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CONSULTING AGREEMENT

This Consulting Agreement (“Agreement”) is entered into this 22nd day of June,
2006, by and between CarMax, Inc., a Virginia corporation (“CarMax”), and Austin
Ligon (“Ligon”), an individual residing in the Commonwealth of Virginia.

RECITAL

CarMax desires to retain Ligon to render certain consulting services to CarMax
on the terms and conditions set forth in this Agreement, and Ligon desires to be
retained by CarMax on such terms and conditions.

AGREEMENT

1. Engagement and Duties. During the Term (defined below), Ligon shall provide
to CarMax the following consulting services, in each case at the request of the
Board of Directors (“Board”) or the Chief Executive Officer of CarMax: (i)
assist in the transition to a new Chief Executive Officer, (ii) assist CarMax’s
Chief Executive Officer in developing relationships with key constituencies,
including employees, investors and strategic partners, (iii) assist in the
development of business opportunities for CarMax, (iv) assist in the refinement
and execution of CarMax’s business strategy, and (v) be available for
consultation on other matters within Ligon’s knowledge and experience relating
to the business of CarMax. Ligon shall not be required to perform services in
excess of 20 hours per month under this Agreement.

2. Manner of Performance. Ligon shall perform all services and duties that
reasonably may be required of him pursuant to the terms hereof to the reasonable
satisfaction of CarMax acting in its sole discretion. Ligon shall not take any
action that would be adverse to CarMax’s business interests or that may subject
Ligon, CarMax or any of its affiliates to civil or criminal liability. Ligon
agrees to comply in full with all applicable laws, ethical standards, rules and
regulations in the course of performing his obligations hereunder. Ligon agrees
that he will comply with CarMax’s Code of Conduct and represents that, on the
date of this Agreement, he does not have any interest in any entity that would
conflict in any manner with the performance of services under this Agreement.
Subject to the restrictive covenants contained in Ligon’s Employment Agreement
dated August 1, 2004 (the “Employment Agreement”), including the non-disclosure,
non-solicitation and non-compete covenants, Ligon may engage in activities on
his own behalf or on behalf of entities other than CarMax and its affiliates,
and may allocate his time between his obligations under this Agreement and such
other activities in any manner Ligon deems appropriate, so long as Ligon’s
obligations under this Agreement are satisfied.

3. Term. This term of this Agreement shall commence on August 22, 2006 (the
“Effective Date”) and shall end on August 21, 2008, unless earlier terminated as
provided in Section 9 of this Agreement (the “Term”).

4. Compensation. As compensation for Ligon’s performance of his services under
this Agreement, CarMax shall pay Ligon $10,000 per month (the “Monthly Fee”)
during the Term, payable in arrears on the last day of the month, provided,
however, that payments for the first six months shall be accumulated and paid no
earlier than the first day of the seventh month following the Effective Date.
CarMax shall pay a prorated portion of the Monthly Fee upon termination of this
Agreement if such termination occurs other than at the end of a month. CarMax
shall deliver each payment to Ligon within seven calendar days after the end of
each month.

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5. Benefits.

(a) Health Benefits.
 
(i) Ligon has indicated that he plans to elect to continue his group health
benefits (medical and dental) in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (such law referred to herein as “COBRA”,
and the continuation of coverage under COBRA referred to herein as “COBRA
Coverage”). Assuming that Ligon so elects and subject to Ligon’s timely
completion of election forms, COBRA Coverage will begin on the first day of the
month immediately following the month in which Ligon’s employment with CarMax
ends and, subject to any change in COBRA or other applicable law and the
provisions of this Agreement, shall remain in effect for a period of up to 18
months (“COBRA Coverage Period”). The parties acknowledge that the COBRA
Coverage Period and the Term may commence on different dates and that the COBRA
Coverage Period will end prior to the expiration of the Term. If Ligon does not
elect to continue his group health benefits under COBRA, then CarMax shall have
no obligation to Ligon with respect to health benefits by virtue of this
Agreement.

