	%
Expected dividend yield	n/a	—	%	—	%	—	%
Expected term (in years) ⁽²⁾	n/a	1.25		6.25		2.00
Risk-free interest rate	n/a	0.6	%	1.9	%	1.0	%

(2) In 2017, the expected term represents the estimated period of time determined using the simplified method because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

Company Performance Plan

The Company created the Performance Plan on July 25, 2016, whereby the Company was authorized to grant up to 1.0 million performance units (the “Performance Units”) to certain employees and consultants. The Performance Units granted were subject to continued employment and were only exercisable upon a qualifying transaction, which included an initial public offering, as defined in the Performance Plan. The IPO completed on May 3, 2017 constituted a qualifying transaction under the terms of the Performance Plan. The Company chose to settle the outstanding Performance Units in equity awards of Carvana Co. and recognized compensation expense related to the vested portion of these equity awards upon completion of the IPO.

As of September 30, 2017 , the total unrecognized compensation expense related to outstanding equity awards was approximately $18.3 million , which the Company expects to recognize over a weighted-average period of approximately 3.5 years . Total unrecognized equity-based compensation expense will be adjusted for actual forfeitures.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

NOTE 11 — LOSS PER SHARE

Basic and diluted net loss per share is computed by dividing the net loss attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive shares. For all periods presented, potentially dilutive shares are excluded from diluted net loss per share because they have an anti-dilutive impact. Therefore, basic and diluted net loss per share attributable to Class A common stockholders are the same for all periods presented.

As discussed in Note 1 — Business Organization , the Organizational Transactions are considered transactions between entities under common control and the financial statements for periods prior to the IPO and Organizational Transactions have been adjusted to combine the previously separate entities for presentation purposes. For purposes of calculating both the numerator and denominator of net loss per share for periods prior to the IPO, the Company has retroactively reflected the 15.0 million shares issued in the IPO and the LLC Units outstanding as of the Organizational Transactions as if they had been issued and outstanding as of the beginning of each period presented. These calculations for periods prior to the IPO do not consider the options or shares of Class A common stock issued on the IPO date under the 2017 Incentive Plan.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator:
Net loss	$	(39,769	)	$	(21,985	)	$	(117,078	)	$	(57,418	)
Less: Net loss attributable to non-controlling interests	(35,389		)	(19,589		)	(104,232		)	(51,159		)
Net loss attributable to Carvana Co., basic and diluted	$	(4,380	)	$	(2,396	)	$	(12,846	)	$	(6,259	)
Denominator:
Weighted-average shares of Class A common stock outstanding	15,520			15,000			15,254			15,000
Less: unvested weighted-average restricted stock awards	475			—			230			—
Weighted-average shares of Class A common stock to compute basic and diluted net loss per Class A common share	15,045			15,000			15,024			15,000
Net loss per share of Class A common stock, basic and diluted	$	(0.29	)	$	(0.16	)	$	(0.86	)	$	(0.42	)

Shares of Class B common stock do not share in the losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted net loss per share of Class B common stock under the two -class method has not been presented. LLC Units (adjusted for the Exchange Ratio and participation thresholds) are considered potentially dilutive shares of Class A common stock because they are exchangeable into shares of Class A common stock.

Weighted-average as-converted Class A Units of approximately 117.2 million together with the related Class B common stock for the three and nine months ended September 30, 2017 and September 30, 2016 were evaluated under the if-converted method for potentially dilutive effects and were determined to be anti-dilutive. Outstanding Class B Units of approximately 7.5 million and 6.5 million at September 30, 2017 and September 30, 2016 , respectively, were evaluated for potentially dilutive effects and were determined to be anti-dilutive. Potentially dilutive restricted stock awards of approximately 0.5 million and 0.2 million for the three and nine months ended September 30, 2017 , respectively, were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive. As of September 30, 2017 , 0.6 million options were outstanding and evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

NOTE 12 — INCOME TAXES

As a result of the IPO and Organizational Transactions, Carvana Co. owns a portion of the LLC Units of Carvana Group, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Carvana Group is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., in accordance with the terms of the LLC Agreement. Carvana Co. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to the allocable share of any taxable income of Carvana Group.

The Company recognizes deferred tax assets to the extent it believes these assets are more-likely-than-not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. Based on Carvana Co.'s limited operating history and future projections of taxable income, it believes there is significant uncertainty as to whether its deferred tax assets will be realized; therefore, Carvana Co. has recorded a full valuation allowance against its deferred tax assets. Additionally, Carvana Co. did not take benefit for its portion of taxable losses incurred by Carvana Group during the three and nine months ending September 30, 2017 subsequent to the IPO and Organizational Transactions.

The Company recognizes uncertain income tax positions when it is more-likely-than-not the position will be sustained upon examination. As of September 30, 2017 and December 31, 2016 , the Company has not identified any uncertain tax positions and has not recognized any related reserves.

Tax Receivable Agreement

Carvana Co. expects to obtain an increase in its share of the tax basis in the net assets of Carvana Group when LLC Units are exchanged by the Existing LLC Unitholders and other qualifying transactions. As described in Note 8 — Stockholders' Equity , each change in outstanding shares of Class A common stock results in a corresponding increase or decrease in Carvana Co.'s ownership of LLC Units. The Company intends to treat any exchanges of LLC Units as direct purchases of LLC interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that Carvana Co. would otherwise pay in the future to various taxing authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”). Under the TRA, the Company generally will be required to pay to the Existing LLC Unitholders 85% of the amount of cash savings, if any, in U.S. federal, state or local tax that the Company actually realizes directly or indirectly (or are deemed to realize in certain circumstances) as a result of (i) certain tax attributes created as a result of any sales or exchanges (as determined for U.S. federal income tax purposes) to or with the Company of their interests in Carvana Group for shares of Carvana Co.'s Class A common stock or cash, including any basis adjustment relating to the assets of Carvana Group and (ii) tax benefits attributable to payments made under the TRA (including imputed interest). The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

If the Internal Revenue Service or a state or local taxing authority challenges the tax basis adjustments that give rise to payments under the TRA and the tax basis adjustments are subsequently disallowed, the recipients of payments under the agreement will not reimburse the Company for any payments the Company previously made to them. Any such disallowance would be taken into account in determining future payments under the TRA and would, therefore, reduce the amount of any such future payments. Nevertheless, if the claimed tax benefits from the tax basis adjustments are disallowed, the Company’s payments under the TRA could exceed its actual tax savings, and the Company may not be able to recoup payments under the TRA that were calculated on the assumption that the disallowed tax savings were available.

The TRA provides that if (i) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, (ii) there is a material breach of any material obligations under the TRA; or (iii) it elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any LLC

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination.

As of September 30, 2017 , there have been no exchanges of LLC Units and the Company has not recorded a liability related to the TRA.

NOTE 13 — COMMITMENTS AND CONTINGENCIES

Lease Commitments

As of September 30, 2017 , the Company is a tenant under various operating leases with third parties related to certain of its delivery hubs, vending machines and offices. The initial terms expire at various dates between 2017 and 2037. Many of the leases include one or more renewal options ranging from three to thirty years. Rent expense for these operating leases was approximately $1.1 million and $0.2 million for the three months ended September 30, 2017 and 2016 , respectively, and approximately $2.9 million and $0.6 million for the nine months ended September 30, 2017 and 2016 , respectively.

In September 2016, the Company entered into a lease with a third party for the second floor of a new corporate headquarters in Tempe, Arizona. The lease has an initial term of 83 months and has three five -year extension options. At the request of the landlord, DriveTime agreed to partially guarantee the lease payments until September 2019 . The Company started incurring rent expense for this lease in April 2017, and it is included within the third party rent expense discussed above.

The Company also has lease agreements with DriveTime that provide the Company access to and utilization of space at various DriveTime inspection and reconditioning centers, temporary storage locations and retail facilities. Additionally, the Company entered into a sublease with DriveTime for the use of the first floor of its new corporate headquarters in Tempe, Arizona. See Note 5 — Related Party Transactions for further related party lease information.

Letters of Credit

In October 2016, the Company obtained an unconditional, irrevocable, stand-by letter of credit for $1.9 million to satisfy a condition of a new lease agreement. The Company is required to maintain a cash deposit of $1.9 million with the financial institution that issued the stand-by letter of credit until February 2018, at which point the cash deposit requirement will be reduced by approximately $1.0 million until November 30, 2018, at which time the letter of credit shall expire. The Company has earned interest on this letter of credit, and as of September 30, 2017 and December 31, 2016 , the balance with the financial institution was approximately $2.0 million . This balance is classified as restricted cash in the accompanying unaudited condensed consolidated balance sheets.

Legal Matters

In the ordinary course of business, the Company may become subject to litigation or claims. The Company is not aware of any pending legal proceedings of which the outcome is reasonably possible to have a material effect on its results of operations, financial condition or cash flows.

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

NOTE 14 — FAIR VALUE OF FINANCIAL INSTRUMENTS

As of September 30, 2017 and December 31, 2016 , the Company held certain assets that were required to be measured at fair value on a recurring basis. The following is a summary of fair value measurements at September 30, 2017 and December 31, 2016 (in thousands):

As of September 30, 2017 :



	Carrying Value		Level 1		Level 2		Level 3
Assets:
Money market funds ⁽¹⁾	$	105,747	$	105,747	$	—	$	—
Purchase price adjustment receivable ⁽²⁾	1,247		—		—		1,247

As of December 31, 2016 :



	Carrying Value		Level 1		Level 2		Level 3
Assets:
Money market funds ⁽¹⁾	$	20,088	$	20,088	$	—	$	—

___________________________

(1) Classified in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

(2) Classified as other assets in the accompanying unaudited condensed consolidated balance sheet and as a component of other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

The fair value of the purchase price adjustment receivable is determined based on the extent to which the Company’s estimated performance of the underlying finance receivables exceeds the purchaser’s estimated performance of the underlying finance receivables as of measurement dates specified in the Master Purchase and Sale Agreement. The Company develops its estimate of future cumulative losses based on the historical performance of finance receivables it originated with similar characteristics as well as general macro-economic trends. The Company then utilizes a discounted cash flow model to calculate the present value of the expected future payment amounts. Such fair value measurement is considered Level 3 under the fair value hierarchy.

The carrying amounts of restricted cash, accounts payable and accrued liabilities and accounts payable to related party approximate fair value because their respective maturities are less than three months. The carrying value of the Floor Plan Facility was determined to approximate fair value due to its short-term duration and variable interest rate that approximates prevailing interest rates as of each reporting period. The carrying value of notes payable was determined to approximate fair value as each of the notes has prevailing interest rates, which have not materially changed as of September 30, 2017 . The fair value of finance receivables, net was determined to be approximately $39.1 million and $25.6 million as of September 30, 2017 and December 31, 2016 , respectively, utilizing the estimated sales price based on the historical experience of the Company. Such fair value measurement of the finance receivables, net is considered Level 2 under the fair value hierarchy.

NOTE 15 — SUBSEQUENT EVENTS

LLC Unit Exchanges

Subsequent to September 30, 2017, certain LLC Unitholders have collectively exchanged approximately 0.5 million LLC Units of Carvana Group together with approximately 0.4 million shares of Carvana Co.'s Class B common stock for approximately 0.4 million shares of Carvana Co.'s Class A common stock under the Exchange Agreement.

Floor Plan Facility

On November 2, 2017, the Company entered into a letter agreement with Ally Bank and Ally Financial (the "Ally Parties") to extend repayment of amounts due under the Floor Plan Facility for sales involving financing originated by the Company that are not sold to or financed by the Ally Parties. With respect to such vehicles, the Ally Parties agree to extend repayment of the advance or the loan for such vehicle to the earlier of fifteen business days after the sale of the vehicle or two business

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

days following the sale or funding of the retail installment contract.

Finance Receivable Sale Agreements

On November 3, 2017 , the Company amended its Purchase and Sale Agreement to increase the aggregate amount of principal balances of finance receivables it can sell from $375.0 million to $1.5 billion . Also on November 3, 2017 , the Company terminated the remaining capacity under the Master Transfer Agreement and replaced this facility by entering into a new master transfer agreement with an unrelated third party under which the third party has committed to purchase up to an aggregate of $357.1 million in principal balances of finance receivables.

Master Sale-Leaseback Agreement

On November 3, 2017, the Company entered into a Master Sale-Leaseback Agreement pursuant to which it may sell and lease back up to $75.0 million of its real property interests, including costs for construction improvements. At any time the Company may elect to, and beginning November 2, 2019, the purchaser has the right to demand that, the Company repurchase one or more sold real property interests for an amount equal to the repurchase price provided in the applicable lease and any amounts due and owing under such lease. The Company expects to sell and lease back many of its real estate holdings and improvements pursuant to this agreement.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless the context requires otherwise, references in this report to "Carvana," the “Company,” “we,” “us” and “our” refer to Carvana Group, LLC and its consolidated subsidiaries prior to the initial public offering described in this report and to Carvana Co. and its consolidated subsidiaries following the Organizational Transactions and the initial public offering. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our prospectus filed with the SEC on April 28, 2017 , as well as our consolidated financial statements and the accompanying notes included in Item 1 of this Form 10-Q.

Overview

Carvana is a leading eCommerce platform for buying used cars. We are transforming the used car buying experience by giving consumers what they want — a wide selection, great value and quality, transparent pricing and a simple, no pressure transaction. Each element of our business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

On May 3, 2017 , we completed our IPO of 15.0 million shares of Class A common stock at a public offering price of $15.00 per share. We received $205.9 million in proceeds, net of underwriting discounts and commissions and offering expenses. We used a portion of the net proceeds to repay the $35.0 million of outstanding borrowings plus accrued interest under the Verde Credit Facility, and will use the remainder for general working corporate purposes. We expect these general corporate purposes to include funding working capital, operating expenses and the selective pursuit of business development opportunities, including to expand our current business through acquisitions of, or investments in, other businesses, products or technologies.

Since the launch of our first market in January 2013 through September 30, 2017 , we have purchased, reconditioned, sold and delivered approximately 58,300 vehicles to customers through our website, generating $1.1 billion in revenue.

Our business combines a comprehensive online sales experience with a vertically-integrated supply chain that allows us to sell high quality vehicles to our customers transparently and efficiently at a low price. Using our website, customers can complete all phases of a used vehicle purchase transaction. Specifically, our online sales experience allows customers to:

•

Purchase a used vehicle. As of September 30, 2017 , we listed approximately 6,700 vehicles for sale on our website, where customers can select and purchase a vehicle, including arranging financing and signing contracts, directly from their desktop or mobile device. Selling used vehicles to retail customers is the primary driver of our business. Selling used vehicles generates revenue equal to the selling price of the vehicle, less an allowance for returns, and also enables multiple additional revenue streams, including vehicle service contracts (“VSCs”), GAP waiver coverage, and trade-ins.

•

Finance their purchase. Customers can pay for their Carvana vehicle using cash, our proprietary loan origination platform or financing from third parties such as banks or credit unions. Customers who choose to apply for our in-house financing fill out a short application form, select from a range of financing terms we provide, and, if approved, apply the financing to their purchase in our online checkout process. We generally seek to sell the automotive finance receivables we originate to third party financing partners and earn a premium on each sale.

•

Protect their purchase. Customers have the option to protect their vehicle with a CarvanaCare-branded VSC as part of our online checkout process. VSCs provide customers with insurance against certain mechanical repairs after the expiration of their vehicle’s original manufacturer warranty. We earn a fee for selling VSCs on behalf of an affiliate of DriveTime and, prior to December 2016, third parties, who are the obligors under these VSCs. We generally have no contractual liability to customers for claims under these agreements. We also recently began offering GAP waiver coverage to customers in most states. This product contractually obligates us to cancel the remaining principal outstanding after insurance proceeds in a total loss event.


•	Sell us their car. We allow our customers to trade-in a vehicle and apply the trade-in value to their purchase, or to sell us a vehicle independent of a purchase. Using our digital appraisal tool, customers can complete a short appraisal

form and receive an offer for their trade-in nearly instantaneously. We generate trade-in offers using a proprietary valuation algorithm supported by extensive used vehicle market and customer behavior data. When customers accept our offer, we take their vehicles into inventory and sell them either at auction as a wholesale sale or through our website as a retail sale. Vehicles sold at auction typically do not meet the quality or condition standards required to be included in retail inventory displayed for sale on our website.

To enable a seamless customer experience, we have built a vertically-integrated used vehicle supply chain, supported by proprietary software systems and data.

•

Vehicle sourcing and acquisition. We acquire the majority of our used vehicle inventory from wholesale auctions. We also, to a lesser extent, acquire vehicles from consumers and directly from used vehicle suppliers, including franchise and independent dealers, leasing companies, and car rental companies. Using proprietary machine learning algorithms and data from a variety of internal and external sources, we evaluate tens of thousands of vehicles daily to determine their fit with consumer demand, internal profitability targets, and our existing inventory mix.

•

Inspection and reconditioning. After acquiring a vehicle, we transport it to one of our inspection and reconditioning centers (“IRCs”), where it undergoes a 150-point inspection and is reconditioned to meet “Carvana Certified” standards. This process is supported by a custom used vehicle inventory management system, which tracks vehicles through each stage of the process and is seamlessly integrated with auto parts suppliers to facilitate the procurement of required parts.

•

Photography and merchandising. We photograph vehicles using our proprietary photo booths located at each of our IRCs. This allows us to display interactive, 360-degree images of each vehicle on our website. We also annotate each vehicle image with a list of features and imperfections to assist our customers in their evaluation of each vehicle for purchase. Our 360-degree photo and annotation processes are enabled by proprietary imaging technology and integrations with various vehicle data providers for vehicle feature and option information.

•

Logistics and fulfillment. We transport vehicles purchased by our customers to their local market for home delivery or pick-up. In markets where we have launched operations, delivery to the customer is completed by a Carvana employee in a branded delivery truck. In a subset of these markets, customers have the option of picking up their car at one of our vending machines. These vending machines are multi-story glass towers where our customers deposit a token into a coin slot and an automated platform delivers the purchased vehicle to a garage bay where the customer is waiting. Our vending machines provide an attractive and unique customer pick-up experience, developing brand awareness while lowering our variable vehicle delivery expense. Our logistics and fulfillment operations are supported by our proprietary vehicle transportation management system, which optimizes the scheduling of transport routes and delivery slots.

Unit Sales

Since launching to customers in Atlanta, Georgia in January 2013, we have experienced rapid growth in sales through our website. During the nine months ended September 30, 2017 , the number of vehicles we sold to retail customers grew by 133.5% to 30,735 , compared to 13,161 in the nine months ended September 30, 2016 .

We view the number of vehicles we sell to retail customers as the most important measure of our growth, and we expect to continue to focus on building a scalable platform to increase our retail units sold. This focus on retail units sold is motivated by several factors:


•	Retail units sold enable multiple revenue streams, including the sale of the vehicle itself, the sale of automotive finance receivables originated to finance the vehicle, the sale of VSCs, the sale of GAP waiver coverage, and the sale of vehicles acquired from customers as trade-ins.


•	Retail units sold are the primary driver of customer referrals and repeat sales. Each time we sell a vehicle to a new customer, that customer becomes a candidate to refer future customers and can become a repeat buyer in the future.


•	Retail units sold is an important driver of the average number of days between vehicle acquisition by us and the sale to a customer. Reducing average days to sale impacts gross profit on our vehicles because used cars depreciate over time.


•	Retail unit sales allow us to benefit from economies of scale due to our centralized online sales model. We believe our model provides meaningful operating leverage in acquisition, reconditioning, transport, customer service and delivery.

We plan to invest in technology and infrastructure to support growth in unit sales. This includes continued investment in our acquisition, reconditioning, and logistics network, as well as continued investment in product development and engineering to deliver customers a best-in-class experience.

Markets

Our growth in retail units sold is driven by expansion into new markets and increased penetration in our existing markets. We define a market as a metropolitan area in which we have commenced local advertising and offer free home delivery to customers with a Carvana employee and branded delivery truck. Opening a new market involves hiring a market operations manager and a team of customer advocates, connecting the market to our existing logistics network, and initiating local advertising. Each new market has typically required approximately $0.5 million in capital expenditures, primarily related to the acquisition of 1 to 2 branded delivery trucks, a multi-car hauler to connect the market to our logistics network, and furniture, fixtures and equipment in a local office space. As a market scales, we may elect to build a vending machine in the market to improve fulfillment and further increase customer awareness. Each new vending machine has required on average $5.0 million of capital expenditures, depending on the number of stories in the vending machine tower and local market conditions.

Our capital- and headcount-light expansion model has enabled us to increase our rate of market openings in each of the past four years. After opening Atlanta, Georgia in 2013, we opened two markets in 2014, six in 2015, twelve in 2016, and 18 in the first three quarters of 2017, bringing our total number of markets to 39 as of September 30, 2017 . Over this period, we have continually improved our market expansion playbook, which we believe provides us with the capability to accelerate this rate of market openings in the future.

When we open a market, we commence advertising using a blend of brand and direct advertising channels. Our advertising spend in each market is approximately proportionate to each market’s population, subject to adjustments based on specific characteristics of the market, used vehicle market seasonality and special events such as vending machine openings. This historically has led to increased market penetration over time following the market opening. Beginning in the second quarter of 2017, we increased national television advertising spend. With our growth into new markets, national television advertising is becoming more economically efficient compared to purchasing several local television advertising campaigns.

Revenue and Gross Profit

Our expansion into new markets and increased penetration in existing ones has led to growth in retail unit sales. We generate revenue on retail units sold from four primary sources: the sale of the vehicle, gains on the sales of loans originated to finance the vehicle, wholesale sales of vehicles we acquire from customers as trade-ins, and sales of ancillary products such as VSCs and GAP waiver coverage.

Our largest source of revenue, used vehicle sales, totaled $208.1 million and $550.4 million during the three and nine months ended September 30, 2017 , respectively. As we continue to expand to new markets and increase penetration in existing ones, we expect used vehicle sales to increase as we increase retail units sold. We generate gross profit on used vehicle sales from the difference between the retail selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

Wholesale sales includes sales of trade-ins and other vehicles acquired from customers as well as sales of certain retail units listed on our website and totaled $7.5 million and $21.0 million during the three and nine months ended September 30, 2017 , respectively. We expect wholesale sales to increase with retail units sold and as we expand our suite of product offerings to customers who may wish to trade-in or to sell us a car independent of a retail sale. We generate gross profit on wholesale vehicle sales from the difference between the wholesale selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

Other sales and revenues, which includes gains on the sales of loans we originate, sales commissions on VSCs, and GAP waiver coverage totaled $9.8 million and $22.4 million during the three and nine months ended September 30, 2017 , respectively. We expect other sales and revenues to increase with retail units sold and as we improve our ability to offer

attractive financing solutions and ancillary products to our customers. Other sales and revenues are 100% gross margin products for which gross profit equals revenue.

During our growth phase, our highest priority will continue to be generating demand and building an infrastructure to support growth in retail units sold. Secondarily, we plan to pursue several strategies designed to increase our total gross profit per unit. These strategies include the following:

•

Reduce average days to sale. Our goal is to increase both our number of markets and our sales growth at a faster rate than we increase our inventory size, which we believe would decrease average days to sale due to a relative increase in demand versus supply. Reductions in average days to sale lead to fewer vehicle price reductions, and therefore higher average selling prices, other things being equal. Higher average selling prices in turn lead to higher gross profit per unit sold, all other factors being equal.


•	Leverage existing IRC infrastructure. As we scale, we intend to more fully utilize the capacity in our existing IRCs, which collectively have capacity to inspect and recondition approximately 200,000 vehicles per year.


•	Increase utilization on logistics network. As we scale, we intend to more fully utilize our in-house logistics network to transport cars to our IRCs after acquisition from wholesale auctions or customers.


•	Increase conversion on existing products. We plan to continue to improve our website to highlight the benefits of our complementary product offerings, including financing, VSCs, GAP waiver coverage and trade-ins.


•	Add new products and services. We plan to utilize our online sales platform to offer additional complementary products and services to our customers.


•	Optimize pricing. We regularly test different pricing of our products, including vehicle sticker prices, trade-in offers and ancillary product prices and believe we can improve by further optimizing prices over time.

Seasonality

Used vehicle sales exhibit seasonality with sales peaking late in the first calendar quarter and diminishing through the rest of the year, with the lowest relative level of vehicle sales expected to occur in the fourth calendar quarter. Due to our rapid growth, our overall sales patterns to date have not reflected the general seasonality of the used vehicle industry, but we expect this to change once our business and markets mature. Used vehicle prices also exhibit seasonality, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year. Historically, this has led our gross profit per unit to be higher on average in the first half of the year than in the second half of the year. We may experience seasonal and other fluctuations in our quarterly operating results, which may not fully reflect the underlying performance of our business.

Relationship with DriveTime

We were founded as a subsidiary of DriveTime in 2012 and subsequently spun out of DriveTime as a standalone entity in November 2014. DriveTime consolidated our financial results in its financial statements through July 2015. DriveTime is controlled by our controlling shareholder, who is also the father of Ernie Garcia, III, our Chief Executive Officer.

For further discussion about our relationship with DriveTime and other related parties, refer to Note 5 — Related Party Transactions included in Part I, Item 1, Unaudited Condensed and Consolidated Financial Statements, of this Quarterly Report on Form 10-Q.

Key Operating Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our progress, and make strategic decisions. Our key operating metrics reflect the key drivers of our growth, including opening new markets, increasing brand awareness and enhancing the selection of vehicles we make available to our customers. Our key operating metrics also demonstrate our ability to translate these drivers into retail sales and to monetize these retail sales through a variety of product offerings.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Retail units sold	11,719		5,023		30,735		13,161
Number of markets	39		16		39		16
Average monthly unique visitors	1,168,693		388,673		941,162		350,983
Inventory units available on website	6,689		4,565		6,689		4,565
Average days to sale	97		92		99		90
Total gross profit per unit	$	1,742	$	1,347	$	1,503	$	1,273

Retail Units Sold

We define retail units sold as the number of vehicles sold to customers in a given period, net of returns under our seven-day return policy. We view retail units sold as a key measure of our growth for several reasons. First, retail units sold is the primary driver of our revenues and, indirectly, gross profit, since retail unit sales enable multiple complementary revenue streams, including financing, VSCs, GAP waiver coverage and trade-ins. Second, growth in retail units sold increases the base of available customers for referrals and repeat sales. Third, growth in retail units sold is an indicator of our ability to successfully scale our logistics, fulfillment, and customer service operations.

Number of Markets

We define a market as a metropolitan area in which we have commenced local advertising and offer free home delivery to customers with a Carvana employee and branded delivery truck. We view the number of markets we serve as a key driver of our growth. As we increase our number of markets, the population of consumers who have access to our fully-integrated customer experience increases, which in turn helps to increase the number of vehicles we sell.

Average Monthly Unique Visitors

We define a monthly unique visitor as an individual who has visited our website within a calendar month, based on data provided by Google Analytics. We calculate average monthly unique visitors as the sum of monthly unique visitors in a given period, divided by the number of months in that period. We view average monthly unique visitors as a key indicator of the strength of our brand, the effectiveness of our advertising and merchandising campaigns and consumer awareness.

Inventory Units Available

We define inventory units available as the number of vehicles listed for sale on our website on the last day of a given reporting period. Until we reach an optimal pooled inventory level, we view inventory units available as a key measure of our growth. Growth in inventory units available increases the selection of vehicles available to consumers in all of our markets simultaneously, which we believe will allow us to increase the number of vehicles we sell. Moreover, growth in inventory units available is an indicator of our ability to scale our vehicle purchasing, inspection and reconditioning operations.

Average Days to Sale

We define average days to sale as the average number of days between vehicle acquisition by us and delivery to a customer for all retail units sold in a period. However, this metric does not include any retail units that remain unsold at period end. We view average days to sale as a useful metric due to its impact on used vehicle average selling price.

Total Gross Profit per Unit

We define total gross profit per unit as the aggregate gross profit in a given period divided by retail units sold in that period. Total gross profit per unit is driven by sales of used vehicles, each of which generates additional revenue sources including: wholesale sales of vehicles we acquire from customers as trade-ins, gains on the sales of loans originated to finance the vehicle, revenue from GAP waiver coverage and commissions on sales of VSCs. We believe total gross profit per unit is a key measure of our growth and long-term profitability.

Components of Results of Operations

Used Vehicle Sales

Used vehicle sales represent the aggregate sales of used vehicles to customers through our website. Revenue from used vehicles sales is recognized upon delivery or pick-up of the vehicle by the customer and reported net of a reserve for expected returns. Factors affecting used vehicle sales revenue include the number of retail units sold and the average selling price of these vehicles. At our current stage of growth, changes in retail units sold are a much larger driver of changes in revenue than are changes in average selling price.

The number of used vehicles we sell depends on the number of markets we serve, our volume of website traffic in these markets, our inventory selection, the effectiveness of our branding and marketing efforts, the quality of our customer sales experience, our volume of referrals and repeat customers, the competitiveness of our pricing, competition from other used car dealerships, and general economic conditions. On a quarterly basis, the number of used vehicles we sell is also affected by seasonality, with demand for used vehicles reaching a seasonal high point in the first half of each year, commensurate with the timing of tax refunds, and diminishing through the rest of the year, with the lowest relative level of used vehicle sales expected to occur in the fourth calendar quarter.

Our retail average selling price depends on the mix of vehicles we acquire and hold in inventory, retail market prices in our markets, our average days to sale, and our pricing strategy. We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to average selling prices increasing or decreasing. We anticipate that our average days to sale will decline over time as we continue to launch new markets, which we believe will have a positive impact on our retail average selling price, other things being equal.

Wholesale Vehicle Sales

Wholesale vehicle sales is equal to the aggregate proceeds we receive on vehicles sold to wholesalers. The vehicles we sell to wholesalers are primarily acquired from our customers who trade-in their existing vehicles when making a purchase from us, and to a lesser extent, vehicles we acquire from customers who do not purchase another vehicle from us. In addition, we occasionally sell certain used vehicles previously listed for sale to customers through our website to wholesalers. Factors affecting wholesale vehicle sales include the number of wholesale units sold and the average wholesale selling price of these vehicles. The average selling price of our wholesale units is primarily driven by the mix of vehicles we sell to wholesalers, as well as general supply and demand conditions in the applicable wholesale vehicle market.

Other Sales and Revenues

We generate other sales and revenues primarily through the sales of automotive finance receivables we originate and sell to third parties and commissions we receive on VSCs. Prior to December 9, 2016, the VSCs were sold and administered by third parties. On December 9, 2016, we entered into a master dealer agreement with DriveTime, pursuant to which we sell VSCs that DriveTime administers. The commission revenues we recognize on VSCs depends on the number of retail units we sell, the conversion rate of VSCs on these sales, commission rates we receive, VSC early cancellation frequency, and product features.

We generally seek to sell the automotive finance receivables we generate under committed forward flow arrangements with third parties who acquire these receivables at premium prices without recourse to us for their post-sale performance. Factors affecting revenue from these sales include the number of automotive finance receivables we originate, the average principal balance of these receivables, the credit quality of the portfolio and the price at which we are able to sell them to third parties.

The number of receivables we originate is driven by the number of used vehicles sold and the percentage of our sales for which we provide financing, which is influenced by the financing terms we offer our customers relative to alternatives available to the customer. The average principal balance is driven primarily by the mix of vehicles we sell, since higher average selling prices typically mean higher average receivable balances. The price at which we resell these automotive finance receivables is driven by the terms of our forward flow arrangements and applicable interest rates.

Cost of Sales

Cost of sales includes the cost to acquire vehicles and the reconditioning and transportation costs associated with preparing the vehicles for resale. Vehicle acquisition costs are driven by the mix of vehicles we acquire, the source of those vehicles, and supply and demand dynamics in the wholesale vehicle market. Reconditioning costs consist of direct costs, including parts, labor and third party repair expenses directly attributable to specific vehicles, as well as indirect costs, such as IRC overhead. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition to the IRC. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value.

Used Vehicle Gross Profit

Used vehicle gross profit equals the vehicle sales price minus our costs of sales associated with vehicles that we list and sell on our website. Used vehicle gross profit per unit equals our aggregate used vehicle gross profit in any measurement period divided by the number of retail units sold in such period.

Wholesale Vehicle Gross Profit

Wholesale vehicle gross profit equals the vehicle sales price minus our cost of sales associated with vehicles we sell to wholesalers. Factors affecting wholesale gross profit include the number of wholesale units sold, the average wholesale selling price of these vehicles, the acquisition price we offer to the customer and, in the case of vehicles formerly listed on our website, the total costs described above associated with that vehicle.

Other Gross Profit

Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in gross profit and the associated drivers are identical to changes in revenues from these products and the associated drivers.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include expenses associated with advertising to customers, operating our logistics hubs, fulfillment centers and vending machines, operating our logistics and fulfillment network, and other corporate overhead expenses, including expenses associated with IT, product development, engineering, legal, accounting, finance and business development. We anticipate that these expenses will increase as we grow. SG&A expenses exclude the costs of inspecting and reconditioning vehicles, which are included in cost of sales.

Interest Expense

Interest expense includes interest incurred on our Floor Plan Facility, notes payable and other long-term debt, which are used to fund inventory, our transportation fleet and certain of our property and equipment, respectively. During 2017, interest expense also includes interest incurred and the commitment fee related to the Verde Credit Facility, which was used as needed to fund working capital prior to its termination in connection with our IPO.

Results of Operations



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017		2016		Change		2017		2016		Change

	(dollars in thousands, except per unit amounts)						(dollars in thousands, except per unit amounts)
Net sales and operating revenues:
Used vehicle sales, net	$	208,113	$	92,115	125.9	%	$	550,442	$	241,098	128.3	%
Wholesale vehicle sales	7,459		2,870		159.9	%	21,003		6,904		204.2	%
Other sales and revenues ⁽¹⁾	9,807		3,859		154.1	%	22,372		10,319		116.8	%
Total net sales and operating revenues	$	225,379	$	98,844	128.0	%	$	593,817	$	258,321	129.9	%
Gross profit:
Used vehicle gross profit	$	9,859	$	2,849	246.1	%	$	22,657	$	6,290	260.2	%
Wholesale vehicle gross profit	751		58		1,194.8	%	1,173		151		676.8	%
Other gross profit ⁽¹⁾	9,806		3,859		154.1	%	22,371		10,319		116.8	%
Total gross profit	$	20,416	$	6,766	201.7	%	$	46,201	$	16,760	175.7	%
Market information:
Markets, beginning of period	30		14		114.3	%	21		9		133.3	%
Market launches	9		2		350.0	%	18		7		157.1	%
Markets, end of period	39		16		143.8	%	39		16		143.8	%
Unit sales information:
Used vehicle unit sales	11,719		5,023		133.3	%	30,735		13,161		133.5	%
Wholesale vehicle unit sales	1,797		787		128.3	%	4,665		1,920		143.0	%
Per unit selling prices:
Used vehicles	$	17,759	$	18,339	(3.2	)%	$	17,909	$	18,319	(2.2	)%
Wholesale vehicles	$	4,151	$	3,647	13.8	%	$	4,502	$	3,596	25.2	%
Per unit gross profit: ⁽²⁾
Used vehicle gross profit	$	841	$	567	48.3	%	$	737	$	478	54.2	%
Wholesale vehicle gross profit	$	418	$	74	464.9	%	$	251	$	79	217.7	%
Other gross profit	$	837	$	768	9.0	%	$	728	$	784	(7.1	)%
Total gross profit	$	1,742	$	1,347	29.3	%	$	1,503	$	1,273	18.1	%

(1) Includes $2,414 and $6,070 of other sales and revenues from related parties for the three and nine months ended September 30, 2017, respectively.
(2) All gross profit per unit amounts are per used vehicle sold, except wholesale vehicle gross profit, which is per wholesale vehicle sold.

Used Vehicle Sales

Three Months Ended September 30, 2017 Versus 2016. Used vehicle sales increased by $116.0 million to $208.1 million during the three months ended September 30, 2017 compared to $92.1 million during the three months ended September 30, 2016 . The increase in revenue was primarily due to an increase in the number of used vehicles sold to 11,719 from 5,023 during the three months ended September 30, 2016 and 2017, respectively. The increase in unit sales was driven in part by growth to 39 markets as of September 30, 2017 from 16 markets as of September 30, 2016 . The increase in units sold was also driven by growth in existing markets due to expanded inventory selection, enhanced marketing efforts, increased brand awareness, and customer referrals. We anticipate that unit sales will continue to grow as we launch new markets and increase penetration in existing markets. The average selling price of our retail units sold decreased to $17,759 in the three months ended September 30, 2017 from $18,339 in the same quarter in the prior year, primarily due to a shift in inventory mix.

Nine Months Ended September 30, 2017 Versus 2016. Used vehicle sales increased by $309.3 million to $550.4 million during the nine months ended September 30, 2017 compared to $241.1 million during the nine months ended September 30, 2016 . The increase in revenue was primarily due to an increase in the number of used vehicles sold to 30,735 from 13,161 during the nine months ended September 30, 2016 and 2017, respectively. The increase in unit sales was driven in part by growth to 39 markets as of September 30, 2017 from 16 markets as of September 30, 2016 . The increase in units sold was also driven by growth in existing markets due to expanded inventory selection, enhanced marketing efforts, increased brand awareness, and customer referrals. We anticipate that unit sales will continue to grow as we launch new markets and increase penetration in existing markets. The average selling price of our retail units sold decreased to $17,909 in the nine months ended September 30, 2017 from $18,319 in the same year-to-date period in the prior year. We believe average selling prices declined primarily due to our shift in inventory mix and partially due to an increase in average days to sale to 99 days in the nine months ended September 30, 2017 from 90 days in the comparable prior year period, leading to additional sticker price reductions and therefore lower average selling prices.

Wholesale Vehicle Sales

Three Months Ended September 30, 2017 Versus 2016. Wholesale vehicle sales increased by $4.6 million to $7.5 million during the three months ended September 30, 2017 , compared to $2.9 million during the three months ended September 30, 2016 . We primarily obtain our wholesale inventory from customer trade-ins. As our retail unit sales have increased, so have the trade-ins we receive. Therefore, we have had more units available for sale to wholesalers over time and our revenues attributed to wholesale vehicle sales have increased.

Nine Months Ended September 30, 2017 Versus 2016. Wholesale vehicle sales increased by $14.1 million to $21.0 million during the nine months ended September 30, 2017 , compared to $6.9 million during the nine months ended September 30, 2016 . We primarily obtain our wholesale inventory from customer trade-ins. As our retail unit sales have increased, so have the trade-ins we receive. Therefore, we have had more units available for sale to wholesalers over time and our revenues attributed to wholesale vehicle sales have increased.

Other Sales and Revenues

Three Months Ended September 30, 2017 Versus 2016. Other sales and revenues primarily consist of gains on the sales of loans we originate, commissions we receive on sales of VSCs and sales of GAP waiver coverage. Other sales and revenues increased by $5.9 million to $9.8 million during the three months ended September 30, 2017 , compared to $3.9 million during the three months ended September 30, 2016 . This increase was primarily driven by the increase in retail units sold which led to an increase in loans originated and sold, as well as an increase in VSC sales and GAP waiver coverage sales. During the three months ended September 30, 2016 , VSC revenues were generated from third party sales whereas during the three months ended September 30, 2017 , all VSC sales were administered through DriveTime.

Nine Months Ended September 30, 2017 Versus 2016. Other sales and revenues increased by $12.1 million to $22.4 million during the nine months ended September 30, 2017 , compared to $10.3 million during the nine months ended September 30, 2016 . This increase was primarily driven by the increase in retail units sold, which led to an increase in loans originated and sold, as well as an increase in VSC sales and GAP waiver coverage sales. During the nine months ended September 30, 2016 , VSC revenues were generated from third party sales whereas during the nine months ended September 30, 2017 , all VSC sales were administered through DriveTime.

Used Vehicle Gross Profit

Three Months Ended September 30, 2017 Versus 2016. Used vehicle gross profit increased by $7.0 million to $9.9 million during the three months ended September 30, 2017 , compared to $2.8 million during the three months ended September 30, 2016 . This increase was driven primarily by an increase in retail units sold, as well as an increase in used vehicle gross profit per unit to $841 for the three months ended September 30, 2017 compared to $567 for the three months ended September 30, 2016 . Despite higher average days to sale, as described above, vehicle gross profit per unit increased. The increase was driven by enhancements in our proprietary vehicle purchasing and pricing technology, as well as by cost efficiencies in the reconditioning of our vehicles.

Nine Months Ended September 30, 2017 Versus 2016. Used vehicle gross profit increased by $16.4 million to $22.7 million during the nine months ended September 30, 2017 , compared to $6.3 million during the nine months ended September 30, 2016 . This increase was driven primarily by an increase in retail units sold, as well as an increase in used vehicle gross profit per unit to $737 for the nine months ended September 30, 2017 compared to $478 for the nine months ended September 30, 2016 . The increase was driven by enhancements in our proprietary vehicle purchasing and pricing technology, as well as by cost efficiencies in the transportation and reconditioning of our vehicles.

Wholesale Vehicle Gross Profit

Three Months Ended September 30, 2017 Versus 2016. Wholesale vehicle gross profit increased by $0.7 million to $0.8 million during the three months ended September 30, 2017 , compared to $0.1 million during the three months ended September 30, 2016 . This increase was driven primarily by an increase in wholesale units sold to 1,797 from 787 and an increase in gross profit per wholesale unit to $418 from $74 .

Nine Months Ended September 30, 2017 Versus 2016. Wholesale vehicle gross profit increased by $1.0 million to $1.2 million during the nine months ended September 30, 2017 , compared to $0.2 million during the nine months ended September 30, 2016 . This increase was driven primarily by an increase in wholesale units sold to 4,665 from 1,920 and an increase in gross profit per wholesale unit to $251 from $79 .

Other Gross Profit

Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in other gross profit and the associated drivers are identical to changes in other sales and revenues and the associated drivers.

Components of SG&A



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016

	(in thousands)				(in thousands)
Compensation and benefits ⁽¹⁾	$	19,404	$	9,868	$	54,496	$	24,390
Advertising expense	15,475		6,677		39,299		17,928
Market occupancy costs ⁽²⁾	1,734		346		4,141		1,199
Logistics ⁽³⁾	3,905		2,252		9,829		5,515
Other overhead costs ⁽⁴⁾	18,158		8,852		48,830		22,939
Total	$	58,676	$	27,995	$	156,595	$	71,971

(1) Compensation and benefits includes all payroll and related costs, including benefits, payroll taxes, and unit-based compensation, except those related to reconditioning vehicles, which are included in cost of sales.
(2) Market occupancy costs includes rent, utilities, security, repairs and maintenance, and depreciation of buildings and improvements, including vending machines and fulfillment centers, excluding the portion related to reconditioning vehicles which is included in cost of sales, and excluding the portion related to our corporate office which is included in other overhead costs.
(3) Logistics includes fuel, maintenance, and depreciation related to owning and operating our own transportation fleet, and third party transportation fees, except the portion related to inbound transportation, which are included in cost of sales.
(4) Other overhead costs include all other overhead and depreciation expenses such as IT expenses, limited warranty, travel, insurance, bad debt, title and registration, and other administrative expenses.

