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EXHIBIT 10.1

CARMAX, INC.
2002 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED MARCH 27, 2009)

 
1.           Purpose. The purpose of this CarMax, Inc. 2002 Stock Incentive Plan
(the “Plan”) is to further the long term stability and financial success of
CarMax, Inc. (the “Company”) by attracting and retaining key employees of the
Company through the use of stock incentives. It is believed that ownership of
Company Stock will stimulate the efforts of those employees upon whose judgment
and interest the Company is and will be largely dependent for the successful
conduct of its business. It is also believed that Incentive Awards granted to
employees under this Plan will strengthen their desire to remain with the
Company and will further the identification of those employees’ interests with
those of the Company’s shareholders.
 
2.           Definitions. As used in the Plan, the following terms have the
meanings indicated:
 
(a)           “Act” means the Securities Exchange Act of 1934, as amended.

(b)           “Applicable Withholding Taxes” means the minimum aggregate amount
of federal, state and local income and payroll taxes that the Company is
required by applicable law to withhold in connection with any Incentive Award.

(c)           “Board” means the Board of Directors of the Company.

(d)           “Change of Control” means the occurrence of either of the
following events: (i) any individual, entity or group (as defined in Section
13(d)(3) of the Act) becomes, or obtains the right to become, the beneficial
owner (as defined in Rule 13(d)(3) under the Act) of Company securities having
20% or more of the combined voting power of the then outstanding securities of
the Company that may be cast for the election of directors to the Board of the
Company (other than as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or (ii) as the result of, or in
connection with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Company before
such transactions shall cease to constitute a majority of the Board or of the
board of directors of any successor to the Company.

(e)           “Code” means the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor
or replacement provision of the Code.

(f)           “Committee” means the committee appointed by the Board as
described under Section 14.

(g)           “Company” means CarMax, Inc., a Virginia corporation.

 
 

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(h)           “Company Stock” means the common stock of the Company. In the
event of a change in the capital structure of the Company, the shares resulting
from such a change shall be deemed to be Company Stock within the meaning of the
Plan.

(i)           “Date of Grant” means the date on which an Incentive Award is
granted by the Committee.

(j)           “Disability” or “Disabled” means, as to an Incentive Stock Option,
a disability within the meaning of Code Section 22(e)(3), and, as to a
Restricted Stock Unit, a disability within the meaning of Code Section
409A(a)(2)(C).  As to all other forms of Incentive Awards, the Committee shall
determine whether a disability exists and such determination shall be
conclusive.

(k)           “Fair Market Value” means, for any given date, the fair market
value of the Company Stock as of such date, as determined by the Committee on a
basis consistently applied based on actual transactions in Company Stock on the
exchange on which it generally has the greatest trading volume.

(l)           “Incentive Award” means, collectively, the award of an Option,
Stock Appreciation Right or Restricted Award under the Plan.

(m)           “Incentive Stock Option” means an Option intended to meet the
requirements of, and qualify for favorable federal income tax treatment under,
Code Section 422.

(n)           “Mature Shares” means shares of Company Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (i) has held for at least six (6) months or (ii) has
purchased on the open market.

(o)           “Maturity Date” means, with respect to a Restricted Stock Unit,
the date upon which all restrictions set forth in Section 6(b) with respect to
such Restricted Stock Unit have lapsed or been removed pursuant to Section 6(g)
or Section 6(h).

(p)           “Nonstatutory Stock Option” means an Option that does not meet the
requirements of Code Section 422 or, even if meeting the requirements of Code
Section 422, is not intended to be an Incentive Stock Option and is so
designated.

(q)           “Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Act.

(r)           “Option” means a right to purchase Company Stock granted under
Section 7 of the Plan, at a price determined in accordance with the Plan.

(s)           “Parent” means, with respect to any corporation, a parent of that
corporation within the meaning of Code Section 424(e).

(t)           “Participant” means any employee who receives an Incentive Award
under the Plan.

 
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(u)           “Reload Feature” means a feature of an Option described in a
Participant’s stock option agreement that authorizes the automatic grant of a
Reload Option in accordance with the provisions of Section 9(e).

(v)           “Restricted Award” means, collectively, the award of Restricted
Stock or Restricted Stock Units.

(w)           “Reload Option” means an Option automatically granted to a
Participant equal to the number of shares of Mature Shares delivered by the
Participant in payment of the exercise price of an Option having a Reload
Feature.

(x)           “Restricted Stock” means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 6.