(ii) In connection with the COBRA Coverage and for the duration of the COBRA
Coverage Period, Ligon shall be responsible for an amount equal to what Ligon
would have otherwise paid if he had remained an active employee of CarMax
(“Ligon Premium”), and CarMax shall be responsible for the remaining costs,
including the COBRA administration fee, relative to Ligon’s COBRA Coverage
(“CarMax Premium”). Ligon, however, shall be responsible for remitting full
payment in an amount that represents the sum of the Ligon Premium and the CarMax
Premium to the COBRA administrator in accordance with COBRA requirements. The
parties shall mutually determine the process by which Ligon receives
reimbursement from CarMax for the CarMax Premium remitted by Ligon. CarMax shall
advise Ligon of the Ligon Premium amount and the CarMax Premium amount, and
shall also advise Ligon of any changes in these amounts during the COBRA
Coverage Period as soon as such amounts are determined. Ligon acknowledges that
the Ligon Premium is subject to increase during the COBRA Coverage Period.

(iii) Ligon agrees to complete all COBRA election forms in accordance with COBRA
requirements. Ligon further agrees that his failure to complete such election
forms or his failure to remit the Ligon Premium and the CarMax Premium to the
COBRA administrator in accordance with COBRA requirements will result in
cancellation of the COBRA Coverage and agrees that, once cancelled, CarMax shall
have no further obligation hereunder with respect to Ligon’s health benefits.

 
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(iv) If Ligon obtains coverage independently or obtains or becomes eligible for
coverage under another/other group health plan(s) (including, but not limited
to, those of a subsequent employer) that provide(s) for substantially equal or
greater benefits to Ligon as the COBRA Coverage, Ligon shall notify CarMax
immediately and the COBRA Coverage, and CarMax’s obligations with respect
thereto, shall terminate on the last day of the month in which the new coverage
commenced. If Ligon and/or his beneficiaries become entitled to COBRA for a
period beyond the COBRA Coverage Period, Ligon and/or his beneficiaries, as
applicable, shall be responsible for any premium, including any COBRA
administration fee, relative to such COBRA coverage.

(b) Pension and BRP Plans. Ligon’s benefits under the CarMax, Inc. Pension Plan
and CarMax, Inc. Benefit Restoration Plan shall be paid in accordance with the
terms prescribed by those plans.

6. Expenses. CarMax shall reimburse Ligon for all reasonable expenses incurred
by him in connection with the performance of his services under this Agreement
within 30 days following his delivery of an accounting of those expenses to
CarMax in accordance with CarMax’s then-current travel and business expense
policy.

7. Independent Contractor Status. CarMax is retaining Ligon in the capacity of
an independent contractor and not as an employee or agent of CarMax or any of
its affiliates. Ligon shall not be authorized at any time to execute any
transaction on behalf of CarMax or any of its affiliates. Nothing in this
Agreement shall create, or shall be construed as creating, any form of
partnership, joint venture, employer-employee relationship, or other affiliation
that would permit Ligon to bind CarMax or any of its affiliates with respect to
any matter or would cause CarMax or any of its affiliates to be liable for any
action of Ligon. Neither CarMax nor Ligon will represent to any third party that
Ligon’s engagement by CarMax hereunder is in any capacity other than as an
independent contractor. Except as provided in Section 5 of this Agreement,
CarMax shall not be obligated to maintain any insurance for Ligon, including,
but not limited to, medical, dental, vision, life, disability, workers
compensation or unemployment compensation insurance.

8. Taxes. Ligon hereby acknowledges and agrees that, as an independent
contractor, he shall bear sole responsibility for operating his business,
including payments of all taxes and all other governmental payments required for
anyone to operate a business, including without limitation, the payment of all
federal, state and local income taxes, self-employment FICA (social security)
taxes, and unemployment and workers compensation insurance payments.

9. Termination. Ligon’s services hereunder will terminate upon the occurrence of
any of the following events:

(a) Ligon dies;

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(b) CarMax, by written notice to Ligon, terminates this Agreement due to Ligon’s
Disability (as defined below);

As used in this Agreement, the term “Disability” shall mean that, for a period
of at least 60 days during any six consecutive month period on account of a
mental or physical condition, Ligon is unable to perform the essential functions
of his services under this Agreement. The determination of Ligon’s Disability
shall be made (i) by a medical physician selected or agreed to by CarMax or (ii)
by CarMax in its reasonable discretion. All costs relating to the determination
of whether Ligon has incurred a Disability shall be paid by CarMax. Ligon shall
submit to any examination that is reasonably required by an examining physician
for purposes of determining whether a Disability exists.