Selling, general and administrative expenses increased by $30.7 million and $84.6 million to $58.7 million and $156.6 million during the three and nine months ended September 30, 2017 , respectively, compared to $28.0 million and $72.0 million during the three and nine months ended September 30, 2016 , respectively. The increase is partially due to an increase in compensation and benefits of $9.5 million and $30.1 million during the three and nine months ended September 30, 2017 , respectively, which was driven by expansion into new markets and growth in headcount at our Phoenix headquarters, including in our product and engineering, accounting, finance, legal, real estate, information technology, and human resources departments. These expenses will increase in absolute terms as we expand to additional markets and continue to grow as a public company. Advertising, market occupancy, logistics and other overhead expenses increased during the three and nine months ended September 30, 2017 compared to the prior comparable periods primarily due to an increase in number of markets.

Interest Expense

Interest expense increased by $0.1 million and $3.2 million to $0.8 million and $5.4 million during the three and nine months ended September 30, 2017 , respectively, compared to $0.7 million and $2.2 million during the three and nine months ended September 30, 2016 , respectively. In order to expand the inventory we make available to customers and accommodate operations in additional markets, we increased our borrowings under our Floor Plan Facility year over year. The increase in interest expense is partially due to the increases in the outstanding balance. In addition, we incurred $1.4 million during the nine months ended September 30, 2017 related to the Verde Credit Facility, including interest expense incurred on the outstanding balance and financing costs. Total borrowings of $35.0 million under the Verde Credit Facility were repaid in full with the proceeds of our IPO and the facility was terminated.

Non-GAAP Financial Measures

To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we also present the following non-GAAP measures: EBITDA, EBITDA margin, adjusted net loss and adjusted net loss per share.

EBITDA and EBITDA Margin

EBITDA and EBITDA Margin are non-GAAP supplemental measures of operating performance that do not represent and should not be considered an alternative to net loss or cash flow from operations, as determined by GAAP. EBITDA is defined as net loss before interest expense, income tax expense and depreciation and amortization expense. EBITDA Margin is EBITDA as a percentage of total revenues. We use EBITDA to measure the operating performance of our business, excluding specifically identified items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations. We use EBITDA Margin to measure our operating performance relative to our total revenues. EBITDA and EBITDA Margin may not be comparable to similarly titled measures provided by other companies due to potential differences in methods of calculations. A reconciliation of EBITDA to net loss, the most directly comparable GAAP measure, and calculation of EBITDA Margin is as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net loss	$	(39,769	)	$	(21,985	)	$	(117,078	)	$	(57,418	)
Depreciation and amortization expense	3,101			1,196			7,746			3,020
Interest expense	838			725			5,404			2,231
EBITDA	$	(35,830	)	$	(20,064	)	$	(103,928	)	$	(52,167	)

Total revenues	$	225,379		$	98,844		$	593,817		$	258,321
EBITDA Margin	(15.9		)%	(20.3		)%	(17.5		)%	(20.2		)%

Adjusted Net Loss and Adjusted Net Loss per Share

Adjusted net loss represents net loss attributable to Carvana Co. assuming the full exchange of all outstanding LLC Units for shares of Class A common stock. Adjusted net loss per share is calculated by dividing adjusted net loss by the weighted-average shares of Class A common stock outstanding assuming (i) the full exchange of all outstanding LLC Units and (ii) shares issued in our public offering were outstanding for the entire period presented.

Adjusted net loss and adjusted net loss per share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net loss and net loss per share, as determined under GAAP. We believe that adjusted net loss and adjusted net loss per share supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period and relative to our competitors. A reconciliation of adjusted net loss to net loss attributable to Carvana Co., the most directly comparable GAAP measure, and the computation of adjusted net loss per share are as follows (in thousands, except per share amounts):



			Three Months Ended September 30,						Nine Months Ended September 30,
			2017			2016			2017			2016
Numerator:
	Net loss attributable to Carvana Co.		$	(4,380	)	$	(21,985	)	$	(57,361	)	$	(57,418	)
	Add: Net loss attributable to non-controlling interests		(35,389		)	—			(59,717		)	—
	Adjusted net loss attributable to Carvana Co.		$	(39,769	)	$	(21,985	)	$	(117,078	)	$	(57,418	)

Denominator:
	Weighted-average shares of Class A common stock outstanding ⁽¹⁾⁽³⁾		15,045			15,000			15,024			15,000
	Adjustments:
		Assumed exchange of LLC Units for shares of Class A common stock ⁽²⁾	121,989			121,760			121,805			121,760
	Adjusted shares of Class A common stock outstanding		137,034			136,760			136,829			136,760
Adjusted net loss per share			$	(0.29	)	$	(0.16	)	$	(0.86	)	$	(0.42	)

(1) Amounts for periods prior to the initial public offering have been retrospectively adjusted to give effect to 15.0 million shares of Class A common stock issued in the initial public offering.

(2) Assumes exchange of all outstanding LLC Units for shares of Class A common stock during each period presented, including retrospectively applying exchanges of LLC units outstanding at the initial public offering to all periods prior to the initial public offering.

(3) Excludes approximately 0.5 million unvested restricted stock awards and 0.6 million vested and unvested stock options outstanding at September 30, 2017 , because they were determined to be anti-dilutive.

Liquidity and Capital Resources

General

Our principal sources of liquidity are cash generated from our operations and from financing activities. Cash generated from operating activities primarily includes cash derived from the sale of used retail vehicles, the sale of wholesale vehicles and proceeds from the sale of automotive finance receivables originated in connection with the sale of used vehicles. Cash generated from our financing activities primarily includes proceeds from the sale of Class A common stock in our IPO, sales of Class C Preferred Units throughout 2015 and 2016 and net proceeds from our floor plan facility.

We have incurred losses each year from inception through September 30, 2017 , and expect to incur additional losses in the future. Our ability to service our debt, fund working capital, capital expenditures and business development efforts will depend on our ability to generate cash from operating and financing activities, which is subject to our future operating performance, as well as to general economic, financial, competitive, legislative, regulatory and other conditions, some of which may be beyond our control. We believe that our existing sources of liquidity including future debt and equity financing will be sufficient to fund our operations, including lease obligations, debt service requirements, capital expenditures and working capital obligations for at least the next 12 months. However, our future capital requirements will depend on many factors, including our rate of revenue growth, our expansion into new markets, construction of vending machines and the timing and extent of our spending to support our technology and software development efforts. To the extent that existing cash and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Floor Plan Facility

We have a floor plan facility with a third party to finance our used vehicle inventory, which is secured by substantially all of our assets, other than our interests in real property (the "Floor Plan Facility"). The line of credit available to us under this agreement is $275.0 million . Starting January 1, 2018, the line of credit will increase to $350.0 million . We are required to make monthly interest payments on borrowings under the Floor Plan Facility at a rate per annum equal to one-month LIBOR plus a fixed base. Repayment in an amount equal to the amount of the advance or loan must be made within five business days of selling or otherwise disposing of the underlying vehicle inventory. For sales involving financing originated by us and sold under either the Purchase and Sale Agreement or the Master Transfer Agreement, the lender has extended repayment to the earlier of fifteen business days after the sale of the used vehicle or one day following the sale of the related finance receivable. We are also required to make principal reduction payments equal to 10% of the original principal amount for each vehicle subject to the floor plan for more than 180 days until the outstanding principal amount for such vehicle is reduced to the lesser of 50% of the original principal amount of such vehicle or 50% of such vehicle’s wholesale value. Additionally, we are permitted to make prepayments to the lender to be held as principal payments under the Floor Plan Facility and subsequently re-borrow such amounts. As of September 30, 2017 , $195.1 million borrowings were outstanding under the Floor Plan Facility, the interest rate was 4.88% and $79.9 million remained available for borrowing.

Verde Credit Facility

On February 27, 2017, we entered into a credit facility with Verde for an amount up to $50.0 million (the "Verde Credit Facility"). As of March 31, 2017, $20.0 million had been drawn under the Verde Credit Facility. From March 31, 2017 through the completion of the IPO, we drew an additional $15.0 million under the Verde Credit Facility, bringing the total outstanding balance to $35.0 million immediately prior to the IPO. Amounts outstanding accrued interest at a rate of 12.0% per annum, compounding semi-annually and payable in kind and matured in August 2018. Upon execution of the agreement, we paid a $1.0 million commitment fee. Upon completion of the IPO on May 3, 2017 , we repaid the entire outstanding principal and accrued interest using a portion of the proceeds we received from the IPO and recognized the unamortized commitment fee as interest expense. Subsequent to the IPO and this repayment, the agreement was terminated.

Other Long-Term Debt

Since 2016, we have periodically issued notes payable to finance haulers and equipment for use in our logistics operations. The assets purchased with the proceeds from these notes serve as the collateral for each note and certain security agreements related to these assets have cross collateralization and cross default provisions with respect to one another. Each note has a five-year term, fixed interest rate and requires monthly principal and interest payments. As of September 30, 2017 , the outstanding principal of these notes totaled $16.7 million and had a weighted-average interest rate of 5.8% .

Finance Receivables

Our customers can obtain vehicle financing directly on our website. Historically, we have entered into various arrangements to sell the finance receivables we originate to third parties and to a lesser extent related parties. Sales of receivables are a source of cash from operations and remove these loans from our balance sheet without recourse for their post-sale performance. In January 2016, we entered into transfer agreements pursuant to which we indirectly sell automotive finance receivables meeting certain underwriting criteria to third party purchasers. Under these transfer agreements and note purchase and security agreements, we could sell up to $230.0 million in principal balances of the finance receivables in this manner, which we reached in the fourth quarter of 2016 and as a result have no capacity under the note purchase and security agreements.

In December 2016, we entered into a master purchase and sale agreement with an unrelated third party pursuant to which we sell automotive finance receivables meeting certain underwriting criteria. Under such sale agreement, the third party has committed to purchase up to an aggregate of $375.0 million in principal balances of automotive finance receivables that we originate, subject to adjustment as described in the agreement. During the nine months ended September 30, 2017 , we sold $241.3 million in principal balances of automotive finance receivables under this agreement and there was $112.4 million of unused capacity under this agreement as of September 30, 2017 . On November 3, 2017 , we amended our Purchase and Sale Agreement to increase the aggregate amount of principal balances of finance receivables we can sell from $375.0 million to $1.5 billion .

In December 2016, we entered into a master transfer agreement with an unrelated third party pursuant to which we sell automotive finance receivables meeting certain underwriting criteria to such party. Under such sale agreement, the third party has committed to purchase up to an aggregate of $292.2 million in principal balances of automotive finance receivables that we originate. The third party purchaser finances a majority of these purchases with borrowings from our purchaser in the master purchase and sale agreement. During the nine months ended September 30, 2017 , we sold $106.6 million in principal balances of automotive finance receivables under this agreement and there was $177.1 million of unused capacity under this agreement as of September 30, 2017 . Also on November 3, 2017 , we terminated the remaining capacity under the Master Transfer Agreement and entered into a new master transfer agreement with an unrelated third party under which the third party has committed to purchase up to an aggregate of $357.1 million in principal balances of finance receivables.

Liquidity Upon Initial Public Offering

On May 3, 2017 , we completed an initial public offering and received $205.9 million in proceeds, net of underwriting discounts and commissions and offering costs. We used a portion of the proceeds to repay $35.0 million of outstanding borrowings plus accrued interest under the Verde Credit Facility and to pay expenses incurred in connection with the IPO and Organizational Transactions. We will use the remaining net proceeds for future working capital and general corporate purposes.

Cash Flows

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the nine months ended September 30, 2017 and 2016 (in thousands):



	Nine Months Ended September 30,
	2017			2016
Net cash used in operating activities	$	(116,014	)	$	(144,778	)
Net cash used in investing activities	(60,897		)	(23,320		)
Net cash provided by financing activities	241,181			205,318
Net increase in cash and cash equivalents	64,270			37,220
Cash and cash equivalents at beginning of period	39,184			43,134
Cash and cash equivalents at end of period	$	103,454		$	80,354

Operating Activities

For the nine months ended September 30, 2017 , net cash used in operating activities was $116.0 million , a decrease of $28.8 million compared to net cash used in operating activities of $144.8 million for the nine months ended September 30, 2016 . Significant changes impacting net cash used in operating activities comparing the nine months ended September 30, 2017 and 2016 are as follows:

•

At December 31, 2015, our accounts payable to related party was $21.4 million, primarily related to vehicle inventory purchases. During the nine months ended September 30, 2016 we made net repayments of $22.8 million to related parties resulting in an ending prepayment to related parties of $1.4 million. Comparatively, as of September 30, 2017 , our balance of accounts payable to related parties increased by $0.3 million since December 31, 2016. Thus, cash flows associated with the change in our accounts payable to related parties increased $23.1 million year over year due to the timing of payments.


•	Net increase in vehicle inventory was $6.0 million during the nine months ended September 30, 2017 compared to a net increase in vehicle inventory of $62.3 million during the nine months ended September 30, 2016 , resulting in a $56.4 million reduction in use of cash related to our efforts to optimize our inventory levels.


•	Net cash generated by originations and proceeds of finance receivables was $0.4 million during the nine months ended September 30, 2017 , a decrease of $5.7 million from the net use of $5.3 million during the nine months ended September 30, 2016 . This is primarily due to the timing of originations and subsequent sales.


•	Our net loss was $117.1 million during the nine months ended September 30, 2017 , an increase of $59.7 million from a net loss of $57.4 million during the nine months ended September 30, 2016 primarily due to an increase in selling, general and administrative expenses associated with expansion to additional markets and expanding our corporate infrastructure.

Investing Activities

Cash used in investing activities was $60.9 million and $23.3 million during the nine months ended September 30, 2017 and 2016 , respectively, an increase of $37.6 million . The increase primarily relates to the increase in purchases of property and equipment of $38.4 million , reflecting the expansion of our business operations into new markets and construction of new vending machines.

Financing Activities

Cash provided by financing activities was $241.2 million and $205.3 million during the nine months ended September 30, 2017 and 2016 , respectively, an increase of $35.9 million . The net increase primarily relates to the following financing activities:


•	Net proceeds from sales of equity increased $46.6 million due to receipt of net proceeds from our IPO of $206.3 million during the nine months ended September 30, 2017 compared to net proceeds of $159.7 million from sales of Class C Preferred Units during the nine months ended September 30, 2016 .


•	Proceeds from and payments on the Floor Plan Facility increased by $427.5 million and $443.8 million , respectively, resulting in a net decrease to sources of cash of $16.2 million related to this facility during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 .

Contractual Obligations and Commitments

During the nine months ended September 30, 2017 , we entered into new leases with DriveTime and Verde, some of which replaced previous leases we had with DriveTime. Pursuant to these new leases, we are contractually obligated to make lease payments to DriveTime and Verde of $15.4 million over the remaining lease terms, which range from seven to eight years. We also entered into new leases with various third parties, pursuant to which we are contractually obligated to make lease payments of $15.2 million over the remaining lease terms which range from less than one to ten years. Further, in April 2017, we financed certain property and equipment through a sale and leaseback transaction. We are now contractually obligated to make rent payments of $5.1 million over the remaining lease term.

Outside of the recent obligations outlined above and routine transactions made in the ordinary course of business, there have been no material changes to the contractual obligations as of the most recently ended fiscal year as disclosed in our prospectus filed with the SEC on April 28, 2017 .

Fair Value Measurements

We report money market securities and certain receivables at fair value. See Note 14 — Fair Value of Financial Instruments , included in Part I, Item 1, Unaudited Condensed and Consolidated Financial Statements, of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2017 .

JOBS Act

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure

obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.

The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period is irrevocable.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and use of estimates from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our prospectus filed with the SEC on April 28, 2017 .

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:


•	future financial position;


•	business strategy;


•	budgets, projected costs and plans;


•	future industry growth;


•	financing sources;


•	the impact of litigation, government inquiries and investigations; and


•	all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, the following:


•	our history of losses and ability to maintain profitability in the future;


•	our ability to effectively manage our rapid growth;


•	our limited operating history;


•	the seasonal and other fluctuations in our quarterly operating results;


•	our relationship with DriveTime;


•	our management’s accounting judgments and estimates, as well as changes to accounting policies;


•	our ability to compete in the highly competitive industry in which we participate;


•	the changes in prices of new and used vehicles;


•	our ability to acquire desirable inventory;


•	our ability to sell our inventory expeditiously;


•	our ability to sell and generate gains on the sale of automotive finance receivables;


•	our dependence on the sale of automotive finance receivables for a substantial portion of our gross profits;


•	our reliance on potentially fraudulent credit data for the automotive finance receivables we sell;


•	our ability to successfully market and brand our business;


•	our reliance on Internet searches to drive traffic to our website;


•	our ability to comply with the laws and regulations to which we are subject;


•	the changes in the laws and regulations to which we are subject;


•	our ability to comply with the Telephone Consumer Protection Act of 1991;


•	the evolution of regulation of the Internet and eCommerce;


•	our ability to maintain reputational integrity and enhance our brand;


•	our ability to grow complementary product and service offerings;


•	our ability to address the shift to mobile device technology by our customers;


•	risks related to the larger automotive ecosystem;


•	the geographic concentration where we provide services;


•	our ability to raise additional capital;


•	our ability to maintain adequate relationships with the third parties that finance our vehicle inventory purchases;


•	the representations we make in our finance receivables we sell;


•	our reliance on our proprietary credit scoring model in the forecasting of loss rates;


•	our reliance on internal and external logistics to transport our vehicle inventory;


•	the risks associated with the construction and operation of our inspection and reconditioning centers, fulfillment centers and vending machines, including our dependence on one supplier for construction and maintenance for our vending machines;


•	our ability to protect the personal information and other data that we collect, process and store;


•	disruptions in availability and functionality of our website;


•	our ability to protect our intellectual property, technology and confidential information;


•	our ability to defend against claims that our employees, consultants or advisors have wrongfully used or disclosed trade secrets or intellectual property;


•	our ability to defend against intellectual property disputes;


•	our ability to comply with the terms of open source licenses;


•	conditions affecting automotive manufacturers, including manufacturer recalls;


•	our reliance on third party technology to complete critical business functions;


•	our dependence on key personnel to operate our business;


•	the costs associated with becoming a public company;


•	the diversion of management’s attention and other disruptions associated with potential future acquisitions;


•	the legal proceedings to which we may be subject in the ordinary course of business;


•	potential errors in our retail installment contracts with our customers that could render them unenforceable;


•	risks relating to our corporate structure and tax receivable agreements; and


•	the other factors identified under the heading “Risk Factors” in our prospectus on Form 424(b) filed with the SEC on April 28, 2017 (File No. 333-217085) and other filings we make with the Securities and Exchange Commission.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure due to potential changes in inflation or interest rates. We do not hold financial instruments for trading purposes.

Interest Rate Risk

Our primary market risk exposure is changing LIBOR-based interest rates. We had total outstanding debt of $195.1 million under our variable Floor Plan Facility at September 30, 2017 . Amounts outstanding under our Floor Plan Facility are generally due within one year and bear a variable interest rate of a fixed spread to the one-month LIBOR rate. At September 30, 2017 , the applicable one-month LIBOR rate was 1.23% . Based on the amounts outstanding, a 100-basis point increase or decrease in market interest rates would result in a change to annual interest expense of $2.0 million at September 30, 2017 .

Our outstanding notes payable each have fixed interest rates, require monthly payments and mature five years after commencement. The outstanding balance totaled $16.7 million as of September 30, 2017 .

Inflation Risk

Based on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or su bmit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity and capital resources.

Future litigation may be necessary to defend ourselves and our partners by determining the scope, enforceability and validity of third party proprietary rights or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our prospectus filed with the SEC on April 28, 2017 .

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On November 2, 2017, we entered into a letter agreement with Ally Bank and Ally Financial (the "Ally Parties") to extend repayment of amounts due under the Floor Plan Facility for sales involving financing originated by us that are not sold to or financed by the Ally Parties. With respect to such vehicles, the Ally Parties agree to extend repayment of the advance or the loan for such vehicle to the earlier of fifteen business days after the sale of the vehicle or two business days following the sale or funding of the retail installment contract. The letter agreement is filed herewith as Exhibit 10.2.

On November 3, 2017 , we amended our Purchase and Sale Agreement to increase the aggregate amount of principal balances of finance receivables we can sell from $375.0 million to $1.5 billion . Also on November 3, 2017 , we terminated the remaining capacity under the Master Transfer Agreement and replaced this facility by entering into a new master transfer agreement with an unrelated third party under which the third party has committed to purchase up to an aggregate of $357.1 million in principal balances of finance receivables. The amendment to the Purchase and Sale Agreement and new master transfer agreement are filed herewith as Exhibits 10.3 and 10.4, respectively.

On November 3, 2017, we entered into a Master Sale-Leaseback Agreement pursuant to which we may sell and lease back up to $75 million of our real property interests, including costs for construction improvements. At any time we may elect to, and beginning November 2, 2019, the purchaser has the right to demand that, we repurchase one or more sold real property interests for an amount equal to the repurchase price provided in the applicable lease and any amounts due and owing under such lease. We expect to sell and lease back many of our vending machines pursuant to this agreement. The Master Sale-Leaseback Agreement is filed herewith as Exhibit 10.5.

ITEM 6. EXHIBITS



Exhibit No.	Description
10.1	Second Amendment to the Carvana Co. 2017 Omnibus Incentive Plan, filed herewith.
10.2	Letter Agreement re Notice of Change in Release Period, filed herewith.
10.3	Second Amendment to the Amended and Restated Master Purchase and Sale Agreement, filed herewith.
10.4 *	Master Transfer Agreement, filed herewith.
10.5 *	Master Sale-Leaseback Agreement, filed herewith.
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith.
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith.
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, filed herewith.
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed herewith.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

* Confidential treatment requested as to certain portions, which portions have been provided separately to the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




Date:	November 7, 2017		Carvana Co.
			(Registrant)

		By:	/s/ Mark Jenkins
			Mark Jenkins
			Chief Financial Officer
			(On behalf of the Registrant and as Principal Financial Officer)

Exhibit 10.1

SECOND AMENDMENT TO THE
CARVANA CO.
2017 OMNIBUS INCENTIVE PLAN

Carvana Co., a Delaware corporation (the “Company”), established the Carvana Co. 2017 Omnibus Incentive Plan effective as of April 27, 2017 (the “Plan”). The Plan was approved by the Company’s Board of Directors and Sole Stockholder on April 27, 2017 and has been amended on one prior occasion. By adoption of this Second Amendment, the Company now desires to amend the Plan as set forth below.

1. This Second Amendment shall be effective as of the date set forth below.

2. Section 14.4 ( Withholding of Taxes ) of the Plan is hereby amended and restated in its entirety to read as follows:

14.4 Withholding of Taxes . Notwithstanding anything in any Award Agreement to the contrary, the Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of shares of Common Stock or the payment of any cash hereunder, payment by the Participant of up to the maximum statutory amount, in the applicable jurisdiction, to satisfy any federal, state or local taxes required to be withheld with respect to an Award. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. To the extent that alternative methods of withholding are available under applicable tax laws, the Committee shall have the power to choose among such methods (including, without limitation, allowing a Participant to satisfy his or her withholding obligation by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned).

3. This Second Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions and intent of this Second Amendment.

IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed as of this 22nd day of August, 2017.



CARVANA CO.

By:	/s/ Paul Breaux
Name:	Paul Breaux
Title:	Vice President

Exhibit 10.2

November 2, 2017

Carvana, LLC

Attn: Kevin Hogan, Corporate Counsel

1930 West Rio Salado Parkway

Tempe, Arizona 85281

Dear Mr. Hogan:


Re:	Notice of Change in Release Period for Certain Vehicles

Under the terms of the Amended and Restated Inventory Financing and Security Agreement, dated July 27, 2015 (as amended, the “IFSA”), Carvana, LLC must make payment to the Ally Parties within five business days of the date a vehicle is sold. The IFSA also provides that the Ally Parties may, in their sole discretion, permit more time to take into account factors such as delays in the administration, processing and delivery of payments (the “Release Period,” as defined in the IFSA). The IFSA further provides that the existence, duration, terms, and continuation of the Release Period are subject to change from time to time by the Ally Parties, and a change in the Release Period does not constitute an amendment of the IFSA.

Consistent with the foregoing, the Ally Parties hereby provide notice that:

With respect to vehicles sold by Carvana pursuant to a retail installment contract that becomes subject to the so-called “Flow Purchase” or “Warehouse Financing” credit facilities between the Ally Parties and Carvana and/or its affiliates, Carvana may make payment to the Ally Parties (under IFSA Section III.C.2(a)) on or before the earlier of: one business day after the Ally Parties fund Carvana (or its affiliate) under the Part A or Part B facility, or 15 business days after the date of sale (unchanged from February 10, 2017 letter agreement); and


2.	With respect to vehicles sold by Carvana pursuant to a retail installment contract, other than as described above in Paragraph 1, Carvana may make payment to the Ally Parties (under IFSA Section III.C.2(a)) on or before the earlier of: two business days after Carvana (or its affiliate) is funded, or 15 business days after the date of sale.


3.	In all other circumstances, Carvana may make payment to the Ally Parties (under IFSA Section III.C.2(a)) on or before five business days after the date of sale.

The Ally Parties reserve the right to adjust, increase or decrease these periods in the future, in their discretion.

Please execute this letter below and return a copy to me to acknowledge Carvana’s receipt and understanding of this notice.



		ALLY BANK
		By:	/s/ Stephen Gambrel
		Name:	Stephen Gambrel
		Title:	Authorized Representative

		ALLY FINANCIAL
		By:	/s/ Stephen Gambrel
		Name:	Stephen Gambrel
		Title:	Authorized Representative

Acknowledged:

Carvana, LLC
By:	/s/ Paul Breaux
Name:	Paul Breaux
Title:	Vice President

Exhibit 10.3

SECOND AMENDMENT

SECOND AMENDMENT dated as of November 3, 2017 (this “ Amendment ”) to the Amended and Restated Master Purchase and Sale Agreement, dated as of March 6, 2017, as amended by the First Amendment, dated as of September 14, 2017 (the “ Master Purchase and Sale Agreement ”), among CARVANA AUTO RECEIVABLES 2016-1 LLC, a Delaware limited liability company, as Transferor (the “ Transferor ”), ALLY BANK, a Utah chartered bank, as a Purchaser (in such capacity, a “ Purchaser ”), and ALLY FINANCIAL INC., a Delaware corporation, as a Purchaser (in such capacity, a “ Purchaser ” and, together with Ally Bank, the “ Purchasers ”).

W I T N E S S E T H:

WHEREAS, the Transferors and the Purchasers are parties to the Master Purchase and Sale Agreement pursuant to which the Purchasers have agreed to purchase specified portfolios of receivables and related property from the Transferor; and

WHEREAS, the parties wish to amend the Master Purchase and Sale Agreement to modify certain defined terms;

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms . Unless otherwise defined herein, capitalized terms used in the above recitals and in this Amendment are defined in and shall have the respective meanings assigned to them in (or by reference in) Appendix A to the Master Purchase and Sale Agreement.

SECTION 2. AMENDMENTS

2.1 Amendments to Section 2.1 (Commitments to Sell and Purchase Receivables Pools) . Section 2.1 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending Section 2.1(a) (Transferor Obligation) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below:

“(a) Transferor Obligation . Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements set forth herein, the Transferor commits to sell to the Purchasers one Receivables Pool each calendar week during the Commitment Period , except for the calendar weeks within the period from January 1, 2018 to January 15, 2018, with a total Cutoff Date Aggregate Outstanding Principal Balance for all such Receivables Pools sold during the Commitment Period, taken together, equal to the Commitment Amount and each Receivables Pool sold to the Purchaser shall have a Cutoff Date Aggregate Outstanding Principal Balance equal to at least 51% (adjusted downward for a nonmaterial amount resulting from application of the Selection Procedures, including the Freestyle Selection, at a Purchase Percentage of 51% of the aggregate principal balance of all receivables originated by the Seller that meet the criteria described in the definition of “Eligible Receivable” during the second calendar week preceding the calendar week in which the related Closing Date shall occur related to such Receivables Pool during the Commitment Period; provided, that the Transferor shall not be obligated to sell any Receivables Pool if the related Second Step Receivables Purchase Price for such Receivables Pool is less than or equal to the Cutoff Date Aggregate Outstanding Principal Balance (collectively, the “Transferor Obligation”).

(b) amending Section 2.1(b) (Purchaser Obligation) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below:

“(b) Purchaser Obligation . Upon the terms and subject to the conditions set forth in this Agreement, including Section 2.1(c) below, and in reliance on the covenants, representations, warranties and agreements herein set forth, the Purchasers commit to purchase one Receivables Pool each calendar week during the Commitment Period , except for the calendar weeks within the period from January 1, 2018 to January 15, 2018, on each Closing Date designated by the Transferor pursuant to Section 4.1(a) ; provided that (i) the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Receivables Pools purchased during the Commitment Period shall not exceed the Commitment Amount , and (ii) the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Receivables Pools purchased during the period from the Extension Amendment Effective Date through December 31, 2017 shall not exceed $125,979,120 (the “ Purchaser Obligation ”).

2.2 Amendment to Section 2.3 (Pricing Model) . Section 2.3 of the Master Purchase and Sale Agreement is hereby amended

(a) by amending clauses (E) through (G) of Section 2.3(a) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below and deleting the stricken text:

“(E) at any time during the existence and continuance of any Catalyst Event or , (F) changes to the methodology (including underlying loss assumptions for comparably-designated dealers) for calculating the NAALR , or (G) a failure by the Transferor and the Purchasers to agree upon mutually acceptable changes to the defined term Eligible Receivables Pool prior by January 24, 2018. ”

2.3 Amendments to Section 2.4 (Termination Options) . Section 2.4 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending clause (iv) of Section 2.4(a) (Transferor Termination Options) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below and deleting the stricken text:

“(iv) for any reason with one hundred eighty (180) twenty (120) days’ prior written notice to the Purchaser.”

(b) amending clauses (vi) and (xvi) of Section 2.4(b) (Purchaser Termination Options) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below and deleting the stricken text:

“(vi) (y) the occurrence of a “Termination Event” or “Commitment Termination Event” under the Receivables Warehouse Facility or the 2017 Receivables Warehouse Facility or a termination event, event of default, or servicer default under any other credit or purchase facility by the Purchasers or any of their Affiliates to the Seller or the Transferor or any of their consolidated Affiliates that enables or permits the holder or holders of such indebtedness or any trustee or agent on its or their behalf to cause such indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (z) any indebtedness of the Seller or the Transferor or any of their consolidated Affiliates which exceeds $20,000,000 in aggregate principal or face amount becoming due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

(xvi) for any reason with one hundred eighty (180) twenty (120) days’ prior written notice to the Transferor; or”

2.4 Amendment to Section 3.1 (Sale of Receivables) . Section 3.1 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending the first sentence of Section 3.1(e) by replacing the current reference to “second (2 ^nd )” that appears in such sentence with a new reference to “third (3 ^rd )”.

2.5 Amendment to Section 4.1 (Effecting Purchases) . Section 4.1 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending the subsection (i) of Section 4.1(a) by replacing the current reference to “second (2 ^nd )” that appears in such subsection with a new reference to “third (3 ^rd )”.

2.6 Amendments to Section 5.2 (Representations and Warranties of the Transferor) and Section 7.1 (Protection of Right, Title and Interest) . Sections 5.2 and 7.1 of the Master Purchase and Sale Agreement are hereby amended by:

(a) amending Sections 5.2(q), 5.2(r), and 7.1(c) by replacing the current reference to “85251” that appears in such sections with a new reference to “85281”.

2.7 Amendment to Section 7.20 (Negative Covenants) . Section 7.20 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending Section 7.20(h) (Credit Policy) as set forth below by inserting each term thereof which is double underlined in the place where such term appears below and deleting the stricken text:

“(h) Credit Policy . During the Commitment Period, the Transferor will not, and it will not permit the Seller to, amend, modify, restate or replace, in whole or in part, its identity, income, and payment verification practices, including, but not limited to, any change to Exhibit E attached hereto, without written notification to the Purchasers; provided that the prior written consent of the Purchasers shall be required if such amendment, modification, restatement or replacement would impair the collectability of any Receivable or otherwise materially and adversely affect the interests or the remedies of the Purchasers under this Agreement or any other Basic Document. At the Purchasers’ request, but no more frequently than monthly, the The Transferor will provide , or shall cause to be provided, to the Purchasers on a monthly basis a current version of an explanation of all material changes to the Seller’s policies concerning generation of financing terms as well as (i) a comparison showing all changes to the Seller’s policies concerning generation of financing terms as provided to the Purchasers during the previous calendar month or (ii) an affirmation that no changes were made to the Seller’s policies concerning generation of financing terms as provided to the Purchasers during the previous calendar month, noting that the Purchasers may also request a current version of the Seller’s policies concerning generation of financing terms at any point in time. over the preceding month. For the avoidance of doubt, changes to the Receivable Structure Constraints shall be considered material changes to policies concerning generation of financing terms.

2.8 Amendment to Section 8.2 (Repurchase of Receivables Upon Breach by the Transferor) . Section 8.2 of the Master Purchase and Sale Agreement is hereby amended by:

(a) adding the following sentence as set forth below immediately following the first sentence of Section 8.2:

“Such notice shall specify the reason for such ineligibility or breach and shall identify all Receivables that the party preparing such notice knows is so ineligible or in breach as of such date.”

2.9 Amendments to Section 8.6 (Notices) . Section 8.6 of the Master Purchase and Sale Agreement is hereby amended by:

(a) amending the first sentence of Section 8.6 as set forth below by deleting the stricken text:

“Section 8.6 Notices . All communications and notices pursuant hereto to either Party must be in writing personally delivered, sent by facsimile or email , in each case with a copy to follow via first class mail or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given at the address, fax number or email for each Party set forth below.

(b) amending the notice address for the Transferor by replacing the current reference to “4020 East Indian School Road Phoenix, Arizona 85018” with a new reference to “1930 W. Rio Salado Pkwy Tempe , AZ 85281”.

(c) amending the notice addresses for the Purchasers by replacing the addresses set forth in Section 8.6 with the addresses set forth below:

“Ally Bank

7159 Corklan Dr.; Suite 200

Jacksonville, FL 32258

Attn: Karen Holley

Email: k aren.holley@ally.com”

and

“Ally Financial

Ally Detroit Center

500 Woodward Avenue

MC: MI-01-10-LEGAL

Detroit, MI 48226

Attn: Richard Kent or Ryan Rettmann

Fax No.: (313) 334-3276”

2.10 Amendment to Section 8.17 (No Petition Covenant) . Section 8.17 of the Master Purchase and Sale Agreement is hereby amended by inserting each term thereof which is double underlined in the place where such term appears below:

“Notwithstanding any prior termination of this Agreement, the Purchasers shall not, prior to the date which is one year and one day after (i) the final payment or liquidation of all the Receivables and (ii) and payment in full of all obligations owing to Ally Bank under the Receivables Warehouse Facility and the 2017 Receivables Warehouse Facility , acquiesce, petition or otherwise invoke or cause the Transferor to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Transferor under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Transferor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Transferor under any federal or state bankruptcy or Insolvency Proceeding.”

2.11 Amendments to Appendix A (Definitions) . Appendix A to the Master Purchase and Sale Agreement is hereby amended by:

(a) deleting clause (ii) of the Eligible Receivable definition in its entirety and replacing it with the following:

“(ii) Such Receivable was purchased by the Transferor from the Seller in the ordinary course of business and as soon as is practicable after the file with respect to such Receivable is complete”.

(b) amending clause (xxxii) of the Eligible Receivable definition by replacing the current reference to “seventy-two (72)” that appears in such clause with a new reference to “seventy-five (75)”.

(c) deleting clause (xxxiii) of the Eligible Receivable definition in its entirety and replacing it with “Reserved;”. ^{1 2}

(d) amending clause (xxxiv) of the Eligible Receivable definition by replacing the current reference to “600” that appears in such clause with a new reference to “590”.

(e) amending the following definitions as set forth below by inserting each term thereof which is double underlined in the place where such term appears below and deleting the stricken text:

“ Commitment Amount ” means the sum of (i) $375,000,000 $1,500,000,000 less 62.5% of the aggregate Outstanding Principal Balance of all retail installment sales contracts which would be Eligible Contracts under the definition thereof sold by the Seller during the Commitment Period to parties other than the Transferor plus (ii) the Outstanding Principal Balance of a Receivable that had been previously included in a Receivables Pool and was repurchased, remediated and resold to the Purchasers in a subsequent Receivables Pool.

“ Defaulted Receivable ” means any Receivable upon the first occurrence of any of the following: (i) all, or any part in excess of 10% of any scheduled payment (the “ Default Threshold ”) is one hundred and twenty (120) twenty-one (121) (or such shorter period as shall be specified in the Collection Policy, it being understood that such period in the Collection Policy shall not be lengthened without the prior written consent of the Purchasers) or more days delinquent on the last day of a calendar month (taking into account the application by the Servicer of payments received in any Collection Period to previously unpaid scheduled payments or portions thereof in accordance with the Collection Policy) ; provided however , during the period beginning on the initial Closing Date and ending on December 31, 2016, the Default Threshold shall be the lesser of 50% of any scheduled payment and the lowest Default Threshold applied in accordance with the Collection Policy; provided , further , that during such period, all reporting and the calculations of Outstanding Principal Balance and similar amounts with respect to the Receivables shall be made as if the 10% standard is in place, (ii) for which the Financed Vehicle has been surrendered or repossessed and the redemption period granted the Obligor or required by applicable law has expired, or is to be repossessed but is unable to be located or is otherwise subject to being repossessed, (iii) which has been settled for less than the Outstanding Principal Balance, (iv) which has been liquidated by the Servicer through the sale of the related Financed Vehicle, (v) for which proceeds have been received which in the Servicer’s judgment, constitute the final amounts recoverable in respect of such Receivable, or (vi) which has been charged-off (or should have been charged-off) in accordance with the Collection Policy.

“ Scheduled Commitment Termination Date ” means the date that is the 364 day anniversary of the date of the Master Purchase and Sale Agreement November 2, 2018 .”

(f) deleting the Previously Originated Receivable definition in its entirety and replacing it with the following:

^{--------------------------------------------------------------------------------------------------------------------------}

¹ The pools sold in after 11/3/17 and PArt C should be governed by a concentration limit.

² Currently being considered by Ally

“ Previously Originated Receivable ” means, for any Closing Date and the related Eligible Receivables Pool, an Eligible Receivable originated in a prior Origination Period that met the eligibility criteria to be included in an Eligible Receivables Pool that could have been sold to the Purchasers pursuant to the Master Purchase and Sale Agreement on a prior Closing Date but for (i) the Seller not having completed ministerial administrative procedures for such Receivable (such as validating receipt of the down payment) or (ii) the failure to satisfy the representations and warranties regarding the information provided for such Receivable on the related Schedule of Receivables in Section 5.2(cc)(iii) of the Master Purchase and Sale Agreement and clause (xxiv) of the definition of “Eligible Receivable” and such Receivables was removed or repurchased from a prior First Tier Receivables Pool or Receivables Pool, as applicable, solely as a result of such failure (and not for any other reason).

(g) adding the following definitions of “Extension Amendment Effective Date” and "2017 Receivables Warehouse Facility” in the appropriate alphabetical order, as set forth below:

““ 2017 Receivables Warehouse Facility ” means the Loan and Security Agreement, dated as of November [3], 2017, by and among Sonoran Auto Receivables Trust 2017-1, the Transferor, Carvana and Ally Bank, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Extension Amendment Effective Date ” means November [3], 2017.”

SECTION 3. MISCELLANEOUS

3.1 Effectiveness . This Amendment shall become effective as of the date first written above upon the receipt of the following:

(a) a signed counterpart to this Amendment, shall have been duly executed and delivered by each of the parties hereto,

(b) a signed counterpart to the Sixth Amended and Restated Letter Agreement re Master Purchase and Sale Agreement, dated as of the date hereof, shall have been duly executed and delivered by Carvana, LLC, Bridgecrest Credit Company, LLC, the Transferor, Ally Financial, and Ally Bank,

(c) a signed counterpart to Omnibus Amendment No. 1 to Basic Documents (Ally-Carvana Flow), dated as of the date hereof, shall have been duly executed and delivered by Carvana, LLC, the Transferor, Ally Bank, Ally Financial Inc., Wells Fargo Bank, National Association and Bridgecrest Credit Company, LLC,

(d) a signed counterpart to the Second Amendment, dated as of the date hereof, to the Loan and Security Agreement, dated as of December 22, 2016, as amended by the First Amendment, dated as of September 14, 2017, shall have been duly executed and delivered by Sonoran Auto Receivables Trust 2016-1, the Transferor, Carvana, LLC and Ally Bank, and

(e) all conditions precedent to the effectiveness of the Loan and Security Agreement, dated as of November [3], 2017, by and among Sonoran Auto Receivables Trust 2017-1, the Transferor, Carvana, LLC and Ally Bank shall have been satisfied or waived, and each of Sonoran Auto Receivables Trust 2017-1, the Transferor, Carvana, LLC and Ally Bank shall have executed and delivered each other document and instrument required to be executed and delivered by such party as of the date hereof, as applicable, prior to the effectiveness thereof or thereunder.

3.2 Continuing Effect of the Master Purchase and Sale Agreement . Except as specifically amended and modified above, the Master Purchase and Sale Agreement is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Purchasers under the Master Purchase and Sale Agreement, nor constitute a waiver of any provision of the Master Purchase and Sale Agreement.

3.3 Binding Effect . This Amendment shall be binding upon and inure to the benefit of the Purchasers, the Servicer and their respective successors and permitted assigns.

3.4 Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. This Amendment contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings other than any fee letter contemplated hereby.