(y)           “Restricted Stock Unit” means an award granted upon the terms and
subject to the restrictions and limitations set forth in Section 6 that entitles
the holder to receive a payment equal to the Fair Market Value of a share of
Company Stock on the Maturity Date.

(z)           “Rule 16b-3” means Rule 16b-3 adopted pursuant to Section 16(b) of
the Act. A reference in the Plan to Rule 16b-3 shall include a reference to any
corresponding rule (or number redesignation) of any amendments to Rule 16b-3
adopted after the effective date of the Plan’s adoption.

(aa)           “Stock Appreciation Right” means a right to receive amounts from
the Company awarded upon the terms and subject to the restrictions set forth in
Section 8.

(bb)           “Subsidiary” means any business entity (including, but not
limited to, a corporation, partnership or limited liability company) of which a
company directly or indirectly owns one hundred percent (100%) of the voting
interests of the entity unless the Committee determines that the entity should
not be considered a Subsidiary for purposes of the Plan. If a company owns less
than one hundred percent (100%) of the voting interests of the entity, the
entity will be considered a Subsidiary for purposes of the Plan only if the
Committee determines that the entity should be so considered. For purposes of
Incentive Stock Options, Subsidiary shall be limited to a subsidiary within the
meaning of Code Section 424(f).

(cc)           “10% Shareholder” means a person who owns, directly or
indirectly, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary of the Company.
Indirect ownership of stock shall be determined in accordance with Code Section
424(d).

3.           General. Incentive Awards may be granted under the Plan in the form
of Options, Stock Appreciation Rights and Restricted Awards. Options granted
under the Plan may be Incentive Stock Options or Nonstatutory Stock Options. The
provisions of the Plan referring to Rule 16b-3 shall apply only to Participants
who are subject to Section 16 of the Act.
 
 
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4.           Stock. Subject to Section 13 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 33,500,000 shares of Company Stock,
which shall be authorized, but unissued shares. Subject to Section 13 of the
Plan, no more than 3,000,000 shares of Company Stock may be allocated to the
Incentive Awards that are granted to any one Participant during any single
calendar year. Shares of Company Stock that have not been issued under the Plan
and that are allocable to Incentive Awards or portions thereof that expire or
otherwise terminate unexercised may again be subjected to an Incentive Award
under the Plan. Similarly, if any shares of Restricted Stock issued pursuant to
the Plan are reacquired by the Company as a result of a forfeiture of such
shares pursuant to the Plan, such shares may again be subjected to an Incentive
Award under the Plan. For purposes of determining the number of shares of
Company Stock that are available for Incentive Awards under the Plan, such
number shall include the number of shares of Company Stock under an Incentive
Award surrendered by a Participant or retained by the Company in payment of
Applicable Withholding Taxes.  Restricted Stock Units shall reduce the number of
shares of Company Stock available for Incentive Awards under the Plan only to
the extent such Restricted Stock Units are paid in shares of Company Stock.

5.           Eligibility.

(a)           All present and future employees of the Company (or any Parent or
Subsidiary of the Company, whether now existing or hereafter created or
acquired) shall be eligible to receive Incentive Awards under the Plan. The
Committee shall have the power and complete discretion, as provided in Section
14, to select which employees shall receive Incentive Awards and to determine
for each such Participant the terms and conditions, the nature of the award and
the number of shares or units to be allocated to each Participant as part of
each Incentive Award.

(b)           The grant of an Incentive Award shall not obligate the Company or
any Parent or Subsidiary of the Company to pay a Participant any particular
amount of remuneration, to continue the employment of the Participant after the
grant or to make further grants to the Participant at any time thereafter.

6.           Restricted Awards.

(a)           Whenever the Committee deems it appropriate to grant a Restricted
Award, notice shall be given to the Participant stating the number of shares of
Restricted Stock or number of Restricted Stock Units for which the Restricted
Award is granted and the terms and conditions to which the Restricted Award is
subject. This notice may be given in writing or in electronic form and shall be
the award agreement between the Company and the Participant. A Restricted Award
may be made by the Committee in its discretion without cash consideration.

(b)           A Restricted Award issued pursuant to the Plan shall be subject to
the following restrictions:

(i)           None of such shares or units may be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered or disposed of until the
restrictions on such shares or units shall have lapsed or shall have been
removed pursuant to paragraph (g) or (h) below.