(c) CarMax terminates this Agreement for Cause (as defined below):

   As used in this Agreement, the term “Cause” shall mean:

(i) Ligon’s conviction of (or plea of guilty or nolo contendere to) (A) any
felony or (B) any misdemeanor involving fraud or dishonesty in connection with
the performance of his services under this Agreement or moral turpitude or
Ligon’s entry into a consent decree (or similar arrangement) with any
governmental agency or office; or

(ii) the willful failure of Ligon during the Term to substantially perform his
services under this Agreement (other than any such failure resulting from
illness or Disability); or

(iii) Ligon has willfully engaged in misconduct which has, or can reasonably be
expected to have, a material adverse effect on CarMax or its business.

For purposes of this Section 9(c), the Board, in its reasonable discretion,
shall determine whether any action or failure to act by Ligon is deemed willful;
provided, however, that no act or failure to act on Ligon’s part shall be
considered willful unless Ligon acted in bad faith or without a reasonable
belief that Ligon’s act or omission was in the best interest of CarMax.

(d) CarMax terminates this Agreement for any reason other than for Cause or
Disability, which CarMax may do at any time;

(e) Ligon voluntarily terminates his services due to a material default by
CarMax in the performance of any of its obligations under this Agreement, which
default remains unremedied by CarMax for a period of 15 days following its
receipt of written notice thereof from Ligon (“Good Reason”); or

(f) Ligon voluntarily terminates his services for any reason other than Good
Reason, which Ligon may do at any time with at least 30 days’ advance notice.

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10. Effects of Termination.

(a) Upon termination of Ligon’s services hereunder for any reason, CarMax shall
promptly pay Ligon that portion of the Monthly Fee earned by him under Section 4
of this Agreement during the then-current month and unpaid through the effective
date of termination.

(b) If Ligon’s services are terminated under Section 9(b), 9(d) or 9(e) of this
Agreement, then CarMax shall perform all of its obligations with respect to
Ligon's health benefits as described in Section 5(a) as and when they would have
been performed had his services not been terminated; provided, however, CarMax
shall not be required to so perform unless Ligon has performed all of his
obligations described in Section 5(a).

(c) If Ligon’s services are terminated under Section 9(a), 9(c) or 9(f) of this
Agreement, then CarMax shall have no further obligations with respect to Ligon’s
health benefits as described in Section 5(a) effective as of the date of
termination, including, but not limited to, obligations with respect to any
CarMax Premium. If Ligon’s services are terminated under Section 9(c) or 9(f)
and if CarMax has advanced funds to Ligon as reimbursement for CarMax Premium
amounts due pursuant to Section 5(a), then Ligon shall return such advanced
funds to CarMax within 10 days of the date of termination.
 
11. Non-Disclosure of Confidential Information. Ligon will not make any
unauthorized use, publication or disclosure, during and after the Term, of any
information generated or acquired by him during the performance of his services
under this Agreement, including, but not limited to, information of a
confidential or trade secret nature (“Confidential Information”). Confidential
Information includes information not generally known by or available to the
public about or belonging to CarMax or belonging to other persons to whom CarMax
may have an obligation to maintain information in confidence. Authorization for
disclosure of Confidential Information may be obtained only through CarMax’s
General Counsel or designee. Ligon will not disclose to CarMax, or induce CarMax
to use, any confidential or trade secret information or material belonging to
others.

12. Ownership of Intellectual Property Rights.

Ligon hereby assigns, transfers, and conveys to CarMax all right, title and
interest in any and all Intellectual Property (as defined herein) that he may
create in direct response to a request made in writing by CarMax to create and
that he agrees in writing to create, whether as a sole inventor or originator or
as a joint inventor or originator with another or others, during the Term.
“Intellectual Property” is defined to mean information of a technical or a
business nature, such as ideas, discoveries, inventions, improvements, trade
secrets, know-how, machines, manufacturing processes, product designs, formulae,
theses, books, computer programs, drawings, lectures, illustrations,
photographs, writings and other works of authorship, customer lists, sales,
profits, financial figures, marketing plans, business methods and the like, that
are related to the business of CarMax or its affiliates. During and after the
Term, at the request and expense of CarMax, Ligon shall execute, acknowledge,
make and deliver to CarMax any and all documents which may be necessary or
desirable to secure for the benefit of CarMax adequate patent and other property
rights in the United States and all foreign countries with respect to any
Intellectual Property owned by or assigned to CarMax under this Agreement.

