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CARMAX, INC.

BENEFIT RESTORATION PLAN

Originally Effective
October 1, 2002

As Amended and Restated
June 30, 2011
 
 
 
 
 
 
 
 
 
 
 

 
 

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TABLE OF CONTENTS

Article I
Purpose/Definitions 
1

 
 
1.1
Purpose 
1

 
1.2
Structure 
1

 
1.3
Definitions 
1

 
Article II
Eligibility 
 
5

 
 
2.1
Eligible Employees 
5

 
2.2
Participation 
5

 
2.3
No Duplication of Benefits 
5

 
Article III
Benefits 
6

 
 
3.1
Minimum Service Requirement 
6

 
3.2
Supplemental Benefit 
6

 
3.3
Adjustment for Early or Late Commencement 
7

 
3.4
Maximum Benefit 
7

 
3.5
Additional Benefit Service 
8

 
3.6
Freezing Benefit Service 
8

 
Article IV
Computation and Payment of Supplemental Benefit 
9

 
 
4.1
Computation 
9

 
4.2
Payment 
9

 
4.3
Payments to Key Employees 
10

 
Article V
Computation and Payment of Survivor Benefit 
 
11

 
 
5.1
Pre-Retirement Survivor Benefit 
11

 
5.2
Post-Retirement Survivor Benefit 
11

 
5.3
Actuarial Assumptions 
12

 
5.4
Medium of Payment 
12

 
Article VI
Administration 
13

 
 
6.1
Plan Administrator 
13

 
6.2
Appointment of the Committee 
13

 
6.3
Powers of the Committee 
13

 
6.4
Indemnification 
13

 
6.5
Binding Decisions or Actions 
14

 
6.6
Discretion 
14

 
6.7
Domestic Relations Orders 
14

 
 

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Article VII
Claims 
15

 
 
7.1
Right to File Claim 
15

 
7.2
Denial of Claim 
15

 
7.3
Claims Review Procedure 
15

 
7.4
Decision on Review
16

 
7.5
Legal Action
16

 
7.6
Exclusive Forum
16

 
Article VIII
Change in Control/Informal Funding
17

 
 
8.1
Effect of Change in Control 
17

 
Article IX
Amendment and Termination 
18

 
 
9.1
Amendment
18

 
9.2
Termination 
18

 
Article X
Miscellaneous 
 
19

 
 
10.1
Tax Matters 
19

 
10.2
Rights Under the Plan 
19

 
10.3
Effect on Employment 
19

 
10.4
Successors 
19

 
10.5
Notice 
19

 
10.6
Headings
20

 
10.7
Construction 
20

 
10.8
Invalid or Unenforceable Provisions 
20

 
10.9
Errors and Omissions 
20

 
10.10
Lost Participants or Beneficiaries
20

 
10.11
Facility of Payment to a Minor
20

 
10.12
Governing Law
20

 
10.13
Assumption of Liabilities from Predecessor Plan
21

 
10.14
Savings Clause
21

 
Appendix A  Provisions Applicable to a Pre-2005 Supplemental Benefit 
22

 

 
 

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Introduction

The provisions of this CarMax, Inc. Benefit Restoration Plan (the “Plan”) were
originally effective October 1, 2002.  The Plan has been amended and restated
from time to time since that date.  Effective January 1, 2009, this Plan was
amended to cease additional benefit accruals of all Plan Participants effective
as of December 31, 2008, and to limit participation in the Plan to those
individuals who were Plan Participants as of December 31, 2008.  This amendment
and restatement is effective June 30, 2011.

Since January 1, 2005, the Plan has been operated in good faith compliance with
the requirements of Section 409A of the Code.  Effective January 1, 2005, the
Plan was amended to conform the written terms of the Plan to the requirements of
Section 409A of the Code.  These amendments applied solely to amounts accrued on
and after January 1, 2005, plus any amounts accrued prior to January 1, 2005,
that are not earned and vested as of December 31, 2004.  Appendix A attached
hereto describes the rules that apply under prior law to amounts accrued prior
to January 1, 2005, that are earned and vested as of December 31, 2004, and
which shall remain subject to the terms of the Plan as in effect on December 31,
2004.

Article I
Purpose/Definitions
 

1.1           Purpose.  The Company maintains the Plan to provide deferred
compensation for certain key employees of the Company and its Affiliated
Companies who are expected to contribute significantly to the growth of the
Company and its Affiliated Companies.  The Board has determined that the
benefits to be provided under the Plan are reasonable and appropriate
compensation for the services rendered and to be rendered.
 
1.2           Structure.  This Plan provides benefits as set forth in Articles
III, IV and V for a select group of management or highly compensated employees
(and their Beneficiaries) whose compensation is in excess of the limit on
compensation under Section 401(a)(17) of the Code, or whose benefits are limited
under the Pension Plan by the maximum benefit limit under Section 415 of the
Code.
 
1.3           Definitions.  Whenever used in the Plan, the following terms shall
have the meanings set forth below.
 
(a)           Affiliated Company.  Any company or business organization that is
under common control with the Company and that has adopted the Pension Plan as a
Related Company.
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

(b)           Benefit Commencement Date.  For a distribution of a Participant’s
or Beneficiary’s Post-2004 Supplemental Benefit which begins on or after January
1, 2008, the first day of the month following the month in which the Participant
Separates from Service with the Company or an Affiliated Company provided that
such Participant has satisfied the requirements for Early or Normal Retirement
under the Pension Plan.
 
(c)           Board.  The Board of Directors of CarMax, Inc.
 