 
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(ii)           The restrictions on such shares or units must remain in effect
and may not lapse for a period of three years beginning on the Date of Grant,
except as provided under paragraph (g) or (h) in the case of Disability,
retirement, death or a Change in Control.

(iii)           If a Participant ceases to be employed by the Company or a
Parent or Subsidiary of the Company, the Participant shall forfeit to the
Company any Restricted Awards, the restrictions on which shall not have lapsed
or shall not have been removed pursuant to paragraph (g) or (h) below, on the
date such Participant shall cease to be so employed.

(iv)           The Committee may establish such other restrictions on such
shares or units that the Committee deems appropriate, including, without
limitation, events of forfeiture and performance requirements for the vesting of
awards.

(c)           Upon the acceptance by a Participant of an award of Restricted
Stock, such Participant shall, subject to the restrictions set forth in
paragraph (b) above, have all the rights of a shareholder with respect to the
shares of Restricted Stock subject to such award of Restricted Stock, including,
but not limited to, the right to vote such shares of Restricted Stock and the
right to receive all dividends and other distributions paid thereon.
Certificates, if any, representing Restricted Stock shall bear a legend
referring to the restrictions set forth in the Plan and the Participant’s award
agreement. If shares of Restricted Stock are issued without certificates, notice
of the restrictions set forth in the Plan and the Participant’s Award Agreement
must be given to the shareholder in the manner required by law.

(d)           Each Restricted Stock Unit shall entitle the Participant, on the
Maturity Date, to receive from the Company an amount equal to the Fair Market
Value on the Maturity Date of one share of Company Stock subject to any
limitations or enhancements on such value as the Committee may set forth in the
notice of the Restricted Stock Unit award.

(e)           The manner in which the Company’s obligation arising on the
Maturity Date of a Restricted Stock Unit shall be paid and date of payment shall
be determined by the Committee and shall be set forth in the Participant’s
Restricted Stock Unit agreement.  The Committee may provide for payment in
Company Stock or cash or a fixed combination of Company Stock and cash, or the
Committee may reserve the right to determine the manner of payment at the time
the payment is made.  Shares of Company Stock issued as payment for a Restricted
Stock Unit shall be valued at Fair Market Value on the Maturity Date subject to
any limitations or enhancements on such value as the Committee may set forth in
the notice of the Restricted Stock Unit award.

(f)           A Participant receiving an award of Restricted Stock Units shall
not possess any rights of a shareholder with respect to the Restricted Stock
Units and shall be entitled to receive payments equivalent to dividends and
other distributions paid on shares of Company Stock only to the extent set forth
in the Restricted Stock Unit agreement.

(g)           The Committee shall establish as to each Restricted Award the
terms and conditions upon which the restrictions set forth in paragraph (b)
above shall lapse. Such terms and conditions may include, without limitation,
the lapsing of such restrictions as a result of the Disability, death or
retirement of the Participant or the occurrence of a Change of Control.

 
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(h)           Notwithstanding the forfeiture provisions of paragraph (b)(iii)
above, the Committee may at any time, in its sole discretion, accelerate the
time at which any or all restrictions will lapse or remove any and all such
restrictions.

(i)           Each Participant shall agree at the time his Restricted Award is
granted, and as a condition thereof, to pay to the Company or make arrangements
satisfactory to the Company regarding the payment to the Company of, Applicable
Withholding Taxes. Until such amount has been paid or arrangements satisfactory
to the Company have been made, no stock certificates free of a legend reflecting
the restrictions set forth in paragraph (b) above shall be issued to such
Participant for Restricted Stock.  If Restricted Stock is being issued to a
Participant without the use of a stock certificate, the restrictions set forth
in paragraph (b) shall be communicated to the shareholder in the manner required
by law. As an alternative to making a cash payment to the Company to satisfy
Applicable Withholding Taxes for Restricted Stock, if the grant so provides, or
the Committee by separate action so permits, the Participant may elect to (i)
deliver Mature Shares or (ii) have the Company retain that number of shares of
Company Stock that would satisfy all or a specified portion of the Applicable
Withholding Taxes. Any such election shall be made only in accordance with
procedures established by the Committee. The Committee has the express authority
to change any election procedure it establishes at any time.  Applicable
Withholding Taxes attributable to Restricted Stock Units may be withheld from
the payment by the Company to the Participant for such Restricted Stock Units.