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13. Restrictive Covenants. Ligon acknowledges and agrees that he will comply
with the non-competition, non-solicitation and non-disclosure covenants
contained in Articles 8, 9 and 10 of his Employment Agreement during the Term,
which Articles shall remain in full force and effect in accordance with their
terms.

14. Return of Property. Before the end of the Term, Ligon shall return all
equipment and property in his possession that belongs to CarMax, including all
files and programs stored electronically or otherwise that relate or refer to
CarMax, and all original and copies of documents, notes, memoranda or any other
written materials that relate or refer to CarMax, including material that
constitutes Confidential Information, other than information or documents
relating to Ligon’s CarMax compensation or benefit plans or programs in which he
participates or participated.

15. Dispute Resolution. Except for actions initiated by CarMax to enjoin a
breach by, and/or recover damages from, Ligon related to any violation of
Section 11 of this Agreement or of any of the restricted covenants referenced in
Section 13 of this Agreement, which CarMax may bring in an appropriate court of
law or equity, the parties agree that any dispute, claim or controversy arising
out of or relating to this Agreement, or the breach, termination or invalidity
thereof, shall be resolved by arbitration administered by the American
Arbitration Association and conducted in accordance with its Commercial
Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof, subject to
the following:

(a) The place of arbitration shall be Richmond, Virginia. The law to be applied
shall be the law of the Commonwealth of Virginia, without regard to its conflict
of laws rules, or federal law, as applicable.

(b) The arbitrator shall render a reasoned written opinion together with a
decision and may, to the extent deemed proper and consistent with applicable
law, award costs to the prevailing party. The arbitrator may not, however, make
an award relative to damages specifically excluded by this Agreement.

(c) Except as provided in paragraph (b) above, each party shall be responsible
for its own arbitration costs and expenses. Each party shall pay one-half of the
fees and expenses of the arbitrator.

16. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect.

17. Ambiguities in this Agreement. The parties acknowledge that this Agreement
has been drafted, prepared, negotiated and agreed to jointly, and to the extent
that any ambiguity should appear, now or at any time in the future, latent or
apparent, such ambiguity shall not be resolved or construed against either
party.

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18. Notices. All notices and other communications hereunder shall be in writing.
Any notice or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth:

If to Ligon, to his current residence address maintained in CarMax’s records.

If to CarMax, to:
 
CarMax, Inc.
12800 Tuckahoe Creek Parkway
Richmond, Virginia 23238-1115
Attention: General Counsel
 
Any party may send any notice or other communication hereunder to the intended
recipient at the address set forth using any other means (including personal
delivery, expedited courier, messenger services, telecopy, ordinary mail or
electronic mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it is actually received by the intended
recipient. Any party may change the address to which notices and other
communications hereunder are to be delivered by giving the other party notice in
the manner set forth herein.

19. Counterpart Agreements. This Agreement may be executed in multiple
counterparts, whether or not all signatories appear on these counterparts, and
each counterpart shall be deemed an original for all purposes.

20. Choice of Law. This Agreement shall be deemed performable by all parties in
the Commonwealth of Virginia, and the construction and enforcement of this
Agreement shall be governed by Virginia law without regard to its conflict of
laws rules.

21. Entire Agreement. This Agreement sets forth the entire agreement between the
parties, and, except as otherwise provided herein, fully supersedes any and all
prior agreements, understandings, or representations between the parties
pertaining to the subject matter of this Agreement, except that the parties
agree that those provisions of Ligon’s Employment Agreement that contemplate
performance subsequent to the cessation of Ligon’s employment thereunder,
including but not limited to Articles 8, 9 and 10 of the Employment Agreement,
shall continue in full force and effect.

 

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22. Binding Effect of Agreement. This Agreement shall be binding upon Ligon,
CarMax and their heirs, administrators, representatives, executors, successors
and permitted assigns.

The parties have duly executed this Agreement as of the date first written
above.

CARMAX, INC.

/s/ Thomas J. Folliard    
Thomas J. Folliard
President and Chief Executive Officer

/s/ Austin Ligon    
AUSTIN LIGON

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