3.5 GOVERNING LAW, SUBMISSION TO JURISDICTION, ETC .

(a) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OR OF ANY OTHER JURISDICTION OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AMENDMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b) THE TRANSFEROR AND THE PURCHASERS HEREBY MUTUALLY AGREE TO SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AMENDMENT, ANY OTHER BASIC DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF THE TRANSFEROR AND THE PURCHASERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) THE TRANSFEROR AND THE PURCHASERS EACH HEREBY WAIVES (TO EXTENT THAT IT MAY LAWFULLY DO SO) ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AMENDMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

[remainder of the page intentionally left blank]

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



			CARVANA AUTO RECEIVABLES 2016-1, LLC,
			as Transferor
			By:	/s/ Paul Breaux
			Name:	Paul Breaux
			Title:	Vice President and Secretary

			ALLY BANK,
			as Purchaser
			By:	/s/ D.P. Shevsky
			Name:	D.P. Shevsky
			Title:	Chief Risk Officer

			ALLY FINANCIAL INC.,
			as Purchaser
			By:	/s/ D.T. Rowe
			Name:	D.T. Rowe
			Title:	Sr. Vice President

[SIGNATURES CONTINUE]

[Signature page to Second Amendment to Amended and Restated Master Purchase and Sale Agreement]



Agreed to and Accepted by:

CARVANA, LLC,
as Seller
By:	/s/ Paul Breaux
Name:	Paul Breaux
Title:	Vice President and Secretary

[Signature page to Second Amendment to Amended and Restated Master Purchase and Sale Agreement]



Acknowledged by:

BRIDGECREST CREDIT COMPANY, LLC,
as Servicer
By:	/s/ Jon Ehlinger
Name:	Jon Ehlinger
Title:	Secretary

[Signature page to Second Amendment to Amended and Restated Master Purchase and Sale Agreement]

MASTER TRANSFER AGREEMENT
between
CARVANA AUTO RECEIVABLES 2016-1 LLC
as Transferor
and
SONORAN AUTO RECEIVABLES TRUST 2017-1

DATED AS OF NOVEMBER 3, 2017



TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND USAGE		PAGE
Section 1.1	Definitions	1

ARTICLE II RECEIVABLES POOLS		2
Section 2.1	Purchase and Sale of Receivables Pools	2
Section 2.2	Payment of Receivables Purchase Price	2
Section 2.3	Loss and Liquidation Data	2
Section 2.4	Re-Liening Trigger Events	2

ARTICLE III PURCHASE AND SALE OF RECEIVABLES		3
Section 3.1	Sale of Receivables	3
Section 3.2	The Closing	5

ARTICLE IV REPRESENTATIONS AND WARRANTIES		5
Section 4.1	Representations and Warranties of the Trust	5
Section 4.2	Presentations and Warranties of the Transferor	5

ARTICLE V CONDITONS		11
Section 5.1	Conditions to Effectiveness	11
Section 5.2	Conditions to Obligation of the Trust	12
Section 5.3	Conditions to Obligation of the Transferor	12

ARTICLE VI COVENANTS OF THE TRANSFEROR		13
Section 6.1	Protection of Right, Title and Interest	13
Section 6.2	Other Liens or Interests	14
Section 6.3	Perfection Costs and Expenses	14
Section 6.4	Separateness	14
Section 6.5	Notice of Servicer Termination; Etc.	14
Section 6.6	Conduct of Business; Ownership	14
Section 6.7	Collections	15
Section 6.8	Selection Standards; Quarterly Meetings	15
Section 6.9	Furnishing of Information and Inspection of Records	15
Section 6.10	Compliance with Laws, Etc.	15
Section 6.11	Indemnification	15
Section 6.12	Forbearance	16
Section 6.13	Consolidations, Mergers and Sales of Assets	16
Section 6.14	Operation of the Transferor	16
Section 6.15	Furnishing of Information and Inspection of Records	16
Section 6.16	Publicity	17
Section 6.17	No Solicitation	17
Section 6.18	Remediation	17
Section 6.19	Quarterly Statements as to Compliance	17
Section 6.20	Additional Covenants	17
Section 6.21	Negative Covenants	20

ARTICLE VII MISCELLANEOUS PROVISIONS		21
Section 7.1	Obligations of the Transferor	21
Section 7.2	Repurchase of Receivables Upon Breach by the Transferor	21
Section 7.3	Assignment of Warranty Receivables	21
Section 7.4	Amendment	21
Section 7.5	Waivers	22
Section 7.6	Notices	22
Section 7.7	Costs and Expenses	22
Section 7.8	Survival	22
Section 7.9	Headings and Cross-References	22
Section 7.10	Governing Law, Submission to Jurisdiction, Etc	22
Section 7.11	Counterparts	22
Section 7.12	Further Assurances	22
Section 7.13	Severability of Provisions	22
Section 7.14	Assignment	23
Section 7.15	Further Assignment; Third Party Beneficiary	23
Section 7.16	Limitations on Rights of Others	23
Section 7.17	No Petition Covenant	23
Section 7.18	Concerning the Owner Trustee	23

EXHIBITS
EXHIBIT A	FORM OF POOL SUPPLEMENT
EXHIBIT B	CREDIT POLICY


APPENDICES
APPENDIX A	DEFINITIONS AND USAGE

MASTER TRANSFER AGREEMENT

THIS MASTER TRANSFER AGREEMENT (as from time to time amended, supplemented or otherwise modified and in effect, this “ Agreement ”) is made as of November 3, 2017, between Carvana Auto Receivables 2016-1 LLC, a Delaware limited liability company (the “ Transferor ”), and Sonoran Auto Receivables Trust 2017-1 LLC, a Delaware statutory trust (the “ Trust ”).

RECITALS:

1. In the regular course of its business, Carvana, LLC (“Carvana”) sells used automobiles and light trucks and originates automobile and light truck retail installment sale contracts secured by such automobiles and light trucks.

2. On the Original Execution Date, Carvana and the Transferor have entered into the Master Sale Agreement (Warehouse) (the “ Master Sale Agreement (Warehouse) ”) pursuant to which Carvana has agreed to sell, and the Transferor has agreed to purchase, from time to time, certain Receivables and related property (including the security interests in the related Financed Vehicles).

3. The Transferor wishes to sell, and the Trust wishes to purchase, from time to time, such Receivables and related property (including the security interests in the related Financed Vehicles) pursuant to the terms of this Agreement.

4. Pursuant to the Loan and Security Agreement, dated as of November 3, 2017 (the “ Loan and Security Agreement ”), by and among the Transferor, the Trust, Carvana, Ally Bank, as Administrative Agent (the “ Administrative Agent ”), and the Lenders party thereto, the Lenders will provide advances to the Trust to finance the purchase of the Receivables and related property by the Trust under this Agreement.

5. The Transferor and the Trust wish to provide in this Agreement, among other things, the terms on which each pool of Receivables (each, a “ Receivables Pool ”) and related property are to be sold by the Transferor to the Trust.

In consideration of the foregoing, other good and valuable consideration, and the mutual terms and covenants contained herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS AND USAGE

Section 1.1 Definitions . Certain capitalized terms used in the above recitals and in this Agreement and not defined herein are defined in and shall have the respective meanings assigned to them in (or by reference in) Appendix A hereto; provided that, if not defined therein, as defined in the Loan and Security Agreement. All references herein to “ the Agreement ” or “ this Agreement ” are to this Master Transfer Agreement as it may be amended, supplemented or modified from time to time, the exhibits and attachments hereto and the capitalized terms used herein which are defined in such Appendix A, and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Agreement unless otherwise specified. The rules of construction and usage set forth in such Appendix A shall be applicable to this Agreement.

ARTICLE II
RECEIVABLES POOLS

Section 2.1 Purchase and Sale of Receivables Pools

(a) Transferor Obligation . Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements set forth herein, the Transferor agrees to sell to the Trust each First Tier Receivables Pool it acquires from Carvana in each calendar week during the Commitment Period; provided, however , in no event shall Receivables required to be sold by Transferor to the Purchasers (as defined in the Master Sale Agreement (Flow) pursuant to the Master Sale Agreement (Flow) be sold to the Trust pursuant to this Agreement and in no event shall the randomization code (as defined in the definition of Freestyle Selection) of any Receivables in any such Receivables Pool exceed the Purchase Percentage for the Origination Period in which such Receivable was originated.

(b) Trust Obligation . Upon the terms and subject to the conditions set forth in this Agreement, including Section 2.1(c) below, and in reliance on the covenants, representations, warranties and agreements herein set forth, the Trust agrees to purchase each such Receivables Pool on each Closing Date described in Section 3.1(e); provided that in no event shall the Trust be obligated to purchase from Transferor hereunder Receivables with a principal amount exceeding an aggregate principal balance as of each Receivable’s applicable Closing Date of $357,142,857.14 plus the aggregate principal balance (as of each Receivable’s applicable resold Closing Date) of all Receivables previously sold to the Trust, repurchased, remediated, and resold to the Trust.

(c) Transaction Documents; Pool Supplement . The Transferor’s right, title and interest in the Receivables and related Purchased Property purchased, from time to time, by the Trust pursuant to Section 3.1 shall be transferred and assigned by the execution and delivery of a Pool Supplement, in form and content substantially similar to Exhibit A attached hereto, and the satisfaction of the terms and conditions and the performance of the transactions contained in this Agreement and such Pool Supplement, as applicable. The Transferor shall deliver the Pool Supplement to the Trust for any Receivables Pool on the applicable Closing Date.

Section 2.2 Payment of Receivables Purchase Price. Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements herein set forth, the Receivables Purchase Price due on each Closing Date shall be paid by the Trust to the Transferor on such Closing Date by wire transfer of immediately available funds to an account or accounts designated by the Transferor. The Receivables Purchase Price will be set forth in the Settlement Report attached to the Pool Supplement for the related Receivables Pool, in the form set forth in Exhibit A.

Section 2.3 Loss and Liquidation Data. No later than 60 days after the end of each calendar quarter during the period beginning on the date hereof and ending on the date all amounts outstanding under the Loan and Security Agreement (other than inchoate obligations for which no claim has been made) have been paid in full, the Transferor shall, or shall cause the Servicer or any other Affiliate holding or aggregating such information to, deliver to the Trust (who shall deliver such information to the Administrative Agent pursuant to the Loan and Security Agreement) a cumulative net loss ratio as of the end of the related calendar quarter (and a narrative description of the methodology for making such calculation), which may be included in the Monthly Servicer Report delivered within 60 days after the end of each calendar quarter to the extent the information is available at that time, for Carvana’s entire originated portfolio of retail installment sales contracts as of the end of the related calendar quarter.

Section 2.4 Re-Liening Trigger Events. Upon the occurrence of a Re-Liening Trigger Event, at the direction of the Trust or, upon the pledge of such property to the Administrative Agent pursuant to the Loan and Security Agreement, the Administrative Agent, the Transferor shall, and the Transferor shall direct and cause any Title Lien Nominee (if not and Affiliate of the Transferor) to and shall cooperate with the Servicer to, take all steps necessary to cause the Certificate of Title or other evidence of ownership of the

related Financed Vehicles (or if such Re-Liening Trigger Event relates to (i) one or more States, the related Financed Vehicles titled in such State or (ii) a Title Lien Nominee, the related Financed Vehicles liened in the name of such Title Lien Nominee) to be revised to name the Administrative Agent or its designee as lienholder. In addition, at the sole expense of the Administrative Agent and the Lenders, upon the request of the Administrative Agent, the Transferor shall, and the Transferor shall direct and cause any Title Lien Nominee (if not an Affiliate of the Transferor) and shall cooperate with the Servicer to, take all steps necessary to cause the Certificate of Title or other evidence of ownership of the related Financed Vehicles identified, individually or by characteristic, by the Administrative Agent to be revised to name the Administrative Agent or its designee as lienholder. The Transferor shall cause any Title Lien Nominee to irrevocably appoint the Administrative Agent as its attorney-in-fact, such appointment being coupled with an interest, to take any and all steps required to be performed pursuant to this Section 2.4, including execution of Certificates of Title or any other documents in the name of the Transferor or such Title Lien Nominee.

ARTICLE III
PURCHASE AND SALE OF RECEIVABLES

Section 3.1 Sale of Receivables

(a) Purchased Property . On each Closing Date, subject to the terms and conditions of this Agreement, the Transferor agrees to sell to the Trust, and the Trust agrees to purchase from the Transferor, a Receivables Pool and the following other property relating thereto (collectively, the “ Purchased Property ”):

(i) all right, title and interest of the Transferor in, to and under each Receivable included in the applicable Receivables Pool listed on a Schedule of Receivables (the form of which is attached as Schedule 5 to the Pool Supplement) delivered to the Trust on such Closing Date and all monies received thereon after the related Cutoff Date, exclusive of any amounts allocable to the premium for physical damage collateral protection insurance required by the Transferor or the Servicer, as applicable, covering any related Financed Vehicle;

(ii) the interest of the Transferor in the security interests in the related Financed Vehicles granted by Obligors pursuant to the Receivables in the applicable Receivables Pool and, to the extent permitted by law, any accessions thereto;

(iii) the interest of the Transferor in any proceeds from claims on any physical damage, credit life, credit disability, warranties, debt cancellation agreements or other insurance policies covering the related Financed Vehicles or Obligors, including any rebates or credits of any premium or other payment with respect to any of the foregoing;

(iv) all of the Transferor’s right, title and interest in, to and under the related Receivable Files;

(v) all of the Transferor’s right, title and interest in and to the Master Sale Agreement (Warehouse) and remedies thereunder and the assignment to the Trust of all UCC financing statements filed against Carvana under or in connection with the Master Sale Agreement (Warehouse); and

(vi) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing described in clauses (i) through (v) above and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all the foregoing, including all proceeds of the conversion of any or all of the foregoing, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property, payment intangibles, general intangibles, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

(b) Receivables Purchase Price . On each Closing Date, in consideration for the related Purchased Property, the Trust shall pay to the Transferor an amount (the “ Receivables Purchase Price ”) equal to the Purchase Price for such Purchased Property. The Receivables Purchase Price for each Receivables Pool shall be set forth in the Settlement Report attached to the related Pool Supplement.

(c) Payment Within two (2) Business Days after each Closing Date, the Transferor shall pay to or as directed by the Trust in (same day) funds an amount equal to the aggregate amount of all Collections received by the Transferor after the related Cutoff Date, including from the Servicer, with respect to the Receivables Pool sold to the Trust on such Closing Date through (but excluding) the applicable Closing Date.

(d) Selection of Receivables Pools . The Receivables to be sold in each Receivables Pool shall be all of the Receivables purchased by the Transferor pursuant to the Master Sale Agreement (Warehouse) and shall have been selected in accordance with Section 3.1(d) of the Master Sale Agreement (Warehouse). If the Administrative Agent reasonably determines that such Receivables Pool does not appear to have been selected on a random basis (based on information reasonably requested by the Administrative Agent and provided by the Transferor comparing the Receivables to be sold to the Trust on the related Closing Date as compared against receivables originated by Carvana during the related Origination Period that meet the definition of an Eligible Receivable under the Loan and Servicing Agreement and are not being transferred to the Transferor pursuant to the Master Sale Agreement (Flow)), then the Administrative Agent, Carvana, the Transferor and the Trust will determine an approach to adjust the mix of Eligible Receivables in such Receivables Pool and the related CAR 2016-1 Purchased Property (as defined in the Master Sale Agreement (Warehouse) (including adding or removing Receivables meeting the definition of Eligible Receivables in the Loan and Security Agreement) to ensure that such Receivables Pool was randomly selected by Carvana and the Transferor and the Trust, as applicable. In such circumstance, Carvana, the Transferor, the Trust and the Administrative Agent will revisit this Section 3.1(d) to determine if changes thereto are needed to ensure future Receivables Pools and the related CAR 2016-1 Purchased Property are representative of receivables originated by Carvana during the related Origination Period that are eligible to be sold hereunder and that there was no adverse selection pursuant to the Freestyle Selection. The Transferor acknowledges and agrees that Carvana’s computer systems assign contract numbers to Contracts on a random basis and Carvana may not change such contract numbering system at any time without the Administrative Agent’s prior written consent (upon which, the Administrative Agent, Carvana, the Trust and the Transferor each agree to develop an alternative methodology in order to randomly select Contracts to be included in succeeding Receivables Pools and the related CAR 2016-1 Purchased Property).

(e) Settlement Report . Not later than the second (2 ^nd ) Business Day prior to a Closing Date, the Transferor shall supply the Trust a final data tape in form and substance necessary for the Trust to comply with the information requirements under the Loan and Security Agreement. Not less than two (2) Business Days prior to each proposed Closing Date, the Transferor will deliver to the Trust and the Administrative Agent a Settlement Report substantially in the form of Schedule 2 attached to the Pool Supplement in form and substance necessary for the Trust to comply with the information requirements under the Loan and Security Agreement setting forth amounts due the Transferor with respect to the applicable Receivables Pool and containing at least the calculation of the related Receivables Purchase Price. Each sale hereunder shall occur immediately after the related sale for the related First Tier Receivables Pool under the Master Sale Agreement (Warehouse).

(f) No Recourse . It is understood that each sale of Purchased Property by the Transferor to the Trust pursuant to this Agreement, the related Pool Supplement and the related Receivables Assignment shall be without recourse (except as set forth herein, and as the Trust’s rights in such recourse shall be pledged by the Trust to the Administrative Agent pursuant to the Loan and Security Agreement) and the Transferor does not guarantee collection of any Receivable. However, each such sale shall be made pursuant to and in reliance by the Trust on the representations, warranties and covenants of the Transferor as set forth in Section 4.2 , the indemnities set forth in Section 6.11 and the repurchase obligation set forth in Section 7.2 and the corresponding provisions of the Master Sale Agreement (Warehouse) assigned to the Trust.

(g) Intent of the Parties . This Agreement, the applicable Pool Supplement and the related Receivables Assignment is intended to effect a sale of each Receivables Pool by the Transferor to the Trust, and the parties intend to treat each such transaction on a standalone basis as an independent sale for financial reporting purposes. It is the

intention of the Transferor and the Trust that each sale, transfer, assignment and other conveyance of Receivables Pools contemplated by this Agreement, the applicable Pool Supplement and the related Receivables Assignment constitutes an independent sale of the related Purchased Property from the Transferor to the Trust and that the beneficial interest in and title to each such Receivables Pool shall not be part of the Transferor’s estate in the event of the filing of a bankruptcy petition by or against the Transferor under any bankruptcy law. Each sale, transfer, assignment and other conveyance contemplated by this Agreement, the applicable Pool Supplement and the related Receivables Assignment does not constitute and is not intended to result in any assumption by the Trust (or any of its assigns) of any obligation of the Transferor to the Obligors, Affiliates of the Transferor, insurers or any other Person in connection with any Receivables, any insurance policies or any agreement or instrument relating to any of them, in each case related to such transfer and assignment. Although the Parties intend that each sale, transfer, assignment and other conveyance contemplated by this Agreement, the applicable Pool Supplement and the related Receivables Assignment to be an independent sale, in the event any such transfer and assignment is deemed to be other than a sale, the parties intend and agree: (i) that all filings described in this Agreement shall give the Trust a first priority perfected security interest in, to and under the Receivables Pool and the related Purchased Property and all proceeds of any of the foregoing, in each case with respect to such transfer and assignment; (ii) this Agreement, together with the applicable Pool Supplement and the related Receivables Assignment, shall be deemed to be the grant of, and the Transferor hereby grants to the Trust, a security interest from the Transferor to the Trust and the Administrative Agent as assignee in such Receivables and the related Purchased Property in order to secure its obligations hereunder with respect to such transfer and assignment; (iii) this Agreement, together with the applicable Pool Supplement and the related Receivables Assignment, shall be a security agreement under applicable law for the purposes of each such transfer and assignment; and (iv) the Trust shall have all of the rights, powers and privileges of a secured party under the UCC with respect to each such transfer and assignment and the Purchased Property related thereto.

(h) Due Diligence. The Transferor shall provide to the Trust such documents and other information necessary for the Trust to comply with Section 4.2(m) of the Loan and Security Agreement.

Section 3.2 The Closing. The initial closing (the “Closing”) shall take place at or about 11:00 a.m., Chicago time, at the offices of Ally Bank, in Detroit, Michigan on or about November 3, 2017, or at such other time, date and place as the parties shall agree upon.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties of the Trust. The Trust represents and warrants to the Transferor as of the date hereof and as of each Closing Date:

(a) Organization and Good Standing . It has been duly organized, and is validly existing and in good standing under the laws of the jurisdiction of its formation, with all requisite power and authority to own or lease its properties and conduct its business as such business is presently conducted, and had at all relevant times, and now has all necessary power, authority and legal right to own or lease its properties and conduct its business as such business is presently conducted, including to acquire, own and sell the Receivables and the other Purchased Property except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) Due Qualification . It is duly qualified to do business and is in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, licenses or approvals (including, as applicable, the origination, purchase, sale and servicing of the Receivables) except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(c) Power and Authority; Due Authorization . It (i) has all necessary power, authority and legal right to (A) execute and deliver the Transaction Documents to which it is a party, (B) carry out the terms of the Transaction Documents to which it is a party and (C) to assign or grant the security interest in the assets transferred by it on the terms and conditions in the Transaction Documents to which it is a party and (ii) has taken all necessary action to authorize the execution, delivery and performance of the Transaction Documents to which it is a party and to assign or grant a security interest in the assets transferred by it on the terms and conditions in the Transaction Documents to which it is a party.

(d) Binding Obligation . The Transaction Documents to which it is a party have been duly executed and delivered by it and constitute legal, valid and binding obligations of it enforceable against it in accordance with their terms.

(e) No Violation . The consummation of the transactions contemplated by the Transaction Documents to which it is a party and the fulfillment of the terms thereof will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, its formation documents or any agreement to which it is bound, (ii) result in the creation or imposition of any Lien upon any of its properties, other than pursuant to the Transaction Documents, or (iii) violate any Requirements of Law, except, in each case, for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(f) No Proceedings . There is no litigation, proceeding or investigation pending or, to the best of its knowledge, threatened against it, before any governmental authority (i) asserting the invalidity of any Transaction Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Transaction Documents, (iii) challenging the enforceability of a material portion of the Receivables or (iv) seeking any determination or ruling that would reasonably be expected to have a Material Adverse Effect.

(g) All Consents Required . All approvals, authorizations, consents, orders, licenses or other actions of any person or of any governmental authority required for the due execution, delivery and performance by it of the Transaction Documents to which it is a party have been obtained except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(h) Compliance. It is not in violation in any material respect of any Transaction Documents to which it is a party or any laws, ordinances, Governmental Rules or regulations to which it is subject except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

Section 4.2 Representations and Warranties of the Transferor . The Transferor represents and warrants to the Trust as of the date hereof and as of each Closing Date (except as provided herein otherwise):

(c) Power and Authority; Due Authorization . It (i) has all necessary power, authority and legal right to (A) execute and deliver the Transaction Documents to which it is a party, (B) carry out the terms of the Transaction Documents to which it is a party and (C) to assign or grant the security interest in the assets transferred by it on the terms and conditions in this Agreement and (ii) has taken all necessary action to authorize the execution, delivery and performance of the Transaction Documents to which it is a party and to assign or grant a security interest in the assets transferred by it on the terms and conditions in this Agreement.

(e) No Violation . The consummation of the transactions contemplated by the Transaction Documents to which it is a party and the fulfillment of the terms thereof will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, its formation documents or any agreement to which it is bound, (ii) result in the creation or imposition of any Lien upon any of its properties, other than pursuant to this Agreement, or (iii) violate any Requirements of Law, except, in each case, for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(h) Compliance. It is not in violation in any material respect of any Transaction Document to which it is a party or any laws, ordinances, Governmental Rules or regulations to which it is subject except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(i) Bulk Sales . The execution, delivery and performance of the Transaction Documents to which it is a party is in the ordinary course of business and does not require compliance with any bulk sales act or similar law.

(j) Solvency . As of each Closing Date, (i) the Transferor is not and shall not become insolvent as a result of the transfer of the related Purchased Property on such date, (ii) the Transferor did not intend to or believe that it would incur debts that would be beyond its ability to pay as such debts matured, (iii) the Transferor did not transfer the related Purchased Property with the actual intent to hinder, delay or defraud any Person and (iv) the assets of the Transferor did not constitute unreasonably small capital to carry out its business as conducted.

(k) Selection Procedures . No procedures believed by it to be materially adverse to the interests of the Trust, the Administrative Agent or the Lenders were utilized by it in identifying or selecting Receivables to be transferred by it. In addition, each Receivable assigned pursuant to this Agreement has been underwritten in accordance with and satisfies the standards of the Credit Policy in all material respects.

(l) Taxes . It has filed, caused to be filed, or received an extension of time for filing that has not yet expired, all federal and material state, local or foreign tax returns that are required to be filed by it. It has paid or made adequate provisions for the payment of all federal or material amounts of state, local or foreign taxes and all material assessments made against it or any of its property (other than any amount of tax the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves have been provided on the books

of it), and no tax lien has been filed and, to the its knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.

(m) Exchange Act Compliance; Regulations T, U and X . None of the transactions contemplated in the Transaction Documents to which it is a party (including the use of the proceeds from the advances) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including Regulations T, U and X of the Federal Reserve Board, 12 C.F.R., Chapter II. It does not own or intend to carry or purchase, and no proceeds from the sale of the Purchased Property will be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purchase credit” within the meaning of Regulation U.

(n) Quality of Title . Each Receivable, together with the Contract related thereto, transferred by it were, prior to the transfer thereof, owned by it free and clear of any Lien except for Permitted Liens, and the Trust upon the providing of value described herein shall acquire a valid ownership interest and a perfected first priority security interest in each Receivable and the related Purchased Property then-existing or thereafter arising, free and clear of any Lien, other than Permitted Liens. Immediately upon the transfer thereof pursuant to this Agreement, each Receivable, together with the Contract related thereto, shall be owned by the Trust free and clear of any Lien except for Permitted Liens, and the Administrative Agent upon the providing of value described in the Loan and Security Agreement shall acquire a valid perfected first priority security interest in each Receivable and the related Purchased Property then-existing or thereafter arising, free and clear of any Lien, other than Permitted Liens. No effective financing statement or other instrument similar in effect covering any portion of the Purchased Property or the Purchased Property or the Collateral shall, after the relevant Closing Date, be on file in any recording office except such as may be filed in favor of Carvana, the Transferor, the Trust or the Administrative Agent in accordance with the Master Sale Agreement (Warehouse), this Agreement and the Loan and Security Agreement.

(o) Security Interest . It has granted a security interest (as defined in the UCC) to the Trust in the Purchased Property, which is enforceable in accordance with applicable law upon execution and delivery of this Agreement. Upon the filing of UCC-1 financing statements naming the Trust as secured party, or upon the Collateral Custodian obtaining possession, in the case of that portion of the Purchased Property which constitutes tangible chattel paper, or upon the E-Vault Provider granting control to the Trust, in the case of that portion of the Purchased Property which constitutes electronic chattel paper, the Trust shall have a first priority (except for any Permitted Liens) perfected security interest in the Purchased Property. Upon the sale of thereof to the Trust pursuant to the Master Transfer Agreement, the Trust shall have granted a security interest (as defined in the UCC) to the Trust in the Purchased Property, which is enforceable in accordance with applicable law upon execution and delivery of the Master Transfer Agreement. Upon the pledge thereof to the Administrative Agent pursuant to the Loan and Security Agreement, the Trust shall have granted a security interest (as defined in the UCC) to the Administrative Agent in the Collateral, which is enforceable in accordance with applicable law upon execution and delivery of the Loan and Security Agreement. Upon the filing of UCC-1 financing statements naming the Administrative Agent as secured party, or upon the Collateral Custodian obtaining possession, in the case of that portion of the Collateral which constitutes tangible chattel paper, or upon the E-Vault Provider granting control to the Administrative Agent, in the case of that portion of the Collateral which constitutes electronic chattel paper, the Administrative Agent shall have a first priority (except for any Permitted Liens) perfected security interest in the Collateral.

(p) Reports Accurate . All Settlement Reports, Funding Reports, information, exhibits, financial statements, documents, books, records or reports (including the data file indicating characteristics of the Receivables and including electronic writings) furnished or to be furnished by the Transferor directly or indirectly to the Trust, the Administrative Agent, the Lenders, the Servicer, the Collateral Custodian or the Account Bank under or in connection with the Transaction Documents to which the Transferor is a party (including the information delivered in connection with each sale in the form of Schedule 4 attached to the related Pool Supplement) are true, correct and complete in all material respects as of the date specified therein or the date so furnished (as applicable).

(q) Location of Offices. The principal place of business and chief executive office of it and the office where it keeps all the Records related to the tangible Contracts are located at the address set forth in Section 7.6 (or at such other locations as to which the notice and other specified requirements shall have been satisfied).

(r) Tradenames and Place of Business . (i) Except as specified in this Agreement, it has no trade names, fictitious names, assumed names or “doing business as” names or other names under which it has done or is doing business and (ii) its principal place of business and chief executive office is located at the address set forth in Section 7.6 and has been so for the last four (4) months.

(s) Transfer Agreements . This Agreement, the Master Sale Agreement (Warehouse), the Master Sale Agreement (Flow) and the Flow Purchase Agreement are the only agreements pursuant to which it purchases or sells the Receivables and the related Contracts.

(t) Value Given . The Trust shall have given reasonably equivalent value to the Transferor in consideration for the transfer by the Transferor to the Trust of the Receivables and the related Purchased Property under this Agreement, no such transfer shall have been made for or on account of an antecedent debt owed by the Transferor to the Trust and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.

(u) Accounting . The Transferor accounts for the transfers to the Trust of Receivables and related Purchased Property under this Agreement on a standalone basis as sales of such Receivables and related Purchased Property in its books, records and financial statements, in each case consistent with the requirements set forth in this Agreement. The Trust accounts for the transfers to the Administrative Agents of the Collateral under the Loan and Security Agreement as pledges in its books, records and financial statements. Carvana may account for such transfers as pledges for income tax and consolidated accounting purposes.

(v) Investment Company Act . The Transferor is not an “investment company” and is not controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(w) ERISA . (i) No prohibited transactions or Reportable Events have occurred with respect to any Pension Plan (if any), (ii) no notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA has been filed, nor has any Pension Plan been terminated under Section 4041(c) of ERISA, nor has the Pension Benefit Guaranty Corporation instituted proceedings to terminate, or appointed a trustee to administer a Pension Plan and no event has occurred or condition exists that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, and (iii) no liability under Title IV (other than accrued premiums to the Pension Benefit Guaranty Corporation) has been incurred (whether or not assessed), which individually or in the aggregate with respect to all or any of (i), (ii) and (iii) above, would reasonably be expected to have a Material Adverse Effect on the Transferor, the Trust or the Administrative Agent or the Lenders (including its rights and interests in, to or under any Contracts or related Receivables), with respect to the Transferor or the Trust.

(x) Accuracy of Representations and Warranties . Each representation or warranty by the Transferor contained in the Transaction Documents to which it is a party or in any certificate or other document furnished by the Transferor or the Trust pursuant thereto or in connection therewith is true and correct in all material respects as of the date made.

(y) OFAC . Neither the Transferor nor any Affiliate is a Sanctioned Person. The proceeds of any funding will not be used and have not been used to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.

(z) Other Agreements . As of each Closing Date, the Transferor has not taken any action that would cause the representations and warranties of Carvana, the Trust, the Servicer, the Collateral Custodian or the Account Bank under the Transaction Documents to be false.

(aa) Use of Proceeds . No proceeds of a purchase hereunder shall be used by the Transferor for a purpose that violates or would be inconsistent with Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.

(bb) Remediation . In the event that Carvana, the Transferor, the Trust or the Servicer or any of their Affiliates has been required under any Requirements of Law, or has agreed or made arrangements with any Governmental

Authority, to make any Remediation, such Person shall have taken such action as so agreed or arranged or in compliance with all Requirements of Law, as applicable.

(cc) Receivables . The Transferor makes the following representations and warranties as of each Closing Date (except to the extent otherwise provided) with respect to the Receivables the Transferor sold to the Trust on such Closing Date, on which the Trust, the Administrative Agent and the Lenders relies in accepting such Receivables. Such representations and warranties speak as of the applicable Closing Date (except as provided herein otherwise), and shall survive the sale, transfer and assignment of such Receivables to the Trust and any subsequent sale, assignment or transfer of any such Receivables:

(i) Selection of Receivables. As of each Cutoff Date with respect to the related Receivables to be purchased, the Receivables Pool was selected as described in Section 2.1(a) .

(ii) Creation, Perfection and Priority of Security Interests . The following representations and warranties regarding creation, perfection and priority of security interests in the Purchased Property or the Collateral, as applicable, are true and correct:

(A) While it is the intention of the Transferor and the Trust that the transfer and assignment contemplated by this Agreement, each Pool Supplement and each Receivables Assignment shall constitute sales of the related Purchased Property from the Transferor to the Trust, this Agreement, each Pool Supplement and, upon execution and delivery, each Receivables Assignment shall create a valid and continuing security interest (as defined in the applicable UCC) in the related Purchased Property in favor of the Trust, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Transferor. The Loan and Security Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Collateral in favor of the Administrative Agent, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Trust.

(B) Prior to the sale of such Purchased Property to the Trust under this Agreement, the Receivables constituted “tangible chattel paper” or “electronic chattel paper” within the meaning of the applicable UCC.

(C) All filings (including such UCC filings) as are necessary in any jurisdiction to perfect the security interest of the Trust and the Administrative Agent in the Purchased Property and the Collateral (subject to permitted exceptions for titling), as applicable, have been (or prior to the applicable Closing Date will be) made.

(D) Other than the sale and backup security interest granted to the Trust or the Administrative Agent pursuant to this Agreement, the Transferor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of such Purchased Property or Collateral. The Transferor has not authorized the filing of, and is not aware of, any financing statements against the Transferor that include a description of collateral covering such Purchased Property other than the financing statements relating to the security interests granted to the Trust and the Administrative Agent, as assignees, under this Agreement or any financing statement that has been effectively terminated. The Transferor is not aware of any judgment or tax lien filings against it or such Purchased Property or the Collateral.

(E) Wells Fargo, as Collateral Custodian, or a permitted subcontractor, has in its possession all original copies of the related Original Contract Documents and other documents that constitute or evidence such Receivables and the related Purchased Property that are tangible chattel paper. The E-Vault Provider has in its “control” (as such term is used in Section 9-105 of the UCC), for the benefit of the Trust, and upon the pledge of the Collateral to the Administrative Agent pursuant to the Loan and Security Agreement, as the “secured party” (as such term is used in Section 9-105 of the UCC), all electronic records constituting or forming a part of the Receivables that are electronic

chattel paper, such that the Trust has had, and will have, and the Administrative Agent has had and will have, at all times a first priority perfected security interest against the Transferor, the Trust and their respective creditors in such Receivables or Collateral, as applicable. Such Receivable Files and other documents that constitute or evidence such Purchased Property do not have any marks or notations indicating that any ownership or security interest therein has been pledged, assigned or otherwise conveyed to any Person other than the Trust and, upon assignment to the Administrative Agent pursuant to the Loan and Security Agreement, the Administrative Agent.

(F) None of the Transferor, the Trust, the Servicer or a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an Authoritative Copy of any loan agreement that constitutes or evidences such Receivable to any Person other than the Collateral Custodian for the benefit of the Trust and, upon assignment of the Collateral to the Administrative Agent pursuant to the Loan and Security Agreement, the Administrative Agent.

(iii) Schedule of Receivables . The information set forth in the related Schedule of Receivables and in any computer tape regarding the Receivables is true, accurate and complete, and no selection procedures believed to be adverse to the Trust, the Administrative Agent or the Lenders were utilized in selecting such Receivables, with respect to the related Receivables Pool, from those receivables of Carvana that otherwise meet such criteria as well as the definition of Eligible Receivables.

(iv) Compliance With Law . All Requirements of Law in respect of any aspect of such Receivables and the related Purchased Property (including the origination thereof), in each case, have been complied with in all material respects and each Receivable and the sale of the related Financed Vehicle evidenced thereby complied at the time it was originated or made and now complies in all material respects with all applicable Requirements of Law.

(v) Binding Obligation . Each such Receivable with respect to the related Receivables Pool represents the genuine, legal, valid and binding payment obligation in writing of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except as enforceability may be limited by bankruptcy, receivership, conservatorship, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights in general and by equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(vi) Security Interest in Financed Vehicle . Immediately prior to the sale, transfer and assignment thereof pursuant hereto and the related Receivables Assignment, each such Receivable with respect to the related Receivables Pool was secured by a valid security interest in the Financed Vehicle in favor of the Transferor as secured party. Immediately prior to the sale, transfer and assignment thereof pursuant to the Loan and Security Agreement, each such Receivable with respect to the related Receivables Pool was secured by a valid security interest in the Financed Vehicle in favor of the Trust as secured party.

(vii) Receivables In Force . As of the applicable Cutoff Date, no such Receivable has been satisfied, subordinated or rescinded, and the Financed Vehicle securing each such Receivable has not been released from the lien of the related Receivable in whole or in part.

(viii) No Waiver . Since the applicable Cutoff Date, no provision of a Receivable has been, or shall be, waived, altered or modified in any respect other than with respect to alterations and modifications so that such Receivable meets the Eligible Receivable criteria (other than clause (ix) thereof, which must have been satisfied at the time of origination and at all times since that date) and such Receivable is enforceable after giving effect thereto.

(ix) No Defenses . No right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any such Receivable.

(x) No Liens . To the best of the Transferor’s knowledge: (1) there are no Lien or claims that have been filed for work, labor or materials affecting any Financed Vehicle securing any such Receivable that are or may be Lien prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by such Receivable; (2) no contribution failure has occurred with respect to any Benefit Plan which is sufficient to give rise to a Lien under Section 303(k) of ERISA with respect to any such Receivable; and (3) no tax lien has been filed and no claim related thereto is being asserted with respect to any such Receivable.

(xi) Insurance . Each Obligor under such Receivables is required to maintain a physical damage insurance policy of the type that Carvana requires in accordance with the Credit Policy.

(xii) Good Title . No such Receivable or the related Purchased Property or the Collateral has been sold, transferred, assigned or pledged by the Transferor to any Person other than the Trust, the Trust and the Administrative Agent; immediately prior to the conveyance of such Receivables and the related Purchased Property pursuant to this Agreement, the related Pool Supplement and the related Receivables Assignment, the Transferor had good and marketable title thereto, free of any Lien other than Permitted Liens; and, upon execution and delivery of the Loan and Security Agreement, the Administrative Agent shall acquire a valid and enforceable perfected security interest in each such Receivable and Purchased Property and the Collateral (subject to permitted exceptions for titling), the unpaid indebtedness evidenced thereby and the collateral security therefor, free of any Lien other than Permitted Liens.

(xiii) Lawful Assignment . No such Receivable or the related Purchased Property was originated in, or is subject to Requirements of Law of, any jurisdiction the Requirements of Law of which would make unlawful, void or voidable the sale, transfer and assignment of such Receivable and the other related Purchased Property under this Agreement and the related Receivables Assignment or the pledge of the Collateral under the Loan and Security Agreement. None of the Transferor, the Trust, the Trust or the Servicer has entered into any agreement with any Obligor that prohibits, restricts or conditions the assignment of such Receivable or any other Purchased Property or Collateral.

(xiv) All Filings Made . All filings (including UCC filings) necessary in any jurisdiction to give the Trust and the Administrative Agent a first priority perfected ownership interest in the Receivables and the related Purchased Property or the Collateral (subject to permitted exceptions for titling), as applicable, shall have been made.

(xv) One Original . There is only one original executed copy of each tangible record constituting or forming a part of such Receivable that is tangible chattel paper or a single Authoritative Copy of each electronic record constituting or forming a part of each Purchased Receivable that is electronic chattel paper.

(xvi) No Documents or Instruments . No such Receivable, or constituent part thereof, constitutes a “negotiable instrument” or “negotiable document of title” (as such terms are used in the UCC).

(xvii) Accounts and Receivables Analysis . The information set forth in the Accounts and Receivables Analysis with respect to such Receivable and the related Receivables Pool, as applicable, provided on Schedule 4 of the related Pool Supplement is true and correct in all material respects.

ARTICLE V
CONDITIONS

Section 5.1 Conditions to Effectiveness . The effectiveness of this Agreement (the “ Effective Date ”) is subject to the satisfaction of the following conditions precedent as of the date hereof:

(a) Transaction Documents . Each of Carvana, the Transferor, the Trust, the Administrative Agent, the Lenders, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor, as the case may be, shall have executed and delivered each of the Transaction Documents to which it is a party, and shall have executed

and/or delivered each other document and instrument required to be executed and/or delivered by such party on the Original Execution Date or the date hereof, as applicable, prior to the effectiveness hereof or thereof, hereunder or thereunder.

(b) Documents to be Delivered by the Transferor .

(i) Evidence of UCC Filing . On or prior to Effective Date, the Transferor shall record and file, at its own expense, a UCC-1 financing statement in each jurisdiction in which it is required by applicable law, authorized by and naming and the Transferor as seller or debtor, naming the Trust as purchaser or secured party, naming the Administrative Agent as assignee, naming the Receivables and the other Purchased Property as collateral, meeting the requirements of the laws of each such jurisdiction and in such manner as is necessary to perfect each sale, transfer, assignment and conveyance of Receivables to the Trust hereunder. Such UCC-1 financing statement shall be provided to the Trust (who will in turn provide such UCC-1 financing statement to the Administrative Agent) on or prior to such Effective Date.

(ii) Other Documents . Carvana, the Transferor, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor shall have provided such other documents as the Trust or the Administrative Agent may reasonably request or otherwise require for the Trust to comply with the requirements to effectiveness under the Loan and Security Agreement.

(c) Representations and Warranties . Each of the representations and warranties of each of Carvana, the Transferor, the Trust, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor, under each of the Transaction Documents shall be true and correct in all material respects as of the date hereof (or, if another date for such representation or warranty is specified herein or therein, then such other date), and Carvana, the Transferor, the Trust, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor shall have performed in all material respects all covenants and agreements required to be performed by it hereunder and thereunder on or prior to the date hereof.

(d) Flow Purchase Agreement . Each of Ally Bank, Ally Financial, Carvana and the Transferor, as the case may be, shall have executed and delivered the Flow Purchase Agreement and shall have executed and/or delivered each other document and instrument required to be executed and/or delivered by such party on the Original Execution Date or the date hereof, as applicable, prior to the effectiveness thereof or thereunder.

Section 5.2 Conditions to Obligation of the Trust . The obligation of the Trust to purchase Receivables and the related Purchased Property with respect to each Receivables Pool and the related Purchased Property under this Agreement, the related Pool Supplement and the related Receivables Assignment is subject to the satisfaction of the following conditions on or before the related Closing Date:

(a) Maximum Sales Amount . The Receivables to be sold shall not include any receivables sold by Transferor to the Purchasers (as defined in the Master Sale Agreement (Flow) pursuant to the Master Sale Agreement (Flow) and the randomization code (as defined in the definition of Freestyle Selection) of any Receivables to be sold shall not exceed the Purchase Percentage for the Origination Period in which such Receivable was originated as specified in Section 2.1(a) .