7.           Stock Options.

(a)           Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares for which
Options are granted, the Option price per share, whether the Options are
Incentive Stock Options or Nonstatutory Stock Options, the extent, if any, to
which Stock Appreciation Rights are granted, and the conditions to which the
grant and exercise of the Options are subject. This notice may be given in
writing or in electronic form and shall be the stock option agreement between
the Company and the Participant.

(b)           The exercise price of shares of Company Stock covered by an
Incentive Stock Option shall be not less than 100% of the Fair Market Value of
such shares on the Date of Grant; provided that if an Incentive Stock Option is
granted to an employee who, at the time of the grant, is a 10% Shareholder, then
the exercise price of the shares covered by the Incentive Stock Option shall be
not less than 110% of the Fair Market Value of such shares on the Date of Grant.

(c)           The exercise price of shares of Company Stock covered by a
Nonstatutory Stock Option shall be not less than 100% of the Fair Market Value
of such shares on the Date of Grant.

(d)           Options may be exercised in whole or in part at such times as may
be specified by the Committee in the Participant’s stock option agreement;
provided that the exercise provisions for Incentive Stock Options shall in all
events not be more liberal than the following provisions:

(i)           No Incentive Stock Option may be exercised after the first to
occur of:

 
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(x)           Ten years (or, in the case of an Incentive Stock Option granted to
a 10% Shareholder, five years) from the Date of Grant,

(y)           Three months following the date of the Participant’s termination
of employment with the Company and any Parent or Subsidiary of the Company for
reasons other than death or Disability; or

(z)           One year following the date of the Participant’s termination of
employment by reason of death or Disability.

(ii)           Except as otherwise provided in this paragraph, no Incentive
Stock Option may be exercised unless the Participant is employed by the Company
or a Parent or Subsidiary of the Company at the time of the exercise and has
been so employed at all times since the Date of Grant. If a Participant’s
employment is terminated other than by reason of death or Disability at a time
when the Participant holds an Incentive Stock Option that is exercisable (in
whole or in part), the Participant may exercise any or all of the then
exercisable portion of the Incentive Stock Option (to the extent exercisable on
the date of termination) within three months after the Participant’s termination
of employment. If a Participant’s employment is terminated by reason of his
Disability at a time when the Participant holds an Incentive Stock Option that
is exercisable (in whole or in part), the Participant may exercise any or all of
the then exercisable portion of the Incentive Stock Option (to the extent
exercisable on the date of Disability) within one year after the Participant’s
termination of employment. If a Participant’s employment is terminated by reason
of his death at a time when the Participant holds an Incentive Stock Option that
is exercisable (in whole or in part), the then exercisable portion of the
Incentive Stock Option may be exercised (to the extent exercisable on the date
of death) within one year after the Participant’s death by the person to whom
the Participant’s rights under the Incentive Stock Option shall have passed by
will or by the laws of descent and distribution.

(iii)           An Incentive Stock Option, by its terms, shall be exercisable in
any calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable for the first time during the calendar
year does not exceed $100,000 (the “Limitation Amount”). Incentive Stock Options
granted under the Plan and all other plans of the Company and any Parent or
Subsidiary of the Company shall be aggregated for purposes of determining
whether the Limitation Amount has been exceeded. The Committee may impose such
conditions as it deems appropriate on an Incentive Stock Option to ensure that
the foregoing requirement is met. If Incentive Stock Options that first become
exercisable in a calendar year exceed the Limitation Amount, the excess Options
will be treated as Nonstatutory Stock Options to the extent permitted by law.

(e)           The Committee may, in its discretion, grant Options that by their
terms become fully exercisable upon a Change of Control notwithstanding other
conditions on exercisability in the stock option agreement.

 
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8.           Stock Appreciation Rights.

(a)           Whenever the Committee deems it appropriate, Stock Appreciation
Rights may be granted in connection with all or any part of an Option, either
concurrently with the grant of the Option or, if the Option is a Nonstatutory
Stock Option, by an amendment to the Option at any time thereafter during the
term of the Option. Stock Appreciation Rights may be exercised in whole or in
part at such times and under such conditions as may be specified by the
Committee in the Participant’s stock option agreement. The following provisions
apply to all Stock Appreciation Rights that are granted in connection with
Options:

(i)           Stock Appreciation Rights shall entitle the Participant, upon
exercise of all or any part of the Stock Appreciation Rights, to surrender to
the Company unexercised that portion of the underlying Option relating to the
same number of shares of Company Stock as is covered by the Stock Appreciation
Rights (or the portion of the Stock Appreciation Rights so exercised) and to
receive in exchange from the Company an amount equal to the excess of (x) the
Fair Market Value on the date of exercise of the Company Stock covered by the
surrendered portion of the underlying Option over (y) the exercise price of the
Company Stock covered by the surrendered portion of the underlying Option. The
Committee may limit the amount that the Participant will be entitled to receive
upon exercise of the Stock Appreciation Right.