(d)           Change in Control.  Any of the following events: (i) a change in
the ownership of the Company, (ii) a change in the effective control of the
Company, or (iii) a change in the ownership of a substantial portion of the
assets of the Company.
 
For purposes of this definition, a change in the ownership of the Company occurs
on the date on which any one person, or more than one person acting as a group,
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company.  A change in the effective
control of the Company occurs on (i) the date any one person or group acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the Company
possessing 30% or more of the total voting power of the stock, or (ii) the date
a majority of the members of the Company’s Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Company’s Board before the date of the appointment or
election.  A change in the ownership of a substantial portion of the assets of
the Company occurs on the date on which any one person, or more than one person
acting as a group (other than a person or group of persons that is related to
the Company), acquires assets from the Company that have a total gross fair
market value equal to or more than 40% of the total gross fair market value of
all of the assets of the Company immediately prior to such acquisition or
acquisitions, taking into account all such assets acquired during the 12-month
period ending on the date of the most recent acquisition.

An event constitutes a Change in Control with respect to a Participant only if
the Participant’s relationship to the Company satisfies the requirements of
Treasury Regulation Section 1.409A-3(i)(5)(ii).

The determination as to the occurrence of a Change in Control shall be based on
objective facts and shall be made in accordance with the requirements of Section
409A.
 
(e)   Code.  The Internal Revenue Code of 1986, as amended from time to time and
as construed, interpreted and modified by regulations or rulings.
 
(f)   Company.  CarMax, Inc.
 
(g)   Committee.  A committee of no less than three members, as described in
Article VI, to be responsible for the general administration of the Plan.  The
Committee may delegate all or a part of its duties to one or more individuals or
entities, and references herein to the Committee shall include such individuals
and entities to the extent of such delegation.
 
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
 
(h)           Effective Date.  October 1, 2002, which is the original effective
date of the Plan.
 
(i)   Key Employee.  A Participant who, as of the date of his Separation from
Service, meets the requirements of Section 409A(a)(2)(B)(i) to be treated as a
“specified employee” of the Company, i.e., a key employee (as defined in Code
section  416(i)(1)(A)(i), (ii) or (iii) applied in accordance with the
regulations thereunder and disregarding Code section 416(i)(5)) at any time
during the 12-month period ending on a given December 31.  Such Participant
shall be treated as a Key Employee for the entire 12-month period beginning on
the next following April 1, provided that the Company is a “public company” (as
determined under Section 409A) on the date of the Participant’s Separation from
Service.  The December 31 and April 1 dates in this definition may be changed by
the Committee, but only in accordance with the applicable requirements imposed
by Section 409A.
 
(j)     Maximum Benefit.  The maximum annual Supplemental Benefit payable from
the Plan as determined under Section 3.4.
 
(k)    Participant.  An individual who is eligible to participate in the Plan
under Article II.
 
(l)     Pension Plan.  The CarMax, Inc. Pension Plan as in effect from time to
time.
 
(m)   Plan.  The CarMax, Inc. Benefit Restoration Plan as set forth herein and
as amended from time to time.  The term “Plan Section” shall refer to a section
of this Plan.
 
(n)    Post-Retirement Survivor Benefit.  The benefit payable under the Plan to
a Beneficiary of a Participant as determined under Section 5.2 or Appendix A
Section 6, as applicable.
 
(o)    Post-2004 Supplemental Benefit.  The portion of a Participant’s
Supplemental Benefit accrued on and after January 1, 2005, plus amounts accrued
prior to January 1, 2005, that are not earned and vested as of December 31,
2004.
 
(p)    Pre-Retirement Survivor Benefit.  The benefit payable under the Plan to a
surviving Spouse of a Participant as determined under Section 5.1 or Appendix A
Section 5, as applicable.
 
(q)    Section 409A.  Section 409A of the Code, and regulations and other
guidance issued thereunder by the Treasury Department and Internal Revenue
Service.
 
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
(r)           Separation from Service or Separates from Service.  The date that
the Participant dies, retires or otherwise experiences a termination of
employment with the Employer.  Whether a Separation from Service has occurred,
including as a result of military leave, sick leave or other bona fide leave of
absence, shall be determined in accordance with Section 409A.
 
(s)           Supplemental Benefit.  The benefit payable under the Plan as
determined by Section 3.2, subject to adjustments as provided in the Plan.  A
Participant’s Supplemental Benefit includes his or her Pre-2005 Supplemental
Benefit (as determined in Appendix A) and Post-2004 Supplemental Benefit.
 
(t)           Tax Limits.  Both (i) the limit on compensation under Section
401(a)(17) of the Code (as adjusted from time to time under the terms of the
Pension Plan), and (ii) the maximum benefit limit under Section 415(b)(1)(A) of
the Code (as adjusted from time to time under the terms of the Pension Plan).
 
The following terms shall have the meanings provided in the Pension
Plan:  Actuarial Equivalent, Alternate Payee, Beneficiary, Benefit Service,
Disability Pension, Early Retirement Date, Employee, Joint and Survivor Annuity
Option, Normal Retirement Date, Period Certain and Continuous Option, Permanent
Disability, Plan Year, Qualified Domestic Relations Order, Qualified Joint and
Survivor Annuity, Qualified Pre-Retirement Survivor Annuity, Related Company,
Single Life Annuity and Spouse.
 