(b) Representations and Warranties . Each of the representations and warranties of each of Carvana, the Transferor, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor, under each of the Transaction Documents shall be true and correct in all material respects at the time of each Closing Date (or, if another date for such representation or warranty is specified herein or therein, then such other date), and Carvana, the Transferor, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor shall have performed in all material respects all covenants and agreements required to be performed by it hereunder and thereunder on or prior to each Closing Date.

(c) Security Interests . The security interest granted by the Transferor in favor of the Trust and by the Trust to the Administrative Agent in each Receivables Pool previously sold is a valid and continuing security interest prior to all other Liens, and is enforceable as against such other creditors of and purchasers from the Transferor and the Trust, as applicable.

(d) Computer Files Marked . Each of the Transferor and the Servicer shall have, on or prior to each Closing Date, indicated in its Receivables System, that such Purchased Property has been sold to the Trust and, upon pledge to the Administrative Agent under the Loan and Security Agreement, pledged to the Administrative Agent.

(e) Documents to be Delivered By the Transferor . On or before such Closing Date, the Transferor shall have delivered to the Trust the following documents:

(i) The Pool Supplement . The Transferor will execute and deliver the related Pool Supplement and each of the other documents, certificates and instruments required to be attached thereto as set forth in Exhibit A (a final completed draft of which shall be delivered to the Trust at least one Business Day prior to the Closing Date).

(ii) Other Documents . On each Closing Date, Carvana, the Trust, the Servicer, the Collateral Custodian, the Account Bank and the Performance Guarantor shall provide or cause to be provided such other documents as the Trust may reasonably request or otherwise require for the Trust to comply with the conditions precedent under the Loan and Security Agreement.

(f) Collateral Custodian Certificate . With respect to all Receivables included in the related Receivables Pool, the Transferor shall have Delivered each related Original Contract Document to the Collateral Custodian and the Trust shall have received the related executed Document Receipt in accordance with the requirements of the Collateral Custodian Agreement, and the Transferor and the Servicer shall have marked their computer files with respect to such Receivables to indicate the interest of the Trust or its or their assignee.

(g) First Step Sale . The closing of the transactions contemplated to occur on such Closing Date pursuant to the Master Sale Agreement (Warehouse) shall occur simultaneously with the closing of the transactions contemplated herein.

(h) Other Transactions . The transactions contemplated by the Loan and Security Agreement and the other Transaction Documents shall be consummated to the extent that such transactions are intended to be substantially contemporaneous with the transactions hereunder.

Section 5.3 Conditions to Obligation of the Transferor . The obligation of the Transferor to sell the Receivables with respect to each Receivables Pool and the related Purchased Property under this Agreement, the related Pool Supplement and the related Receivables Assignment is subject to the satisfaction of the following conditions on or before the related Closing Date:

(a) Receivables Purchase Price . On such Closing Date, the Trust shall deliver to the Transferor the Receivables Purchase Price for such Receivables Pool, in accordance with Section 2.1(b) of this Agreement.

(b) Representations and Warranties True . The representations and warranties of the Trust under this Agreement and each of the other Transaction Documents to which it is a party shall be true and correct in all material respects as of such Closing Date, and the Trust shall have performed in all material respects all covenants and agreements, if any, required to be performed by it hereunder and thereunder on or prior to such Closing Date.

(c) Documents to be Delivered By the Trust . On or before such Closing Date, the Trust shall have delivered to the Transferor the related Pool Supplement.

(d) Other Documents . On such Closing Date, the Trust shall provide such other documents as the Transferor may reasonably request.

(e) First Step Sale . The closing of the transactions contemplated to occur on such Closing Date pursuant to the Master Sale Agreement (Warehouse) shall occur simultaneously with the closing of the transactions contemplated herein.

(f) Other Transactions . The transactions contemplated by the Loan and Security Agreement and the other Transaction Documents shall be consummated to the extent that such transactions are intended to be substantially contemporaneous with the transactions hereunder in connection with such sale and such Closing Date.

ARTICLE VI

COVENANTS OF THE TRANSFEROR

Section 6.1 Protection of Right, Title and Interest . The Transferor covenants and agrees with the Trust as follows:

(a) Protection of Title; Filings . The Transferor shall authorize and file such financing statements and amendments to financing statements and cause to be authorized, as applicable, and filed such continuation and other statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of (i) the Trust under this Agreement, each Pool Supplement and each Receivables Assignment and (ii) the interests of the Administrative Agent and the Lenders under the Loan and Security Agreement. The Transferor shall deliver (or cause to be delivered) to the Trust and the Administrative Agent file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.

(b) Name Change . The Transferor shall not change its State of organization or its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Transferor in accordance with Section 6.1(a) seriously misleading within the meaning of the UCC, unless it shall have given the Trust and the Administrative Agent (i) at least 30 days prior written notice thereof if such change would create a new debtor under the UCC (which for purposes of this Section 6.1(b) , shall not include a name change) or change the jurisdiction that would govern the perfection or effect of perfection against the Transferor and after delivery to the Trust and the Administrative Agent of the applicable financing statements necessary to perfect or continue the perfection of the Trust’s and the Administrative Agent’s security and ownership interests hereunder and under the other Transaction Documents, or (ii) otherwise, notice thereof within 30 calendar days after effectiveness of such change, together with delivery to the Trust and the Administrative Agent of the applicable financing statements necessary to perfect or continue the perfection of their respective security and ownership interests hereunder and under the other Transaction Documents.

(c) Executive Office; Maintenance of Offices . The Transferor shall (i) give the Trust and the Administrative Agent at least 30 days prior written notice of any relocation of its principal executive office if, 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 Records and (ii) deliver to the Trust and the Administrative Agent acknowledgment copies of the applicable financing statements necessary to perfect or continue the perfection of their respective security or ownership interests hereunder and under the other Transaction Documents (it being understood that amendments to all relevant financing statements will be filed in connection with the change in chief executive office described above). The Transferor shall at all times maintain offices from which it primarily services Receivables and its principal executive office within the United States of America.

(d) New Debtor . In the event that the Transferor shall change the jurisdiction in which it is formed or otherwise enter into any transaction which would result in a “new debtor” (as defined in the UCC) succeeding to the obligations of the Transferor hereunder, the Transferor shall comply fully with the obligations of Section 6.1(a) .

(e) Receivables System . The Transferor shall maintain its Receivables System so that, from and after the time of sale of the Receivables under this Agreement, if the computer systems and records (including any backup archives) shall refer to any such Receivable, they shall indicate clearly the ownership interest of the Trust and, upon pledge to the Administrative Agent under the Loan and Security Agreement, the security interest of the Administrative Agent in such Receivable, as applicable. Indication of the Trust’s ownership of and the Administrative Agent’s security

interest in a Receivable shall be deleted from or modified on the Receivables System and records of the Transferor, if any, when, and only when, the related Receivable shall have been paid in full or repurchased. The Transferor shall cause the Collateral Custodian or the E-Vault Provider on its behalf at all times to maintain “control” (as such term is used in Section 9-105 of the UCC) of all electronic records constituting or forming a part of a Receivable constituting electronic chattel paper on behalf of the Trust and, upon pledge to the Administrative Agent under the Loan and Security Agreement, the Administrative Agent as “secured party” (as such term is used in Section 9-105 of the UCC) such that the Trust and the Administrative Agent, as applicable, have had and at all relevant times will have a first priority perfected security interest against the Transferor and the Trust, as applicable, and their creditors in such Receivable.

(f) Certificates of Title . If the Transferor has not received a Certificate of Title related to a Purchased Receivable naming a Title Lien Nominee the first lien holder on such Certificate of Title for the related Financed Vehicle or the title application or other documentation necessary to obtain a Certificate of Title thereto noting such lien holder has not been submitted, then, promptly, but no later than 30 days after the related date of origination, the Transferor shall take all steps necessary to perfect the security interest against each Obligor in the related Financed Vehicle.

(g) Maintenance of Records . If at any time the Transferor proposes to sell, grant a security interest in, or otherwise transfer any interest in automotive contracts to any prospective purchaser, lender or other transferee, the Transferor shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from back-up archives) that, if they refer in any manner whatsoever to any specific Receivable, indicate that such Receivable has been sold to the Trust and pledged to the Administrative Agent, unless such Receivable has been paid in full or purchased by Carvana, the Transferor or the Servicer in accordance with the terms of the applicable Transaction Documents.

Section 6.2 Other Liens or Interests. Except for the sale contemplated by this Agreement and the Receivables Assignment, the Transferor shall not sell, pledge, assign or transfer any Receivable or the related Purchased Property (or any portion thereof) to any other Person, or grant, create, incur, assume or suffer to exist any Lien thereon or on any interest therein, and the Transferor shall defend the right, title, and interest of the Trust and the Administrative Agent in, to and under such Receivables and the related Purchased Property or the Collateral, as applicable, against all claims of third parties claiming through or under the Transferor or the Trust, in the case of the Administrative Agent. The Transferor shall not do anything to impair the, right, title, ownership or security interest of the Trust and the Administrative Agent in the Purchased Property.

Section 6.3 Perfection Costs and Expenses . The Transferor agrees to pay all reasonable costs and disbursements in connection with the perfection, as against all third parties, of the Trust’s right, title and interest in and to the Purchased Property with respect to each Receivables Pool.

Section 6.4 Separateness . The Transferor has taken, and shall continue to take, steps to make it unlikely that a voluntary or involuntary application for relief by Carvana under the Bankruptcy Code or similar applicable Requirements of Law in any state jurisdiction, would result in consolidation of the assets and liabilities of the Transferor with those of Carvana. These steps include the maintenance of the Transferor as a separate, limited-purpose subsidiary pursuant to the limitations in the Transferor’s limited liability company agreement and compliance with any assumptions or statements of fact in the non-consolidation opinion delivered to the Administrative Agent in connection with the Transaction Documents.

Section 6.5 Notice of Servicer Termination; Etc. The Transferor shall notify the Trust and the Administrative Agent (A) as soon as possible and in any event within five (5) Business Days after it obtains knowledge of the occurrence of an Event of Servicing Termination; and (B) promptly after the Transferor obtains knowledge thereof, notice of any litigation, investigation or proceeding that may exist at any time between the Transferor and any Person or any litigation or proceeding relating to this Agreement, the other Transaction Documents or the Purchased Property.

Section 6.6 Conduct of Business; Ownership . The Transferor shall carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly organized, validly existing and in good standing as a domestic limited liability

company in its jurisdictions of formation and maintain all requisite authority, licenses and permits to conduct its business in each jurisdiction in which its business is conducted, except for any such noncompliance that would not reasonably be expected to have a Material Adverse Effect.

Section 6.7 Collections . In the event the Transferor receives any Collections after the applicable Cutoff Date with respect to the Purchased Property for any amount due, it shall turn over any Collections received by it with respect to any Purchased Property to the Servicer within two (2) Business Days after its identification of such Collections.

Section 6.8 Selection Standards; Quarterly Meetings. Until the Commitment Termination Date, in addition to the Quarterly Operations Review (as defined in the Master Servicing Agreement), the Transferor shall participate in quarterly meetings with the Administrative Agent and the Lenders (“Quarterly Selection Standards Meeting”) on the 60 ^th day (or such other day as soon thereafter as the Transferor and the Administrative Agent shall mutually agree) of each quarter and if such day is not a Business Day, then on the next Business Day (or as Parties may mutually agree) by telephone or, if agreed to by the parties, in person, to discuss and review, among other things, loss and delinquency performance of Carvana’s originated portfolio of motor vehicle installment sales contracts and installment loans, any material changes to the Carvana’s Credit Policy and other origination or underwriting guidelines, processes or policies, including special origination programs, that could influence, modify or impact the Purchased Property or the mix or characteristics of future Receivables Pools, as well as any proposed amendments or modifications to the definitions of Eligible Receivable or Eligible Receivables Pool since the preceding Quarterly Selection Standards Meeting.

Section 6.9 Furnishing of Information and Inspection of Records . If at any time the Transferor maintains any information regarding the Purchased Property, the Transferor shall furnish to the Administrative Agent from time to time such information with respect to the Purchased Property as the Administrative Agent may reasonably request. If the Transferor maintains such information, the Transferor shall, at any time and from time to time during regular business hours, as requested by the Administrative Agent, permit the requesting party, or its agents, representatives or regulators, (i) to examine and make copies of and take abstracts from all books, records and documents (including computer tapes and disks) relating to the Receivables or other Purchased Property, and (ii) to visit the offices and properties of the Transferor for the purpose of examining such materials described in clause (i), and to discuss matters relating to the Purchased Property or the Transferor’s performance hereunder and under the other Transaction Documents to which such Person is a party with any of the officers, directors, employees or independent public accountants of the Transferor having knowledge of such matters.

Section 6.10 Compliance with Laws, Etc. The Transferor shall comply with all Requirements of Law applicable to it, except for any such noncompliance that would not reasonably be expected to have a Material Adverse Effect on the Trust, the Administrative Agent, the Lenders or any of the Purchased Property or any of the transactions contemplated by the Transaction Documents.

Section 6.11 Indemnification.

(a) The Transferor shall indemnify, defend and hold harmless the Trust, the Owner Trustee, the Administrative Agent, the Lenders and their respective assigns and their respective officers, directors, employees, Affiliates and agents (the “ Transferor Indemnified Parties ”) from and against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from the use, ownership or operations by the Transferor or any of its Affiliates of any Financed Vehicle.

(b) The Transferor shall indemnify, defend and hold harmless the Transferor Indemnified Parties from and against any and all reasonable and documented costs, expenses, losses, claims, damages and liabilities solely to the extent that such cost, expense, loss, claim, damage or liability arose out of or resulted from the action or inaction (including any failure to comply with any applicable Requirements of Law) of any third party to whom the Transferor subcontracted or delegated the performance of its duties under this Agreement or the other Transaction Documents to which it is a party and only to the extent such cost, expense, loss, claim, damage or liability is not related to any credit loss.

(c) The Transferor shall indemnify, defend and hold harmless the Transferor Indemnified Parties from and against any and all costs, expenses, losses, claims, damages and liabilities, including reasonable external legal fees and expenses (i) to the extent that such cost, expense, loss, claim, damage, or liability arose out of, resulted from or was imposed upon any such Transferor Indemnified Party through the negligence (except for reasonable errors in judgment), willful misfeasance or bad faith of the Transferor or agent in the performance of its duties under this Agreement or the other Transaction Documents to which it is a party or by reason of a breach of its obligations or duties under this Agreement or the other Transaction Documents to which it is a party, (ii) arising out of, or resulting from, any breach of any representation, warranty, covenant or obligation of the Transferor in this Agreement, or the other Transaction Documents to which it is a party or in any Schedule, Exhibit, written statement or certificate furnished by the Transferor pursuant to this Agreement or the other Transaction Documents to which it is a party (in each case, as each such representation or warranty would read if all qualifications as to knowledge or materiality, including each reference to the defined term “Material Adverse Effect,” were deleted therefrom), (iii) arising out of, or resulting from, any untrue statement of a material fact in any written information provided or delivered by the Transferor, or any Affiliate of the Transferor on its behalf, to the Trust, the Administrative Agent or the Lenders pursuant to, for the purposes of, or in connection with, this Agreement or the other Transaction Documents to which it is a party, (iv) arising out of, or resulting from, any action, suit, proceeding or claim or other litigation to the extent resulting from the actions or omissions of the Transferor, the Trust or any of their consolidated Affiliates or any of their respective agents, directors, officers, servants or employee, excluding, however, any costs, expenses, losses, claims, damages or liabilities resulting from the gross negligence, bad faith or willful misconduct on the part of such Transferor Indemnified Party and (v) resulting from any conduct or omission of the Transferor or the Trust that results in failure of the Trust or the Administrative Agent, as applicable, to have a perfected and enforceable security interest against a related Obligor in the related Financed Vehicle, including any failure to obtain a first priority perfected security interest in the related Financed Vehicle in connection with the origination of the Receivable. Indemnification under this Section 6.11 shall include reasonable fees and expenses of one external counsel and reasonable costs and expenses of litigation; provided , however , that the Transferor pursuant to this Section 6.11 , Carvana pursuant to Section 6.11 of the Master Sale Agreement (Warehouse), the Trust, the Transferor or the Trust Administrator pursuant to Article XI of the Loan and Security Agreement, and the Servicer pursuant to Section 5.2 of the Master Servicing Agreement shall only be responsible collectively for reasonable fees and expenses of one external counsel. If the Transferor has made any indemnity payments pursuant to this Section 6.11 and the recipient thereafter collects any of such amounts from others with respect to such claim, the recipient shall promptly repay such amounts collected to the Servicer, without interest.

(d) This Section 6.11 shall survive any termination of this Agreement.

Section 6.12 Forbearance . The Transferor shall not cause or permit the Trust to take any action which would result in the Trust’s failure to comply with Sections 6.4 or 6.14 hereunder or the Trust’s failure to comply with Sections 6.1(o) of the Loan and Security Agreement.

Section 6.13 Consolidations, Mergers and Sales of Assets . The Transferor and the Trust will not be a party to any merger or consolidation, or purchaser or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or sell, transfer, covey or lease all or any substantial part of its assets, or sell or assign with or without recourse any portion of its assets or the Collateral or any interest therein (other than pursuant to the Transaction Documents.

Section 6.14 Operation of the Transferor . Without limiting the generality of Section 6.4 , the Transferor shall be operated and managed in accordance with rating agency requirements for single-use special purpose entities.

Section 6.15 Furnishing of Information and Inspection of Records . The Transferor shall furnish to the Trust and the Administrative Agent from time to time such information with respect to the Purchased Property or the origination or acquisition thereof as the Trust and the Administrative Agent may reasonably request to the extent that such information is not held by or under the control of the Servicer. The Transferor shall, at any time and from time to time during regular business hours, as requested by the Trust or the Administrative Agent, permit the requesting party, or its agents, representatives or regulators, (i) to examine and make copies of and take abstracts from all books, records and documents (including computer tapes and disks) relating to the Receivables or other Purchased Property

to the extent that such information is not held by or under the control of the Servicer, and (ii) to visit the offices and properties of the Transferor for the purpose of examining such materials described in clause (i), and to discuss matters relating to the Purchased Property or the origination or acquisition thereof or the Transferor’s performance hereunder and under the other Transaction Documents to which such Person is a party with any of the officers, directors, employees or independent public accountants of the Transferor having knowledge of such matters.

Section 6.16 Publicity . All media releases, public announcements and public disclosures by any Party or its respective employees or agents, relating to this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby or the name of the Transferor, the Trust, the Administrative Agent or the Lenders, including promotional or marketing material, shall be coordinated with and consented to by the other Party in writing prior to the release thereof, which consent shall not be unreasonably withheld or delayed; provided , however , that any announcement intended solely for internal distribution by the disclosing Party to its directors, employees, officers and agents or any disclosure required by Requirements of Law or by accounting requirements, shall not require such coordination or consent.

Section 6.17 No Solicitation . The Transferor agrees that it will not, directly or indirectly, specifically solicit, and will not permit any of its Affiliates to, directly or indirectly, specifically solicit, any Obligor (in writing or otherwise) to refinance any Purchased Receivable (including solicitations for the purchase of a new vehicle); provided , however , that each of Transferor and its Affiliates may, directly or indirectly, engage in a general solicitation directed generally at the obligors of receivables originated or serviced by the Transferor or the Servicer at large, so long as the Obligors under the Purchased Receivables are not the predominant targets of such general solicitation for refinancing.

Section 6.18 Remediation . The Transferor shall (i) provide the Trust and the Administrative Agent with written notice, to the extent not prohibited by any applicable Requirements of Law, of any Remediation if such Remediation could reasonably be expected, individually or in the aggregate with any other Remediation, to have a Material Adverse Effect on the Trust, the Administrative Agent or the Lenders or any of the Purchased Property or the Collateral and (ii) implement any Remediation in accordance with all terms thereof and all applicable Requirements of Law.

Section 6.19 Quarterly Statements as to Compliance. The Transferor shall deliver to the Trust and the Administrative Agent and the Lenders on or before the forty-fifth (45th) day following each calendar quarter, beginning February 14, 2018 (or, if such day is not a Business Day, the next succeeding Business Day), an Officer’s Certificate of the Transferor, dated as of the last Business Day of the immediately preceding calendar quarter, in each instance stating that (i) a review of the activities of the Transferor during the preceding calendar quarter (or, with respect to the first such certificate, such period as shall have elapsed from the Effective Date to the date of such certificate) and of its performance under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Transferor has fulfilled all its obligations under this Agreement in all material respects throughout such period, or, if there has been a default in the fulfillment of any such obligation, in any material respect specifying each such default known to such officer and the nature and status thereof.

Section 6.20 Additional Covenants. From the date hereof until the later of the Commitment Termination Date and the date on which the Receivables have been paid in full, the Transferor will:

(a) Preservation of Existence; License . It will preserve and maintain its existence, rights, franchises and privileges in its State of formation, and qualify and remain qualified in good standing in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification has had, or would reasonably be expected to have, a Material Adverse Effect and (without suspension or limitation) will not terminate or let lapse any licenses, consents or approval currently held by it necessary to ensure its performance of any duty contemplated this Agreement or the other Transaction Documents to which it is a party.

(b) Performance and Compliance with Contracts . It will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts and in and

all other agreements related to such Contracts. It shall enforce its rights under this Agreement or the other Transaction Documents to which it is a party.

(c) Keeping of Records and Books of Account . It will (or will cooperate with the Servicer to) maintain and implement administrative and operating procedures (including an ability to re-create records evidencing Receivables in the event of the destruction of the originals thereof, in the case of tangible Contracts, or loss of access to the vault system of the Contracts maintained therein, in the case of electronic Contracts), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables.

(d) Transferred Assets . With respect to each Receivable transferred or acquired by it, it will: (i) transfer or acquire such Receivable pursuant to and in accordance with the terms of this Agreement, (ii) take all action necessary to perfect, protect and more fully evidence the assignee’s interest in such Receivable, including (A) filing and maintaining, effective financing statements (Form UCC-1) in all necessary or appropriate filing offices, and filing continuation statements, amendments or assignments with respect thereto in such filing offices and (B) executing or causing to be executed such other instruments or notices as may be necessary or appropriate and (iii) taking all additional action that the Trust or the Administrative Agent may reasonably request, including the filing of financing statements to perfect, protect and more fully evidence the respective interests of the parties to this Agreement, the Master Sale Agreement (Warehouse) and the Loan and Security Agreement in the Purchased Property.

(e) Collection Policy . It will (or will cooperate with the Servicer to), to the extent applicable, comply with the Collection Policy with respect to each Receivable.

(f) Taxes . It will file or cause to be filed all federal and material state, local or foreign tax returns that are required to be filed by it. It will shall pay all federal or material amounts of state, local or foreign taxes and all material assessments made against it or any of its property (other than any amount of tax the validity of which it plans to contest in good faith by appropriate proceedings and with respect to which it retains reserves on its books).

(g) Liens . It will not create, or participate in the creation of, or permit to exist, any Lien with respect to the Collection Account or any account into which collections on the Receivables are deposited, except as set forth in the Transaction Documents.

(h) Reporting . It will distribute, or cause to be distributed, to the Trust and the Administrative Agent:

(i) Settlement Reports . Not later than the second Business Day preceding each Settlement Date, a Settlement Report, and not later than the third Business Day preceding any Funding Date, a Funding Report.

(ii) Additional Data . Additionally, and solely to the extent such data is available, the Transferor shall provide, or reasonably cooperate with the Servicer to provide the Administrative Agent the Monthly Servicer Report or Monthly Data File, as applicable, in a format reasonably acceptable to the Administrative Agent, with data regarding the characteristics of the Receivables, in form and substance necessary for the Trust and the Servicer to comply with the information requirements under the Loan and Security Agreement and the Master Servicing Agreement, respectively, and the reasonably acceptable to the Administrative Agent, including (A) delinquencies (including a list of Delinquent Receivables), and (B) annualized losses or loss information by vintage origination year on Carvana’s originated portfolio of motor vehicle installment sales contracts and installment loans, presented on a quarterly basis, in each case of clause (A) and (B) , until the date all amounts outstanding under the Loan and Security Agreement (other than inchoate obligations for which no claim has been made) have been paid in full.

(iii) Income Tax Liability . Within ten (10) Business Days after the receipt of revenue agent reports or other written proposals, determinations or assessments of the Internal Revenue Service or any other taxing authority which propose, determine or otherwise set forth positive adjustments to the tax liability of any “Affiliated Group” (within the meaning of Section 1504(a)(l) of the Code) which equal or exceed twenty-five thousand dollars ($25,000) with respect to the Transferor or the Trust, telephonic or emailed notice (confirmed

in writing within five (5) Business Days) specifying the nature of the items giving rise to such adjustments and the amounts thereof.

(iv) Tax Returns . Upon demand by the Administrative Agent, copies of all federal, State and local tax returns and reports filed by the Transferor (excluding sales, use and like taxes), to the extent the Transferor is required to file such tax returns.

(v) Auditors’ Management Letters . Promptly after any auditors’ management letters are received by the Transferor or by its accountants, which refer in whole or in part to any inadequacy, defect, problem, qualification or other lack of fully satisfactory accounting controls utilized by the Transferor.

(vi) ERISA . Promptly after receiving written notice of any “Reportable Event” (as defined in Title IV of ERISA) with respect to the Transferor (or any ERISA Affiliate thereof), a copy of such written notice.

(vii) Notice of Material Events . Promptly after obtaining knowledge of an event or circumstance that is likely to result in a Commitment Termination Event, Event of Servicing Termination or have a Material Adverse Effect on the Transferor or the Trust, the Purchased Property, the Administrative Agent or the Lenders, or entry of a judgment against the Transferor or the Trust of $25,000 or more, notice of such event or circumstance.

(i) Accounting Policy . It will promptly notify the Trust and the Administrative Agent of any material change in its accounting policies.

(j) Other . It will furnish to the Administrative Agent promptly, from time to time, such other information, documents, records or reports respecting the Purchased Property or the condition or operations, financial or otherwise, of it as the Administrative Agent may from time to time reasonably request in order to protect the interests of the Trust, the Administrative Agent and the Lenders under or as contemplated by the Transaction Documents.

(k) Compliance with System Description . It will, and will cause the Collateral Custodian and E-Vault Provider, at all times comply in all material respects with the System Description with respect to matters related to the perfection in the Receivables, the Purchase Receivable and the Collateral by “control” (as such term is used in Section 9-105 of the UCC).

(l) Financial Statements . To the extent not filed with the Securities and Exchange Commission and publicly available on EDGAR, within 120 days after the end of each fiscal year and 60 days after each fiscal quarter (or if the Transferor is a reporting company under the Securities and Exchange Act of 1934, such period as required thereunder for the filing thereof), the Transferor will provide to the Administrative Agent copies of its unaudited financial statements for the prior fiscal year or unaudited financial statements with respect to each of the first three fiscal quarters.

(m) Access to Systems . During the period beginning on the initial Closing Date and ending thirty (30) days after the Commitment Period, the Transferor shall give the Administrative Agent and the Lender and their duly authorized representatives, attorneys and auditors, upon reasonable request of the Administrative Agent, on-site access to the Transferor’s loan tracking systems and document repository, which access shall facilitate quality assurance and quality control reviews, enable the Administrative Agent and the Lenders to back-up Receivables Files to the their respective systems, to enable them to review Receivables tracking processes, procedures, approvals and boarding and permit them with reasonable access to the Transferor’s quality reporting and backup documentation (e.g., workpapers, sampled transactions and account-level results). Promptly following the end of each calendar month during the period beginning on the initial Closing Date and ending thirty (30) days after the Commitment Period, the Transferor shall, at the reasonable request of the Administrative Agent, provide the Administrative Agent and the Lenders with screenshots that would enable them to complete the foregoing review on a sample of Receivables determined by the Administrative Agent (limited to one hundred (100) Receivables in any calendar week.

(n) Annual Opinion of Counsel . Counsel for the Transferor shall deliver on or before March 15 of each year (or, if such date is not a Business Day, the next succeeding Business Day), beginning March 15, 2019, an Opinion

or Opinions of Counsel addressed to the Trust and the Administrative Agent and the Lenders stating that, in the opinion of such counsel, such action has been taken with respect to the authorization, execution and filing of any financing statements and continuation statements as is necessary to maintain the liens and security interests created under this Agreement and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the liens and security interests created under this Agreement.

(o) Delivery of Servicer Files . To the extent that any portion of the Servicer Files related to any Purchased Receivable is not in the possession of the Servicer immediately prior to any related Closing Date, the Transferor shall deliver such portion of the Servicer Files for each Receivable listed on the Schedule of Receivables delivered to the Administrative Agent on each Closing Date.

Section 6.21 Negative Covenants. From the date hereof until the later of the Commitment Termination Date and the date on which the Receivables have been paid in full, the Transferor will not:

(a) Receivables Not to be Evidenced by Instruments . It will take no action to cause any Receivable that is not, as of the Closing Date or the related Settlement Date, as the case may be, evidenced by an “instrument” (as defined in Article 9 of the UCC), other than an instrument that constitutes part of chattel paper, to be so evidenced except in connection with the enforcement or collection of such Receivable.

(b) True Sale . It will not account for or treat (whether in its financial statements or otherwise) the transfers by Carvana to the Transferor or the Transferor to the Trust in any manner other than as the sale, or absolute assignment, of the Receivables and related assets.

(c) ERISA Matters . It will not, to the extent it could reasonably result in material liability to or impairment of any assets of or interests of the Trust, the Administrative Agent or the Lenders in assets of the Transferor, (i) engage or permit any ERISA affiliate to engage in any prohibited transaction for which an exemption is not available or has not previously been obtained from the United States Department of Labor, (ii) permit to exist any accumulated funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the Code with respect to any Pension Plan, (iii) fail to make any payments to a Multiemployer Plan that it or any ERISA Affiliate is required to make under the agreement relating to such Multiemployer Plan or any law pertaining thereto, (iv) permit the filing of any notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA, (v) permit the termination of any Pension Plan under Section 4041(c) of ERISA or the institution by the Pension Benefit Guaranty Corporation of proceedings to terminate or appoint a trustee to administer a Pension Plan, or (vi) permit any event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(d) Changes in Payment Instructions to Obligors . It will not add or make any change, or permit the Servicer to make any change, in its instructions to Obligors regarding payments to be made with respect to the Receivables, unless the Administrative Agent shall have consented to such change and has received duly executed copies of all documentation related thereto, which documentation shall be satisfactory in form and substance to the Administrative Agent.

(e) Extension or Amendment of Receivables . It will not, except as otherwise permitted in pursuant to this Agreement or the other Transaction Documents, extend, amend or otherwise modify, or permit the Servicer to extend, amend or otherwise modify, the terms of any Receivables.

(f) Credit Policy . During the Commitment Period, the Transferor will not permit Carvana to amend, modify, restate or replace, in whole or in part, its identity, income, and payment verification practices, including, but not limited to, any change to Exhibit B attached hereto, without written notification to the Administrative Agent; provided that the prior written consent of the Administrative Agent shall be required if such amendment, modification, restatement or replacement would impair the collectability of any Receivable or otherwise materially and adversely affect the interests or the remedies of the Administrative Agent or the Lenders under this Agreement or any other Transaction Document. At the Administrative Agent’s request, but no more frequently than monthly, the Transferor

will cause Carvana to provide to the Administrative Agent an explanation of all material changes to Carvana’s policies concerning generation of financing terms over the preceding month. For the avoidance of doubt, changes to the Receivable Structure Constraints shall be considered material changes to policies concerning generation of financing terms.

(g) Collection Policy . The Transferor will not amend, modify, restate or replace, in whole or in part, the Collection Policy, as such guidelines, policies and procedures as may be amended, modified, restated, replaced or otherwise supplemented from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement, and as modified by the Servicing Exceptions, if any, or with respect to any successor Servicer, the customary servicing and collection guidelines, policies and procedures of such successor Servicer with such changes as shall be required by the Administrative Agent and agreed to in writing by such successor Servicer and the Administrative Agent, as such agreed upon guidelines, policies and procedures may be changed from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement.

(h) No Assignments . It will not assign or delegate, grant any interest in or permit any Lien (other than Permitted Liens) to exist upon any of its rights, obligations or duties under this Agreement or any other Transaction Document without the prior written consent of the Administrative Agent.

ARTICLE VII
MISCELLANEOUS PROVISIONS

Section 7.1 Obligations of the Transferor. The obligations of the Transferor under this Agreement shall not be affected by reason of any invalidity, illegality or irregularity of any Receivable with respect to any Receivables Pool.

Section 7.2 Repurchase of Receivables Upon Breach by the Transferor . Upon (i) the discovery of any breach of any representation or warranty as set forth in Section 4.2(cc) of this Agreement (and with respect to paragraph (x) therein, without giving effect to any knowledge requirements) or (ii) The Transferor, the Trust, the Administrative Agent or the Lenders incurring any cost, expense, loss, claim, damage or liability resulting from any conduct or omissions of Carvana or the Transferor that results in the failure of the Trust or the Administrative Agent to have a perfected and enforceable security interest against a related Obligor in the related Financed Vehicle (including any failure to obtain a first priority perfected security interest in the related Financed Vehicle in connection with the origination of the Receivable), the Party discovering such breach shall give prompt written notice of the breach to the other Parties. Unless the breach described in clause (i) above has been cured in all material respects by the last day of the Collection Period immediately following the Collection Period during which such breach is discovered or notice of such breach is given and, with respect to the failure described in clause (ii) above, in each such circumstance, or unless Carvana has repurchased such Receivables pursuant to Section 7.2 of the Master Sale Agreement (Warehouse) the Transferor shall repurchase, as of the last day of such Collection Period, any Receivable for which such representation or warranty was breached for the Warranty Payment. In consideration of the repurchase of a Warranty Receivable, the Transferor shall remit the Warranty Payment to the Trust, who shall in turn remit, or cause to be remitted, such payment to the Collection Account for distribution pursuant to Section 4.2 of the Master Servicing Agreement. The obligation of the Transferor to repurchase any Receivable as to which a breach has occurred and is continuing, shall, if such obligation is fulfilled, constitute the sole remedy (except as provided in Section 6.11 of this Agreement) against the Transferor for such breach available to the Trust, the Administrative Agent and the Lenders.

Section 7.3 Assignment of Warranty Receivables . With respect to all Receivables repurchased pursuant to this Agreement, the Trust shall assign to the Transferor, without recourse, representation or warranty to the Transferor, all of the Trust’s right, title and interest in and to such Receivables, and all security and documents relating thereto

Section 7.4 Amendment . This Agreement may be amended from time to time, with prior written consent of the Administrative Agent and the Lenders, by a written amendment duly executed and delivered by the Transferor and the Trust.

Section 7.5 Waivers . No failure or delay on the part of the Trust or any assignee thereof in exercising any power, right or remedy under this Agreement, any Pool Supplement or any Receivables Assignment shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.

Section 7.6 Notices . All communications and notices pursuant hereto to either Party must be in writing personally delivered, sent by facsimile or email, and shall be deemed to have been duly given at the address, fax number or email for each Party set forth below.


To the Transferor:	Carvana Auto Receivables 2016-1 LLC c/o Carvana, LLC, its sole member 1930 W. Rio Salado Pkwy, Tempe, AZ 85281 Attention: General Counsel Email: DL-CarvanaLegal@carvana.com


With a copy to:	Snell & Wilmer L.L.P. 400 East Van Buren Phoenix, Arizona 85004-2202 Attention: Brian Burke 602.382.6379 bburke@swlaw.com


To the Trust:	Sonoran Auto Receivables Trust 2017-1 CAIH, LLC 227 West Monroe, Suite 4800 Chicago, Illinois 60606 Attention: Gregory Drake Email: [________]


With a copy to:	Carvana, LLC 1930 W. Rio Salado Pkwy, Tempe, AZ 85281 Attention: General Counsel Email: DL-CarvanaLegal@carvana.com

To Administrative


Agent:	Ally Bank 7159 Corklan Dr.; Suite 200 Jacksonville FL 32258 Attn: Karen Holley Email: karen.holley@ally.com


To Carvana:	Carvana, LLC 1930 W. Rio Salado Pkwy, Tempe, AZ 85281 Attention: General Counsel Email: DL-CarvanaLegal@carvana.com@carvana.com


With a copy to:	Snell & Wilmer L.L.P. 400 East Van Buren Phoenix, Arizona 85004-2202 Attention: Brian Burke 602.382.6379 bburke@swlaw.com

Section 7.7 Costs and Expenses . Except as otherwise provided in this Agreement or the other Transaction Documents, the Transferor and the Trust shall each pay its own expenses incident to the performance of its respective obligations under this Agreement.

Section 7.8 Survival . The respective agreements, representations, warranties and other statements by the Transferor and the Trust set forth in or made pursuant to this Agreement shall remain in full force and effect and shall survive the closing under Section 2.2 and any sale, transfer or other assignment of the Receivables or other Purchased Property by the Trust.

Section 7.9 Headings and Cross-References . The various headings in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.

Section 7.10 Governing Law, Submission to Jurisdiction, Etc .

(a) THIS AGREEMENT AND THE RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY AND 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 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b) THE TRANSFEROR AND THE TRUST HEREBY MUTUALLY AGREE TO SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF THE TRANSFEROR AND THE TRUST HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) THE TRANSFEROR AND THE TRUST EACH HEREBY WAIVES (TO THE EXTENT THAT IT MAY LAWFULLY DO SO) ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. INSTEAD, ANY DISPUTE RESOLVED IN COURT SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

Section 7.11 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. Delivery of an executed counterpart of a signature page to this Agreement electronically or by facsimile shall be as effective as delivery of a manually executed counterpart of this Agreement.

Section 7.12 Further Assurances. The Transferor and the Trust shall each, at the request of the other or the Administrative Agent execute and deliver to the other all other instruments that either may reasonably request in order to more fully effect the sale of the Purchased Property to the Trust or the sale of the Purchased Property to the Trust or the pledge thereof to the Administrative Agent.

Section 7.13 Severability of Provisions . If any provision of this Agreement is invalid or unenforceable, then, to the extent such invalidity or unenforceability shall not deprive either Party of any material benefit intended to

be provided by this Agreement, all of the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the parties hereto.

Section 7.14 Assignment . Neither the Transferor nor the Trust may assign or otherwise transfer its rights and obligations under this Agreement without the prior written consent of the other Party and the Administrative Agent except that the Trust may pledge such rights to the Administrative Agent pursuant to the Loan and Security Agreement.

Section 7.15 Further Assignment; Third Party Beneficiary . The Transferor acknowledges that the Trust may, pursuant to the Loan and Security Agreement, pledge such Receivables and related Purchase Property to the Administrative Agent. The Parties hereby acknowledge and agree that the Administrative Agent and the Lenders may rely on, and each is an express third party beneficiary of, this Agreement and the Receivables Assignment, and each of the representations, warranties, covenants and agreements hereunder and thereunder.

Section 7.16 Limitations on Rights of Others . The provisions of this Agreement, each Pool Supplement and each Receivables Assignment are solely for the benefit of the Transferor, the Trust and the Administrative Agent and the Lenders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in, under, or in respect of this Agreement or any covenants, conditions or provisions contained herein. This Agreement does not create, and shall not be deemed to create, a relationship between the Parties or either of them and any third party, other than the Administrative Agent and the Lenders, as described in Section 7.15 above in the nature of a third party beneficiary or fiduciary relationship; provided, however, that the existence of this Section 7.16 shall not relieve the Transferor of its indemnity obligations set forth in Section 6.11 of this Agreement and the Trust may, and shall when requested, enforce such indemnification claims for the Transferor Indemnified Parties set forth in Section 6.11.

Section 7.17 No Petition Covenant . Notwithstanding any prior termination of this Agreement, the Trust shall not, prior to the date which is one year and one day after the later (i) of the final payment or liquidation of all Receivables purchased by Ally Bank and Ally Financial, Inc. under the Flow Purchase Agreement and (ii) the repayment in full of all obligations owing to the Administrative Agent and the Lenders pursuant to the Loan and Security Agreement, acquiesce, petition or otherwise invoke or cause the Transferor to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Transferor under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Transferor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Transferor under any federal or state bankruptcy or Insolvency Proceeding.

Section 7.18 Concerning the Owner Trustee . It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust, National Association (“ WTNA ”), not individually or personally but solely as Owner Trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by WTNA but is made and intended for the purpose of binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on WTNA, individually or personally, to perform any covenant either expressed or implied contained herein of the Trust, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTNA has made no investigation as to the accuracy or completeness of any representations and warranties made by the Trust in this Agreement and (e) under no circumstances shall WTNA be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement or any other Transaction Documents.

* * *

The Parties have caused this Master Transfer Agreement to be executed by their respective duly authorized officers as of the date and year first above written.



	CARVANA AUTO RECEIVABLES 2016-1 LLC, as Transferor
	By: __________________________________
	Name:
	Title:

	SONORAN AUTO RECEIVABLES TRUST 2017-1

	By: WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee
	By: _____________________________________
	Name:
	Title:



	S-1

EXHIBIT A

FORM OF POOL SUPPLEMENT

THIS POOL SUPPLEMENT (this “ Supplement ”) to the Master Transfer Agreement (the “ Master Transfer Agreement ”), dated as of November 3, 2017, by and between Carvana Auto Receivables 2016-1 LLC, a Delaware limited liability company (the “ Transferor ”) and Sonoran Auto Receivables Trust 2017-1, a Delaware statutory trust (the “ Trust ”). Except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms used herein shall have the meanings attributed to them in Appendix A to the Master Transfer Agreement.

Receivables Pool Specific Information .

(a) The following information shall apply to the Receivables Pool sold by the Transferor to the Trust on the date hereof:

Receivables Pool Number: [Insert Pool Number]

Pool Cutoff Date: [_____, 20__].

Closing Date: [_____, 20__].

Cutoff Date Aggregate Outstanding Principal Balance: $[________________].

Purchase Price: $[________________].

Total to be Wired $[________________].

The first Payment Date: [_____, 20__].

The first Reporting Date: [_______, 20__].

(b) The following Schedules are attached hereto and incorporated herein by reference:

SCHEDULE 1 Officer’s Certificate of the Transferor

SCHEDULE 2 Settlement Report


SCHEDULE 3	Receivables Assignment


SCHEDULE 4	Accounts and Receivables Analysis for the subject Receivables Pool


SCHEDULE 5	Schedule of Receivables for the subject Receivables Pool



	Ex. A-1


SCHEDULE 6	Pool Stratifications and Other Pool Characteristics

Each such Exhibit shall be completed and executed (as applicable) as of the Closing Date.