(ii)           Upon the exercise of a Stock Appreciation Right and surrender of
the related portion of the underlying Option, the Option, to the extent
surrendered, shall not thereafter be exercisable.

(iii)           The Committee may, in its discretion, grant Stock Appreciation
Rights in connection with Options which by their terms become fully exercisable
upon a Change of Control, which Stock Appreciation Rights shall only be
exercisable following a Change of Control. The underlying Option may provide
that such Stock Appreciation Rights shall be payable solely in cash. The terms
of the underlying Option shall provide the method by which the value of the
Company Stock on the date of exercise shall be calculated based on one of the
following alternatives:

(x)            the Fair Market Value of the Company Stock on the day of
exercise;

(y)           the highest closing price of the Company Stock on the exchange on
which it is then traded, during the 90 days immediately preceding the Change of
Control; or

(z)            the greater of (x) or (y).
 
(iv)           Subject to any further conditions upon exercise imposed by the
Committee, a Stock Appreciation Right shall be exercisable only to the extent
that the related Option is exercisable, and shall expire no later than the date
on which the related Option expires.

 
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(v)           A Stock Appreciation Right may only be exercised at a time when
the Fair Market Value of the Company Stock covered by the Stock Appreciation
Right exceeds the exercise price of the Company Stock covered by the underlying
Option.
 
 
(b)           Whenever the Committee deems it appropriate, Stock Appreciation
Rights may be granted without related Options. The terms and conditions of the
award shall be set forth in a Stock Appreciation Rights agreement between the
Company and the Participant in written or electronic form. The following
provisions apply to all Stock Appreciation Rights that are granted without
related Options:

(i)           Stock Appreciation Rights shall entitle the Participant, upon the
exercise of all or any part of the Stock Appreciation Rights, to receive from
the Company an amount equal to the excess of (x) the Fair Market Value on the
date of exercise of the Company Stock covered by the surrendered Stock
Appreciation Rights over (y) the Fair Market Value on the Date of Grant of the
Company Stock covered by the Stock Appreciation Rights. The Committee may limit
the amount that the Participant may be entitled to receive upon exercise of the
Stock Appreciation Right.

(ii)           Stock Appreciation Rights shall be exercisable, in whole or in
part, at such times as the Committee shall specify in the Participant’s Stock
Appreciation Rights agreement.

(c)           The manner in which the Company’s obligation arising upon the
exercise of a Stock Appreciation Right shall be paid shall be determined by the
Committee and shall be set forth in the Participant’s stock option agreement (if
the Stock Appreciation Rights are related to an Option) or Stock Appreciation
Rights agreement. The Committee may provide for payment in Company Stock or
cash, or a fixed combination of Company Stock or cash, or the Committee may
reserve the right to determine the manner of payment at the time the Stock
Appreciation Right is exercised. Shares of Company Stock issued upon the
exercise of a Stock Appreciation Right shall be valued at their Fair Market
Value on the date of exercise.

9.           Method of Exercise of Options and Stock Appreciation Rights.

(a)           Options and Stock Appreciation Rights may be exercised by the
Participant by giving notice of the exercise to the Company, stating the number
of shares the Participant has elected to purchase under the Option or the number
of Stock Appreciation Rights he has elected to exercise. In the case of a
purchase of shares under an Option, such notice shall be effective only if
accompanied by the exercise price in full paid in cash; provided that, if the
terms of an Option so permit, or the Committee by separate action so permits,
the Participant may (i) deliver Mature Shares (valued at their Fair Market Value
on the date of exercise) in satisfaction of all or any part of the exercise
price, (ii) to the extent permitted under applicable laws and regulations,
deliver a properly executed exercise notice together with irrevocable
instructions to a broker to exercise all or part of the Option, sell a
sufficient number of shares of Company Stock to cover the exercise price,
Applicable Withholding Taxes (if required by the Committee) and other costs and
expenses associated with such sale and deliver promptly the amount necessary to
pay the exercise price and any Applicable Withholding Taxes or (iii) request
that the Company reduce the number of shares of Company Stock issued by the
number of shares having an aggregate Fair Market Value equal to the aggregate
exercise price. The Participant shall not be entitled to make payment of the
exercise price other than in cash unless provisions for an alternative payment
method are included in the Participant’s stock option agreement or are agreed to
in writing by the Company with the approval of the Committee prior to exercise
of the Option.