 
4

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article II
Eligibility
 

2.1           Eligible Employees.  Each participant in the Pension Plan who is
an employee of the Company or an Affiliated Company on or after the Effective
Date, and whose retirement benefits under the Pension Plan are limited by either
or both of the Tax Limits, shall be a Participant.   In addition, any
participant in the Pension Plan who had a benefit under the Circuit City Stores,
Inc. Benefit Restoration Plan as of the Effective Date that is assumed under
Section 10.13 shall become a Participant as of the Effective Date.  Effective
January 1, 2009, no individual can become a Participant who was not already a
Participant on December 31, 2008.
 
2.2           Participation.  A Participant shall commence participation in the
Plan on the later of the Effective Date or the first day of the Plan Year
beginning after the Participant’s future retirement benefits under the Pension
Plan are limited by either or both of the Tax Limits.  An individual shall cease
to be a Participant when the individual’s future retirement benefits under the
Pension Plan are no longer limited by either of the Tax Limits and when the
individual and his or her Beneficiary have received all benefits payable under
the Plan.  Effective January 1, 2009, no individual can become a Participant who
was not already a Participant on December 31, 2008.
 
2.3           No Duplication of Benefits.  All benefits described in the Plan
are subject to the provisions of Section 3.4.  Notwithstanding anything in the
Plan to the contrary, there shall be no duplication of benefits under this Plan
and the Pension Plan.
 

 
5

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article III
Benefits
 

3.1           Minimum Service Requirement.  To be eligible to receive a
Supplemental Benefit, a Participant must (i) meet one or more of the criteria
described in Section 3.1(a), (b) and (c), below; and (ii) for distributions
which begin on or after January 1, 2008, terminate from employment with the
Company and any Affiliated Company after satisfying the requirements for Early
or Normal Retirement under the Pension Plan.  The criteria are:
 
(a)           A Participant must have completed fifteen (15) years of Benefit
Service at termination of employment with the Company or an Affiliated Company
(any Benefit Service credited after termination of employment during a period of
Permanent Disability also shall be included in years of Benefit Service for this
purpose),
 
(b)   A Participant must have (i) reached his or her Early Retirement Date at
the date of termination of employment with the Company or an Affiliated Company
or (ii) reached his or her Early Retirement Date and have had a continuous
Permanent Disability from the date of termination of employment until the Early
Retirement Date, or
 
(c)   A Participant must have (i) reached his or her Normal Retirement Date at
the date of termination of employment with the Company or an Affiliated Company
or (ii) reached his or her Normal Retirement Date and have had a continuous
Permanent Disability from the date of termination of employment until the Normal
Retirement Date.
 
(d)   Effective January 1, 2009, no years of Benefit Service after December 31,
2008, will be counted under the Plan for purposes of accruing a Supplemental
Benefit.  Participants who are employed on December 31, 2008, and who continue
to be employed after such date shall earn additional years of Benefit Service
under this Plan section solely for purposes of eligibility to receive the
Supplemental Benefit earned by such Participant as of December 31, 2008.  Such
additional years of Benefit Service shall be determined in the same manner as
additional years of Vesting Service (as defined in the Pension Plan) credited to
such Participant under the Pension Plan after December 31, 2008.
 
3.2           Supplemental Benefit.  The Participant shall receive a
Supplemental Benefit under this Plan equal to the amount (if any) determined as
follows:
 
(a)           The retirement benefit that would have been paid from the Pension
Plan (i) had the Participant’s benefit not been limited by the Tax Limits and
(ii) additionally if applicable, had the Participant actually earned any Benefit
Service imputed under Section 3.5,
 

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
reduced by
 
(b)           The total retirement benefit that is payable to the Participant
under the Pension Plan.
 
3.3           Adjustment for Early or Late Commencement.  If a Supplemental
Benefit commences before the Participant’s Normal Retirement Date, the benefit
under Section 3.2(a) shall be calculated in accordance with any early retirement
reduction provided under the Pension Plan.  If a Supplemental Benefit commences
after a Participant’s Normal Retirement Date, the benefit under Section 3.2(a)
shall be calculated in accordance with the provisions of the Pension Plan for
benefits commencing after Normal Retirement Date.  If a Supplemental Benefit
commences when a Participant starts a Disability Pension under the Pension Plan,
the benefit under Section 3.2(a) shall be calculated by including Benefit
Service during the period of Permanent Disability in accordance with the
provisions of the Pension Plan for a Disability Pension.
 
3.4           Maximum Benefit.
 
(a)           Notwithstanding any other provision of the Plan to the contrary,
the annual Supplemental Benefit payable to a Participant under this Plan shall
not exceed (i) the Maximum Benefit reduced by (ii) the total annual benefit that
is payable to the Participant under the Pension Plan.  The Maximum Benefit is
based on the payment of the Supplemental Benefit as a single life annuity (with
no ancillary benefits).  If benefits are payable in any other form, the Maximum
Benefit shall be actuarially adjusted to be the Actuarial Equivalent of the
Maximum Benefit payable as a single life annuity (with no ancillary benefits).
 
(b)           The Maximum Benefit is an annual amount equal to $462,500 (for
2008), as adjusted below.  The Maximum Benefit shall be subject to increase in
the same percentage as the dollar limit is adjusted under Section 415(d)(1)(A)
of the Code from time to time.  The adjustment will be made effective as of each
January 1 based on the percentage adjustment applicable to that calendar year
(prior to 2006, the adjustment was made effective as of each March 1).  If no
adjustment is made under Section 415(d)(1)(A) of the Code for a calendar year,
there shall be no adjustment in the Maximum Benefit for that year.  In addition,
the Maximum Benefit shall be proportionately adjusted for increases in the
statutory maximum dollar limit under Section 415(b)(1)(A) of the Code.  The
Maximum Benefit is not actuarially increased or decreased if the Participant
commences payments other than at Normal Retirement Date.
 