Section 2. Representations and Warranties of the Transferor .

The representations and warranties of the Transferor set forth in Section 4.2(n) of the Master Transfer Agreement shall be true as of the Closing Date.

Section 3. Effect of Supplement . Except as specifically supplemented herein, the Master Transfer Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Supplement need not be made in the Master Transfer Agreement, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Master Transfer Agreement, any reference in any of such items to the Master Transfer Agreement being sufficient to refer to the Master Transfer Agreement as supplemented hereby.

Section 4. Counterparts . This Supplement may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Supplement electronically or by facsimile shall be as effective as delivery of a manually executed counterpart of this Agreement. Any of the parties hereto may execute this Supplement by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Supplement shall be governed by the internal laws of the State of New York.

Section 5 Concerning the Owner Trustee . It is expressly understood and agreed by the parties hereto that (a) this Pool Supplement is executed and delivered by Wilmington Trust, National Association (“WTNA”), not individually or personally but solely as Owner Trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by WTNA but is made and intended for the purpose of binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on WTNA, individually or personally, to perform any covenant either expressed or implied contained herein of the Trust, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTNA has made no investigation as to the accuracy or completeness of any representations and warranties made by the Trust in this Pool Supplement and (e) under no circumstances shall WTNA be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Pool Supplement or any other Transaction Documents.

* * * * *



	Ex. A-2

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



	SONORAN AUTO RECEIVABLES TRUST 2017-1
	By: WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee
	By: _____________________________________
	Name:
	Title:

	CARVANA AUTO RECEIVABLES 2016-1 LLC, as Transferor
	By: _____________________________________
	Name:
	Title:



	Ex. A-3

Schedule 1

Officer’s Certificate of the Transferor

In accordance with Section 1(b) of the Pool Supplement dated as of [________], 20[__], by and between Sonoran Auto Receivables Trust 2017-1, a Delaware statutory trust (the “ Trust ”), and Carvana Auto Receivables 2016-1 LLC (the " Transferor "), a Delaware limited liability company, the undersigned hereby certifies to the Trust that, as of the date hereof, the representations and warranties of the Transferor under the Master Transfer Agreement and the other Transaction Documents to which it is a party are true and correct in all material respects (or, if another date for such representation or warranty is specified therein, then as of such other date), and that the Transferor has complied with all agreements and satisfied all conditions on its part to be performed or satisfied in all material respects on or prior to the date hereof pursuant to the Master Transfer Agreement and the other Transaction Documents to which it is a party.



	Sch. 1-1

IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate as of the date and year first above written.



	CARVANA AUTO RECEIVABLES 2016-1, LLC, as Transferor
	By _____________________________________
	Name:
	Title:



	Sch. 1-1

Schedule 2

FORM OF SETTLEMENT REPORT ¹



Pool Cutoff Date					__/__/20__
Closing Date					__/__/20__
Days Elapsed between Cutoff and Closing					[__]





A. Cutoff Date Aggregate Outstanding Principal Balance					$[___________]

B. Purchase Price					$[___________]




Receivables Purchase Price					$[___________]


Total to be Wired					$[___________]

Collections after the related Cutoff Date of each Receivable to the Closing Date to be paid by the Transferor to the Trust on [_________] [__], 20[__] pursuant to Section 2.1 of the Master Transfer Agreement.

__________________________________

¹ Example - not actual

Sch. 2-1

Schedule 3

Receivables Assignment

[__________], 201[_]

For value received, in accordance with the Master Transfer Agreement dated as of November 3, 2017 (the “ Master Transfer Agreement ”), between the undersigned and Sonoran Auto Receivables Trust 2017-1 (the “ Trust ”), as amended, supplemented or otherwise modified from time to time, the undersigned does hereby sell, assign, transfer and otherwise convey to the Trust (except as provided in the Master Transfer Agreement), without recourse (except as provided in the Master Transfer Agreement) the following (collectively, the “ Purchased Property ”):

(i) all right, title and interest of the Transferor in, to and under the Receivables listed on the Schedule of Receivables attached as Schedule 5 to the related Pool Supplement, delivered to the Trust on the date hereof, and all monies received thereon after the related Cutoff Date, exclusive of any amounts allocable to the premium for physical damage collateral protection insurance required by the Transferor or the Servicer covering any related Financed Vehicle;

(ii) the interest of the Transferor in the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and, to the extent permitted by law, any accessions thereto;

(iii) the interest of the Transferor in any proceeds from claims on any physical damage, credit life, credit disability, warranties, debt cancellation agreements or other insurance policies covering the related Financed Vehicles or Obligors, including any rebates or credits of any premiums or other payment with respect to any of the foregoing;

(iv) all of the Transferor’s right, title and interest in, to and under the Receivable Files;

(v) all of the Transferor’s right, title and interest in and to the Master Sale Agreement (Warehouse), dated as of November 3, 2017, between the Transferor and Carvana, LLC, and remedies thereunder and the assignment to the Trust of all UCC financing statements filed against Carvana under or in connection with such Master Sale Agreement (Warehouse); and

Sch. 3-1

It is the intention of the Transferor and the Trust that the sale, transfer, assignment and other conveyance of the Receivables contemplated by this Receivables Assignment shall constitute an independent sale of such Receivables from the Transferor to the Trust and the beneficial interest in and title to such Receivables shall not be part of the Transferor’s estate in the event of the filing of a bankruptcy petition by or against the Transferor under any bankruptcy law. Although the parties intend that the sale, transfer, assignment and other conveyance contemplated by this Receivables Assignment to be an independent sale, in the event any such sale, transfer, assignment and other conveyance is deemed to be other than a sale, the parties intend and agree (i) that all filings described in the Master Transfer Agreement shall give the Trust a first priority perfected security interest in, to and under such Receivables and the related Purchased Property and all proceeds of any of the foregoing, in each case with respect to such transfer and assignment; (ii) this Receivables Assignment together with the Master Transfer Agreement and the related Pool Supplement shall be deemed to be the grant of, and the Transferor hereby grants to the Trust, a security interest from the Transferor to the Trust in such Receivables and the related Purchased Property in order to secure its obligations with respect to such transfer and assignment; (iii) this Receivables Assignment together with the Master Transfer Agreement and the related Pool Supplement shall be a security agreement under applicable law for the purpose of each such transfer and assignment; and (iv) the Trust shall have all of the rights, powers and privileges of a secured party under the UCC with respect to such transfer and assignment and the Purchased Property related thereto.

The foregoing conveyance does not constitute and is not intended to result in any assumption by the Trust of any obligation of the undersigned to the Obligors, insurers or any other Person in connection with such Receivables, the applicable Receivable Files, any insurance policies or any agreement or instrument relating to any of them.

This Receivables Assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Master Transfer Agreement and is to be governed by the Master Transfer Agreement.

Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Master Transfer Agreement.

Sch. 3-2

IN WITNESS WHEREOF, the undersigned has caused this Receivables Assignment to be duly executed as of the date and year first above written.

CARVANA AUTO RECEIVABLES 2016-1, LLC, as Transferor

By:
    Name:
    Title:

Sch. 3-3

Schedule 4

Accounts and Receivables Analysis

Any form of Analysis approved in writing from time to time by Transferor, the Trust and the Administrative Agent.



	Sch. 4-1

Schedule 5

Schedule of Receivables

For each Receivables Pool, to include final information required for the Trust to complete the related Funding Request and Funding Report.

Electronic files sent to Trust at the following date and time: _____.xls - sent ____ AM/PM on _______, 20__



	Sch. 5-1

Schedule 6

Pool Stratifications and Other Pool Characteristics

Any form of pool stratifications and other pool characteristics approved in writing from time to time by Transferor, the Trust and the Administrative Agent.

Sch. 6-1

EXHIBIT B

CREDIT POLICY

The Microsoft Word files contained in the file named
“Carvana-UnderwritingPolicyandProcedure.docx” that Carvana delivered to the Trust and the Administrative Agent by electronic mail at 4:41 P.M. eastern time on December 13, 2016

Ex. B-1

APPENDIX A

DEFINITIONS AND USAGE

Appx A

App. A-2

APPENDIX A

DEFINITIONS AND USAGE

(a) Construction and Usage.

Unless otherwise provided in the Master Sale Agreement (Warehouse), the Master Transfer Agreement, or the Master Servicing Agreement (the “ Specified Documents ”), the following rules of construction and usage are applicable to this Appendix and the Specified Documents.

(i) As used in this Appendix or in Specified Documents and in any certificate or other document made or delivered pursuant thereto, accounting terms not defined herein, or in any such Specified Document, or in any such certificate or other document, and accounting terms partly defined herein or in any such certificate or other document, to the extent not defined herein, have the respective meanings given to them under generally accepted accounting principles. To the extent that the definitions of accounting terms herein, in any such Specified Document or in any such certificate or other document are inconsistent with the meanings of such terms under such generally accepted accounting principles, the definitions contained herein, in such Specified Document or in any such certificate or other document control.

(ii) The words “hereof,” “herein,” “hereunder” and words of similar import when used in any Specified Document refer to such Specified Document as a whole and not to any particular provision or subdivision thereof. References in any Specified Document to “Article,” “Section” or another subdivision or to an attachment are, unless the context otherwise requires, to an article, section or subdivision of or an attachment to such Specified Document. The term “including” means “including without limitation.” The word “or” is not exclusive.

(iii) The definitions contained in any Specified Document are equally applicable to both the singular and plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

(iv) Any agreement, instrument, statute or regulation defined or referred to below means such agreement, instrument, statute or regulation as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.

(b) Definitions

All terms defined in this Appendix shall have the defined meanings when used in any Specified Document, unless otherwise specified or defined therein.

“ Account Bank ” means Wells Fargo Bank, National Association, or any successor thereto in its capacity as Account Bank under the Account Control Agreement.

App. A-1

“ Account Control Agreement ” means the Securities Account Control Agreement, dated as of November 3, 2017, among the Borrower, the Administrative Agent and the Account Bank, pursuant to which the Borrower grants exclusive control over the Accounts to the Administrative Agent.

“ Accounts and Receivables Analysis ” means, with respect to a Receivables Pool and a First Tier Receivables Pool, the accounts and receivables analysis set forth in Schedule 6 attached to the related Pool Supplement and Schedule 4 attached to the related First Step Pool Supplement, respectively.

“ Action Plan ”, with respect to a Receivables Pool, has the meaning set forth in Section 3.16(d) of the Master Servicing Agreement.

“ Action Plan Meeting ”, with respect to a Receivables Pool, has the meaning set forth in Section 3.16(c) of the Master Servicing Agreement.

“ Administrative Purchase Payment ” means, with respect to an Administrative Receivable within a Receivables Pool to be repurchased as of the last day of a Collection Period, a payment equal to the sum of (i) the Outstanding Principal Balance with respect to such Administrative Receivable as of such date and (ii) the product of (x) the amount set forth in clause (i)(a) above, (y) the APR of such Administrative Receivable and (z) the number of days from the last payment of principal with respect to such Receivable/360.

“ Administrative Receivable ” means a Receivable which the Servicer has repurchased pursuant to Section 3.8 of the Master Servicing Agreement.

“ Affiliate ” means, with respect to any specified Person, any other Person controlling, controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Aggregate Outstanding Principal Balance ” means, with respect to a First Tier Receivables Pool or a Receivables Pool and as of any date, the aggregate of the Outstanding Principal Balance of each Receivable in such First Tier Receivables Pool or Receivables Pool, as applicable.

“ Ally Bank ” means Ally Bank, a Utah chartered bank, and its permitted successors and assigns.

“ Ally Bank Controls Effectiveness Review ” means the Ally Bank process that assesses a supplier’s risk management controls in compliance with FDIC/FFIEC Third Party Vendor Management guidelines.

“ Ally Financial ” means Ally Financial Inc., a Delaware corporation, and its permitted successors and assigns.

App. A-2

“ Annual Percentage Rate ” or “ APR ” means, with respect to a Receivable, the annual rate of finance charges stated in the Receivable.

“ Anti-Corruption Laws ” has the meaning set forth in Section 3.28 of the Master Servicing Agreement.

“ Applicable Servicing Modification ,” with respect to a Banking Regulatory Change, shall be the modification to the Servicer’s servicing standards and practices (i) approved by the Banking Regulator, if the Banking Regulator has approved a different modification than that proposed by the Administrative Agent in the related Notice of Banking Regulatory Change, (ii) if clause (i) is inapplicable, then as approved by the Administrative Agent, if the Administrative Agent has approved a different modification than that proposed by the Purchaser in the related Notice of Banking Regulatory Change, or (iii) otherwise, the modification proposed by the Purchaser in the related Notice of Banking Regulatory Change.

“ Authoritative Copy ” means, with respect to any Electronic Contract, a copy of such Contract that is unique, identifiable and, except as otherwise provided in Section 9-105 of the UCC, unalterable, and is marked “original” or has no watermark or other marking that would indicate that it is a “copy” or “duplicate” or not an original or not an “authoritative” copy.

“ Banking Regulator ” means a United States federal or State regulatory agency or instrumentality having authority over U.S. national banks or state chartered banks, including the Office of the Comptroller of the Currency, the Federal Reserve Board, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Federal Financial Institutional Examination Council and the Utah Department of Financial Institutions, or any successor federal or state agency or instrumentality.

“ Banking Regulatory Change ” will occur if (i) a Banking Regulator adopts or modifies regulations or policies which alter the obligations of U.S. national or state chartered banks in general, or Ally Bank in particular, with respect to the servicing of retail automotive loans and retail automotive installment sales contracts, (ii) such regulations apply to retail automotive installment sale contracts owned or serviced by Ally Bank, (iii) compliance by third parties servicing receivables (as servicer for Ally Bank) owned by Ally Bank is required by law and (iv) such regulations require the Servicer (as servicer for Ally Bank) to implement new servicing standards or practices, or otherwise modify the existing standards or practices, other than those set forth in the Transaction Documents.

“ Bankruptcy Code ” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

“ Benefit Plan ” means any of (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan subject to Section 4975 of the Code or (iii) any entity whose underlying assets include plan assets by reason of investment by an employee benefit plan or plan in such entity.

App. A-3

“ Bridgecrest ” means Bridgecrest Credit Company, LLC, an Arizona limited liability company, and its permitted successors and assigns.

“ Business Continuity Plan ” means the document in which the Servicer plans to protect its employees, and continue its most critical business functions in situations where the facilities, people or information technology resources are interrupted for an extended period.

“ Business Day ” means any day other than a Saturday, a Sunday or any other day on which banking institutions or trust companies in New York, New York, Wilmington, Delaware, Minneapolis, Minnesota or Detroit, Michigan may, or are required to, remain closed.

“ CAR 2016-1 ” means Carvana Auto Receivables 2016-1 LLC, a Delaware limited liability company.

“ Carvana ” Carvana, LLC, an Arizona limited liability company.

“ CER ” has the meaning set forth in Section 3.23 of the Master Servicing Agreement.

“ Certificate of Title ” means, with respect to a Financed Vehicle, (i) the original Certificate of Title relating thereto, or copies of correspondence to the applicable Registrar of Titles, and all enclosures thereto, for issuance of the original Certificate of Title or (ii) if the applicable Registrar of Titles issues a letter or other form of evidence of lien in lieu of a Certificate of Title (including electronic titling), either notification of an electronic recordation, by either a Title Intermediary or the applicable Registrar of Titles, or the original lien entry letter or form or copies of correspondence to such applicable Registrar of Titles, and all enclosures thereto, for issuance of the original lien entry letter or form, which, in either case, shall name the related Obligor as the owner of such Financed Vehicle and a Title Lien Nominee as secured party.

“ Change Order ” has the meaning set forth in Section 7.1(b) of the Master Servicing Agreement.

“ Change Request ” has the meaning set forth in Section 7.1(b) of the Master Servicing Agreement.

“ Closing Date ” means, with respect to a First Tier Receivables Pool and subject to Section 3.1(e) of the Master Sale Agreement (Warehouse) or a Receivables Pool and subject to Section 4.1(a) of the Master Transfer Agreement, the date on which the related First Step Pool Supplement or Pool Supplement, as applicable, is executed and delivered and the First Step Receivables Purchase Price or the Purchase Price, as applicable, is paid, which will be the same day as the Funding Date in that calendar week under the Loan and Security Agreement.

“ CNL ” means, with respect to any Receivables Pool and any Settlement Date, the Cumulative Net Losses for such Receivables Pool through the last day of the related Collection Period.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder.

“ Collateral ” has the meaning set forth in Section 1.1 of the Loan and Security Agreement.

App. A-4

“ Collateral Custodian ” means Wells Fargo Bank, National Association, and its successors and permitted assigns as Collateral Custodian under the Collateral Custodian Agreement.

“ Collateral Custodian Agreement ” means the Collateral Custodian Agreement, dated as of November 3, 2017, among the Borrower, the Administrative Agent, the Collateral Custodian and the Account Bank.

“ Collection Account ” means the segregated account established by the Borrower with Account Bank and subject to the Account Control Agreement, into which all Collections are to be deposited.

“ Collection Period ” means, with respect to any Settlement Date, the immediately preceding calendar month or, in the case of the initial Collection Period, the Cut-off Date to and including the last day of the month preceding the month in which the first Settlement Date occurs.

“ Collection Policy ” means, with respect to (i) the initial Servicer, the customary servicing and collection guidelines, policies and procedures of the Servicer, including those attached as Exhibit D to the Servicing Agreement, in effect on the date of the Servicing Agreement, as such guidelines, policies and procedures may be amended, modified, restated, replaced or otherwise supplemented from time to time in accordance with Section 3.1(c) of the Servicing Agreement, and as modified by the Servicing Exceptions and the Process Remediations attached to the Servicing Agreement as Exhibit F, if any, or (ii) any successor Servicer, the customary servicing and collection guidelines, policies and procedures of such successor Servicer with such changes as shall be required by the Administrative Agent and agreed to in writing by such successor Servicer and the Administrative Agent, as such agreed upon guidelines, policies and procedures may be changed from time to time in accordance with Section 3.1(c) of the Servicing Agreement.

“ Collections ” means all amounts collected by the Servicer or its agents (from whatever source) or otherwise turned over to the Collection Account on or with respect to the related Receivables or the other Collateral.

“ Commission ” means the Securities and Exchange Commission.

“ Commitment Period ” means the period beginning on November 3, 2017 and ending on the Commitment Termination Date.

“ Commitment Termination Date ” means the date agreed upon in writing by Seller, the Trust and the Administrative Agent.

“ Commitment Termination Event ” has the meaning specified in the Loan and Security Agreement.

“ Confidential Information ” means all information and material of any type, scope or subject matter whatsoever relating to the Administrative Agent, the Lenders, the Transferor, Carvana, the Servicer or any of their subsidiaries, whether oral or written, and howsoever

App. A-5

evidenced or embodied, which each Party, each Party’s representatives or agents (including any officers of any Party or any of their subsidiaries) may furnish to the other, or to which either Party is afforded access by the other Party, either directly or indirectly for purposes of such Party’s participation in the transactions contemplated by the Loan and Security Agreement. However, “Confidential Information” shall not include information or material of a Party which (i) becomes generally available to the public other than as a result of a disclosure by the receiving Party or its agents and other representatives, (ii) was available to the receiving Party on a non-confidential basis prior to its disclosure by the disclosing Party, (iii) becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party or the disclosing Party’s representatives or agents, provided that such source is not, to receiving Party’s knowledge, bound by a confidentiality agreement or otherwise prohibited from transmitting the information to the Administrative Agent, the Lenders, Carvana, the Servicer or the Transferor by a contractual, legal or fiduciary obligation or (iv) consists of the documents evidencing the consummation of the transactions contemplated by the Transaction Documents so long as all references to the other Party and all information specific to the assets sold or price paid pursuant to the transactions are removed.

“ Contract ” means any fully-executed retail installment sale contract, direct purchase money loan or conditional sale contract for a Financed Vehicle under which an extension of credit is made in the ordinary course of business of Carvana to an Obligor and which is secured by the related Financed Vehicle.

“ Credit Policy ” means the credit underwriting guidelines, policies and procedures that Carvana and its Subsidiaries utilize in originating or acquiring retail installment sales contracts, including the credit policies as attached as Exhibit D to the Loan and Security Agreement, as such guidelines, policies and procedures may be changed from time to time in accordance with Section 6.2(k) of the Loan and Security Agreement.

“ Cumulative Net Losses ” means, with respect to a Receivables Pool as of any Settlement Date, the sum of (i) the aggregate Net Losses experienced on all Liquidating Receivables with such Receivables Pool from the first day of the related Origination Period through the end of the related Collection Period and (ii) the Outstanding Principal Balance as of the Pool Termination Date of any Receivables within such Receivables Pool outstanding on the related Pool Termination Date.

“ Customer Information ” has the meaning set forth in Section 2(b) of the Master Confidentiality and Reconstitution Agreement.

“ Cut-off Date ” or “ Cutoff Date ” means, with respect to any Receivable acquired by the Borrower and made a part of the Collateral, the last day of the preceding calendar week; provided that for the purpose of this definition, Sunday shall be deemed to be the last day of the calendar week.

“ Cutoff Date Aggregate Outstanding Principal Balance ” means, with respect to a First Tier Receivables Pool or a Receivables Pool and as of the applicable Cutoff Date, the aggregate of the Outstanding Principal Balance of each Receivable in such First Tier Receivables Pool or Receivables Pool as of the applicable Cutoff Date, as applicable.

App. A-6

“ Disclosure Information ” has the meaning set forth in Section 3(a)(iv) of the Master Confidentiality and Reconstitution Agreement.

“ DriveTime ” means DriveTime Automotive Group, Inc., a Delaware corporation, and its permitted successors and assigns.

“ Electronic Contract ” means a Contract that constitutes “electronic chattel paper” under and as defined in Section 9-102(31) of the UCC.

“ Eligible Receivable ” has the meaning set forth in Section 1.1 of the Loan and Security Agreement.

“ E-Vault Provider ” means eOriginal, Inc.

“ Event of Servicing Termination ” or “ Servicing Termination Event ” means an event specified in Section 6.1 of the Master Servicing Agreement.

“ Exchange Act ” means The Securities Exchange Act of 1934.

“ FDIC/FFIEC Third Party Vendor Management ” means the guidance to address the management by a regulated entity of third and fourth party suppliers issued by the Federal Deposit Insurance Corporation, the Federal Financial Institutions Examination Council or any other regulatory entity that covers a business in which Ally Bank or an Ally Bank Affiliate currently operates or may look to operate in the future.

“ Financed Vehicle ” means, with respect to a Receivable, any new or used automobile, light-duty truck, minivan or sport utility vehicle, together with all accessories thereto, securing such Receivable.

“ First Step Pool Supplement ” means the First Step Pool Supplement, in the form of Exhibit A to the Master Sale Agreement, executed by CAR 2016-1 and the Seller on each Closing Date.

“ First Step Receivables Assignment ” means the document of assignment attached as Schedule 3 to the First Step Pool Supplement executed by the Seller.

“ First Step Receivables Purchase Price ” means, with respect to a First Tier Receivables Pool, an amount equal to the Purchase Price for such First Tier Receivables Pool for the related Closing Date.

“ First Tier Receivables Pool ” has the meaning set forth in the recitals to the Master Sale Agreement.

“ Freestyle Selection ” means the random order that the Receivables are to be selected in the System of Record, after consideration of the Purchase Percentage and the criteria for a Receivable to be an Eligible Receivable. The Receivables to be sold to by the Seller to the Transferor will be based on the contract number of the Receivables. Subject to the provisions and restrictions contained in the Master Sale Agreement (Warehouse), the Seller shall sell to the

App. A-7

Transferor all Receivables where the ninth and tenth digits of the contract number (such number, the “ randomization code ”) are a number from 01 through the number equal to the Purchase Percentage (it being understood that a Purchase Percentage of 100 would have a randomization code of 00) or, with respect to any Previously Originated Receivable that later becomes an Eligible Receivable, such Previously Originated Receivable shall be included in such Receivables Pool if its randomization code falls within the Purchase Percentage for its related Origination Period. For example, if the Purchase Percentage for an Origination Period is 85%, the Seller would sell Receivables with contract numbers ending in 01 through 85, and retain Receivables with contract numbers ending in 86 through 00. The Seller shall ensure that contract numbers are assigned randomly as they are entered into the System of Record and in no way adverse to the Trust, the Administrative Agent or the Lender(s).

“ GAP Letter ” has the meaning set forth in Section 3.13 of the Master Servicing Agreement.

“ General Change ” has the meaning set forth in Section 3.18(b) of the Master Servicing Agreement.

“ GLBA ” means the Gramm-Leach-Bliley Act and its implementing regulations.

“ Governmental Authority ” means any government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over the applicable Person.

“ Governmental Rules ” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

“ Information Recipient ” has the meaning set forth in Section 3.26 of the Master Servicing Agreement.

“ Information Security Program ” has the meaning set forth in Section 3.17(b) of the Master Servicing Agreement.

“ Insolvency Event ” means with respect to a specified Person, such Person shall (A) file a petition or commence a proceeding (1) to take advantage of any Insolvency Law or (2) for the appointment of a trustee, conservator, receiver, liquidator or similar official for or relating to such Person or all or substantially all of its property, or for the winding up or liquidation of its affairs, (B) consent or fail to object to any such petition filed or proceeding commenced against or with respect to it or all or substantially all of its property, or any such involuntary petition or proceeding shall not have been dismissed or stayed within sixty (60) days of its filing or commencement, or a court, agency or other supervisory authority with jurisdiction shall not have decreed or ordered relief with respect to such petition or proceeding, (C) admit in writing its inability to pay its debts generally as they become due, (D) make an assignment for the benefit of its creditors, (E) voluntarily suspend payment of its obligations or (F) take any action in furtherance of any of the foregoing

App. A-8

“ Insolvency Laws ” means the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, rearrangement, receivership, insolvency, reorganization, suspension of payments, marshaling of assets and liabilities or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“ Insolvency Proceeding ” means with respect to any Person, any bankruptcy, insolvency, arrangement, rearrangement, conservatorship, moratorium, suspension of payments, readjustment of debt, reorganization, receivership, liquidation, marshaling of assets and liabilities or similar proceeding of or relating to such Person under any Insolvency Laws.

“ Inspection Standard ” has the meaning set forth in Section 3.18(a) of the Master Servicing Agreement.

“ Insurance Policy ” means, with respect to any Receivable, an insurance policy covering physical damage, warranties, debt cancellation, credit life, credit disability, theft, mechanical breakdown or similar event with respect to the related Financed Vehicle or the related Obligor, as applicable.

“ Lender ” means each signatory to the Loan and Security Agreement as a lender, and the successors and permitted assigns of any lender from time to time that becomes a party hereto by execution of an assignment.

“ Lien ” means any security interest, lien, charge, pledge, equity, or encumbrance of any kind.

“ Liquidating Receivable ” means a Receivable as to which the Servicer (i) has reasonably determined, in accordance with its customary servicing procedures, that eventual payment of amounts owing on such Receivable is unlikely, or (ii) has repossessed and disposed of the Financed Vehicle.

“ Liquidation Expenses ” means, with respect to a Liquidating Receivable, the actual reasonable out-of-pocket costs of liquidation not to exceed $550 (or such greater amount as the Servicer determines is reasonably necessary in accordance with its customary procedures to refurbish and dispose of a liquidated Financed Vehicle).

“ Liquidation Proceeds ” means, with respect to a Liquidating Receivable, all amounts realized with respect to such Receivable net of Liquidation Expenses and any amounts that are required to be refunded to the Obligor on such Receivable, but in any event not less than zero.

“ Loan-to-Value Ratio ” or “ LTV ” has the meaning set forth for LTV in Section 1.1 of the Loan and Security Agreement.

“ Master Sale Agreement ” or “ Master Sale Agreement (Warehouse) ” means the Master Sale Agreement (Warehouse), dated as of November 3, 2017, by and among Carvana, LLC and Carvana Auto Receivables 2016-1 LLC, as the same may be amended, restated, supplemented or otherwise modified from time to time.

App. A-9

“ Master Sale Agreement (Flow) ” means the Amended and Restated Master Sale Agreement (Flow), dated as of March 6, 2017, as amended by Omnibus Amendment No. 1, dated as of November 3, 2017, by and among Carvana, LLC and Carvana Auto Receivables 2016-1 LLC, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Master Servicing Agreement ” or “ Servicing Agreement ” means the Master Servicing Agreement (Warehouse), dated as of November 3, 2017, by and among Carvana, the Servicer, the Trust and the Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Master Servicing Agreement (Flow) ” means the Master Servicing Agreement (Flow), dated as of December 29, 2016, by and among Carvana, the Servicer and the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Master Transfer Agreement ” means the Master Transfer Agreement, dated as of November 3, 2017, by and among Carvana Auto Receivables 2016-1 LLC and Sonoran Auto Receivables Trust 2017-1, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Material Adverse Effect ” means, with respect to any Person and to any event or circumstance, a material adverse effect on (i) the business, financial condition, operations, performance or properties of such Person, (ii) the validity or enforceability of the Loan and Security Agreement or any other Transaction Document or the validity, enforceability or collectability of (a) a material portion of the Receivables, or (b) a material portion of the Collections or the security interests in the Financed Vehicles, (iii) the rights and remedies of the Administrative Agent and Secured Parties, (iv) the ability of such Person to perform its obligations under the Loan and Security Agreement or any Transaction Document to which it is a party or (v) the status, existence, perfection, priority or enforceability of the Administrative Agent’s or any Lender’s interest in the Collateral.

“ Monthly Data File ” has the meaning set forth in Section 4.3 of the Master Servicing Agreement.

“ Monthly Servicer Report ” has the meaning set forth in Section 4.3 of the Master Servicing Agreement.

“ Net Loss ” means, with respect to a Receivables Pool, (i) as of any Settlement Date, for each Liquidating Receivable in such Receivables Pool, the Outstanding Principal Balance of such Liquidating Receivable when it became a Liquidating Receivable minus all Liquidation Proceeds received with respect to such Liquidating Receivable on or before the last day of the related Collection Period and (ii) as of the related Pool Termination Date, and with respect to each Receivable then outstanding within such Receivables Pool, the Outstanding Principal Balance of such Receivable as of the last day of the related Collection Period.

App. A-10

“ Notice of Banking Regulatory Change ” has the meaning set forth in Section 3.18(a) of the Master Servicing Agreement.

“ Notified Total Costs ” has the meaning set forth in Section 3.18(b) of the Master Servicing Agreement.

“ NPPI ” means “non-public personal information” as defined in 16 C.F.R. § 314.2(b) (2003) as well as any information that identifies a customer or consumer (as such terms are defined by the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. § 6801 et seq.), as amended from time to time) and information from which a customer’s or consumer’s identity can be ascertained, either from the information itself or by combining the information with information from other sources. NPPI also includes any information Ally Financial or Ally Bank (including any of their Affiliates) may directly or indirectly disclose to the Servicer or any Servicer agent or which the Servicer or any Servicer agent may collect or otherwise have access to due to the Servicer or the Servicer agents’ relationship with Ally Financial, Ally Bank or any of their Affiliates that relates to an individual. This includes, but is not limited to, financial information; medical or health related information; credit history; income; financial benefits; application, loan or claim information; names or lists of individuals derived from nonpublic personally identifiable information or otherwise derived from Ally Financial, Ally Bank or any of their Affiliates; and the identification of an individual as an Ally Financial or Ally Bank customer or as an individual Ally Financial or Ally Bank claimant.

“ Obligor ” means the purchaser or co-purchasers of the Financed Vehicle or any other Person who owes payments under a Receivable.

“ Officer’s Certificate ” means, with respect to any Person, a certificate signed by a Responsible Officer of such Person.

“ OFSS ” or “ Outward Facing Supplier Standards ” has the meaning set forth in Section 3.23 of the Master Servicing Agreement.

“ Operations Diligence ” has the meaning set forth in Section 3.15(c) of the Master Servicing Agreement.

“ Opinion of Counsel ” means a written opinion of counsel, which counsel may be internal or external counsel to a Party, reasonably acceptable to the Party receiving such opinion.

“ Original Amount Financed ” means, with respect to a Receivable and as of the date on which such Receivable was originated, the aggregate amount advanced under the Receivable toward the purchase price of the Financed Vehicle, including accessories, vehicle delivery fees, insurance premiums, service and warranty contracts and other items customarily financed as part of automobile and light truck retail installment sale contracts or direct purchase money loans and related costs.

“ Original Contract Documents ” means with respect to each Receivable, (i) the original Contract and (ii) the Certificate of Title or evidence that such Certificate of Title has been applied for. For the avoidance of doubt, an Authoritative Copy of an electronic document shall constitute an original.

App. A-11

“ Origination Period ” means, each calendar week during the period beginning with the week of November 6, 2017, and ending with the week containing the last day of the Commitment Period; provided , that, with respect to the initial First Tier Receivables Pool and Receivables Pool, respectively, the “Origination Period” shall be the period consented to by the Administrative Agent.

“ Outstanding Principal Balance ” means, with respect to a Receivable and as of any date, the Original Amount Financed, less:

(i) payments received from or on behalf of the related Obligor prior to such date allocable to principal;

(ii) any refunded portion of extended warranty protection plan costs, physical damage, credit life or disability, warranties, debt cancellation and other insurance premiums included in the Original Amount Financed and allocable to principal;

(iii) any Administrative Purchase Payment or Warranty Payment to the extent allocable to principal; and

(iv) any Liquidation Proceeds previously received on or prior to the last day of the related Collection Period allocable to principal with respect to such Receivable.

“ Owner Trustee ” means Wilmington Trust, National Association, acting not in its individual capacity, but solely as Owner Trustee for the Borrower, or any successor Owner Trust pursuant to the terms of the Trust Agreement.

“ Party ” means, with respect to each Transaction Document, each Person that is a party to such Transaction Document, and its permitted successors and assigns.

“ Performance Guarantor ” means DriveTime Automotive Group, Inc. and its successors and permitted assigns under the Servicing Agreement.

“ Pool Balance ” means, with respect to a First Tier Receivables Pool or a Receivables Pool, as applicable, as of the close of business of the last day of a Collection Period, the Aggregate Outstanding Principal Balance of the Receivables in such First Tier Receivables Pool or Receivables Pool (excluding Administrative Receivables and Warranty Receivables and Liquidating Receivables as of such date).

“ Pool Supplement ” means the Pool Supplement, in the form of Exhibit A to the Master Transfer Agreement executed by the Transferor and the Trust on each Closing Date.

“ Previously Originated Receivable ” means, for any Closing Date and the related Receivables Pool, an Eligible Receivable originated in a prior Origination Period that met the eligibility criteria to be included in a Receivables Pool that could have been sold to the Purchasers pursuant to the Master Sale Agreement (Warehouse) and Master Transfer Agreement on a prior Closing Date but for (i) the Seller not having completed ministerial administrative procedures for such Receivable (such as validating receipt of the down payment) or (ii) the failure to satisfy the representations and warranties regarding the information provided for such Receivable on the related Schedule of Receivables in Section 4.2(cc)(iii) of the Master Sale Agreement (Warehouse) and the Master Transfer Agreement and such Receivable was removed or repurchased from a prior First Tier Receivables Pool or Receivables Pool, as applicable, solely as a result of such failure (and not for any other reason).

App. A-12

“ Program ” has the meaning set forth in Section 3.25 of the Master Servicing Agreement.

“ Purchase Percentage ” means, for an Origination Period, the corresponding “Purchase Percentage” for the corresponding origination period pursuant to the Master Sale Agreement (Flow).

“ Purchase Price ” means for any First Tier Receivables Pool or Receivables Pool, the fair market value determined from time to time by Carvana, the Transferor and the holder of the certificates issued by the Trust.

“ Purchased Property ” has the meaning set forth in Section 3.1(a) of the Master Transfer Agreement.

“ Purchased Receivables ” means, as applicable, all Receivables purchased by CAR 2016-1 in any First Tier Receivables Pool pursuant to the Master Sale Agreement and all Receivables purchased by the Purchaser in any Receivables Pool pursuant to the Master Purchase and Sale Agreement.

“ Purchaser Inspection Parties ” has the meaning set forth in Section 3.19(a) of the Master Servicing Agreement.

“ Purchasers ” means either Ally Bank or Ally Financial, and its permitted successors and assigns, if the reference to “Purchaser” relates to Receivables purchased by a specified Purchaser, or both Ally Bank and Ally Financial, and their permitted successors and assigns, if the reference to “Purchaser” or “Purchasers” relates to the Receivables or the Receivables Pools as a whole, as the context may require.

“ Quarterly Operations Review ” has the meaning set forth in Section 3.15(a) of the Master Servicing Agreement.

“ Quarterly Review Event ” has the meaning set forth in Section 3.15(c) of the Master Servicing Agreement.

“ Receivable ” means a Contract for a Financed Vehicle and any amendments, modifications or supplements to such retail installment sale contract that is included in the Schedule of Receivables attached as Schedule 5 to each Pool Supplement. The term “Receivable” does not include any Repurchased Receivable.

App. A-13

“ Receivable Files ” means, with respect to each Receivable and the related Contract, collectively, the Original Contract Documents and the Servicer Files.

“ Receivables Assignment ” means, with respect to each Receivables Pool, the document of assignment attached as Schedule 3 to the related Pool Supplement.

“ Receivables Pool ” shall have the meaning given to such term in Section 3.1 of the Master Transfer Agreement.

“ Receivables Pool CNL Ratio ” means, for any Settlement Date, the ratio of (i) net losses with respect to the Receivables included in a Receivables Pool during the related Collection Period to (ii) the difference between the beginning balance of the Outstanding Principal Balance for such Collection Period and the ending balance of the Outstanding Principal Balance for such Collection Period, in each case with respect to the Receivables included in such Receivables Pool.

“ Receivables Pool CNL Ratio Comparison ” means, with respect to a Receivables Pool on any Settlement Date, (x) the Receivables Pool CNL Ratio for such Receivables Pool reported on any Settlement Date for the related Collection Period, divided by (y) the Carvana entire portfolio cumulative net loss ratio for the same Collection Period.

“ Receivables Purchase Rate ” the rate agreed upon from time to time by Carvana, the Transferor and the holders of the certificates issued by the Trust.

“ Receivables System ” means the principal computer system of the Servicer used in the servicing of retail installment sales contracts and direct purchase money loans, including back up archives.

“ Regulation AB ” Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7, 2005)), in the adopting release (Asset-Backed Securities Disclosure and Registration, Securities Act Release 33-9638, 79 Fed. Reg. 57,184 (September 24, 2014)) and in any adopting release in respect of any amendment with respect to any of the foregoing or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

“ Regulator Inspection Parties ” has the meaning set forth in Section 3.19(a) of the Master Servicing Agreement.

“ Relationship Manager ” has the meaning set forth in Section 3.24 of the Master Servicing Agreement.

“ Re-Liening Expenses ” means any costs associated with the revision of the Certificates of Title pursuant to Section 2.14 of the Loan and Security Agreement.

“ Re-Liening Trigger Event ” has the meaning agreed upon by the Seller, the Trust and the Administrative Agent.

App. A-14

“ Remediation ” has the meaning set forth in Section 5.1(r) of the Master Servicing Agreement.

“ Repurchased Receivable ” means any repurchased Administrative Receivable or repurchased Warranty Receivable.

“ Requirements of Law ” means, with respect to any Person, all (a) requirements of applicable federal, state and local laws, and regulations thereunder and (b) orders, decrees, directives, rules and binding guidelines of, or agreements, with any Governmental Authority that are directed to or binding on such Person or such Person’s business, operations, services (including, with respect to the Servicer, the Servicer’s obligation to service the Collateral for the benefit of the Lenders pursuant to the Servicing Agreement) or assets, including, in each case, usury laws, Utah banking laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Consumer Financial Protection Bureau’s Regulations “B” and “Z,” the Servicemembers Civil Relief Act of 2003, the Texas Consumer Credit Code, the United States Foreign Corrupt Practices Act of 1977, the Patriot Act and state adaptations of the National Consumer Act and the Uniform Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure laws; provided, that, in each case with respect to clauses (a) and (b) above, with respect to the Servicer’s obligations described in the Servicing Agreement, “Requirements of Law” shall not include any items described in clauses (a) or (b) above that are directed to or binding on Ally Financial or Ally Bank solely as a result of such Peron’s status as a bank holding company or Utah charted bank, respectively, unless otherwise specified on Exhibit E to the Servicing Agreement. Following the Closing Date during the term of the Servicing Agreement, should the Servicer offer or enter into any subsequent agreement with another Person to service assets on behalf of such Person in compliance with, or provide indemnity for breach of, Requirements of Law applicable to Ally Financial or Ally Bank that are excluded from this definition as a result of the preceding proviso, then this definition shall be deemed to be modified to include such broader provision without any further action of the Parties.

“ Responsible Officer ” means (a) When used with respect to any Person other than the Owner Trustee, Collateral Custodian or Account Bank, any officer of such Person, including any president, vice president, assistant vice president, secretary, assistant secretary or any other officer thereof customarily performing functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any matter is referred because of such officer’s knowledge of or familiarity with the particular subject, (b) with respect to the Owner Trustee, any officer within the Corporate Trust Administration office of the Owner Trustee with direct responsibility for the administration of the Trust Agreement and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of, and familiarity with, the particular subject, (c) with respect to the Borrower, the Owner Trustee or the Trust Administrator, and (d) with respect to the Collateral Custodian or Account Bank, any officer in the Corporate Trust Office of the such Person, including any president, vice president, executive vice president, assistant vice president, treasurer, secretary, assistant secretary, corporate trust officer or any other officer thereof customarily performing functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any matter is referred because of such officer’s knowledge of or familiarity with the particular subject, and, in each case, having direct responsibility for the administration of the Loan and Security Agreement and the other Transaction Agreements to which such Person is a party.

App. A-15

“ Schedule of Receivables ” means, the list identifying the Receivables attached as Schedule 5 to each Pool Supplement (which list may be in the form of electronic file, microfiche, disk or other means acceptable to the Purchaser, or pursuant to the Master Sale Agreement).

“ Securities Act ” means the Securities Act of 1933.

“ Selection Procedures ” means, the process for selecting Eligible Receivables ‎for inclusion in any First Tier Receivables Pool and Receivables Pool pursuant to Section 3.1(d) of the Master Sale Agreement whereby such First Tier Receivables Pool and Receivables Pool is selected by the Seller and Transferor utilizing the System of Record under a Freestyle Selection. Such selection shall be made subject to the Eligible Receivable criteria and the sequential contract number assignment described in Section 3.1(d) of the Master Sale Agreement.