 
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(b)           The Company may place on any certificate representing Company
Stock issued upon the exercise of an Option or a Stock Appreciation Right any
legend deemed desirable by the Company’s counsel to comply with federal or state
securities laws, and the Company may require of the participant a customary
written indication of his investment intent. Until the Participant has made any
required payment, including any Applicable Withholding Taxes, and has had issued
to him a certificate for the shares of Company Stock acquired, he shall possess
no shareholder rights with respect to the shares.

(c)           Each Participant shall agree as a condition of the exercise of an
Option or a Stock Appreciation Right to pay to the Company Applicable
Withholding Taxes, or make arrangements satisfactory to the Company regarding
the payment to the Company of such amounts. Until Applicable Withholding Taxes
have been paid or arrangements satisfactory to the Company have been made, no
stock certificate shall be issued upon the exercise of an Option or a Stock
Appreciation Right.

As an alternative to making a cash payment to the Company to satisfy Applicable
Withholding Taxes if the Option or Stock Appreciation Rights agreement so
provides, or the Committee by separate action so provides, a Participant may
elect to (i) deliver Mature Shares or (ii) have the Company retain that number
of shares of Company Stock that would satisfy all or a specified portion of the
Applicable Withholding Taxes. Any such election shall be made only in accordance
with procedures established by the Committee.

(d)           Notwithstanding anything herein to the contrary, if the Company is
subject to Section 16 of the Act, Options and Stock Appreciation Rights shall
always be granted and exercised in such a manner as to conform to the provisions
of Rule 16b-3.

(e)           If a Participant exercises an Option that has a Reload Feature by
delivering Mature Shares in payment of the exercise price, the Participant shall
automatically be granted a Reload Option. At the time the Option with a Reload
Feature is awarded, the Committee may impose such restrictions on the Reload
Option as it deems appropriate, but in any event the Reload Option shall be
subject to the following restrictions:

(i)           The exercise price of shares of Company Stock covered by a Reload
Option shall be not less than 100% of the Fair Market Value of such shares on
the Date of Grant of the Reload Option;

(ii)           If and to the extent required by Rule 16b-3, or if so provided in
the Option agreement, a Reload Option shall not be exercisable within the first
six months after it is granted; provided that, subject to the terms of the
Participant’s stock option agreement, this restriction shall not apply if the
Participant becomes Disabled or dies during the six-month period;

(iii)           The Reload Option shall be subject to the same restrictions on
exercisability imposed on the underlying Option (possessing the Reload Feature)
that was exercised unless the Committee specifies different limitations;

 
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(iv)           The Reload Option shall not be exercisable until the expiration
of any retention holding period imposed on the disposition of any shares of
Company Stock covered by the underlying Option (possessing the Reload Feature)
that was exercised; and

(v)           The Reload Option shall not have a Reload Feature.

10.           Nontransferability of Incentive Awards. Incentive Awards shall not
be transferable unless so provided in the award agreement or an amendment to the
award agreement; provided, however, that no transfer for value or consideration
will be permitted without the prior approval of the Company’s shareholders.
Options and Stock Appreciation Rights which are intended to be exempt under Rule
16b-3 (to the extent required by Rule 16b-3 at the time of grant or amendment of
the award agreement), by their terms, shall not be transferable by the
Participant except by will or by the laws of descent and distribution and shall
be exercisable, during the Participant’s lifetime, only by the Participant or by
his guardian or legal representative.

11.           Effective Date of the Plan and Transition.

(a)           This Plan shall be effective as of the date of separation between
the Company and Circuit City Stores, Inc., and shall be submitted to the
shareholders of Circuit City Stores, Inc. for approval prior to the separation.
No Option or Stock Appreciation Right shall be exercisable and no Company Stock
shall be issued under the Plan until (i) the Plan has been approved by
shareholders, (ii) shares issuable under the Plan have been registered with the
Securities and Exchange Commission and accepted for listing on the New York
Stock Exchange upon notice of issuance, and (iii) the requirements of any
applicable state securities laws have been met.