(c)           A Participant’s Maximum Benefit shall be determined as of the
commencement of payment of the Supplemental Benefit to the Participant and shall
not be subject to future adjustment.  The Supplemental Benefit shall not be
reduced if additional benefits become payable from the Pension Plan for any
reason.  A Participant’s Supplemental Benefit shall not be increased if the
Maximum Benefit is increased under Section 3.4(b) after the commencement of
payments under the Plan.
 
 
 
7

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
3.5           Additional Benefit Service.  At its discretion, the Board or the
Compensation and Personnel Committee of the Board may provide that any
Participant shall be credited with additional imputed Benefit Service for
purposes of Section 3.2(a).  The Board or Compensation and Personnel Committee
shall have complete discretion to determine the amount of additional Benefit
Service to be imputed and any other terms and conditions of the additional
service crediting.   Any imputed Benefit Service shall be treated the same as
actual Benefit Service for purposes of this Plan.
 
3.6           Freezing Benefit Service.  Pursuant to the amendments made to the
Pension Plan, no additional imputed Benefit Service shall be credited pursuant
to Plan section 3.5 after December 31, 2008.
 

 
8

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article IV
Computation and Payment of Supplemental Benefit
 

4.1           Computation.  The amount of the Supplemental Benefit described in
Article III will initially be determined by assuming that the benefits payable
under this Plan and the Pension Plan are paid in the form of a Single Life
Annuity payable for the Participant’s lifetime, beginning on the date on which
payments actually begin to be made to the Participant from the Plan assuming
that payments have begun under the Pension Plan and ending at the Participant’s
death.
 
4.2           Payment.  This Section 4.2 governs the payment of a Participant’s
Post- 2004 Supplemental Benefit, distribution of which begins on or after
January 1, 2008.
 
(a)           A Participant’s Supplemental Benefit governed by this Section 4.2
will be paid or begin to be paid on the Participant’s Benefit Commencement Date,
in the form elected by the Participant, except as provided in Section 4.3 below.
 
(b)           The Supplemental Benefit described in Article III will be
actuarially adjusted, using the actuarial assumptions then in effect under the
Pension Plan.  A Participant must make an election under this Section 4.2 either
(i) in 2007 or (ii) if not made in 2007, within 30 days following the first day
of the Plan Year after the Plan Year in which he or she first accrues a benefit
under the Plan in accordance with Treas. Reg. 1.409A-2(a)(7)(iii).
 
(c)           A Participant may elect from the following forms of benefit, which
shall be payable on the first day of each month during the distribution
period:  (i) a Qualified Joint and Survivor Annuity; (ii) a Single Life Annuity;
(iii) a Period Certain and Continuous Option with 60, 120 or 180 monthly
payments guaranteed; (iv) a Joint and Survivor Annuity Option (with a 100%, 75%
or 50% survivor benefit); or (v) a single lump sum.  Absent an election, the
Participant’s Supplemental Benefit shall be paid in the form of a Qualified
Joint and Survivor Annuity if the Participant is married on his Benefit
Commencement Date or, if the Participant is unmarried on his Benefit
Commencement Date, in the form of a Single Life Annuity.  Notwithstanding
anything in the Pension Plan or herein to the contrary, all forms of annuity
payments set forth above shall be Actuarially Equivalent in accordance with
Treas. Reg. 1.409A-2(b)(2)(ii).
 
(d)           A Participant may change his or her election made pursuant to
Section 4.2(a) and (b) above, provided, however, that if such change is regarded
as a change in time and form of payment for purposes of Section 409A and
Treasury Regulations Section 1.409A-2(b)(2)(ii) (relating to life annuities),
such change may not take effect until at least 12 months after the date on which
the election is made and the payment with respect to which such election is made
must be deferred for a period not less than five years from the date the payment
would otherwise be made.  For purposes of this election, the payments under the
annuity forms of payment are deemed to be a single payment.
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
4.3           Payments to Key Employees.  Payment of the Post-2004 Supplemental
Benefit of a Participant who is a Key Employee on his Separation from Service
shall commence on the first day of the month following the six-month anniversary
of the Key Employee’s Separation from Service.  The initial payment under the
preceding sentence shall include amounts that would have been paid prior to the
initial payment had the Participant not been a Key Employee.
 

 
10

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article V
Computation and Payment of Survivor Benefit
 

5.1           Pre-Retirement Survivor Benefit.  A Pre-Retirement Survivor
Benefit shall be payable to the surviving Spouse of a Participant if (i) the
Participant had at least ten years of Benefit Service at death, and (ii) the
Participant’s surviving Spouse is entitled to a Qualified Pre-Retirement
Survivor Annuity under the Pension Plan.
 
(a)           The Spouse will be entitled to receive a Pre-Retirement Survivor
Benefit from this Plan equal to the amount (if any) determined as follows:
 
(i)           The survivor benefit that would have been payable to the Spouse
under the Pension Plan had the Participant’s Supplemental Benefit (as adjusted
under Sections 3.3 and 3.4) and benefit from the Pension Plan been paid entirely
from the Pension Plan,
 
reduced by
 
(ii)           The total survivor benefit that is payable to the Spouse under
the Pension Plan.
 