“ Seller Indemnified Parties ” has the meaning set forth in Section 6.11 of the Master Sale Agreement (Warehouse).

“ Servicer ” means initially Bridgecrest Credit Company, LLC as the servicer of the Receivables, or any permitted successor or assignee thereto under the Master Servicing Agreement.

“ Servicer Coverage ” has the meaning set forth in Section 3.22 of the Master Servicing Agreement.

“ Servicer Files ” means the documents specified in Section 2.1 of the Master Servicing Agreement.

“ Servicer Review Trigger Event ” has the meaning set forth in Section 3.16 of the Master Servicing Agreement.

“ Servicer Termination Threshold Event ” means, with respect to the sold Receivables Pools, on any Settlement Date, the aggregate CNL for such Receivables Pools shall be equal to [***]% or greater of the aggregate Administrative Agent’s estimated Cumulative Net Losses for such Receivables Pools on such Settlement Date.

“ Servicing Criteria ” means “Servicing Criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.



[***]	Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission.

App. A-16

“ Servicing Exception ” means any exceptions or supplements to the Collections Policy specified on Exhibit E to the Servicing Agreement (including any requirement of federal, state or local law, or any regulation or any order, decree, directive, rule and binding guideline of, or agreement, with any Governmental Authority applicable to the Lender solely as a result of the Lender’s status as a bank holding company or a bank, as applicable, that the Administrative Agent determines requires revisions to the existing Collections Policy), as may be amended or supplemented from time to time by the Administrative Agent.

“ Servicing Fee ” means the fee payable to the Servicer in accordance with the Servicing Agreement and Section 2.11(a) of the Loan and Security Agreement, which fee shall be equal to the product of (x) the Servicing Fee Rate, (y) the Principal Balance of the Receivables held by the Borrower as of the open of business on first Business Day of the related Monthly Period, and (z) a fraction, the numerator of which is thirty (30) and the denominator of which is three hundred sixty (360).

“ Servicing Fee Rate ” has the meaning agreed upon by the Parties.

“ Settlement Date ” means the fifteenth (15th) day of each calendar month beginning in the calendar month after the Closing Date.

“ Settlement Report ” means a monthly statement (including a data tape) prepared and delivered on or prior to the Business Day preceding the applicable Settlement Date to the Administrative Agent, the Lender(s), the Owner Trustee, the Account Bank and the other Persons specified in the Servicing Agreement by the Servicer with respect to the immediately preceding calendar month, which shall be in substantially the form of Exhibit G-1 to the Loan and Security Agreement, as such form may be amended from time to time.

“ SOC 1 ” has the meaning set forth in Section 3.13 of the Master Servicing Agreement.

“ State ” means any of the 50 states of the United States of America, or the District of Columbia.

“ System of Record ” means the computer system and programs in place on the date that the Master Sale Agreement (Warehouse) become effective (as such system may be updated or otherwise modified) utilized by Carvana to select Receivables for each First Tier Receivables Pool under the Master Sale Agreement (Warehouse).

“ Three-Month Average Receivables Pool CNL Ratio Comparison ” means, on any Settlement Date, the average of the Receivables Pool CNL Ratio Comparison with respect to a Receivable Pool for such Settlement Date and the two Settlement Dates preceding such Settlement Date.

App. A-17

“ Title Intermediary ” means, VINTek or another title administration service provider approved in writing by the Seller and Purchasers.

“ Title Lien Nominee ” means Carvana LLC or GFC Lending LLC (or any other name approved in writing by the Administrative Agent).

“ Transaction Documents ” means the Loan and Security Agreement, the Master Sale Agreement (Warehouse), the Master Transfer Agreement, the Servicing Agreement, the Collateral Custodian Agreement, the Account Control Agreement, the Trust Agreement, and any other document, certificate, opinion, agreement or writing the execution of which is necessary or incidental to carrying out the transactions contemplated by the Loan and Security Agreement or any of the other foregoing documents.

“ Transferor Indemnified Parties ” has the meaning set forth in Section 6.11 of the Master Transfer Agreement.

“ Treasury Regulations ” means the regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

“ Trust Administrator ” means Carvana, or any successor Trust Administrator pursuant to the Loan and Security Agreement or the Trust Agreement.

“ Trust Agreement ” means that certain amended and restated trust agreement of the Borrower, dated on or about the date hereof, between the Transferor and the Owner Trustee.

“ Warranty Payment ” means, with respect to a Warranty Receivable within a First Tier Receivables Pool or a Receivables Pool, as applicable, to be repurchased as of the last day of a Collection Period, a payment equal to the sum of (i) the Outstanding Principal Balance with respect to such Warranty Receivable as of such date and (ii) the product of (x) the amount set forth in clause (i)(a) above, (y) the APR of such Warranty Receivable and (z) the number of days from the last payment of principal with respect to such Receivable/360.

“ Warranty Receivable ” means a Receivable which the Transferor has repurchased pursuant to Section 7.2 of the Master Transfer Agreement or the Seller has repurchased pursuant to Section 7.2 of the Master Sale Agreement (Warehouse).

* * * * *

App. A-18

Exhibit 10.5

MASTER SALE-LEASEBACK AGREEMENT

THIS MASTER SALE-LEASEBACK AGREEMENT (this “ Agreement ”) dated November 3, 2017 (the “ Effective Date ”), by and between CARVANA, LLC , an Arizona limited liability company, (hereinafter referred to as “ Carvana ”) and VMRE, LLC , a Delaware limited liability company (hereinafter referred to as “ VMRE ”) (each a “ Party ” and, collectively, the “ Parties ”).

R E C I T A L S

Carvana owns fee title or has a valid ground lease interest in certain real property (each an “ Existing Parcel ” and, collectively, the “ Existing Parcels ”) and, from time to time from and after the Effective Date, Carvana may identify additional real property to be purchased or ground leased pursuant to the terms and conditions set forth in this Agreement (each a “ New Parcel ” and collectively the “ New Parcels ”).

Carvana has constructed improvements on each Existing Parcel (exclusive of any USTs, the “ Existing Improvements ”) and intends to construct new or additional improvements on some Existing Parcels and on each New Parcel (exclusive of any USTs to be placed upon a New or Existing Parcel, the “ New Improvements ”), which such Existing Improvements and New Improvements shall be used by Carvana for the Permitted Operations (as defined below).

VMRE desires to purchase from Carvana, subject to the terms and conditions set forth in this Agreement, the Existing Parcels and the Existing Improvements (an Existing Parcel together with the Existing Improvements located thereon and any New Improvements to be constructed thereon is defined herein as an “ Existing Property ” and, collectively, as the “ Existing Properties ”). From time to time, as Carvana identifies and acquires New Parcels and constructs New Improvements thereon (a New Parcel, together with the New Improvements Constructed thereon, is defined herein as a “ New Property ” and, collectively, as the “ New Properties ”), VMRE desires to purchase such New Properties, subject to the terms and conditions set forth in this Agreement.

Upon the closing of the purchase of each Property (as defined below) by VMRE, VMRE (or its designee) and Carvana (“ Carvana Lessee ”) shall enter into an Operator Lease (as defined below) pursuant to which VMRE (or its designee, as landlord) shall lease the applicable Property to Carvana Lessee (as tenant) and Guarantor shall enter into a Guaranty (as defined below) with respect to the obligations of Carvana Lessee under such Operator Lease.

NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1. DEFINITIONS

“ Additional Title Objections ” means a title encumbrance and/or defect that appears for the first time on an updated Title Commitment, or an updated Survey, and was not created by or with the consent of VMRE, and is not acceptable to VMRE.

“ Affiliate ” means any person or entity which directly or indirectly controls, is under common control with, or is controlled by any other person or entity. For purposes of this definition, “controls”, “under common control with” and “controlled by” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through ownership of voting securities or otherwise.

“ Applicable Law ” means all (i) statutes, laws, common law, rules, regulations, ordinances, codes or other legal requirements of any Governmental Authority, board of fire underwriters and similar quasi-governmental authority,

including, without limitation, The Americans with Disabilities Act of 1990, as amended from time to time, and any regulations and rules issued pursuant thereto, and (ii) any judgment, injunction, order or other similar requirement of any court or other adjudicatory authority, in each case to the extent the person or Property in question is subject to the same.

“ Assignment Agreement ” means the assignment of Owner Licenses and Permits, Plans and Specifications, Warranties and Miscellaneous Assets in a form agreed to in writing by Carvana and VMRE.

“ Budget ” means the detailed budget with respect to New Improvements to be constructed by Carvana, allocating the Purchase Price to specific items of Hard Costs and Soft Costs and including a contingency line item, as the same may be amended, modified or supplemented with the consent of VMRE to the extent the such amendments, modifications, or supplements cause the initial Budget (exclusive of land acquisition costs) to increase by more than 15%.

“ Business ” means the operation of retail or wholesale automobile sales or leasing operation including, without limitation the sale of new or used automobiles and the related inspection, repair, reconditioning, preparation, storage, advertising for sale, display and/or marketing of new or used automobiles.

“ Business Day ” means a day on which banks located in Phoenix, Arizona, are not required or authorized to remain closed.

“ Carvana Entities ” means, collectively, Carvana, Carvana Lessee and any Affiliate of Carvana or Carvana Lessee, each of which individually is a “Carvana Entity”.

“ Carvana’s Diligence Material ” shall have the meaning set forth in Section 5.8.

“ Closing ” shall have the meaning set forth in Section 4.1.

“ Closing Date ” means the date on which a Closing occurs under Section 4.1.

“ Code ” means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq ., as amended.

“ Completion Date ” for any Property shall have the meaning given that term in the Disbursement Agreement for that Property.

“ Construction Consultant ” means Fulcrum, LLC, an Arizona limited liability company, or any other construction consultant, engineering firm, inspection company or other consultant engaged by VMRE to (a) review the construction of New Improvements, (b) advise as to the status of completion of such New Improvements, (c) review the Budget, invoices, paid receipts, and invoices related to the construction of New Improvements, (d) advise VMRE with respect to Disbursements under the Disbursement Agreement, and (e) provide such other construction consultant and advisory functions as VMRE deems reasonably necessary.

“ Conveyance Documents ” means for any Property the Deed, the Bill of Sale and the Assignment Agreement (if required).

“ De Minimis Amounts ” shall mean, with respect to any given level of Hazardous Materials for a Property, that level or quantity of Hazardous Materials in any form or combination of forms which does not constitute a violation of any Environmental Laws and is customarily employed in, or associated with, similar businesses located in the state in which the applicable Property is located.

“ Deed ” means that certain special or limited warranty deed (or other equivalent thereof), as agreed to by Carvana and VMRE, whereby Carvana conveys to VMRE (or in a subsequent repurchase or reconveyance transaction VMRE conveys

to Carvana) marketable and indefeasible fee simple title to all of grantor’s right, title and interest in and to the Real Property, subject only to the Permitted Encumbrances.

“ Development Activities ” means the demolition and removal of any improvements currently (as of the Closing Date) located at a Property, if any, and the construction and development of the New Improvements on such Property.

“ Disbursement Agreement ” means a Construction and Disbursement Agreement in a form agreed to in writing by VMRE and Carvana, to be executed by VMRE, Carvana and Title Company at or prior to Closing, with respect to any Property requiring the construction of New Improvements

“ Environmental Condition ” means any adverse condition with respect to soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding the applicable Property, whether or not yet discovered, which is likely to or does result in any damage, loss, cost, expense, claim, demand, order or liability to or against Carvana (or its assignee hereunder), VMRE (or its designee or assignee hereunder), or by any third party (including, without limitation, any Governmental Authority), including, without limitation, any condition resulting from the operation of Carvana's business and/or the operation of the business of any other property owner or operator in the vicinity of the applicable Property and/or any activity or operation formerly conducted by any person or entity on or off the applicable Property.

“ Environmental Laws ” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Materials, relating to liability for or costs of Remediation or prevention of Releases or relating to liability for or costs of other actual or threatened danger to human health or the environment. “Environmental Laws” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. “Environmental Laws” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the property; requiring notification or disclosure of Releases or other environmental condition of the applicable Property to any Governmental Authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the applicable Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the applicable Property.

“ Event of Default ” has the meaning set forth in Section 9.1.

“ ESA ” means a Phase I environmental site assessment for a Property addressed to VMRE which satisfies ASTM Standard E1527-13.

“ Facility Cap ” has the meaning set forth in Section 3.1.

“ Facility Term ” has the meaning set forth in Section 3.1.

“ Fee Property ” means either an Existing Property or a New Property in which fee simple title to the applicable real property is vested in a Carvana Entity or which a Carvana Entity has an option or right to acquire such fee simple title.

“ Governmental Authority ” means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi-governmental authority of the United States, the State or any political subdivision thereof.

“ Ground Lease ” means a ground lease of an applicable Property entered into by Carvana or another Carvana Entity as ground lessee.

“ Ground Sub-Lease ” means a sub-lease of a Ground Lease in a form agreed to in writing by Carvana and VMRE that will be by and between Carvana, as ground sublessor, and VMRE as ground sublessee.

“ Guarantor ” means, Carvana Group, LLC.

“ Guaranty ” means an unconditional guaranty of payment and performance in the form attached hereto as Exhibit A .

“ Hard Costs ” means the total of all costs and expenses, other than the Soft Costs, relating to the development of a Property and the acquisition and construction of the Improvements as identified in the Budget with respect to New Improvements or as evidenced by documentation provided by Carvana to VMRE with respect to Existing Improvements.

“ Hazardous Materials ” means (a) any toxic substance or hazardous waste, substance, solid waste or related material, or any pollutant or contaminant; (b) radon gas, asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contains dielectric fluid containing levels of polychlorinated biphenyls in excess of federal, state or local safety guidelines, whichever are more stringent, or any petroleum product; (c) any substance, gas, material or chemical which is or may be defined as or included in the definition of “hazardous substances,” “toxic substances,” “hazardous materials,” hazardous wastes” or words of similar import under any Environmental Laws; and (d) any other chemical, material, gas or substance the exposure to or release of which is or may be prohibited, limited or regulated by any Governmental Authority that asserts or may assert jurisdiction over the Property or the operations or activity at the Property, or any chemical, material, gas or substance that does or may pose a hazard to the health and/or safety of the occupants of the Property or the owners and/or occupants of property adjacent to or surrounding the Property.

“ Improvements ” has the meaning set forth in Section 2.1.2.

“ Insolvency Event ” means (a) a person’s (i) failure to generally pay its debts as such debts become due; (ii) admitting in writing its inability to pay its debts generally; or (iii) making a general assignment for the benefit of creditors; (b) any proceeding being instituted by or against any person (i) seeking to adjudicate it a bankrupt or insolvent; (ii) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors; or (iii) seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and in the case of any such proceeding instituted against any such Person, either such proceeding shall remain undismissed for a period of 90 days or any of the actions sought in such proceeding shall occur; or (c) any Person taking any corporate or other formal action to authorize any of the actions set forth above in this definition.

“ Inspection Period Commencement Date ” means the date on which Carvana delivers to VMRE Carvana’s Diligence Materials items 1 through 4 (inclusive) of Schedule 2.8 hereof with respect to a Property.

“ Inspection Period Expiration Date ” means the date which is forty (40) days after the Inspection Period Commencement Date.

“ Inspections ” means, with respect to any Property, any investigations, tests and/or due diligence activities conducted by VMRE or any of its agents, representatives, attorneys, independent contractors, advisors, architects, contractors, subcontractors, engineers and/or designees that VMRE deems necessary and reasonably appropriate, in VMRE’s sole discretion, to evaluate the Property in connection with this Transaction; provided, however, if VMRE requires access to such Property to conduct Inspections, (x) the Inspection will be conducted during normal business hours, and (y) will not unreasonably interfere with Carvana’s business operations; and provided further that VMRE may not conduct a Phase II investigation without Carvana’s consent unless the ESA recommends same.

“ Land ” has the meaning set forth in Section 2.1.1.

“ Lease Proof of Insurance ” means insurance certificates, in form and substance satisfactory to VMRE, that evidence and confirm the insurance coverages, limits and policies required to be carried by Carvana Lessee pursuant to the terms of the Operator Lease and the Disbursement Agreement, as appropriate, currently exist and are in full force and effect.

“ Leasehold Property ” means either an Existing Property or a New Property that is subject to a Ground Lease in which Carvana is the ground lessee.

“ Lien(s) ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).

“ Non-Foreign Seller Certificate ” means the certificate delivered by Carvana prior to or on the Closing Date in the form attached hereto as Exhibit B .

“ Miscellaneous Assets ” has the meaning set forth in Section 2.1.7.

“ Operator Lease ” means the lease agreement (or sublease agreement, as applicable) for a Property substantially in a form agreed to in writing by Carvana and VMRE.

“ Other Agreements ” means, collectively, all agreements and instruments now or hereafter entered into between, among or by (1) any of the Carvana Entities, and, or for the benefit of, (2) any of the VMRE Entities, including, without limitation, leases and guaranties, but excluding the Operator Leases and all other agreements executed pursuant to this Agreement.

“ Owner Licenses and Permits ” has the meaning set forth in Section 2.1.3.

“ Owner’s Title Policy ” means the owner’s or leasehold policy of title insurance for a Property to be issued based on a Title Commitment in the manner set forth in Section 5.1(d) of this Agreement.

“ Permitted Exceptions ” means those recorded easements, restrictions, liens and encumbrances set forth as exceptions in the title insurance policy issued with respect to any applicable Property by Title Company to VMRE and approved by VMRE as set forth in this Agreement.

“ Permitted Operations ” has the meaning set forth in Section 3.1.

“ Plans and Specifications ” has the meaning set forth in Section 2.1.4.

“ Property ” or “ Properties ” has the meaning set forth in Section 2.1.

“ Property Appreciation Payment ” means an amount payable to VMRE to compensate VMRE for the appreciation to the value of the Properties during the Facility Term which such amount or rate shall be agreed upon by VMRE and Carvana prior to the Closing of each Property and shall be reflected in the applicable Operator Lease.

“ Property Event of Default ” means an Event of Default (i) of the types described in Sections 9.1(a) through (e), inclusive, that occurs with respect to a Property (the “ Defaulted Property ”), including information and/or representations and warranties specific to the Defaulted Property contained in this Agreement or any applicable Transaction Document being false or misleading in any material respect, or (ii) as described in Section 6.01 of the applicable Disbursement Agreement (excluding the Event of Default described in Section 6.01(h) thereof).

“ Purchase Facility Fee ” has the meaning set forth in Section 3.3.

“ Purchase Price ” means the amount calculated under the terms of Section 3.2.

“ Real Property ” has the meaning set forth in Section 2.1.2.

“ Recognition Agreement ” means a recognition and non-disturbance agreement, in substantially a form agreed to in writing by Carvana and VMRE, with respect to a Ground Lease, entered into by and among VMRE, Carvana and the lessor under the applicable Ground Lease.

“ Regulated Substances ” means “petroleum” and “petroleum-based substances” or any similar terms described or defined in any Hazardous Materials Laws and any applicable federal, state, county or local laws applicable to or regulating USTs.

“ Release ” means any presence, release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials.

“ Remediation ” means any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Material, any actions to prevent, cure or mitigate any Release, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or any evaluation relating to any Hazardous Materials.

“ Retained Liabilities ” has the meaning set forth in Section 2.3.

“ Seller’s Historical Documents ” means, collectively, the following items, to the extent they are in Carvana’s possession or control, that relate to the ownership, leasing, construction, operation and/or maintenance of each Property:


(a)	plans, specifications, elevations, drawings and engineering reports;


(b)	surveys;


(c)	environmental materials or reports (e.g. historical phase I and phase II environmental investigation reports);


(d)	material permits, variances and approvals obtained by Carvana (or Carvana’s Affiliate or designee) in connection with the Development Activities;


(e)	owner policies of title insurance;


(f)	guaranties and warranties with regard to each Property;


(g)	a copy of the most current tax bills;


(i)	financial statements prepared with respect to a Property, if available;


(j)	any other material agreements relating to and necessary to ownership or management of the Property, together with all assignments, amendments and/or modifications thereto; and


(k)	other material documents, materials and/or information as reasonably requested by VMRE.

“ Soft Costs ” means certain fees, costs and expenses relating to the acquisition, design and development of a Property including the construction of the Improvements (as identified in the Budget as soft costs with respect to a Property or as evidenced by documentation provided by Carvana to VMRE with respect to Existing Properties), including, without limitation, the cost of title insurance, the reasonable external attorneys’ fees of Carvana, the cost of surveys, stamp taxes, transfer taxes, disbursement fees, escrow and recording fees and the reasonable fees and expenses of Carvana’s architect, which, with respect to Improvements, shall be approved as to category and amount by VMRE in its sole discretion to the extent such fees, costs and expenses exceed the aggregate amount of Soft Costs shown in the Budget, after taking into consideration the 15% contingency set forth in the Budget.

“ State ” means the applicable state in which a Property is located.

“ Threatened Release ” means a substantial likelihood of a Release which requires action to prevent or mitigate damage to the soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air or any other environmental medium comprising or surrounding the Property which may result from such Release.

“ Title Commitment ” means a current commitment for title insurance (owner’s policy or leasehold policy, as applicable) with respect to the Property, issued by Title Company, to VMRE on ALTA 2006 Standard Form in the amount of the Purchase Price.

“ Title Company ” means First American Title Insurance Company, whose address is 2425 East Camelback Road, Suite 300, Phoenix, Arizona 85016 or any other alternative title insurance company or agency selected by VMRE.

“ Title Company Affidavit ” means an affidavit as to debts, liens and parties-in-possession, or other similar type of affidavit, in a form sufficient for the Title Company to issue to VMRE the Owner’s Title Policy, together with such additional affidavits, documents, indemnities and undertakings as may be reasonably required by Title Company to allow for the deletion of any mechanics’ lien exceptions and/or other standard exceptions from the Owner’s Title Policy.

“ Transactions ” means the transaction contemplated by this Agreement including the purchase and sale of the Properties in accordance with the terms, provisions, covenants and conditions contained within this Agreement.

“ Transaction Costs ” means, collectively, and any reasonable out‑of‑pocket costs and reasonable expenses incurred in connection with the Transaction and/or any Closing (whether or not the Transaction closes) including, but not limited to, amounts incurred in connection with obtaining any of the following items: Title Commitment, Survey, ESA (Phase II, if applicable), Zoning Evidence, Title Company escrow fee, recording costs, taxes and related charges imposed on conveyances of real property (e.g. transfer taxes, documentary stamp taxes, intangibles taxes, mortgage taxes, leasehold taxes, privilege taxes, etc., but expressly excluding any taxes imposed on the gross income of a party, etc.), Owner’s Title Policy and endorsements thereto reasonably requested by VMRE (which shall be issued at the simultaneous issue rate if such rate is available from the Title Company), local law charges, and professional advisors fees (e.g. legal, accounting, and other similar types of professional advisors) including, without limitation VMRE’s attorneys’ fees and all fees and costs related to VMRE’s engagement of the Construction Consultant.

“ Transaction Documents ” means, collectively and only if applicable, the following documents: this Agreement and each Operator Lease, Guaranty, Disbursement Agreement, Deed, Ground Sub-Lease, Recognition Agreement, Bill of Sale, Assignment Agreement, Non-Foreign Seller Certificate, Lease Proof of Insurance, and any and all documents referenced in this Agreement or any of the Transaction Documents, as well as such other documents, instruments and certificates (including, without limitation, an owner’s title affidavit, owner’s gap indemnity and an indemnity with respect any mechanic’s and materialmen’s liens) as are reasonably requested by VMRE and/or the Title Company.

“ Transaction Term ” means the later of (a) the date which is the fifteenth (15 ^th ) anniversary of the Effective Date and (b) the date upon which Carvana has repurchased all of the Properties sold to VMRE pursuant to the Transaction.

“ UCC-1 Financing Statements ” means such UCC-1 Financing Statements as VMRE shall require to be executed and delivered by Carvana with respect to the transactions contemplated by this Agreement.

“ USTs ” means any one or combination of tanks and associated product piping systems used in connection with storage, dispensing and general use of Regulated Substances.

“ Valuations ” means appraisals, brokers’ opinions of value, current site inspections and/or valuations of any kind with respect to a Property.

“ VMRE Entities ” means, collectively, VMRE and any Affiliate of VMRE.

“ VMRE’s Title Objections ” means for any Property VMRE’s initial written notification to Carvana and the Title Company of VMRE’s objection(s) to any exceptions or other matters shown on the Title Commitment or the Survey.

“ Warranties ” has the meaning set forth in Section 2.1.5.

“ Warranty Claims ” has the meaning set forth in Section 2.1.6.

“ Zoning Evidence ” means a zoning report that certifies, among other things, whether the applicable Property complies with all zoning ordinances of the Governmental Authority having jurisdiction over such Property and, if such Property does not comply, identifies the areas of non-compliance.

Article II. THE PROPERTY AND THE TRANSACTION

2.1 The Property . Subject to the terms set forth in this Agreement, Carvana shall sell, convey, transfer, assign and deliver to VMRE, and VMRE shall purchase and accept from Carvana, all of Carvana’s right, title and interest in and to each Existing Property and each New Property, including Leasehold Properties, selected by Carvana, together with all assets, rights and interests set forth in this Section 2.1 and Section 2.2 (each, individually a “ Property ” and collectively, the “ Properties ”):

2.1.1 Land . With respect to a Fee Property, fee simple title in and to the land (subject to Permitted Exceptions), together with all appurtenant easements and any other rights and interests appurtenant thereto (the “ Land ”);

2.1.2 Improvements . With respect to any Property, all of Carvana’s or other Carvana Entity’s interest in and to buildings, structures and improvements located on or affixed to the Land on a Fee Property or located on a Leasehold Property and all fixtures on the Land or Leasehold Property which constitute real property under Applicable Law including all Existing Improvements and New Improvements, as such New Improvements may be conveyed from time to time pursuant to the terms of this Agreement but excluding all USTs presently or hereafter located on such Land (the “ Improvements ”; the Land and the Improvements are referred to collectively herein as the “ Real Property ”);

2.1.3 Owner Licenses and Permits . All licenses, permits, consents, authorizations, approvals, registrations and certificates issued by any Governmental Authority with respect to the operation of the Land, Improvements or both, or the construction or operation of the Land, Improvements or both, that are required by Applicable Law to be held in the name of the owner of the Real Property (the “ Owner Licenses and Permits ”), together with any deposits made by Carvana (or the applicable Carvana Entity) thereunder, to the extent such Owner Licenses and Permits and deposits are transferable, or the consent for such transfer is obtained; “Owner Licenses and Permits” expressly excludes those licenses, permits, consents, authorizations, approvals, registrations and certificates to the extent related to the operation by Carvana of the Business;

2.1.4 Plans and Specifications . All of Carvana’s plans and specifications, blue prints, architectural plans, engineering diagrams and similar items which relate to the Real Property (the “ Plans and Specifications ” (and Carvana shall deliver to VMRE a consent to such assignment from the applicable architect or engineer in a form agreed to in writing by Carvana and VMRE), which shall not be construed to include intellectual property, trade secrets or other proprietary rights which are otherwise identified by Carvana as “ Excluded Assets ”);

2.1.5 Warranties . All warranties and guaranties with respect to the Improvements (the “ Warranties ”), to the extent such Warranties are transferable, or the consent for such transfer is obtained;

2.1.6 Warranty Claims . Any rights held by Carvana to receive or recover property, debt, or damages on a cause of action, including rights to indemnification, damages or claims for breach of warranty whether pending or not or any other event or circumstance, judgments, settlements, and proceeds from judgments and settlements, to the extent arising out of a breach of the Warranties (“ Warranty Claims ”);

2.1.7 Other Assets . All of Carvana’s interest in the General Contract (as defined in the applicable Disbursement Agreement, including a consent to such assignment from the applicable General Contractor in a form agreed to in writing by Carvana and VMRE) and all other property, assets, rights or interests owned and assignable or held and assignable by Carvana which are necessary to the ownership of the Land, Improvements, Licenses and Permits, Plans and Improvements, Warranties or Warranty Claims (the “ Miscellaneous Assets ”). Notwithstanding the foregoing, Miscellaneous Assets shall not be construed to include any Excluded Assets.

2.2 Ground Leased Properties . Subject to the terms set forth in this Agreement, Carvana or another Carvana Entity (as ground sub-lessor) (the " Carvana Sublessor ") shall enter into a Ground Sub-Lease with respect to each Leasehold Property and shall sell, convey, transfer, assign and deliver to VMRE, and VMRE shall purchase and accept from the Carvana Sublessor, all of Carvana Sublessor’s right, title and interest in and to the Improvements located on each Leasehold Property including all Existing Improvements and New Improvements, as such New Improvements may be conveyed from time to time pursuant to the terms of this Agreement; such conveyance shall include the Owner Licenses and Permits, Plans and Specifications, Warranties, Warranty Claims and Miscellaneous Assets related to such Leasehold Property.

2.3 Retained Liabilities . At Closing, Carvana shall retain all Liabilities with respect to each Property and the Business, with respect to all matters arising both prior to, on, and subsequent to, the applicable Closing Date (the “ Retained Liabilities ”). This Section 2.3 shall survive each Closing and shall survive the termination of this Agreement.

2.4 Lease-Back . With respect to each Property acquired by VMRE under the terms of this Agreement and any assets in connection therewith, VMRE shall lease (or sub-lease, as applicable) the Property to Carvana Lessee pursuant to an Operator Lease.

2.5 Guaranty . Guarantor shall execute and deliver a Guaranty with respect to each Operator Lease entered into by Carvana Lessee.

2.6 Transaction Costs . Carvana agrees to pay and shall be responsible for all Transaction Costs related to this Transaction including, without limitation in any way, the fees and costs of VMRE’s attorneys and the Construction Consultant. This Section 2.6 shall survive each Closing and shall survive the termination of this Agreement.

2.7 Transaction Term . If this Agreement has not otherwise terminated or expired prior to such date, this Agreement shall terminate as of the expiration of the Transaction Term, except as to any matters which are expressly intended to survive.

Article III. PURCHASE FACILITY AND PURCHASE PRICE

3.1 Purchase Facility . Commencing as of the Effective Date and continuing through the second anniversary of the Effective Date (the “ Facility Term ”), and subject to the terms of this Agreement, VMRE shall purchase Properties from Carvana from time to time, provided, that at no time during the Facility Term will the aggregate amount of the Purchase Price for the Properties purchased by VMRE exceed $75,000,000 (the “ Facility Cap ”). Additionally, the sum of the aggregate amount of the Purchase Price of the Properties purchased by VMRE and the amount not yet disbursed under Budgets approved pursuant to the applicable Disbursement Agreements shall not exceed (x) $100,000,000 during the period from the Effective Date until the 1 ^st anniversary of the Effective Date and (y) $85,000,000 during the period after the 1 ^st anniversary of the Effective Date until the expiration of the Facility Term. The Properties to be purchased by VMRE shall be limited to (a) Properties used by Carvana in the operation of Carvana’s Business related to the fulfilling of the purchases of automobiles by customers utilizing automobile “vending machines” and (b) one non-vending machine Property related to the operation of Carvana’s Business of inspecting, repairing, reconditioning and storing vehicles (the “ Permitted Operations ”). To the extent that any Property is repurchased from VMRE during the Facility Term pursuant to Section 3.5, the amount paid to VMRE (but not exceeding the Purchase Price) (x) shall not be included in any calculation of the aforementioned $100,000,000 or $85,000,000 limitations set forth in this Section 3.1 and (y) may be reallocated to permit the purchase of additional Properties and/or Improvements during the Facility Term up to, but not exceeding, the Facility Cap.

3.2 Property Purchase Price . In connection with the Purchase of a Property, VMRE agrees to pay the Purchase Price (as defined in this Section) for such Property. The purchase price paid for a Property (the “ Purchase Price ”) shall be determined as follows:

3.2.1 With respect to a Fee Property, the Purchase Price shall be one hundred percent (100%) of the actual cost of the amount paid by Carvana to purchase the Land, which shall be funded at Closing under this Agreement, plus one hundred percent (100%) of the actual costs incurred by Carvana with respect to the construction of the Improvements (whether New Improvements or Existing Improvements), including all Hard Costs and Soft Costs (but no internal management fee or administrative costs incurred by Carvana or otherwise), which shall be funded pursuant to the applicable Disbursement Agreement, which such amount shall be subject to VMRE’s confirmation, review and approval if such aggregate amount for Property exceeds the applicable Budget (excluding land acquisition costs) after taking into consideration the 15% contingency set forth in the Budget; provided that Improvements constructed after the applicable Closing shall be funded pursuant to the applicable Disbursement Agreement, and all other Improvements shall be funded pursuant to this Agreement;

3.2.2 With respect to a Leasehold Property, the Purchase Price shall be one hundred percent (100%) of the actual costs incurred by Carvana with respect to the construction of the Improvements (whether New Improvements or Existing Improvements), including all Hard Costs and Soft Costs (but no internal management fee or administrative costs incurred by Carvana or otherwise) which such amount shall be subject to VMRE’s confirmation, review and approval if such aggregate amount exceeds the applicable Budget after taking into consideration the 15% contingency set forth in the Budget; provided that Improvements constructed after the applicable Closing shall be funded pursuant to the applicable Disbursement Agreement, and all other Improvements shall be funded pursuant to this Agreement.

3.3 Purchase Facility Fee . Carvana shall pay to VMRE, on the Effective Date, a purchase facility fee in the amount of [***] of the amount of the Facility Cap (the “ Purchase Facility Fee ”). The Purchase Facility Fee constitutes VMRE’s underwriting, site assessment, valuation and processing fees and such Purchase Facility Fee shall be deemed fully earned upon the Effective Date and is not refundable. Carvana’s obligation to pay the Purchase Facility Fee shall be an obligation separate and apart from Carvana’s obligation to pay Transaction Costs under this agreement.

3.4 Reserved .

3.5 Repurchase Option . At any time during the term of any Operator Lease, Carvana may elect to repurchase a Property sold to VMRE pursuant to this Agreement. The purchase price for such repurchase (the “ Repurchase Price ”) shall be calculated in the manner set forth in Section 3.2 above, plus (x) any and all Purchase Price disbursements made under a Disbursement Agreement for such applicable Property, (y) any amounts added to or subtracted from the Repurchase Price pursuant to the Operator Lease, and (z) any and all amounts paid by VMRE with regard to such Property pursuant to VMRE’s lease or ownership of the Property during VMRE’s ownership of such Property. The conveyance of a Property made pursuant to this repurchase option shall be made by VMRE, “AS IS, WHERE IS AND WITH ALL FAULTS” as of the date Carvana exercises its option, without representation or warranty except as may be expressly provided in the conveyance documents to be delivered by VMRE which shall be in substantially the same form as the Conveyance Documents entered into with respect to VMRE’s purchase of such Property. Additionally, such conveyance shall be subject to (i) all applicable Permitted Exceptions related to the Property, (ii) all other new easements, liens or encumbrances entered into during VMRE’s ownership of the Property, but excluding only any new easements, liens or encumbrances created or entered into by VMRE during VMRE’s ownership which (a) have not been requested by Carvana and (b) have been entered into without Carvana’s consent, which consent may not be unreasonably withheld, unless in either case (a) or (b) such new easements, liens, or encumbrances do not unreasonably interfere with Carvana’s operations at the Property, and (iii) any mechanic’s and materialmen’s liens related to Carvana’s construction of the Improvements. Upon the reconveyance of a Property made under this Section 3.5, any Ground Sub-Lease related to the applicable Property shall terminate as of the date of such repurchase and reconveyance and Carvana agrees to execute any instrument or agreement reasonably requested by VMRE for purposes of terminating the applicable Ground Sub-Lease. In connection with the repurchase of the Property under this Section 3.5, VMRE shall not be required to provide or deliver any indemnification or affidavit to Carvana or to any title company with respect to mechanic’s or materialmen’s liens related to or resulting from Carvana’s construction activities on the Property.



[***]	Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission.

3.6 Put Option . At any time from and after the date which is sixty (60) days prior to the expiration of the Facility Term, VMRE shall have a put option (the “ Put ”), pursuant to which VMRE may (but shall not be required to) require Carvana to repurchase from VMRE any Property sold to VMRE pursuant to this Agreement. Upon written notice from VMRE exercising the Put with respect to a Property, Carvana shall have a period of sixty (60) days to repurchase the Property at the Repurchase Price. If Carvana fails to repurchase the Property within the 60-day period provided in the foregoing sentence, such failure shall be deemed an Event of Default under the Operator Lease and rent shall accrue under such Operator Lease at rate equal to the Holdover Rent (as defined in the Operator Lease). The conveyance of the Property made pursuant to a Put shall be made by VMRE, “AS IS, WHERE IS AND WITH ALL FAULTS” as of the date VMRE exercises it’s the Put, without representation or warranty except as may be expressly provided in the conveyance documents to be delivered by VMRE which shall be in substantially the same form as the Conveyance Documents entered into with respect to VMRE’s purchase of such Property. Additionally, such conveyance shall be subject to (i) all applicable Permitted Exceptions related to the Property, (ii) all other new easements, liens or encumbrances entered into during VMRE’s ownership of the Property, but excluding only any new easements, liens or encumbrances created or entered into by VMRE during VMRE’s ownership which (a) have not been requested by Carvana and (b) have been entered into without Carvana’s consent, which consent may not be unreasonably withheld, unless in either case (a) or (b) such new easements, liens, or encumbrances do not unreasonably interfere with Carvana’s operations at the Property, and (iii) any mechanic’s and materialmen’s liens related to Carvana’s construction of the Improvements. Upon the reconveyance of a Property made under this Section 3.6, any Ground Sub-Lease related to the applicable Property shall terminate as of the date of such repurchase and reconveyance and Carvana agrees to execute any instrument or agreement reasonably requested by VMRE for purposes of terminating the applicable Ground Sub-Lease. In connection with the repurchase of the Property under this Section 3.6, VMRE shall not be required to provide or deliver any indemnification or affidavit to Carvana or to any title company with respect to mechanic’s or materialmen’s liens related to are resulting from Carvana’s construction activities on the Property.

Article IV. PURCHASE OF THE PROPERTY

4.1 Closing Date . The purchase and sale of a Property shall be closed (the “ Closing ”) within five (5) Business Days following the later of (a) the Inspection Period Expiration Date and the satisfaction of all of the terms and conditions contained herein related to such property and (b) Seller’s delivery of those documents set forth in Section 7.1(a), but in no event shall any Closing occur after the expiration of the Facility Term.

4.2 Purchase Price . On a Closing Date, the Purchase Price for a Property (determined as set forth in Section 3.2), as adjusted pursuant to this Agreement, shall be paid by VMRE to Carvana (through the Title Company, as escrow agent) in immediately available United States funds pursuant to, among other things, separate Closing Settlement Statements executed and delivered by VMRE and Carvana, respectively.

4.3 Closing . VMRE has ordered (or Carvana has ordered on VMRE’s behalf) a title insurance commitment for the Property from Title Company. Prior to the Closing Date, the parties hereto shall deposit with Title Company all documents and moneys necessary to comply with their obligations under this Agreement. Title Company shall not cause the transaction to close unless and until it has received written instructions from the Parties to do so. All Transaction Costs shall be borne by Carvana, including, without limitation, the cost of title insurance, the attorneys' fees and expenses of Carvana, reasonable attorneys' fees and out-of-pocket expenses incurred by VMRE and the fees related to the Construction Consultant. All real and personal property and other applicable taxes and assessments and other charges relating to a Property which are due and payable on or prior to the Closing Date, as well as such taxes and assessments due and payable subsequent to the Closing Date but which Title Company requires to be paid at Closing as a condition to the issuance of the title insurance policy described in Section 5.1, shall be paid by Carvana at or prior to the Closing; and all other taxes and assessments shall be paid by Carvana Lessee in its capacity as lessee (or sublessee, as applicable) under the Operator Lease in accordance with the terms of the Operator Lease. The applicable Transaction Documents shall be dated as of the Closing Date.

Carvana and VMRE hereby agree to employ Title Company to act as escrow agent in connection with the Transactions. Carvana and VMRE will deliver to Title Company all documents, pay to Title Company all sums and do or cause to be done all other things necessary or required by this Agreement, in the reasonable judgment of Title Company, to enable Title Company to comply herewith and to enable any title insurance policy provided for herein to be issued. Title Company is authorized to pay, from any funds held by it for VMRE’s or Carvana's respective credits all amounts necessary to procure the delivery of such documents and to pay, on behalf of VMRE and Carvana, all charges and obligations payable by them, respectively. Carvana will pay all charges payable to Title Company. Title Company is authorized, in the event any conflicting demand is made upon it concerning these instructions or the escrow, at its election, to hold any documents and/or funds deposited hereunder until an action shall be brought in a court of competent jurisdiction to determine the rights of VMRE and Carvana or to interplead such documents and/or funds in an action brought in any such court. Deposit by Title Company of such documents and funds, after deducting therefrom its charges and its expenses and attorneys' fees incurred in connection with any such court action, shall relieve Title Company of all further liability and responsibility for such documents and funds. Title Company's receipt of this Agreement and opening of an escrow pursuant to this Agreement with respect to a Property shall be deemed to constitute conclusive evidence of Title Company's agreement to be bound by the terms and conditions of this Agreement pertaining to Title Company. Disbursement of any funds shall be made by Federal wire transfer. Title Company is authorized to act upon any statement furnished by the holder or payee, or a collection agent for the holder or payee, of any lien on or charge or assessment in connection with a Property, concerning the amount of such charge or assessment or the amount secured by such lien without liability or responsibility for the accuracy of such statement. The employment of Title Company as escrow agent shall not affect any rights of subrogation under the terms of any title insurance policy issued by Title Company in favor of VMRE or Carvana.

Section 4.4 Prorations . Except to the extent payable by the Tenant under the Operator Lease, insurance, taxes, special assessments, utilities or any other costs related to a Property shall be prorated between VMRE and Carvana as of the Closing Date of the initial purchase by VMRE or any subsequent repurchase by Carvana. For all periods prior to the Closing Date, Carvana represents and warrants to VMRE that Carvana has paid (or will pay, to the extent payment is not yet due) all state and local income, franchise, and other taxes (and any applicable interest or penalties) imposed upon, or payable by, Carvana in the state where the Property is located and VMRE will not inherit any liability associated with “successor liability laws”. Carvana shall be responsible for delivering to the Title Company such indemnifications as may be required by the Title Company to insure indefeasible fee simple title to the Property free and clear of any and all such taxes. Carvana shall indemnify, defend and hold harmless VMRE of and from any claims, demands and causes of action asserted against VMRE as a result of a breach of the foregoing representation and covenant. Such indemnification obligation shall survive the Closing.