(b)           As of the date of separation between the Company and Circuit City
Stores, Inc., this Plan shall assume obligations, including outstanding awards,
from the Circuit City Stores, Inc. 1988 Stock Incentive Plan and the Circuit
City Stores, Inc. 1994 Stock Incentive Plan with respect to employees of the
Company or otherwise, to the extent provided in an agreement between the Company
and Circuit City Stores, Inc.

12.           Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on the day immediately
preceding the tenth anniversary of the date of separation between the Company
and Circuit City Stores, Inc. No Incentive Awards shall be granted under the
Plan after its termination. The Board may terminate the Plan or may amend the
Plan in such respects as it shall deem advisable; provided that, if and to the
extent required by the Code or Rule 16b-3, no change shall be made that
increases the total number of shares of Company Stock reserved for issuance
pursuant to Incentive Awards granted under the Plan (except pursuant to Section
13), expands the class of persons eligible to receive Incentive Awards, or
materially increases the benefits accruing to Participants under the Plan unless
such change is authorized by the shareholders of the Company. Notwithstanding
the foregoing, the Board may unilaterally amend the Plan and Incentive Awards as
it deems appropriate to ensure compliance with Rule 16b-3 and to cause Incentive
Awards to meet the requirements of the Code, including Code Sections 162(m) and
422, and regulations thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant’s rights under an Incentive Award
previously

 
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granted to him. In no event shall any change be made to the Plan that permits
repricing of Options unless such change is authorized by the shareholders of the
Company.

13.           Change in Capital Structure.

(a)           In the event of a stock dividend, stock split or combination of
shares, recapitalization, merger in which the Company is the surviving
corporation, reorganization, reincorporation, consolidation, or other change in
the Company’s capital stock without the receipt of consideration by the Company
(including, but not limited to, the creation or issuance to shareholders
generally of rights, options or warrants for the purchase of common stock or
preferred stock of the Company), the number and kind of shares of stock or
securities of the Company to be subject to the Plan and to Incentive Awards then
outstanding or to be granted thereunder, the aggregate and individual maximum
number of shares or securities which may be delivered under the Plan pursuant to
Section 4, and the exercise price and other terms and relevant provisions of
Incentive Awards shall be appropriately adjusted by the Committee, whose
determination shall be binding on all persons; provided, however, that no
adjustment of an outstanding Option or Stock Appreciation Right may be made that
would create a deferral of income or a modification, extension or renewal of
such Option or Stock Appreciation Right under Code Section 409A except as may be
permitted in applicable Treasury Regulations. If the adjustment would produce
fractional shares with respect to any Restricted Award or unexercised Option or
Stock Appreciation Right, the Committee may adjust appropriately the number of
shares covered by the Incentive Award so as to eliminate the fractional shares.

(b)           If the Company is a party to a consolidation or merger in which
the Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company’s outstanding stock by a single
person or entity, or a sale or transfer of substantially all of the Company’s
assets, the Committee may take such actions with respect to outstanding
Incentive Awards as the Committee deems appropriate.

(c)           Any determination made or action taken under this Section 13 by
the Committee shall be final and conclusive and may be made or taken without the
consent of any Participant.

14.           Administration Of The Plan. The Plan shall be administered by a
Committee, which shall be appointed by the Board, consisting of not less than
three members of the Board. Subject to paragraph (e) below, the Committee shall
be the Compensation Committee of the Board unless the Board shall appoint
another Committee to administer the Plan. The Committee shall have general
authority to impose any limitation or condition upon an Incentive Award that the
Committee deems appropriate to achieve the objectives of the Incentive Award and
the Plan and, without limitation and in addition to powers set forth elsewhere
in the Plan, shall have the following specific authority:

(a)           The Committee shall have the power and complete discretion to
determine (i) which eligible employees shall receive an Incentive Award and the
nature of the Incentive Award, (ii) the number of shares of Company Stock to be
covered by each Incentive Award, (iii) whether Options shall be Incentive Stock
Options or Nonstatutory Stock Options, (iv) when, whether and to what extent
Stock Appreciation Rights shall be granted in connection with Options, (v) the