(b)           A Pre-Retirement Survivor Benefit distribution which begins on or
after January 1, 2008, shall be payable in the form of the survivor portion of a
50% Joint and Survivor Annuity Option, calculated immediately prior to
Participant’s death, and commencing on the later of (i) the first day of the
month following the earliest date which would have qualified as the
Participant’s Early Retirement Date under the Pension Plan or (ii) the first day
of the second month following the month of Participant’s death; provided that
the Pre-Retirement Survivor Benefit calculated under this sentence shall be the
Actuarial Equivalent of the benefit described in Section 5.1(a).
 
5.2           Post-Retirement Survivor Benefit.  A Post-Retirement Benefit shall
be payable with respect to the Post-2004 Supplemental Benefit of a Participant
with a Benefit Commencement Date on or after January 1, 2008.
 
(a)           A Post-Retirement Survivor Benefit shall be payable under this
Section to the surviving Beneficiary of a Participant who elects a form of
benefit under the Plan that provides for a survivor benefit.  The amount of the
benefit shall be the Actuarial Equivalent of (i) minus the sum of (ii) plus
(iii) below where:
 
(i)           equals the survivor benefit that would have been payable to the
Beneficiary under the Pension Plan had the Participant’s Supplemental Benefit
(as adjusted under Sections 3.3 and 3.4) and the benefit from the Pension Plan
been paid entirely from the Pension Plan, less the sum of
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
(ii)           the total survivor benefit that is payable to the Beneficiary
under the Pension Plan, plus
 
(iii)           the total survivor benefit that is payable to a Beneficiary
under Section 5.1 above.
 
(b)           A Post-Retirement Survivor Benefit is payable under this Section
to a Beneficiary designated by the Participant under an election made in
accordance with Section 4.2.
 
5.3           Actuarial Assumptions.  The actuarial assumptions used for
purposes of the Pension Plan will be used to determine the benefits payable
under this Plan.
 
5.4           Medium of Payment.  The Pre-Retirement Survivor Benefit and
Post-Retirement Survivor Benefit will be paid in cash or a cash equivalent.
 

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article VI
Administration
 
6.1           Plan Administrator.  The Plan shall be administered by the
Committee.
 
6.2           Appointment of the Committee.  The Chief Executive Officer of the
Company shall appoint at least three persons to serve on the Committee.
 
6.3           Powers of the Committee.  The Committee will have full and
exclusive power and discretion to administer the Plan, including as to all of
its details, including the power to decide Plan benefit claims.  For the purpose
of administering the Plan, the Committee’s power will include, but will not be
limited to, the following authority:
 
 
(a)
to make and enforce such rules and regulations as it deems necessary or proper
for the efficient administration of the Plan or as required to comply with
applicable law;

 
(b)
to interpret the Plan, its interpretation thereof in good faith to be final and
conclusive as to any current or former Employee, Participant, or Beneficiary;

 
 
 
(c)
to decide all questions concerning the Plan, including whether a payment of Plan
benefits is due;

 
(d)
to compute the amount of benefits payable to any current or former Employee,
Participant, or Beneficiary in accordance with the Plan, and to determine the
person or persons to whom such benefits will be paid;

(e)           to authorize the payment of Plan benefits;

 
(f)
to keep such records and submit such filings, elections, applications, returns
or other documents or forms as may be required under the Code and applicable
regulations, or under state or local law and regulations; and

 
 
(g)
to appoint such agents, counsel, accountants, consultants and record keepers as
may be required to assist in administering the Plan.

6.4           Indemnification.  The Company shall indemnify the Committee, its
members, and each other Employee who is involved in the administration of the
Plan against all costs, expenses and liabilities, including attorneys’ fees,
incurred in connection with any action, suit or proceeding that alleges, arises
out of, or relates in any way to any good faith act or failure to act in
connection with, or related in any way to, the Plan.  Promptly after receipt by
an indemnified party of notice of the commencement of any such action, suit or
proceeding, the indemnified party shall notify the Company.  The Company shall
be entitled to participate at its own expense in the defense or to assume the
defense of any indemnified party.  If the Company elects to assume the defense,
counsel chosen by the Company shall conduct the defense, and the indemnified
party shall bear the fees and expenses of any additional counsel retained by
him.
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
6.5           Binding Decisions or Actions.  The decision or action of the
Committee in respect of any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations thereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.
 
6.6           Discretion.  In discharging the duties assigned to them under the
Plan, each of the Company, the Committee, and each other individual or entity
authorized by the Committee (each, an “Authorized Person”) has the discretion to
interpret the Plan; adopt, amend and rescind rules and regulations pertaining to
its duties under the Plan; and to make all other determinations necessary or
advisable for the discharge of its duties under the Plan.  The discretionary
authority of an Authorized Person is absolute and exclusive.  The express grant
in the Plan of any specific power to an Authorized Person with respect to any
duty assigned to it under the Plan must not be construed as limiting any power
or authority of such Authorized Person to discharge its duties.  A decision of
an Authorized Person is final and conclusive in any subsequent action, suit, or
proceeding unless it is established that the decision constituted an abuse of
discretion.  No Plan benefits shall be paid to any Participant, Beneficiary or
other person unless an Authorized Person shall determine, in its sole and
absolute discretion, that such benefits are due.
 
6.7           Domestic Relations Orders.  If the Committee receives a Domestic
Relations Order requiring the payment of a Participant’s Supplemental Benefit
under this Plan to a person other than the Participant, the Committee shall take
the following steps:
 
(a)           If benefits are in pay status, the Committee shall account
separately for the amounts that will be payable to the Alternate Payee.
 
(b)           The Committee shall promptly notify the named Participant and the
Alternate Payee of the receipt of the Domestic Relations Order.
 