Section 4.5 Lease of Property; Guaranty; Disbursement Agreement . As of each Closing, VMRE and Carvana Lessee shall execute an Operator Lease for the Property, pursuant to which VMRE shall, from and after the Closing, lease the Property to Carvana Lessee. The rent payable under each Operator Lease related to a Fee Property shall be determined by VMRE based on the Purchase Price for the applicable Property and a rate of return or “cap rate” in an amount to be agreed upon by VMRE and Carvana prior to the applicable Closing and reflected in the applicable Operator Lease. The rent payable under each Operator Lease related to a Leasehold Property shall be determined by VMRE as the sum of (a) all rent and other amounts payable under the applicable Ground Lease and (b) an amount determined by VMRE based on the Purchase Price for the Leasehold Property and a rate of return or “cap rate” in an amount agreed upon by Carvana and VMRE prior to the applicable Closing. The term of the Operator Lease shall be fifteen (15) years subject to early termination rights as set forth in the Operator Lease. Guarantor shall execute and deliver the Guaranty with respect to the Operator Lease for the applicable Property. If New Improvements will be constructed upon a Property, VMRE, Carvana and Title Company shall execute and deliver a Disbursement Agreement with respect to such Property.

Section 4.6 Development Activities . If New Improvements will be constructed upon a Property, the Operator Lease and the Disbursement Agreement shall provide for the following:

(a) Carvana Lessee shall undertake the Development Activities with respect to the Property pursuant to plans and specifications provided by Carvana Lessee and approved by VMRE prior to Closing as set forth in this Agreement; promptly after Closing, Carvana Lessee shall commence and diligently complete the Development Activities;

(b) VMRE, as landlord under the Operator Lease, shall disburse to Carvana Lessee amounts related to certain costs and expenses for the Development Activities, all as expressly provided by and in accordance with the terms of the Operator Lease and the Disbursement Agreement; in no event shall VMRE’s obligation to disburse amounts to Carvana for Development Activities exceed the "Maximum Investment Amount" set forth in the applicable Disbursement Agreement;

(c) Carvana Lessee shall be responsible for payment of rent and additional rent (including, without limitation, insurance and real property taxes) with respect to the Property as described in the Operator Lease; and

(d) upon each disbursement to Carvana Lessee by VMRE with respect to the Development Activities, Carvana Lessee’s obligation to pay rent to VMRE under the Operator Lease shall increase as described in the Operator Lease and the Disbursement Agreement.

Section 4.7 Integrated Transaction . The conveyance of the Property by Carvana to VMRE, the execution and delivery of the Operator Lease by VMRE and Carvana Lessee, the execution and delivery of the Guaranty by the Guarantor, the execution and delivery of the Disbursement Agreement by VMRE and Carvana Lessee (if applicable), the disbursement by VMRE to Carvana Lessee under the Disbursement Agreement, the completion of the Development Activities by Carvana Lessee (if applicable) with respect to each Property and the conveyance of New Improvements by Carvana Lessee to VMRE (if applicable) with respect to each Property under the terms of this Agreement are not severable and shall be considered a single integrated transaction. The provisions of this Section 4.7 shall survive each Closing and shall survive the termination of this Agreement.

Article V. DUE DILIGENCE

Section 5.1 Title Insurance .

(a) Title Company . The Title Company shall be employed by Carvana and VMRE to act as escrow closing agent in connection with the Transactions. Subject to VMRE’s written instructions and any written instructions from Carvana, this Agreement shall be used as instructions to the Title Company, as escrow agent with respect to any Closing, which may provide its standard conditions of acceptance of escrow; provided, however, that in the event of any inconsistency between such standard conditions of acceptance and the terms of this Agreement, the terms of this Agreement shall prevail. With respect to any Closing, Carvana shall be entitled to a Butler Rebate and/or any reissue rates as allowed in any applicable State for the issuance of an Owner’s Title Policy and the Lender’s Title Policy (if any).

(b) Title Company Actions . The Title Company is authorized to pay, at each Closing, from any funds held by it for VMRE’s and/or Carvana’s respective credit, all amounts necessary to procure the delivery of the Transaction Documents and to pay, on behalf of VMRE and Carvana, all charges and obligations payable by them hereunder, respectively. VMRE and Carvana will pay to the Title Company all charges payable by them. The Title Company shall not close the Transaction with respect to any Property unless and until it receives separate written instructions from each of VMRE and Carvana. The Title Company is authorized, in the event any conflicting demand is made upon the Title Company and memorialized in either VMRE’s or Carvana’s written instructions, at its election, to hold any documents and/or funds deposited hereunder until

an action shall be brought in a court of competent jurisdiction to determine the rights of VMRE and Carvana or to interplead such documents and/or funds in an action brought in any court of competent jurisdiction.

(c) Title Commitment . With respect to any Property Carvana desires to sell to VMRE and VMRE desires to purchase from Carvana, VMRE shall order a Title Commitment. Upon receipt, the Title Company shall forward a copy of the Title Commitment to VMRE and to Carvana. In addition to the title Commitment, Carvana shall deliver to VMRE a copy of any existing title policy for the applicable Property.

(d) VMRE’s Title Objections .

(i) Within ten (10) days after VMRE’s receipt of the later of the Title Commitment (including legible copies of all title exceptions listed therein), Zoning Evidence (if ordered), and Survey, VMRE shall deliver VMRE’s Title Objections to Carvana. VMRE’s failure to timely and properly deliver VMRE’s Title Objections to Carvana shall be deemed VMRE’s acceptance of the items disclosed in the Title Commitment (provided that such item also appears in the existing title policy for the applicable Property delivered under (c) above, if any), Zoning Evidence and/or Survey, and each item shall become a Permitted Encumbrance.

(ii) Within five (5) Business Days after Carvana receives VMRE’s Title Objections, Carvana shall notify VMRE in writing of those VMRE’s Title Objections that Carvana (x) agrees to satisfy, or cause to be satisfied, at or prior to the Closing and at no cost and expense to VMRE, and (y) cannot or will not satisfy, or cause to be satisfied. Carvana’s failure to timely respond to VMRE’s Title Objections shall be deemed Carvana’s election not to cure any of VMRE’s Title Objections.

(iii) If Carvana chooses not to satisfy any, or all, of the items to which VMRE has timely and properly objected, VMRE shall have the option, in its sole discretion to either (A) terminate the purchase of the applicable Property by delivering written notice of said termination to Carvana and, except as otherwise provided in this Agreement, neither Carvana nor VMRE shall have any further liability or obligation under this Agreement with respect to such Property, or (B) waive Carvana’s failure to cure any or all of the VMRE’s Title Objections, whereupon the uncured matters set forth in VMRE’s Title Objections shall become Permitted Encumbrances.

(iv) If, on or prior to the Closing Date, Carvana is unable or unwilling to satisfy (or cause to be satisfied) any of VMRE’s Title Objections that Carvana previously agreed to satisfy, VMRE shall have the option, at VMRE’s sole discretion and without limiting any other rights and remedies herein, to terminate the purchase of the applicable Property under this Agreement by delivering written notice to Carvana and neither VMRE nor Carvana shall have any further duties or obligations under this Agreement with respect to such Property, except as otherwise provided herein. If Carvana is unable or unwilling to satisfy any of VMRE’s Title Objections and VMRE does not terminate this Agreement as to such Property pursuant to Section 5.1(d)(iii) or this Section 5.1(d)(iv), then such VMRE’s Title Objections which Carvana is unable or unwilling to satisfy shall be deemed waived and approved by VMRE and shall thereafter be deemed Permitted Encumbrances.

(v) If any update to the Title Commitment or the Survey discloses Additional Title Objections, within five (5) Business Days following receipt of such update, VMRE may notify Carvana in writing of VMRE’s objection thereto. If any Additional Title Objections is not removed or resolved by Carvana to VMRE’s satisfaction at least three (3) days before the scheduled Closing Date, then on or before the scheduled Closing Date, VMRE shall have the option, at VMRE’s sole discretion and without limiting any other rights or remedies which VMRE may have under this Agreement, to (A) terminate the purchase of the applicable Property under this Agreement by delivering written notice to Carvana and neither VMRE nor Carvana shall have any further duties or

obligations under this Agreement with respect to such Property, except as otherwise provided herein, or (B) waive such Additional Title Objections and proceed with the Closing, in which case each such waived Additional Title Objections shall be deemed a Permitted Encumbrance. If VMRE does not terminate this Agreement by reason of an Additional Title Objections, then such Additional Title Objections shall be deemed waived and approved by VMRE and shall thereafter be deemed a Permitted Encumbrance.

(vi) Notwithstanding anything set forth in this Agreement, whether or not VMRE includes such Liens in VMRE’s Title Objections, any Lien(s) that are removable from title by the payment of money, including, without limitation, any mortgage lien, deed of trust lien, tax lien, judgment lien, mechanics liens and/or other monetary lien affecting a Property shall automatically be deemed a VMRE’s Title Objection or an Additional Title Objection, as applicable, and must be paid and satisfied, or bonded off the Property by Carvana at or before Closing.

(vii) If Carvana is unable to convey title to a Property free and clear of the lien of any state or local tax, Carvana shall be responsible for either paying such tax or providing to the Title Company security (such as a cash deposit) so that the Title Company can issue the Owner’s Title Policy with respect to the Property to VMRE free and clear of such liens, whether or not VMRE includes such liens in VMRE’s Title Objections or the Additional Title Objections.

Section 5.2 Carvana’s Due Diligence Materials . With respect to any Property Carvana desires to sell to VMRE and VMRE desires to purchase from Carvana, Carvana shall deliver to VMRE Carvana’s Due Diligence Materials to the extent they exist and are in Carvana’s possession or control.

Section 5.3 Survey . Carvana shall order a Survey (or provide an existing Survey acceptable to Title Company permitting Title Company to remove any standard exceptions to the Title Commitment related to receipt of a survey of the Property), which shall be certified to VMRE, any requested Affiliate of VMRE, and the Title Company, and otherwise in a form reasonably acceptable to VMRE.

Section 5.4 Environmental . In its sole discretion and in the event any environmental reports (ESA or Phase II as applicable) are more than one-year-old or if, for any reason, VMRE cannot obtain a reliance letter from the engineering firm who drafted the ESA or Phase II, as applicable, in form acceptable to VMRE in VMRE’s sole discretion, VMRE may direct Carvana to order a current ESA environmental report for the Property on VMRE’s behalf from an engineering firm selected by Carvana that is acceptable to VMRE in its reasonable discretion, the cost of which shall be paid for by Carvana. If any environmental investigation report recommends additional subsurface investigation of the applicable Property, Carvana shall either (a) permit VMRE to perform such additional subsurface investigation from one (1) or more environmental inspection companies selected by VMRE, detailing and analyzing certain aspects of the Property; provided, however, that, notwithstanding the foregoing, if Carvana fails or refuses to permit any such additional subsurface investigation, VMRE may elect to terminate the Purchase of the applicable Property under this Agreement and except for those provisions expressly surviving termination hereof, Carvana’s and VMRE’s obligations hereunder shall terminate as to such Property, or (b) withdraw the Property from consideration for Purchase by VMRE in which event this Agreement shall terminate as to such Property and, except for those provisions expressly surviving termination hereof, Carvana’s and VMRE’s obligations hereunder shall terminate as to such Property.

Section 5.5 Valuations . Carvana shall deliver to VMRE any Valuations for the Property and any and all documentation, materials, receipts and other information confirming the cost of the Land (if a Fee Property) and the cost of the construction of the Improvements (whether Existing Improvements or New Improvements). VMRE shall similarly be obligated to deliver to Carvana copies of any Valuations obtained by VMRE.

Section 5.6 Zoning . Carvana shall deliver to VMRE Zoning Evidence with respect to the Property, which shall be certified to VMRE.

Section 5.7 Insurance . In addition to all other conditions precedent to VMRE’s obligations herein, VMRE’s obligation to close the acquisition of any Property under this Agreement is further subject to the condition precedent that prior to Closing with respect to such Property, VMRE shall have received the Lease Proof of Insurance.

Section 5.8 Inspection Period; Inspections .

(a) With respect to a Property, Carvana will deliver to VMRE all information in Carvana’s possession or control relating to such Property, including without limitation Seller’s Historical Documents for such Property and all materials and information related to such Property as described on Schedule 2.8 attached hereto and made a part hereof (collectively, “ Carvana’s Diligence Materials ”). VMRE shall have until the Inspection Period Expiration Date to review Carvana’s Diligence Materials, conduct any investigations, studies or tests desired by VMRE, in VMRE’s sole discretion and to determine the feasibility of acquiring the applicable Property; provided that VMRE may not conduct any Phase II investigation without Carvana’s consent unless an ESA recommends same.

(b) Beginning on the Inspection Period Commencement Date and continuing until the Closing, VMRE may conduct the Inspections and, as set forth herein, Carvana shall provide VMRE and its agents, representatives, attorneys, independent contractors, advisors, architects, contractors, subcontractors, engineers and/or designees including, without limitation, the Construction Consultant, with access to the Property to conduct the Inspections.

(c) VMRE shall indemnify, defend and hold harmless Carvana from and against any third (3rd) party claims against Carvana arising out of injury to persons or damage to property caused by the Inspections (other than as to any matters discovered by VMRE during the Inspections) and shall repair any material damage to any of the Property caused by the Inspections; provided, however, if the Inspections produce hazardous substances or waste samples that are required to be disposed of at an off-site location in accordance with applicable laws, VMRE shall have the right to deliver to Carvana all such hazardous substances and/or waste samples and thereafter VMRE shall have no obligations whatsoever with regard to the hazardous substances and/or waste samples. This indemnification, with regard to each Property, shall survive the Closing for a period of twelve (12) months after Closing on such Property.

Section 5.9 VMRE’s Diligence Review . Notwithstanding any provision contained in this Agreement, in addition to all other express rights under this Agreement, so long as VMRE timely and properly provides written notice thereof to Carvana on or before the applicable Closing, in the event VMRE cannot confirm that the risk profile of a Property meets VMRE’s required risk profile, VMRE may cancel its impending purchase of any Property under this Agreement, in which event neither Carvana nor VMRE shall have any further duties or obligations under this Agreement with respect to such Property except as otherwise provided herein.

Article VI. REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 6.1 Carvana’s Representations, Warranties and Covenants . With regard to each Property being purchased on a Closing Date, Carvana represents and warrants to, and covenants with, VMRE, as of the Effective Date (as applicable to Carvana and any applicable Properties), as of each Inspection Period Commencement Date (with respect to Carvana and any applicable Property) and as of each Closing Date (with respect to Carvana and any applicable Property), as follows:

(a) Organization and Authority . Carvana is duly organized or formed, validly existing and in good standing under the laws of the state of Arizona, and is qualified to do business in any jurisdiction where such qualification is required. Carvana has all requisite power and authority to own and operate each Property, to

execute, deliver and perform its obligations under this Agreement and all of the other Transaction Documents, and to carry out the Transactions. The person who has executed this Agreement on behalf of Carvana has been duly authorized to do so.

(b) Enforceability of Documents . Upon execution by Carvana and Guarantor (as applicable) of this Agreement and any other Transaction Documents to which Carvana and/or Guarantor (as applicable) is a party, this Agreement and such other Transaction Documents shall constitute the legal, valid and binding obligations of each such party, enforceable against each such party in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles.

(c) No Other Agreements and Options . None of Carvana, Guarantor or any Property is subject to any commitment, obligation, or agreement, including, without limitation, any right of first refusal or offer or similar right to purchase or lease or option to purchase or lease granted to a third (3rd) party, other than the Operator Lease and any Ground Lease, which will (x) to Carvana’s knowledge, prevent the provision of the Guaranty by Guarantor, or (y) bind VMRE subsequent to consummation of the Transactions or any applicable Closing, and Carvana shall not enter into any such commitment, obligation or agreement from the Effective Date until Closing of the applicable Property or the earlier termination of this Agreement.

(d) No Violations; No Successor Liability . The authorization, execution, delivery and performance of this Agreement and the other Transaction Documents will not:

(i) violate any provisions of the charter or other organizational documents of Carvana;

(ii) result in a violation of or a conflict with, or constitute a default (or an event which, with or without due notice or lapse of time, or both, would constitute a default) under any other document, instrument or agreement to which Carvana is a party or by which Carvana or any applicable Property is subject or bound (subject to Section 7.1(a)(vi);

(iii) result in the creation or imposition of any Lien(s), restriction, charge or limitation of any kind, upon Carvana or any applicable Property;

(iv) violate any law, statute, regulation, rule, ordinance, code, rule or order of any court or Governmental Authority applicable to Carvana or any Property; or

(v) transfer to VMRE any tax liability owed by Carvana to a Governmental Authority pursuant to any applicable successor liability laws.

(e) Compliance . Carvana has not received written notice of, nor is Carvana in receipt of written materials stating, that any Property or the planned use thereof is not in compliance with:

(i) all Applicable Laws;

(ii) all restrictions, covenants and encumbrances with respect to such Property; and

(iii) all agreements, contracts, insurance policies (including, without limitation, to the extent necessary to prevent cancellation thereof and to insure full payment of any claims made under such policies), agreements and conditions applicable to the Property or the ownership, operation, use or possession thereof.

(f) Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws . Without in any way limiting the provisions of Section 6.1(e) above, Carvana is not currently identified on the OFAC List or is a person with whom a citizen of the United States is prohibited from engaging in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or executive order of the President of the United States.

(g) Title to the Property; Leasehold Properties . Each Fee Property is owned by Carvana and Carvana has (or will have at Closing) good and marketable fee simple title to each Fee Property (subject to the applicable Permitted Exceptions). Carvana has a validly existing and enforceable leasehold or subleasehold interest in each Leasehold Property (subject to the applicable Permitted Exceptions). With respect to each Leasehold Property sold to VMRE, Carvana has the legal or contractual right to sublease each Leasehold Property to VMRE or will obtain from all necessary parties consent and authorization to sublease each Leasehold Property to VMRE, subject to Section 7.1(a)(vi). Each Ground Lease is in full force and effect and is a legal, valid, binding obligation of Carvana and, to Carvana’s knowledge, the ground lessor thereunder enforceable in accordance with its terms, as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles. Neither Carvana nor any Affiliate has received any written notice claiming a default under any Ground Lease that remains uncured, nor has there occurred any event with the passing of time or the giving of notice, or both, which would constitute a default by Carvana under the any Ground Lease and, to Carvana’s knowledge, no other party to any Ground Lease is in default thereunder nor are there circumstances which, to Carvana’s knowledge, with or without the giving of notice or passage of time, or both, would constitute a default by such other party under any Ground Lease, subject to Section 7.1(a)(vi). Carvana has not received written notice from any other party to a Ground Lease in which such party has exercised or attempted to exercise any termination right with respect to such Ground Lease. There are no leases, subleases, licenses or assignments to which Carvana or any of its Affiliates is a party granting to any party or parties other than Carvana the right to the use or occupancy of any portion of the Property. Other than Carvana or one of its Affiliates, there are no parties in possession of any Property.

(h) Litigation . There is no legal, administrative, arbitration or other dispute, proceeding, claim or action of any nature or investigation pending or involving, or to Carvana’s knowledge, threatened in writing against, the Property. There is no legal, administrative, arbitration or other dispute, proceeding, claim or action of any nature or investigation pending or, to Carvana’s knowledge, threatened in writing against Carvana which, if adversely decided or adjudicated against Carvana would have a material, adverse effect upon the financial condition of Carvana.

(i) Condition of Property . Carvana has not received any written correspondence from a Governmental Authority stating that any part or all of a Property is in violation of applicable Legal Requirement or require any repairs or improvements.

(j) Intended Use . The Property is being used solely for, or upon completion of the Development Activities will be used solely for, the Permitted Operations and related ingress, egress and parking, and for no other purposes, except as provided in the Operator Lease.

(k) Utilities . On the Completion Date, the Property shall have sufficient public utilities available to permit full utilization of such Property for its intended purposes and Carvana has paid (or shall pay) all applicable utility connection fees and use charges.

(l) Condemnation; Blighted Areas . Except as expressly disclosed in a written representation from Carvana to VMRE made within 10 days prior to the applicable Inspection Period Expiration Date, Carvana has received no notice of condemnation or eminent domain proceedings affecting the Property and Carvana has no actual knowledge, without independent investigation or inquiry, that any such proceedings are

contemplated. To Carvana’s knowledge, the areas where the Property is located have not been declared blighted by any Governmental Authority.

(m) Environmental . Except as expressly disclosed in a written representation from Carvana to VMRE made within 10 days prior to the applicable Inspection Period Expiration Date, Carvana has not received any written notice or other written communication from any person (including but not limited to a Governmental Authority) relating to the existence of Hazardous Materials, Regulated Substances or USTs, or remediation thereof, or possible liability of any Person (including without limitation, Carvana Lessee) pursuant to any Environmental Law, other environmental conditions in connection with the Real Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing. Carvana is fully familiar with the present use of the Property, and, after due inquiry, Carvana has become generally familiar with the prior uses of the Property. During the time of Carvana’s occupancy or ownership, no Hazardous Materials have been used, handled, manufactured, generated, produced, stored, treated, processed, transferred or disposed of at or on the Property, except in De Minimis Amounts and in compliance with all applicable Environmental Laws, and no Release or Threatened Release has occurred at or on the Property. The activities, operations and business undertaken on, at or about the Property, including, but not limited to, any past or ongoing alterations or improvements at the Property, are and have been at all times, in compliance with all Environmental Laws. No further action is required to remedy any Environmental Condition or violation of, or to be in full compliance with, any Environmental Laws, and no lien has been imposed on the Property in any federal, state or local Governmental Authority in connection with any Environmental Condition, the violation or threatened violation of any Environmental Laws or the presence of any Hazardous Materials on or off the Property. There is no pending or threatened litigation or proceeding before any Governmental Authority in which any person or entity alleges the violation or threatened violation of any Environmental Laws or the presence, Release, Threatened Release or placement on or at the Property of any Hazardous Materials, or of any facts which would give rise to any such action, nor has Carvana (a) received any notice (and Carvana has no actual or constructive knowledge) that any Governmental Authority or any employee or agent thereof has determined, threatens to determine or requires an investigation to determine that there has been a violation of any Environmental Laws at, on or in connection with the Property or that there exists a presence, Release, Threatened Release or placement of any Hazardous Materials on or at the Property, or the use, handling, manufacturing, generation, production, storage, treatment, processing, transportation or disposal of any Hazardous Materials at or on the Property; (b) received any notice under the citizen suit provision of any Environmental Law in connection with the Property or any facilities, operations or activities conducted thereon, or any business conducted in connection therewith; or (c) received any request for inspection, request for information, notice, demand, administrative inquiry or any formal or informal complaint or claim with respect to or in connection with the violation or threatened violation of any Environmental Laws or existence of Hazardous Materials relating to the Property or any facilities, operations or activities conducted thereon or any business conducted in connection therewith.

(n) Information and Financial Statements . The financial statements and other information concerning Carvana delivered by or on behalf of Carvana to VMRE are true, correct and complete in all material respects, and no material adverse change has occurred with respect to the information provided in any such financial statements, or other information provided to VMRE since the date such financial statements and other information were prepared or delivered to VMRE. Carvana understands that VMRE is relying upon such financial statements and information and Carvana represents that such reliance is reasonable. All such financial statements were prepared in accordance with generally accepted accounting principles consistently applied and accurately reflect, as of the date of such statements, the financial condition of each entity to which they pertain.

(o) Solvency . There is no contemplated, pending or threatened Insolvency Event or similar proceedings, whether voluntary or involuntary, affecting Carvana.

(p) Restrictions . Beginning on the Inspection Period Commencement Date and continuing through the Closing Date with respect to any Property or the earlier termination of this Agreement as to any Property, Carvana shall not, without the prior written consent of VMRE, place any easement, covenant, condition, right-of-way or restriction on the Property, amend or modify any such instrument, or voluntarily take any other action that materially and adversely affects title to the Property.

(q) Development of Property . Carvana has determined that the Property is acceptable and suitable for its planned development and use for the operation of the Permitted Operations and has obtained all necessary approvals, permits, and other authorizations required for its development and operation of the Property in accordance with the Disbursement Agreement.

(r) No Mechanics’ Liens . Except for such liens as may arise from work performed as contemplated by the applicable Budget, there are no outstanding accounts payable, mechanics’ liens, or rights to claim a mechanics’ lien in favor of any materialman, laborer, or any other person in connection with labor or materials furnished to or performed on any portion of the Property, which will not have been fully paid for on or before the Closing Date or, to Carvana’s actual knowledge, without independent investigation or inquiry, which might provide the basis for the filing of such liens against the Property or any portion thereof. Except for such liens as may arise from work performed as contemplated by the applicable Budget, no work has been performed or is in progress nor have materials been supplied to the Property or agreements entered into for work to be performed or materials to be supplied to the Property prior to the date hereof, which will not have been fully paid for on or before the Closing Date or which might provide the basis for the filing of such liens against the Property or any portion thereof. Carvana shall be responsible for any and all claims for mechanics’ liens and accounts payable that have arisen or may subsequently arise due to agreements entered into by Carvana prior to the Closing Date for and/or any work performed on, or materials supplied to the Property prior to and, to the extent same were at the request or requirement of Carvana, subsequent to the Closing Date, and Carvana shall and does hereby agree to defend, indemnify and forever hold VMRE and VMRE’s designees harmless from and against any and all such mechanics’ lien claims or accounts payable relating to the Property.

(s) USTs . The Property does not contain or include any USTs.

All representations and warranties of Carvana made in this Agreement shall (i) be true as of the Effective Date and (ii) be deemed to have been made again and be true, as of each Closing Date with regard to a Property being purchased by VMRE, except as expressly stated otherwise herein. The right to prosecute an action based on a breach of a representation or warranty contained in this Section 6.1 shall survive Closing.

Section 6.2 VMRE’s Representations, Warranties and Covenants . VMRE represents and warrants to, and covenants with, Carvana as follows:

(a) Organization and Authority . VMRE is duly organized, validly existing and in good standing under the laws of its state of formation. VMRE has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and all of the other Transaction Documents to which it is a party and to carry out the Transaction. The person who has executed this Agreement on behalf of VMRE has been duly authorized to do so.

(b) Enforceability of Documents . Upon execution by VMRE, this Agreement and the other Transaction Documents to which it is a party, shall constitute the legal, valid and binding obligations of VMRE, enforceable against VMRE in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles.

(c) Litigation . To the best of VMRE’s knowledge, there are no actions or proceedings pending against or involving VMRE before any Governmental Authority which in any way adversely affect or may adversely affect VMRE or VMRE’s ability to perform under this Agreement and the other Transaction Documents to which it is a party.

(d) Satisfaction of Conditions Precedent . Beginning on the Effective Date and continuing through the Closing Date, VMRE agrees to use its best efforts to satisfy all conditions precedent set forth in Section 7.2.

All representations and warranties of VMRE made in this Agreement shall (i) be true as of the Effective Date, and (ii) be deemed to have been made again and be true, as of each Closing Date, except as expressly stated otherwise herein. The right to prosecute an action based on a breach of a representation or warranty contained in this Section 6.2 shall survive Closing.

Article VII. CONDITIONS PRECEDENT TO CLOSING

Section 7.1 VMRE’s Conditions to Closing . VMRE shall not Close and fund the acquisition of any Property pursuant to this Transaction until the following conditions precedent are satisfied or waived in writing by VMRE:

(a) Before the Closing Date for the applicable Property, Carvana shall have delivered to the Title Company (with a copy to VMRE by email) one (1) or more original of the following documents with respect to such Property, executed by Carvana:

(i) Carvana’s written closing instructions;

(ii) Carvana’s Closing Settlement Statement;

(iii) Deed;

(iv) Bill of Sale (in a form agreed to in writing by VMRE and Carvana);

(v) Assignment Agreement;

(vi) Recognition Agreement (if Leasehold Property); provided, however, VMRE may elect to waive the delivery of the Recognition Agreement as a condition to Closing provided that (a) Carvana has demonstrated to VMRE that Carvana has used commercially reasonable best efforts to diligently and promptly obtain the applicable prime landlord’s execution of the Recognition Agreement, (b) Carvana has regularly provided to VMRE information regarding Carvana’s efforts and progress with respect to obtaining such execution, (c) Carvana has promptly responded to any requests made by VMRE for any updates or other reasonable information regarding Carvana’s efforts to obtain execution of the Recognition Agreement, and (d) Carvana has promptly cooperated with any other reasonable requests made by VMRE related to the Recognition Agreement;

(vii) Non-Foreign Seller Certificate;

(viii) Title Company Affidavit; and

(ix) Carvana’s good standing certificate and other resolutions or consents as may be required by the Title Company.

(b) VMRE or the Title Company shall have received (with a copy being provided to the other party by electronic mail) the following items on or before the Closing Date, unless an earlier delivery is required elsewhere in this Agreement:

(i) Operator Lease;

(ii) Guaranty;

(iii) Disbursement Agreement;

(iv) Evidence of Flood Insurance (if applicable);

(v) Lease Proof of Insurance;

(vi) Carvana’s good standing certificate from the applicable State and any other resolutions or consents as may reasonably be required by VMRE;

(vii) Carvana Lessee’s good standing certificate from the applicable State and any other resolutions or consents as may reasonably be required by VMRE;

(viii) UCC-1 Financing Statements (if required); and

(ix) Any other document required to be delivered pursuant to this Agreement and/or the other Transaction Documents and such further documents as may be reasonably required in order to fully and legally close the Transaction and/or the sale of the applicable Property.

(c) VMRE shall have received the Title Company’s irrevocable commitment and unconditional agreement to issue to VMRE the Owner’s Title Policy pursuant to the applicable Title Commitment approved by VMRE and such endorsements and additional coverages as reasonably requested by VMRE (if applicable).

(d) There shall be adequate rights of access to public roads and ways available to the Real Property to permit full utilization of the Real Property for operation of the Permitted Operations, and all required permits and approvals necessary to allow Carvana Lessee to commence the Development Activities and for the operation of the Permitted Operations shall be in full force and effect.

(e) There shall have been no material adverse change since the Effective Date in the financial condition of Carvana, Carvana Lessee or Guarantor or in the title to or condition of the Property.

(f) The representations and warranties of Carvana set forth in Section 6.1 above and elsewhere in this Agreement shall have been true and correct in all material respects when made and shall continue to be true and correct in all material respects as of each Closing Date.

(g) There shall be no outstanding Event of Default.

(h) All real estate taxes due and payable with respect to the Real Property shall be paid-in-full by Carvana, excluding any real estate taxes for the year of Closing which are not yet due and payable.

(i) No event shall have occurred and be continuing, or condition exist, which would, upon the Closing Date or the giving of notice and/or passage of time, constitute a breach or default pursuant to Section 9.1 below or under any other Transaction Document.

(j) With respect to any Property on which New Improvements will be constructed, VMRE shall have received confirmation and approval of such proposed construction, New Improvements and Budget from Construction Consultant to the extent required under the Disbursement Agreement and Construction Consultant shall have confirmed satisfaction of such other matters as may be set forth in the Disbursement Agreement.

(k) VMRE shall have received valid copies of all of Carvana’s Diligence Materials listed in Items 1 through 4 (inclusive) of Schedule 2.8 hereof.

Section 7.2 Carvana’s Conditions Precedent to Closing . Carvana shall not be obligated to Close the sale of any Property pursuant to this Transaction until the following conditions precedent are satisfied or waived in writing by Carvana:

(a) Before the Closing Date VMRE shall have delivered to the Title Company (with a copy to Carvana by email) one (1) or more original of the following documents, executed by VMRE:

(i) VMRE’s Closing Settlement Statement,

(ii) VMRE’s written closing instructions, and

(iii) any other document required to be delivered pursuant to this Agreement and/or the other Transaction Documents, including the Lease from VMRE to Carvana and such further documents as may be reasonably required in order to fully and legally close the Transaction and/or the sale of the applicable Property.

(b) VMRE shall have deposited with the Title Company the amounts due from VMRE as listed on VMRE’s Closing Settlement Statement.

(d) No event shall have occurred, or condition exist, which would, upon the Closing Date or the giving of notice and/or passage of time, constitute a breach or default pursuant to Section 9.3 below or under any other Transaction Document.

Article VIII. CLOSING

Section 8.1 Closing and Funding .

(a) Subject to the satisfaction of all conditions precedent set forth in Section 7.1 and Section 7.2 above and the termination rights provided for throughout this Agreement, the Closing of each Property shall occur on the Closing Date; provided, however, VMRE and Carvana may agree to in writing to extend the Closing Date to a mutually agreed-upon date.

(b) When all conditions precedent have been satisfied (or waived in writing), no Event of Default is outstanding (or VMRE has provided a written waiver thereof), no VMRE Event of Default outstanding (or Carvana has provided a written waiver thereof) and the Title Company has confirmed that it has actual physical possession of all Transaction Documents (or has confirmed that VMRE has in its physical possession any of the Transaction Documents not held by Title Company) and related items necessary to Close and fund the purchase and sale of a Property in accordance with this Transaction, then Carvana and VMRE shall instruct the Title Company to Close the purchase and sale of such Property in accordance with this Transaction pursuant to VMRE’s written closing instructions and Carvana’s written closing instructions.

Section 8.2 Possession . Possession of the Property, free and clear of all tenants and other parties-in-possession (except for Carvana Lessee pursuant to the Operator Lease), shall be delivered to VMRE on the Closing Date.

Article IX. DEFAULTS; REMEDIES

Section 9.1 Event of Default . Each of the following shall constitute an Event of Default:

(a) If any representation or warranty of Carvana contained herein is false in any material respect when made or deemed made;

(b) If any representation or warranty of Carvana contained in a Transaction Document is false in any material respect when made or deemed made; provided, however, if such false representation or warranty is not intentionally made by Carvana and is of the nature that such false representation or warranty can be cured, Carvana shall have fifteen (15) days from the date upon which Carvana receives written notice from VMRE identifying the false representation or warranty and declaring the default to cure such false representation or warranty;

(c) If Carvana represents to VMRE a materially false statement about any portion of this Agreement, the Transactions or a Property; provided, however, if such materially false statement is not intentionally made by Carvana and is of the nature that such materially false statement can be cured, Carvana shall have fifteen (15) days from the date upon which Carvana receives written notice from VMRE identifying the materially false statement and declaring the default to cure such materially false statement;

(d) If Carvana fails to timely and properly perform any covenant, requirement and/or obligation imposed on Carvana pursuant to this Agreement and does not cure the default within thirty (30) days from when Carvana receives written notice form VMRE identifying the unperformed covenant, requirement and/or obligation imposed on Carvana pursuant to this Agreement and declaring the default;

(e) If there is an Event of Default under any Operator Lease which is not cured according to the terms of such Operator Lease or if there is an Event of Default under any of the Other Agreements which is not cured according to the terms of the applicable Other Agreements;

(f) An Insolvency Event occurs with respect to Carvana or Carvana Lessee;

(g) If there is a default under any Ground Lease which is not cured by Carvana prior to the expiration of any notice or cure period provided under such Ground Lease or if a Ground Lease is terminated at any time during which an Operator Lease was in effect with respect to the applicable Property, except if such termination occurs in connection with a Carvana Repurchase or Put of the applicable Property; or

(h) If Carvana fails to cure a Property Event of Default in the manner and with the cure period provided for in Section 9.2 hereof.

Section 9.2 VMRE’s Remedies . In the event an Event of Default (other than a Property Event of Default) occurs VMRE shall be entitled to exercise, at its option, concurrently, successively or in any combination, all remedies available at law or in equity, including without limitation any one or more of the following:

(a) To terminate this Agreement by giving written notice to Carvana in which case neither party shall have any further obligation or liability, except such liabilities as Carvana may have for such breach or default;

(b) To proceed with any Closing and direct Title Company to apply such portion of the Purchase Price as VMRE may deem reasonably necessary to cure any such breach or default;

(b) To bring an action for damages against Carvana, which, in the event VMRE proceeds to close, may include an amount equal to the difference between the value of the Property as conveyed to VMRE and the value the VMRE would have had if all representations and warranties of Carvana were true and Carvana had complied with all of its obligations under this Agreement;

(d) To recover from Carvana all expenses, including reasonable attorneys' fees, paid or incurred by Buyer as a result of such breach or default; and/or

(e) To exercise the Put with respect to any or all of the Properties in which event Carvana shall have a period of thirty (30) days to repurchase the Property or Properties at the Repurchase Price.

Notwithstanding the foregoing, nothing contained in this Section 9.2 shall be construed to effect in any way Carvana’s indemnities set forth in this Agreement.

Notwithstanding anything contained in this Agreement or in any Transaction Document to the contrary and provided that such obligation, condition or event that is the basis of such Property Event of Default is not, in VMRE’s discretion, reasonably anticipated to result in a material adverse effect on the financial condition of any Carvana Entity, VMRE's sole remedy following the occurrence of a Property Event of Default shall be to require Carvana to repurchase the Defaulted Property from VMRE by paying VMRE the applicable Purchase Price, which repurchase shall (i) occur within thirty (30) days from the occurrence of the Property Event of Default, and (ii) cure such Property Event of Default. The conveyance of the Defaulted Property to cure a Property Event of Default shall be made by VMRE, AS-IS, WHERE IS AND WITH ALL FAULTS” as of the date of such conveyance, without representation or warranty except as may be expressly provided in the conveyance documents to be delivered by VMRE which shall be in substantially the same form as the Conveyance Documents entered into with respect to VMRE’s purchase of such Defaulted Property. Additionally, such conveyance shall be subject to (i) all applicable Permitted Exceptions related to the Property, (ii) all other new easements, liens or encumbrances entered into during VMRE’s ownership of the Property, but excluding only any new easements, liens or encumbrances created or entered into by VMRE during VMRE’s ownership which (a) have not been requested by Carvana and (b) have been entered into without Carvana’s consent, which consent may not be unreasonably withheld, unless in either case (a) or (b) such new easements, liens, or encumbrances do not unreasonably interfere with Carvana’s operations at the Property and (iii) any mechanic’s and materialmen’s liens related to Carvana’s construction of the Improvements. Upon the reconveyance of a Property made under this Section, any Ground Sub-Lease related to the applicable Property shall terminate as of the date of such repurchase and reconveyance and Carvana agrees to execute any instrument or agreement reasonably requested by VMRE for purposes of terminating the applicable Ground Sub-Lease. In connection with the repurchase of the Property under this Section, VMRE shall not be required to provide or deliver any indemnification or affidavit to Carvana or to any title company with respect to mechanic’s or materialmen’s liens related to are resulting from Carvana’s construction activities on the Property. During the period that a Property Event of Default exists, Carvana shall not be eligible for any disbursements under the Disbursement Agreement.

Section 9.3 VMRE Event of Default . Each of the following shall constitute a “Purchaser Event of Default”:

(a) If VMRE fails to timely and properly perform any covenant, requirement and/or obligation imposed on VMRE pursuant to this Agreement and does not cure the default within thirty (30) days from when VMRE actually, receives Carvana’s written notice identifying the unperformed covenant, requirement and/or obligation imposed on VMRE pursuant to this Agreement and declaring a default; or

(b) An Insolvency Event occurs with respect to VMRE.

Section 9.4 Carvana’s Sole Remedy . In the event a Purchaser Event of Default occurs, Carvana’s sole and exclusive sole remedy shall be to seek specific performance with regard to VMRE’s obligations under this Agreement. In no event shall Carvana have the right to terminate this Agreement or to otherwise seek or cause this Agreement to be terminated.

X. MISCELLANEOUS

Section 10.1 Further Assurances . Each of VMRE and Carvana agrees, whenever and as often as reasonably requested to do so by the other party or the Title Company, to execute, acknowledge, and deliver, or cause to be executed, acknowledged, or delivered, any and all such further conveyances, assignments, confirmations, satisfactions, releases, instruments, or other documents as may be necessary, expedient or proper, in order to complete any and all conveyances, transfers, sales and assignments herein provided and to do any and all other acts and to execute, acknowledge and deliver any and all documents as so requested in order to carry out the Transaction and the intent and purpose of this Agreement.

Section 10.2 Transaction Characterization .

(a) VMRE and Carvana intend that all components of the Transactions be considered a single integrated transaction and not be severable.

(b) VMRE and Carvana intend that Carvana’s conveyance of each Property to VMRE be an absolute conveyance in form and substance, and that the Conveyance Documents to be delivered at each Closing shall not serve or operate as a mortgage, equitable mortgage, deed of trust, security agreement, trust conveyance or financing or trust arrangement of any kind, nor as a preference or fraudulent conveyance against any creditors of Carvana. After the execution and delivery of the Conveyance Documents with respect to a Property, Carvana will have no legal or equitable interest or any other claim or interest in the Property (except to the extent set forth in the Operator Lease). VMRE and Carvana also intend for each Operator Lease to be a true lease and not a transaction creating a financing lease, capital lease, equitable mortgage, mortgage, deed of trust, security interest or other financing arrangement, and the economic realities of each Operator Lease are those of a true lease. Neither VMRE nor Carvana shall contest the validity, enforceability or characterization of the sale and purchase of any Property as an absolute conveyance by Carvana to VMRE pursuant to this Agreement, and VMRE and Carvana shall support the intent expressed herein that the purchase of each Property by VMRE pursuant to this Agreement provides for an absolute conveyance and does not create a joint venture, partnership, equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs.

(c) Each of VMRE and Carvana hereto agrees that it will not, nor will it permit any Affiliate to, at any time, take any action or fail to take any action with respect to the preparation or filing of any statement or disclosure to Governmental Authority, including without limitation, any income tax return (including an amended income tax return), to the extent that such action or such failure to take action would be inconsistent with the intention of VMRE and Carvana expressed in this Agreement; provided, however, in no event shall this Section 10.2 require Carvana to take any action contrary to generally accepted accounting principles and Carvana shall be permitted to account for matters related to this Transaction as Carvana deems necessary based on the terms of this Transaction.

Section 10.3 Risk of Loss .

(a) Condemnation . If, prior to Closing, action is initiated to take a Property or any portion of a Property, or any portion thereof, by eminent domain proceedings or by deed-in-lieu thereof, within three (3) Business Days from when Carvana received notice of the taking, Carvana shall give VMRE prompt written notice of the commencement of such action and VMRE may elect at or prior to Closing, to:

(i) terminate this Agreement as to such Property, in which event Carvana and VMRE shall be relieved and discharged from any further obligation or liability herein with respect to such Property, except as expressly stated otherwise herein; or

(ii) proceed to close on the acquisition of the Property, in which event all of Carvana’s assignable right, title and interest in and to the award of the condemning authority shall be assigned to VMRE at the Closing and there shall be no reduction in the Purchase Price.