 
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Fair Market Value of Company Stock, (vi) the time or times when an Incentive
Award shall be granted, (vii) whether an Incentive Award shall become vested
over a period of time and when it shall be fully vested, (viii) when Options or
Stock Appreciation Rights may be exercised, (ix) whether a Disability exists,
(x) the manner in which payment will be made upon the exercise of Options or
Stock Appreciation Rights, (xi) conditions relating to the length of time before
disposition of Company Stock received upon the exercise of Options or Stock
Appreciation Rights is permitted, (xii) whether to approve a Participant’s
election (A) to deliver Mature Shares to satisfy Applicable Withholding Taxes or
(B) to have the Company withhold from the shares to be issued upon the exercise
of a Nonstatutory Stock Option or a Stock Appreciation Right the number of
shares necessary to satisfy Applicable Withholding Taxes, (xiii) the terms and
conditions applicable to Restricted Awards, (xiv) the terms and conditions on
which restrictions upon Restricted Awards shall lapse, (xv) whether to
accelerate the time at which any or all restrictions with respect to Restricted
Awards will lapse or be removed, (xvi) notice provisions relating to the sale of
Company Stock acquired under the Plan, and (xvii) any additional requirements
relating to Incentive Awards that the Committee deems appropriate.
Notwithstanding the foregoing, no “tandem stock options” (where two stock
options are issued together and the exercise of one option affects the right to
exercise the other option) may be issued in connection with Incentive Stock
Options. The Committee shall have the power to amend the terms of previously
granted Incentive Awards so long as the terms as amended are consistent with the
terms of the Plan and provided that the consent of the Participant is obtained
with respect to any amendment that would be detrimental to the Participant,
except that such consent will not be required if such amendment is for the
purpose of complying with Rule 16b-3 or any requirement of the Code applicable
to the Incentive Award.

(b)           The Committee may adopt rules and regulations for carrying out the
Plan. The interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.

(c)           A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument signed by all
of the members, and any action so taken shall be fully effective as if it had
been taken at a meeting.

(d)           The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee. If a
Committee of the Board is appointed to serve as the Committee, such Committee
shall have, in connection with the administration of the Plan, the powers
possessed by the Board, including the power to delegate a subcommittee of the
administrative powers the Committee is authorized to exercise, subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board.

 
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(e)            To the extent permitted by applicable law, the Committee may
delegate to one or more Officers the authority to do one or both of the
following: (i) designate Participants who are not Officers to be recipients of
Incentive Awards, and (ii) determine the number of shares of Company Stock or
units to be subject to such Incentive Awards granted to such Participants;
provided, however, that the Committee’s delegation of this authority shall
specify the total number of shares of Company Stock or units subject to such
delegation, and that, in no event, shall such Officer grant an Incentive Award
to himself or herself.  All other terms and conditions of any Incentive Award
made pursuant to this delegation of authority shall be determined by the
Committee.

(f)           All members of the Committee must be “outside directors” as
described in Code Section 162(m). In addition, all members of the Committee must
be “non-employee directors” as defined in Rule 16b-3.

15.           Notice. All notices and other communications required or permitted
to be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows:

(a)           If to the Company—at its principal business address to the
attention of the Secretary;

(b)           If to any Participant—at the last address of the Participant known
to the sender at the time the notice or other communication is sent.

16.           Shareholder Rights. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Company Stock subject to an Incentive Award unless and until such
Participation has satisfied all requirements under the terms of the Incentive
Award.

17.           No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Incentive Award granted under the Plan shall confer upon
any Participant any right to continue to serve the Company (or a Parent or
Subsidiary of the Company) in the capacity in effect at the time the Incentive
Award was granted or shall affect the right of the Company (or a Parent or
Subsidiary of the Company) to terminate the employment of a Participant with or
without notice and with or without cause.

18.           Interpretation. The terms of the Plan shall be governed by the
laws of the Commonwealth of Virginia, without regard to conflict of law
provisions at any jurisdiction. The terms of this Plan are subject to all
present and future regulations and rulings of the Secretary of the Treasury or
his delegate relating to the qualification of Incentive Stock Options under the
Code. If any provision of the Plan conflicts with any such regulation or ruling,
then that provision of the Plan shall be void and of no effect. As to all
Incentive Stock Options and all Nonstatutory Stock Options with an exercise
price of at least 100% of Fair Market Value of the Company Stock on the Date of
Grant, this Plan shall be interpreted for such Options to be excluded from
applicable employee remuneration for purposes of Code Section 162(m).

 
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IN WITNESS HEREOF, this instrument has been executed as of the 27th day of
March, 2009.
 
 

 
CARMAX, INC.
       
 
By: /s/ Keith D. Browning
 
Keith D. Browning
 
Executive Vice President &
 
Chief Financial Officer

 

 

 
 
 

 
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