(c)           The Committee shall pay the specified amounts to the Alternate
Payee pursuant to the Order; provided, however, that the Committee may
distribute or cause to be distributed in a single lump sum to the Alternate
Payee the Actuarial Equivalent of the Alternate Payee’s Supplemental Benefit
under this Plan.
 
The Committee shall determine whether any document received by it is a Domestic
Relations Order.  In making this determination, the Committee may consider the
rules applicable to “domestic relations orders” under Code section 414(p) and
ERISA section 206(d), and such other rules and procedures as it deems relevant.

 
14

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article VII
Claims

7.1           Right to File Claim.  A Participant, Beneficiary or former
Participant (each a “Claimant”) shall be entitled to file with the Committee’s
delegate a claim for benefits under the Plan.  The claim must be in
writing.  Unless another individual or entity is named by the Committee to hear
claims for benefits, the Committee’s delegate shall be the Company’s Director of
Benefits or the Plan’s recordkeeper.

7.2           Denial of Claim.  If the claim is denied by the Committee’s
delegate in whole or in part, the Claimant shall be furnished within 90 days
after the receipt by the Committee’s delegate of the claim (or within 180 days
after such receipt if special circumstances require an extension of time) a
written notice of denial of the claim containing the following:

(a)           the specific reason or reasons for the denial;

(b)           specific reference to the Plan provisions on which the denial is
based;

(c)           a description of any additional material or information necessary
for the Claimant to perfect the claim, and an explanation of why such material
or information is necessary; and

(d)           an explanation of the procedure for review of the denied or
partially denied claim (set forth below) and applicable time limits, including a
statement of the Claimant’s right to bring a civil action under ERISA section
502(a) following an adverse benefit determination on review.

7.3           Claims Review Procedure.  Upon denial of a claim, in whole or in
part, the Claimant or his duly authorized representative will have the right to
submit a request to the Committee for a full and fair review of the denied claim
by filing a written notice of appeal with the Committee.  The notice of appeal
must be filed within 60 days of the receipt by the Claimant of written notice of
the denial of the claim.  The Claimant or his representative will have, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the Claimant’s claim for benefits and
may submit issues and comments in writing.  The Committee will take into account
all comments, documents, records, and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial decision on the claim.

If the Claimant fails to file an appeal within 60 days of the receipt by the
Claimant of the denial of the claim, the claim will be deemed abandoned and the
Claimant precluded from reasserting it.  If the Claimant does file an appeal,
his request must include a description of the issues and evidence he deems
relevant.

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

7.4           Decision on Review.  The Committee will review and decide whether
an appeal is approved or denied.  A written notice of the decision will be
furnished to the Claimant within 60 days of the date on which the appeal is
received by the Committee.  If special circumstances require a longer period,
the Claimant will be notified in writing, prior to the expiration of the 60-day
period, of the reasons for an extension of time and the date by which a decision
is expected; provided, however, that no extensions will be permitted beyond 60
days after the expiration of the initial 60-day period.  An appeal is considered
approved only if its approval is communicated in writing to the Claimant.  If an
appeal is denied, in whole or in part, the written notice will clearly set
forth:
 
(a)           the specific reason or reasons for the adverse determination;

(b)           specific reference to the Plan provisions on which the adverse
determination is based;

(c)           a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the Claimant’s claim for benefits; and

(d)           a statement of the Claimant’s right to bring an action under ERISA
section 502(a).

7.5           Legal Action.  A Claimant may not bring any legal action,
including commencement of any arbitration, relating to a claim for benefits
under the Plan unless and until the Claimant has followed the claims procedures
under the Plan and exhausted his administrative remedies under such claims
procedures.  Any such legal action must be commenced within one year of a final
determination hereunder with respect to such claim.

7.6           Exclusive Forum. Any action by a current or former Participant or
Beneficiary arising out of or related to this Plan shall be litigated
exclusively in the United States District Court for the Eastern District of
Virginia, Richmond Division (“District Court”) and any reviewing appellate court
thereof.  In the event that the District Court lacks subject matter jurisdiction
over such an action, then, and only then, such action shall be litigated
exclusively in the Circuit Court of Goochland, Virginia and any reviewing
appellate court thereof.

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article VIII
Change in Control/Informal Funding
 

8.1           Effect of Change in Control.  Immediately prior to a Change in
Control, the Company shall establish and fund the CarMax, Inc. Benefit
Restoration Plan Trust (the “Trust”) with an amount equal to the then Actuarial
Equivalent of the present value of the Supplemental Benefits of all Participants
and the survivor benefits of all Beneficiaries determined as a single lump sum
payment.  The Trust shall be irrevocable, shall be a grantor trust commonly
known as a rabbi trust, and shall be funded with cash or cash equivalents other
than stock of the Company.
 

 

 
17

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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article IX
Amendment and Termination

9.1           Amendment.  The Company shall have the right by action of the
Committee to  amend the Plan from time to time (a) as necessary to ensure the
Plan meets requirements under the Code; or (b) to implement changes in Plan
design that are not financially material to the Company or the Company’s
shareholders; provided, however, that no amendment shall reduce a Participant’s
accrued benefit under the Plan as of the date of the amendment.  Any amendment
to the Plan that is financially material to the Company or the Company’s
shareholders must be approved by the Board. For purposes of this Section 9.1, a
Participant’s accrued benefit under the Plan shall be computed based on the
formulas in this Plan and his accrued benefits under the Pension Plan as of the
date of the computation.
 