(b) Casualty . Within three (3) Business Days following a casualty event with respect to a Property, Carvana shall give VMRE prompt written notice of the casualty event. Carvana assumes all risks and liability for damage to or injury occurring to the Property by fire, storm, accident, or any other casualty or cause until the Closing has been consummated and thereafter the Operator Lease shall control. If the Property, or any part thereof, suffers any damage prior to the Closing from fire or other casualty which Carvana, at its sole option, does not elect to fully repair, VMRE may elect at or prior to Closing, to:

(ii) proceed to close the acquisition of the Property, in which event all of Carvana’s assignable right, title and interest in and to the proceeds of any insurance policy covering such casualty (less an amount equal to any expense and cost reasonably incurred by Carvana to repair or restore the Property, which shall be payable to Carvana upon Carvana’s delivery to VMRE of satisfactory evidence thereof) shall be assigned to VMRE at Closing, and VMRE shall be entitled to a credit in the amount of Carvana’s (or Carvana Lessee’s, as the case may be) deductible at Closing. In such event, VMRE shall apply such proceeds to the repair and restoration of the improvements located on the Property, but to the extent such proceeds exceed the cost of repair and restoration, VMRE shall be entitled to keep the excess proceeds.

Section 10.4 Notices .All notices, demands, designations, certificates, requests, offers, consents, approvals, appointments and other instruments given pursuant to this Agreement shall be in writing and given by any one of the following: (a) hand delivery; (b) express overnight delivery service; (c) certified or registered mail, return receipt requested; or (d) E-Mail transmission, and shall be deemed to have been delivered upon (i) receipt, if hand delivered; (ii) the next Business Day, if delivered by a reputable express overnight delivery service; (iii) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested; or (iv) transmission, if delivered by E-Mail transmission. Notices shall be provided to the parties and addresses (or electronic mail addresses) as VMRE or Carvana may from time to time hereafter specify to the other party in a written notice delivered in the manner provided above. Whenever in this Agreement the giving of Notice is required, it may be waived in writing at any time by the Person or Persons entitled to receive such Notice. If either party provides notice to the other pursuant to any manner of delivery other than electronic mail, the parties shall endeavor to provide additional notice to the other party by electronic mail, provided that in no event shall a failure by either party to provide such additional electronic mail notice render any other notice provided by the notifying party invalid so long as it otherwise complies with the requirements of this Section.

A copy of any Notice delivered pursuant to this Section 10.4 shall contemporaneously be delivered in the manner provided for herein to any mortgagee or assignee of VMRE’s interest that previously notified Carvana in writing of its name and address.

Section 10.5 Assignment . VMRE may assign its rights under this Agreement in whole or in part at any time to any Affiliate without the consent of Carvana. With respect to any assignment of VMRE’s rights under this Agreement in whole, such Affiliate must have the ability to fulfill the terms of this Agreement and must expressly assume all rights and responsibilities of VMRE under this Agreement. Upon any unconditional assignment of VMRE’s entire right and interest hereunder and assumption by such Affiliate of VMRE’s rights and responsibilities under this Agreement, VMRE shall automatically be relieved, from and after the date of such assignment, from liability for the performance of VMRE’s obligations herein. Carvana shall not, without the prior written consent of VMRE, which consent may not be unreasonably withheld, sell, assign, transfer, mortgage, convey, encumber or grant any easements or other rights or interests of any kind in any Property, or any of Carvana’s rights under this Agreement, whether voluntarily, involuntarily or by operation of law or otherwise, including, without limitation, by merger, consolidation, dissolution or otherwise. In the event of any assignment or transfer of this agreement in whole or in part by VMRE as contemplated in this Section 10.5, references to VMRE in this Agreement shall include VMRE’s assignee or designee to the extent applicable. In the event of any assignment or transfer of this agreement in whole or in part by Carvana as contemplated in this Section 10.5, references to Carvana in this Agreement shall include Carvana’s assignee or designee to the extent applicable.

Section 10.6 Indemnity . In addition to any indemnity provided by Carvana to VMRE set forth in this Agreement, if the Closing occurs, Carvana shall indemnify, defend and hold harmless VMRE and its directors, officers, shareholders, employees, successors, assigns, agents, lenders, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees and invitees, as applicable, from and against any and all losses, costs, claims, liabilities, damages and expenses, including, without limitation, VMRE's reasonable attorneys' fees and consequential damages of any nature arising from or connected with the ownership and operation of the Property from and after the Effective Date and continuing through the Closing. The indemnity in this Section 10.6 shall survive each Closing and shall survive the termination of this Agreement.

Section 10.7 Brokerage Commission . Each of VMRE and Carvana represents and warrants to the other that neither VMRE nor Carvana has dealt with, negotiated through or communicated with any broker in connection with this Transaction. Either VMRE or Carvana, as applicable, shall indemnify, defend and hold harmless the other party from and against any and all claims, loss, costs and expenses, including reasonable attorneys’ fees, resulting from any claims that may be made against the other Party by any broker claiming a commission or fee by, through or under such indemnifying Party. VMRE’s and Carvana’s respective obligations under this Section 10.7 shall survive each Closing or termination of this Agreement.

Section 10.8 Reporting Requirements . VMRE and Carvana agree to comply with any and all reporting requirements applicable to the Transactions which are set forth in any law, statute, ordinance, rule, regulation, order or determination of any Governmental Authority, and further agree upon request, to furnish the other party with evidence of such compliance.

Section 10.9 Disclosures and Securities Laws . Except as expressly set forth in this Agreement and as required by law or judicial action, prior to Closing neither Carvana nor VMRE will make any public disclosure of this Agreement, the Transactions, the Transaction Documents (including provisions contained within the Transaction Documents) without the prior consent of the other party hereto. VMRE and Carvana further agree that, notwithstanding any provision contained in this Agreement, either VMRE or Carvana (and each employee, representative or other agent of any party) may disclose to any and all persons, without limitation of any kind, any matter required under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, Carvana and VMRE hereby acknowledge that each is aware that the United States securities laws prohibit any person who has material, non-public information concerning the matters which are the subject of this agreement from purchasing or selling securities of Carvana (and options, warrants and rights relating thereto) or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities. Each party shall bear responsibility for handling any and all disclosure in connection with this provision accordingly.

Section 10.10 Time is of the Essence . VMRE and Carvana expressly agree that time is of the essence with respect to the performance of this Agreement.

Section 10.11 Non-Business Days . If the Closing Date, or the date for delivery of a Notice, or performance of a party’s covenant or obligation falls on a Saturday, Sunday or legal holiday in the state in which the Property is located, the Closing Date or such notice or performance shall be postponed until the next Business Day.

Section 10.12 Waiver and Amendment . No provision of this Agreement shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any prior or future occasion.

Section 10.13 VMRE’s and Carvana’s Liability .

(a) Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Agreement by VMRE, that:

(i) there shall be absolutely no personal liability on the part of any director, officer, manager, partner, member, employee or agent of VMRE with respect to any of the terms, covenants and conditions of this Agreement;

(ii) Carvana waives all claims, demands and causes of action against VMRE’s directors, officers, managers, members, partners, employees and agents in the event of any breach by VMRE of any of the terms, covenants and conditions of this Agreement to be performed by VMRE; and

(iii) Carvana shall look solely to the assets of VMRE or its assignee for the satisfaction of each and every remedy of Carvana in the event of any breach by VMRE of any of the terms, covenants and conditions of this Agreement to be performed by VMRE, such exculpation of liability to be absolute and without any exception whatsoever, subject to the other provisions of this Agreement which may limit recourse of Carvana against VMRE.

(b) Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Agreement by Carvana, that:

(i) there shall be absolutely no personal liability on the part of any director, officer, manager, member, employee or agent of Carvana with respect to any of the terms, covenants and conditions of this Agreement;

(ii) VMRE waives all claims, demands and causes of action against Carvana’s directors, officers, managers, members, partners, employees and agents in the event of any breach by Carvana of any of the terms, covenants and conditions of this Agreement to be performed by Carvana; and

(iii) VMRE shall look solely to the assets of Carvana for the satisfaction of each and every remedy of VMRE in the event of any breach by Carvana of any of the terms, covenants and conditions of this Agreement to be performed by Carvana, such exculpation of liability to be absolute and without any exception whatsoever, subject to the other provisions of this Agreement which may limit recourse of Carvana against VMRE.

Section 10.14 Headings; Internal References . The headings of the various sections and exhibits of this Agreement have been inserted for reference only and shall not to any extent have the effect of modifying the express terms and provisions of this Agreement. Unless stated to the contrary, any references to any section, subsection, exhibit and the like contained herein are to the respective section, subsection, exhibit and the like of this Agreement.

Section 10.15 Construction Generally . This is an agreement between parties who are experienced in sophisticated and complex matters similar to the Transaction, and this Agreement and the other Transaction Documents, are entered into by VMRE and Carvana in reliance upon the economic and legal bargains contained herein and therein, and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of VMRE and Carvana or the domicile of either one. Each of Carvana and VMRE was represented by legal counsel competent in advising them of their obligations and liabilities hereunder.

Section 10.16 Attorneys’ Fees . In the event of any controversy, claim, dispute or proceeding between VMRE and Carvana concerning this Agreement, the prevailing party shall be entitled to recover all of its reasonable attorneys’ fees and other costs, whether incurred prior to trial, at trial, on appeal and during any bankruptcy proceedings, in addition

to any other relief to which it may be entitled. The provisions of this Section 10.16 shall survive each Closing and shall survive the termination of this Agreement.

Section 10.17 Entire Agreement . This Agreement and all other Transaction Documents, and all other certificates, instruments or agreements to be delivered hereunder and therein constitute the entire agreement between VMRE and Carvana with respect to the subject matter hereof, and there are no other representations, warranties or agreements, written or oral, between Carvana and VMRE with respect to the subject matter of this Agreement. Notwithstanding anything in this Agreement to the contrary, upon the execution and delivery of this Agreement by Carvana and VMRE:

(a) this Agreement shall supersede any previous discussions, letters of intent, agreements and/or term or commitment letters relating to the Transaction, including without limitation, the Letter of Intent. Carvana shall not issue any press release or other public disclosure using the name, logo or otherwise referring to VMRE any of its affiliates or the Transaction without the prior written consent of VMRE, in VMRE’s sole and absolute discretion. Carvana and Carvana’s agents and representatives shall keep this Agreement confidential, and shall not, without the prior written consent of VMRE, which consent may be withheld in VMRE’s sole and absolute discretion, disclose the existence or terms of this Agreement to any other Person (other than to Carvana’s accountants, attorneys, or agents who need to know and whom Carvana has directed to treat such information as confidential) subject to Section 10.6. The terms of this shall survive each Closing and shall survive the termination of this Agreement.

(b) the terms and conditions of this Agreement shall control notwithstanding that such terms are inconsistent with, or vary from, those set forth in any of the foregoing agreements; and

The provisions of this Section 10.17 shall survive each Closing and shall survive the termination of this Agreement.

Section 10.18 Forum Selection; Jurisdiction; Venue . For purposes of any action or proceeding arising out of this Agreement, VMRE and Carvana hereto expressly submit to the jurisdiction of all federal and state courts located in the State of Arizona. Carvana consents that it may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, Carvana waives and agrees not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper.

Section 10.19 Separability; Binding Effect; Governing Law . Each provision hereof shall be separate and independent, and the breach of any provision by VMRE shall not discharge or relieve Carvana from any of its obligations hereunder. Each provision hereof shall be valid and shall be enforceable to the extent not prohibited by law. If any provision hereof or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Subject to the provisions of Section 10.5 (Assignment), all provisions contained in this Agreement shall be binding upon, inure to the benefit of and be enforceable by the successors and assigns of VMRE and Carvana, including, without limitation, any United States trustee, any debtor-in-possession or any trustee appointed from a private panel, in each case to the same extent as if each successor and assign were named as a party hereto. This Agreement shall be governed by, and construed with, the laws of the State of Arizona, without giving effect to any state’s conflict of laws principles.

Section 10.20 WAIVER OF JURY TRIAL . TO THE EXTENT PERMITTED BY APPLICABLE LAW, VMRE AND CARVANA HERETO SHALL, AND THEY HEREBY DO, INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF VMRE AND CARVANA HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING

OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND/OR ANY CLAIM OR INJURY OR DAMAGE RELATED THERETO. CARVANA FURTHER WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM VMRE IN ANY ACTION, PROCEEDING OR COUNTERCLAIM WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND/OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO.

Section 10.21 Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one (1) and the same instrument, and VMRE and Carvana agree that the use of pdf signatures (by email) for the negotiation and execution of this Agreement shall be legal and binding and shall have the same full force and effect as if originally signed.

Section 10.22 Local Law Provisions . Carvana shall be responsible for complying (at its expense) with any local law requirements (such as required inspections) which are conditions for the conveyance of any Property and/or the Closing of the Transaction with respect to any Property as contemplated herein. In addition, the following local law provisions shall apply:

(a) If any local law requires an inspection of the Real Property or a certificate from a local municipality, Carvana shall be required to undertake and pay for such inspection and/or shall obtain such certificate and pay for the same.

(b) Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon testing may be obtained from your county health department. The foregoing notification is provided pursuant to Section 404.056(6) of the Florida Statutes.

Section 10.23 1031 Exchange . Carvana and/or VMRE may close any purchase or sale of a Property related to this Transaction as part of a like-kind exchange of properties under Section 1031 of the Internal Revenue Code of 1986, as amended, and applicable rules and regulations. The exchanging party shall bear all costs of its exchange. The non-exchanging party shall cooperate with the exchanging party and do all things reasonably required and requested by the exchanging party (provided that such actions do not increase the non-exchanging party’s obligations or liabilities under this Agreement or with respect to such Property) to effect and facilitate such an exchange. The exchanging party shall and does hereby indemnify, defend and hold the non-exchanging party harmless for and from all liabilities arising as a result of the exchange that would not have arisen had the exchanging party not closed a purchase or sale of a Property under this Transaction as part of a like-kind exchange. Anything in this section to the contrary notwithstanding:

(a) neither VMRE nor Carvana makes any representation or warranty to the other as to the effectiveness or tax impact of any proposed exchange;

(b) in no event shall VMRE or Carvana be required to take title to any exchange or replacement property;

(d) neither VMRE nor Carvana, as applicable, shall be required to incur any costs or expenses or incur any additional liabilities or obligations whatsoever, in order to accommodate any exchange requested by the exchanging party or any exchange intermediary or facilitator.

[Remainder of page intentionally left blank; signature page(s) to follow]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above:



CARVANA, LLC,
an Arizona limited liability company
BY:	/s/ Paul Breaux
PRINTED NAME:	Paul Breaux
TITLE:	Vice President
DATE:	11/6/2017

STATE OF ARIZONA

COUNTY OF MARICOPA

On this 6th day of November , 20 17 , before me, the undersigned, Notary Public in and for said County and State, personally appeared Paul Breaux , who acknowledged himself/herself to be the Vice President of Carvana, LLC, an Arizona limited liability company, and as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself/herself as such officer , on behalf of such limited liability company.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.



	/s/ Elizabeth Lang
	Notary Public

[SEAL]	My Commission Expires:	12/6/2020



VMRE, LLC,
a Delaware limited liability company
BY:	/s/ [***]
PRINTED NAME:	[***]
TITLE:	Assistant Secretary
DATE:	11/3/2017

STATE OF ARIZONA

COUNTY OF MARICOPA

On this 3rd day of November , 20 17 , before me, the undersigned, Notary Public in and for said County and State, personally appeared [***] , who acknowledged himself/herself to be the Asst. Secretary of VMRE, LLC, a Delaware limited liability company, and as such [***] , being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself/herself as such Asst. Secretary , on behalf of such limited liability company.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.



		/s/ [***]
		Notary Public

[SEAL]		My Commission Expires:	August 14, 2019











[***]	Indicates that text has been omitted which is the subject of a confidential treatment request. The text has been separately filed with the Securities and Exchange Commission.

Exhibit A

Form of Lease Guaranty

UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE

THIS UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE (this “ Guaranty ”) is made as of __________, 20__ by CARVANA GROUP, LLC , a Delaware limited liability company (“ Guarantor ”), for the benefit of VMRE [___], LLC , a Delaware limited liability company, (together with its successors and assigns pursuant to the Operator Lease (as defined below), “ Landlord ”).

RECITALS

[IF GROUND LEASE TRANSACTION A. _______________________, a(n) ___________________, (“ Owner ”) is the owner in fee of the land more particularly described on Exhibit A attached hereto and made a part hereof (the “ Land ”). Pursuant to that certain [Ground Lease] dated ______________, between Owner, as ground lessor, and CARVANA, LLC, an Arizona limited liability company (“ Carvana ”), as ground lessee, as amended, modified and supplemented by ___________________ (collectively, together with any further amendments, modifications or supplements, the “ Prime Lease ”), Owner leased the Property to Carvana.

B. Pursuant to that certain Ground Sublease Agreement dated _______________, 20__ (the “ Sublease Agreement ”), Carvana, as sublandlord, has subleased the Land and any and all improvements located thereon (the “ Leased Premises ”) to Landlord, as subtenant, subject to the terms and conditions of the Sublease Agreement.]

[IF NON-GROUND LEASE TRANSACTION A. Landlord is the owner of the real property more particularly described on Exhibit A attached hereto and made a part hereof (the “ Leased Premises ”).]

[B][C]. Landlord and Carvana (in its capacity as tenant of the Operator Lease defined below, “ Original Tenant ”; Original Tenant and any future tenant pursuant to the Lease are referred to collectively or individually, as the case may be, as the “ Tenant ”) have entered into that certain Operator Lease Agreement dated as of the date hereof (as the same may be amended from time to time, the “ Operator Lease ”), pursuant to which Landlord [subleases][leases] to Tenant the Leased Premises and any and all improvements now or hereafter located thereon (the “ Improvements ”, and together with the Leased Premises, collectively, the “ Property ”).

[C][D]. As a condition to Landlord entering into the Operator Lease, Guarantor has agreed to execute and deliver this Guaranty for the benefit of Landlord.

[D][E]. Guarantor owns a substantial direct and/or indirect interest in the Original Tenant and will derive substantial benefit from the Operator Lease.

[E][F]. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Operator Lease.

In consideration of the premises and other good and valuable consideration, the receipt of and sufficiency of which are hereby acknowledged, and in order to induce the Landlord to enter into the Operator Lease, Guarantor hereby agrees as follows:

1. Guaranty . Guarantor unconditionally, absolutely and irrevocably guarantees the punctual and complete payment and/or performance and/or completion when due of all obligations of the Tenant pursuant to the Operator Lease, including but not limited to the payment when due of all Monetary Obligations, including, without limitation, Rental, taxes, insurance premiums, impounds, reimbursements, late charges, default interest, damages,

indemnity obligations and all other amounts, costs, fees, expenses and charges of any kind or type whatsoever, which may or at any time be due to Landlord under or pursuant to the documents listed on Schedule I attached hereto (collectively, the “ Documents ”) and the completion of all construction and alterations now being performed or to be performed and completed in the future in accordance with the Operator Lease. Guarantor also unconditionally guarantees the satisfaction of all conditions by Tenant and the full and timely performance of all obligations to be performed by Tenant, under or pursuant to the Documents.

[FOR TRANSACTIONS INVOLVING CONSTRUCTION: In addition, Guarantor hereby unconditionally guarantees to and for the benefit of Landlord the full, prompt and complete performance by Tenant of all the terms and provisions of the Construction and Disbursement Agreement dated as of the date of this Guaranty (the “ Disbursement Agreement ”) pertaining to Tenant’s obligations with respect to the design, permitting, installation, construction and completion of the construction of the Improvements. Without limiting the generality of the foregoing, Guarantor guarantees that, subject to the terms and conditions of the Disbursement Agreement: (a) the Improvements will be constructed, installed and completed in accordance with the Development Documents, the Master Sale-Leaseback Agreement (as defined in the Disbursement Agreement) and the other Transaction Documents (as defined in the Disbursement Agreement), subject to modifications to the extent permitted thereunder; (b) the Improvements will be constructed, installed and completed free and clear of any liens on account of the construction, installation and/or completion of the Improvements; and (c) all costs of constructing the Improvements, including any and all cost overruns or Change Orders (as defined in the Disbursement Agreement) will be paid when due. Completion of the Improvements free and clear of liens (other than Permitted Exceptions, as defined in the Master Sale-Leaseback Agreement) will be deemed to have occurred only upon satisfaction of the conditions set forth in the Development Documents and the Disbursement Agreement, and the expiration of the applicable statutory periods of the state in which the Leased Premises is located within which valid construction, mechanics or materialmen’s liens may be recorded and served by reason of the design, supply or construction of the Improvements with any such liens, other than contested items, that have been filed having been released, discharged of record, or bonded pursuant to the Disbursement Agreement, or, alternatively, Landlord’s receipt of valid, unconditional final lien releases thereof from all persons entitled to record such liens.

If (i) the Improvements are not constructed in the manner required by the Development Documents and the Disbursement Agreement, (ii) construction of such Improvements should cease or be abandoned prior to the completion of the Improvements for such period of time that constitutes an Event of Default under the Disbursement Agreement, Operator Lease or Master Sale-Leaseback Agreement, or (iii) any Event of Default under the Transaction should otherwise exist, then Guarantor will, promptly upon written demand of Landlord either: (A) to the extent such Event of Default is a Property Event of Default (as defined in the Master Sale-Leaseback Agreement), cause Tenant to repurchase the Property pursuant to Section 9.2 of the Master Sale-Leaseback Agreement or, if Tenant is unable to repurchase the Property for any reason, Guarantor shall repurchase the Property from Landlord under the same terms and condition set forth in Section 9.2 of the Master Sale-Leaseback Agreement, or (B) diligently proceed to commence the completion of the Improvements and to cause the completion of the Improvements to occur; (C) fully pay and discharge all claims for labor performed and material and services furnished in connection with the design, supply, construction or installation of the Improvements that are then due and payable; and (D) release and discharge or bond all claims of construction liens and equitable liens that may arise in connection with the design, supply, construction or installation of the Improvements. Landlord agrees to give Guarantor access to the Property as and to the extent necessary to complete the Improvements or to exercise any other right set forth in this Guaranty.]

The matters which are guaranteed pursuant to this paragraph 1 are hereinafter collectively referred to as the “ Obligations ”. The obligations of Guarantor under this Guaranty are primary, joint and several and independent of the obligations of Tenant and any and every other guarantor of the Obligations, and a separate action or actions may be brought and executed against Guarantor or any other such guarantor, whether or not such action is brought against Tenant or any other such guarantor and whether or not Tenant or any other such guarantor be joined in such action or actions.

2. Waivers. This is an absolute and unconditional guaranty of payment and performance and not of collection, and Guarantor unconditionally (a) waives any requirement that Landlord first make demand upon, or seek to enforce or exhaust remedies against, Tenant or any other Person (including any other guarantor) or any of the collateral or property of Tenant or such other Person before demanding payment from, or seeking to enforce this Guaranty against, Guarantor; (b) until all of the covenants and conditions of the Operator Lease to be performed by Tenant have been performed, observed and satisfied, waives all rights of subrogation, all rights of indemnity and any other rights to collect reimbursement from Tenant; (c) until all of the covenants and conditions of the Operator Lease to be performed by Tenant have been performed, observed and satisfied, waives any right to participate in any security now or hereafter held by Landlord or in any claim or remedy of Landlord or any other Person against Tenant with respect to the Obligations; (d) waives diligence, presentment, protest, demand for performance, notice of nonperformance, notice of intent to accelerate, notice of acceleration, notice of protest, notice of dishonor, notice of execution of any Documents, notice of extension, renewal, alteration or amendment, notice of acceptance of this Guaranty, notice of defaults under any of the Documents and all other notices whatsoever; (e) waives and agrees not to assert any and all rights, benefits and defenses which might otherwise be available under the provisions of Ariz. Rev. Stat. §12-1641 and §12–1642 et seq., §44-141, §44-142 or §47-3605, Arizona Rules of Civil Procedure Rule 17(f), or any other laws, statutes or rules (including any laws, statutes or rules amending, supplementing or supplanting same) which may conflict with the terms of this Guaranty or might operate, contrary to Guarantor’s agreements in this Guaranty, to limit Guarantor’s liability under, or the enforcement of, this Guaranty; (f) covenants that this Guaranty will not be discharged until all of the Obligations are fully satisfied; and (g) agrees that this Guaranty shall remain in full effect without regard to, and shall not be affected or impaired by, any invalidity, irregularity or unenforceability in whole or in part of any of the Documents, or any limitation of the liability of Tenant or Guarantor thereunder, or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever.

3. Continuing Guaranty . This Guaranty is a continuing guaranty, and the obligations, undertakings and conditions to be performed or observed by Guarantor under this Guaranty shall not be affected or impaired by reason of the happening from time to time of the following with respect to the Documents, all without notice to, or the further consent of, Guarantor: (a) the waiver by Landlord of the observance or performance by Tenant or Guarantor of any of the obligations, undertakings, conditions or other provisions contained in any of the Documents, except to the extent of such waiver; (b) the extension, in whole or in part, of the time for payment of any amount owing or payable under the Documents; (c) the modification or amendment (whether material or otherwise) of any of the obligations of Tenant under, or any other provisions of, any of the Documents, except to the extent of such modification or amendment; (d) the taking or the omission of any of the actions referred to in any of the Documents (including, without limitation, the giving of any consent referred to therein); (e) any failure, omission, delay or lack on the part of Landlord to enforce, assert or exercise any provision of the Documents, including any right, power or remedy conferred on Landlord in any of the Documents or any action on the part of Landlord granting indulgence or extension in any form; (f) the assignment to or assumption by any third party of any or all of the rights or obligations of Tenant under all or any of the Documents; (g) the release or discharge of Tenant from the performance or observance of any obligation, undertaking or condition to be performed by Tenant under any of the Documents by operation of law, including any rejection or disaffirmance of any of the Documents in any bankruptcy or similar proceedings; (h) the receipt and acceptance by Landlord or any other Person of notes, checks or other instruments for the payment of money and extensions and renewals thereof; (i) any action, inaction or election of remedies by Landlord which results in any impairment or destruction of any subrogation rights of Guarantor, or any rights of Guarantor to proceed against any other Person for reimbursement; (j) any setoff, defense, counterclaim, abatement, recoupment, reduction, change in law or any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor, indemnitor or surety under the laws of the State of Arizona, the state in which the Property is located or any other jurisdiction; and (k) the termination or renewal of any of the Obligations or any other provision thereof.

4. Representations and Warranties . Guarantor represents and warrants to Landlord that: (a) neither the execution nor delivery of this Guaranty nor fulfillment of nor compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms or conditions of, or constitute a default under, any agreement or instrument

to which Guarantor is now a party or by which Guarantor may be bound, or result in the creation of any lien, charge or encumbrance upon any property or assets of Guarantor, which conflict, breach, default, lien, charge or encumbrance could result in a material adverse change in the financial condition of Guarantor; (b) no further consents, approvals or authorizations are required for the execution and delivery of this Guaranty by Guarantor or for Guarantor’s compliance with the terms and provisions of this Guaranty; (c) this Guaranty is the legal, valid and binding agreement of Guarantor and is enforceable against Guarantor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, liquidation, reorganization and other laws affecting the rights of creditors generally and subject to general principles of equity; (d) Guarantor has the full power, authority, capacity and legal right to execute and deliver this Guaranty, and, to the extent Guarantor is a limited liability company or other form of entity, the parties executing this Guaranty on behalf of Guarantor are fully authorized and directed to execute the same to bind Guarantor; (e) Guarantor is not, and if Guarantor is a “disregarded entity,” any owner of the disregarded entity is not, a “nonresident alien,” “foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” or any other “person” that is not a “United States person,” as those terms are defined in the U.S. Internal Revenue Code and the regulations promulgated thereunder; (f) Guarantor is not a party with whom a citizen of the United States is prohibited from engaging in transactions by any trade embargo, economic sanction or other prohibition of United States law, regulation or Executive Order of the President of the United States; (g) all financial statements and other information relating to Guarantor heretofore delivered to Landlord are true, correct and complete in all material respects as of the date of this Guaranty; and (h) the Documents are conclusively presumed to have been signed in reliance on this Guaranty, and the assumption by Guarantor of Guarantor’s obligations under this Guaranty results in direct financial benefit to Guarantor. Guarantor understands that Landlord is relying on the representations and warranties of Guarantor, and Guarantor represents that such reliance is reasonable.

5. Nature of Guaranty . This Guaranty shall commence upon execution and delivery of any of the Documents and shall continue in full force and effect until all of the Obligations are duly, finally and permanently paid, performed and discharged and are not subject to any right of extension by Tenant, and Landlord gives Guarantor written notice of the full and final satisfaction of the Obligations. The Obligations shall not be considered fully paid, performed and discharged unless and until all payments by Tenant to Landlord are no longer subject to any right on the part of any Person whomsoever, including but not limited to Tenant, Tenant as a debtor-in-possession and/or any trustee in bankruptcy, to disgorge such payments or seek to recoup the amount of such payments or any part thereof. This Guaranty shall remain in full force and effect and continue to be effective upon an Insolvency Event. This Guaranty shall continue to be effective or be reinstated, as applicable, if at any time payment and performance of the Obligations, or any part thereof, are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by Landlord, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made. In the event that any payment of the Obligations, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid to Landlord and not so rescinded, reduced, restored or returned. If Tenant, or Tenant’s trustee, receiver or other officer with similar powers with respect to Tenant, rejects, disaffirms or otherwise terminates the Operator Lease pursuant to any bankruptcy, insolvency, reorganization, moratorium or any other law affecting creditors’ rights generally, Guarantor shall nonetheless remain obligated to pay all sums payable and/or due pursuant to the Operator Lease, and to perform all covenants required to be performed by Tenant under the Operator Lease, as if such rejection, disaffirmance or other termination of the Operator Lease had never occurred and as if the Operator Lease (without taking into account such rejection, disaffirmance or termination) were in full force and effect, notwithstanding the fact that: (a) Landlord may not be able to recover any part or all of such sums due pursuant to the Operator Lease from Tenant; or (b) Tenant’s obligations to pay sums due pursuant to the Operator Lease, or to perform obligations pursuant to the Operator Lease, may be limited by application of such bankruptcy, insolvency, reorganization, moratorium or other law affecting creditors’ rights generally.

6. Subordination . Notwithstanding Section 2, in the event that Guarantor shall have any claims against Tenant, any indebtedness of Tenant now or hereafter held by Guarantor is hereby subordinated to the indebtedness of Tenant to Landlord, including, without limitation, any and all amounts due to Landlord under the Operator Lease. Any such indebtedness of Tenant to Guarantor, if Landlord so requests, shall be collected, enforced and received by Guarantor

as trustee for Landlord and be paid over to Landlord on account of the Obligations, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.

7. Authority . It is not necessary for Landlord to inquire into the powers of Tenant or its officers, directors, partners or agents acting or purporting to act on its behalf, and Guarantor shall be liable for the Obligations in accordance with their terms notwithstanding any lack of authorization or defect in execution or delivery by Tenant.

8. Attorneys’ Fees and Costs . In addition to the amounts guaranteed under this Guaranty, Guarantor agrees to pay (a) all of Landlord’s Costs, and (b) interest (including post-petition interest to the extent a petition is filed by or against Tenant under the Bankruptcy Code) at the Default Rate on any Obligations not paid when due. Guarantor hereby agrees to indemnify and hold harmless Landlord for, from and against all Losses suffered or occasioned by the failure of Tenant to satisfy its obligations under the Documents. The agreement to indemnify Landlord contained in this Section shall be enforceable notwithstanding the invalidity or unenforceability of the Documents or any of them or the invalidity or unenforceability of any other paragraph contained in this Guaranty. All moneys available to Landlord for application in payment or reduction of the liabilities of Tenant under the Documents may be applied by Landlord to the payment or reduction of such liabilities of Tenant, in such manner, in such amounts and at such time or times as Landlord may elect.

9. Notice . All notices, demands, designations, certificates, requests, offers, consents, approvals, appointments and other instruments given pursuant to this Guaranty (collectively called “ Notices ”) shall be in writing and given by any one of the following: (a) hand delivery; (b) express overnight delivery service; (c) certified or registered mail, return receipt requested; or (d) electronic mail message, and shall be deemed to have been delivered upon (i) receipt, if hand delivered, (ii) the next Business Day, if delivered by a reputable express overnight delivery service; (iii) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested; or (iv) transmission, if delivered by electronic mail. Notices shall be provided to the parties and addresses (or electronic mail addresses) as either party may from time to time hereafter specify to the other party in a notice delivered in the manner provided above.

10. Governing Law . This Guaranty is delivered in the State of Arizona and it is the intent of Guarantor and Landlord that this Guaranty shall be deemed to be a contract made under and governed by the internal laws of the State of Arizona, without regard to its principles of conflicts of law. For purposes of any action or proceeding involving this Guaranty, Guarantor submits to the jurisdiction of all federal and state courts located in the State of Arizona and consents that Guarantor may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Guarantor waives and agrees not to assert in any such action, suit or proceeding that Guarantor is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. Nothing contained in this section shall limit or restrict the right of Landlord to commence any proceeding in the federal or state courts located in the state where the Leased Premises is located or in the State in which Guarantor maintains Guarantor’s residence or chief executive office to the extent Landlord deems such proceeding necessary or advisable to exercise remedies available under the Documents.

11. Acknowledgement of Operator Lease . Guarantor intends for the Operator Lease to be a “true lease” and not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, security agreement or other financing or trust arrangement, and the economic realities of the Operator Lease are those of a true lease. Guarantor shall not challenge the validity, enforceability or characterization of the Transaction, and Guarantor shall support the intent of Guarantor, Tenant and Landlord that the Operator Lease is a “true lease” and does not create a joint venture, partnership, equitable mortgage, trust, financing device or arrangement, trust agreement, security interest or the like.

12. Independent Rights . All of Landlord’s rights and remedies under the Documents and this Guaranty are intended to be distinct, separate and cumulative and no such right and remedy is intended to be in exclusion of or a waiver of any of the others, except as expressly provided to the contrary in the Documents.

13. Assignment . Guarantor acknowledges and agrees that Landlord may assign this Guaranty solely in compliance with Section 10.5 of the Master Sale-Leaseback Agreement.

14. Inurement . This Guaranty is solely for the benefit of Landlord, its permitted successors and assigns, and is not intended to nor shall it be deemed to be for the benefit of any third party, including, without limitation, Tenant. This Guaranty and all obligations of Guarantor hereunder shall be binding upon the successors and assigns of Guarantor (including, a debtor-in-possession on behalf of Guarantor) and shall, together with the rights and remedies of Landlord hereunder, inure to the benefit of Landlord, all future holders of any instrument evidencing any of the Obligations and its successor and assigns. No sales, participations, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein shall in any manner affect the rights of Landlord or its successors and assigns hereunder. Guarantor may not assign, sell, hypothecate. revoke or otherwise transfer any interest in or obligation under this Guaranty.

15. Severability . If any provision of this Guaranty is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect. Guarantor agrees to take such action and to sign such other documents as may be appropriate to carry out the intent of this Guaranty. This Guaranty may be executed in one or more counterparts, each of which shall be deemed an original.

16. WAIVER OF JURY TRIAL . LANDLORD, BY ACCEPTING THIS GUARANTY, AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LANDLORD OR GUARANTOR AGAINST ANY PARTY OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF LANDLORD, TENANT AND/OR GUARANTOR, TENANT’S USE OR OCCUPANCY OF THE PROPERTY, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY LANDLORD AND GUARANTOR OF ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR LANDLORD ACCEPTING THIS GUARANTY. FURTHERMORE, GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT GUARANTYOR MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM LANLDORD OR ANY OF LANDLORD’S AFFILIATES, OFFICERS, DIRECTORS, MANAGERS OR EMPLOYEES OR ANY OF LANDLORD’S SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY GUARANTOR AGAINST LANDORD OR ANY OF LANDLORD’S AFFILIATES, OFFICERS, DIRECTORS, MANAGERS OR EMPLOYEES OR ANY OF LANDLORD’S SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY GUARANTOR OF ANY RIGHT GUARANTOR MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF GUARANTOR’S BARGAIN.

17. Final Agreement . This Guaranty represents the final agreement between Landlord and Guarantor and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements. Guarantor covenants and agrees that there are no unwritten oral agreements between Landlord and Guarantor and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Guaranty. Neither this Guaranty nor any provision hereof may be waived, modified, amended, discharged, revoked or terminated except by an agreement in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge, revocation or termination is sought, and then only to the extent set forth in such agreement.

[Remainder of page intentionally left blank; signature page to follow]

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty effective as of the date set forth in the introductory paragraph of this Guaranty.



		GUARANTOR :

		CARVANA GROUP, LLC,
		a Delaware limited liability company

		By:
		Name:
		Title:



STATE OF	)
	) ss.
COUNTY OF	)

The foregoing instrument was acknowledged before me this _____ day of ____________________________, 20__, by _________________, the ________________ of Carvana Group, LLC, a Delaware limited liability company, on behalf of said limited liability company.




			Notary Public

My Commission Expires:

SCHEDULE I

DOCUMENTS

1. The Operator Lease.

2. The Master Sale-Leaseback Agreement.

3. [Construction and Disbursement Agreement dated as of the date of this Guaranty.]

4. Any other document, agreement, instrument or certificate contemplated by the Operator Lease, the Master Sale-Leaseback Agreement[, the Construction and Disbursement Agreement], or any other documents, agreements, instruments or certificates now or hereafter entered into between Landlord and Tenant with respect to the Operator Lease or the Master Sale-Leaseback Agreement [or the Construction and Disbursement Agreement].

5. Any amendment of the foregoing documents, agreements, instruments or certificates now or hereafter entered into between Landlord and Tenant.

EXHIBIT B

Form of Non-Foreign Seller Certificate

NON‑FOREIGN SELLER CERTIFICATE



STATE OF		)
		) ss.
COUNTY OF		)

_______________, being first duly sworn deposes and states under penalty of perjury:


1.	That he/she is a of ________________, a _______________, the transferor of the Property described on Schedule I attached hereto.


2.	That the transferor’s office address is at ___________.


3.	That the United States taxpayer identification number for the transferor is ________________________.


4.	That the transferor is not a “ foreign person ” as that term is defined in Section 1445(f) of the United States Internal Revenue Code of 1986, as amended (the “ Code ”).


5.	That the transferor is not a disregarded entity as defined in § 1.1445 2(b)(2)(iii) of the regulations promulgated under the Code.

This affidavit is given to VMRE [_____], LLC, a Delaware limited liability company, the transferee of the Property described in paragraph 1 above, for the purpose of establishing and documenting the nonforeign affidavit exemption to the withholding requirement of Section 1445 of the Code. The transferor understands that this affidavit may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.



[CARVANA], a _________________


By:
Name:
Title:

Subscribed and sworn to before me this _____ day of , 2017.

Notary Public: __________________________

(SEAL)

My Commission Expires: _________________

Schedule I

to Non-foreign Seller Certificate

PROPERTY

LEGAL DESCRIPTION

SCHEDULE 2.8

Carvana’s Diligence Materials

1. Site Selection

o Brokerage and confidentiality agreements (as applicable);

o Market, demographic, traffic / visibility and other data points used to determine preliminary suitability;

o Background property information (taxes, ownership, zoning verification, use restrictions, known CC&Rs, etc.);

o Fit / Suitability Tests (Concept-level site plan to determine truck turns, access, usability, layout of improvements, etc.).

2. Legal / Contracts, Due Diligence (Inspection, Enviro. & Title):

o Letter of Intent with Right of Entry and access (for early-stage site inspection and property review);

o Purchase Agreement or Lease (as applicable);

o Existing Survey;

o Title Commitment (with title review, our objections and resolution as necessary)

§ Identified Schedule B matters and closing requirements (CCRs, easements, utility or access issues, association matters, etc.);

o Environmental (Phase I and if recommended Phase II with remediation plan or NFA as applicable);

o Site inspections (including geotechnical / soil testing);

o Forms of Closing Documents - usual market-typical closing checklist items (as may be applicable transaction-by-transaction): Deed / Bill of Sale or Lease, Estoppels, SNDAs, Landlord Waivers (as applicable), or Memo of Lease, Post-closing escrow or hold-back (if necessary), Owner's or Leasehold Title Policy;

o Warranties and list of any Warranty Claims.

3. Entitlements, Approvals and Permitting (when each such item is available):

o Zoning verification or approval letters;

o Conditional Use / Special Use Permit, Variance or other land use approvals;

o Association Approvals (if needed, including Architectural Review Committee where applicable);

o Site plan;

o Building Permit;

o Will Serve Letters from Utilities;

o Sign Permit;

o Licensing (business / use, etc. but excluding vehicle dealer license).

4. Construction and Development

o Project Budget

o List of all Vendors;

o Construction Documents;

o Construction Contract;

o Construction and Equipment Warranties;

o Construction Time Schedule (as defined in the applicable Disbursement Agreement).

5. Draws for Sites Under Construction


•	Draw Application


o	to include Lien Releases (unconditional for prior draw after payment and conditional for current draw);

§ to include Change Order Log

o Site Photos showing Progress / Per Draw Request

o As-Built Drawings if desired

o Permit Close Docs (Temporary Certificate of Occupancy and Permanent Certificate of Occupancy)

o Final Draw with Lien Release

o Vendor Invoice Copies, to the extent required under the applicable Disbursement Agreement

o Final Site Photos / Close Out Reconciliation Of Budget.

Exhibit 31.1

Certification of the Chief Executive Officer

Pursuant to Rule 13a-14(a)

I, Ernie Garcia, III, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Carvana Co.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	November 7, 2017	/s/ Ernest C. Garcia, III
		Ernest C. Garcia, III
		Chairman and Chief Executive Officer

Exhibit 31.2

Certification of the Chief Financial Officer

Pursuant to Rule 13a-14(a)

I, Mark Jenkins, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Carvana Co.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	November 7, 2017	/s/ Mark Jenkins
		Mark Jenkins
		Chief Financial Officer

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to Rule 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Carvana Co. (the “Company”) for the quarter ended September 30, 2017 , as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Ernie Garcia, III, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	November 7, 2017	/s/ Ernest C. Garcia, III
		Ernest C. Garcia, III
		Chairman and Chief Executive Officer

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to Rule18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Carvana Co. (the “Company”) for the quarter ended September 30, 2017 , as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Mark Jenkins, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	November 7, 2017	/s/ Mark Jenkins
		Mark Jenkins
		Chief Financial Officer