9.2           Termination.  The Board may terminate the Plan at any time;
provided, however, that no termination shall reduce a Participant’s accrued
benefit under the Plan as of the date of the termination.  For purposes of this
Section 9.2, a Participant’s accrued benefit under the Plan shall be computed
based on the formulas in this Plan and his accrued benefits under the Pension
Plan as of the date of the computation.  Any termination of the Plan will be
carried out in accordance with Section 409A of the Code and Treasury Regulations
and other guidance thereunder.

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Article X
Miscellaneous
 

10.1   Tax Matters.  The Company does not represent or guarantee that any
particular federal state or local income or payroll tax consequence will result
to any Participant, Beneficiary or Alternate Payee under this Plan.  The Company
has the right to withhold from any benefit payments to any person under this
Plan or take other actions necessary to satisfy the Company’s obligation to
withhold federal, state and local income and payroll taxes.
 
10.2   Rights Under the Plan.  This Plan is an unfunded deferred compensation
plan.  Title to and beneficial ownership of all benefits described in the Plan
shall at all times remain with the Company.  Participation in the Plan and the
right to receive payments under the Plan shall not give a Participant or
Beneficiary any proprietary interest in the Company or any of its
assets.  Benefits under the Plan shall be payable from the general assets of the
Company. Subject to Section 8.1, no trust fund may be created in connection with
the Plan (other than a trust that, under applicable law, does not affect the
characterization of this Plan as an unfunded plan), and there shall be no
required funding of amounts that may become payable under the Plan.  A
Participant and his Beneficiary shall, for all purposes, be general, unsecured
creditors of the Company.  The interest of a Participant and his Beneficiary in
the Plan cannot be assigned, anticipated, sold, encumbered or pledged and shall
not be subject to the claims of their creditors.
 
10.3   Effect on Employment.  The Plan will not affect the right of the Company
or an Affiliated Company to terminate an employee’s employment at any
time.  Benefits payable under the Plan will not be considered compensation for
purposes of other retirement or benefit plans maintained by the Company or an
Affiliated Company.
 
10.4   Successors.  The Plan is binding on the Company and its successors and
assigns and on Participants and their Beneficiaries, successors, estates, and
distributees.
 
10.5   Notice.  Any notice or filing required or permitted to be delivered to
the Committee under this Plan shall be delivered in writing.  Notice shall be
deemed given as of the date of receipt of the notice by the Committee.  Notice
shall be sent by certified mail to:
 
CARMAX, INC.
ATTN: DIRECTOR OF BENEFITS
12800 TUCKAHOE CREEK PARKWAY
RICHMOND, VIRGINIA 23238

With a copy to:

CARMAX, INC.
ATTN: LEGAL DEPARTMENT
12800 TUCKAHOE CREEK PARKWAY
RICHMOND, VIRGINIA 23238
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Any notice or submission required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and either hand-delivered or
sent by mail to the last known address of the Participant.
 
10.6   Headings.  The headings of Plan Articles and Sections are included solely
for convenience of reference, and if there is any conflict between such headings
and the text of this Plan, the text shall control.

10.7   Construction.  Unless the context requires otherwise, all words in any
gender shall extend to and include all genders, all words used in the singular
shall extend to and include the plural, and all words used in the plural shall
extend to and include the singular.

10.8   Invalid or Unenforceable Provisions.  If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof and the Committee may elect in its sole and
absolute discretion to construe such invalid or unenforceable provisions in a
manner that conforms to applicable law or as if such provisions, to the extent
invalid or unenforceable, had not been included.

10.9   Errors and Omissions.  In the event an error or omission is discovered in
the operation or administration of the Plan, the Committee or its delegate may
make such equitable adjustments that it deems necessary or desirable to correct
the error or omission, so long as such adjustments comply with Section 409A.

10.10   Lost Participants or Beneficiaries.  Any Participant or Beneficiary who
is entitled to a benefit from the Plan has the duty to keep the Committee
advised of his current mailing address.  If benefit payments are returned to the
Plan or are not presented for payment after a reasonable amount of time, the
Committee shall presume that the payee is missing.  The Committee, after making
such efforts as in its sole and absolute discretion it deems reasonable and
appropriate to locate the payee, shall stop payment on any uncashed checks and
may discontinue making future payments.

10.11           Facility of Payment to a Minor.  If a distribution is to be made
to a minor, or to a person who is otherwise incompetent, then the Committee may,
in its sole and absolute discretion, make such distribution: (i) to the legal
guardian, or if none, to a parent of a minor payee with whom the payee maintains
his residence; or (ii) to the conservator or committee or, if none, to the
person having custody of an incompetent payee.  Any such distribution shall
fully discharge the Committee, the Company, and the Plan from further liability
on account thereof.

10.12   Governing Law.  Except as otherwise provided by federal law, the
provisions of this Plan shall be construed, administered and enforced according
to the laws of the Commonwealth of Virginia, without giving effect to its
conflicts of law rules.
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
10.13           Assumption of Liabilities From Predecessor Plan.  As of the
Effective Date, the Plan shall assume all of the liabilities of the Circuit City
Stores, Inc. Benefit Restoration Plan with respect to any Participant in the
Plan.  In addition, if any individual became an employee of the Company or an
Affiliated Company before March 1, 2003 who has or had an accrued benefit under
the Circuit City Stores, Inc. Benefit Restoration Plan, the Plan shall assume
all of the liabilities of the Circuit City Stores, Inc. Benefit Restoration Plan
with respect to the individual as of the date of hire by the Company or an
Affiliated Company.

10.14   Savings Clause.  The Plan is intended to comply with Section 409A and
official guidance issued thereunder (except with respect to amounts covered by
Appendix A).  Notwithstanding anything herein to the contrary, this Plan shall
be interpreted, operated and administered in a manner consistent with this
intention.

 
WITNESS the following signature as of the 29th day of June, 2011.
 

 
CARMAX, INC.
 

By:
/s/ Keith D. Browning
 
Keith D. Browning
 
Executive Vice President, Finance
   

   

 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

Appendix A
Provisions Applicable to a Pre-2005 Supplemental Benefit
 

The provisions of this Appendix A contain special rules that apply to amounts
accrued prior to January 1, 2005, that are earned and vested as of December 31,
2004, and which shall remain subject to the terms of the Plan as in effect on
December 31, 2004, particularly with respect to the time and form of benefit
payments.  All other provisions of the Plan continue to apply to such benefits.

1.           Definitions.                      For purposes of this Appendix,
the following terms apply:

Pre-2005 Supplemental Benefit means the portion of a Participant’s Supplemental
Benefit accrued prior to January 1, 2005, that is earned and vested as of
December 31, 2004.

2.           Minimum Service Requirements.  To be eligible to receive a
Supplemental Benefit, a Participant must (i) meet one or more of the criteria
described in Plan Section 3.1(a), (b) and (c), and (ii) for distributions
commencing under the Plan on or before December 31, 2007, commence benefits
under the Pension Plan.

3.           Payment.  This Section governs the payment of (i) a Participant’s
entire Supplemental Benefit, distribution of which began on or before
December 31, 2007 and (ii) a Participant’s Pre-2005 Supplemental Benefit,
distribution of which begins on or after January 1, 2008.

(a)           The amount of the Supplemental Benefit described in this Appendix
A will initially be determined by assuming that the benefits payable under this
Plan and the Pension Plan are paid in the form of a Single Life Annuity payable
for the Participant’s lifetime, beginning on the date on which payments actually
begin to be made to the Participant from the Pension Plan and ending at the
Participant’s death.

(b)           A Participant’s Supplemental Benefit governed by this Appendix A
Section 3 will be paid at the same time and in the same form of payment as
benefits for the Participant under the Pension Plan, except as provided in
Appendix A Section 4.  If the benefit governed by this Section is to be paid in
a form other than the single life annuity form described above, the Supplemental
Benefit described in Plan Section 3.2 will be actuarially adjusted, using the
actuarial assumptions then in effect under the Pension Plan.

(c)           Except as provided in Appendix A Section 4, a Participant’s
Supplemental Benefit governed by this Section will begin to be paid on the date
on which the Participant begins receiving benefits under the Pension Plan and
will be paid in cash or a cash equivalent.
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
4.           Distribution of Accrued Benefit
 
(a)           Notwithstanding anything in the Plan to the contrary, the Company
may distribute, or cause to be distributed in a single lump sum, to a
Participant (or, after his death, to his Beneficiary) the Actuarial Equivalent
of the Pre-2005 Supplemental Benefit of the Participant (or Beneficiary) under
the Plan as of a specified date.  The distribution may be made at any time
deemed appropriate by the Company.  The lump sum shall be distributed in cash or
a cash equivalent.  The Company shall indicate in writing that the distribution
is intended to be a distribution of the Participant’s (or Beneficiary’s) accrued
benefit under the Plan.  The Company may take into account the tax consequences
of the distribution when computing the amount to be distributed under this
Section.
 
(b)           After a distribution under this Section, the Company shall have no
further liability with respect to the Pre-2005 Supplemental Benefit.  The
Company has the sole discretion to determine when and if a distribution is to be
made under this Section, and to determine the amount of any distribution, and no
Participant or Beneficiary shall have any right to receive a distribution under
this Section.
 
5.           Pre-Retirement Survivor Benefit.  A Pre-Retirement Survivor Benefit
distribution of which begins on or before December 31, 2007, is payable in the
same form and at the same time as the survivor benefit is payable under the
Pension Plan, including benefit forms that may provide payments after the death
of the surviving Spouse.
 
6.           Post-Retirement Survivor Benefit.  This Section applies to payments
with respect to a Participant’s entire Supplemental Benefit, distribution of
which began on or before December 31, 2007, and with respect to a Participant’s
Pre-2005 Supplemental Benefit, distribution of which begins on or after January
1, 2008.  A Post-Retirement Survivor Benefit shall be payable to the surviving
Beneficiary of a Participant if (i) the Participant is receiving a form of
benefit under the Pension Plan that provides for a survivor benefit, and (ii) a
survivor benefit is payable to the Beneficiary under the Pension Plan.
 
(a)           The Beneficiary will be entitled to receive a Post-Retirement
Survivor Benefit from this Plan equal to the amount (if any) determined as
follows:
 
(i)           The survivor benefit that would have been payable to the
Beneficiary under the Pension Plan had the Participant’s Supplemental Benefit
(as adjusted under Sections 3.3 and 3.4) and benefit from the Pension Plan been
paid entirely from the Pension Plan,
 
 
 
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CarMax, Inc.
Benefit Restoration Plan
As Amended and Restated June 30, 2011

 
reduced by
 
(ii)             The total survivor benefit that is payable to the Beneficiary
under the Pension Plan.
 
(b)          A Post-Retirement Survivor Benefit under this Section is payable to
a surviving Spouse, any other Beneficiary of a Participant who is receiving a
survivor benefit under the Pension Plan.
 
(c)           A Post-Retirement Survivor Benefit under this Section is payable
in the same form and at the same time as the survivor benefit is payable under
the Pension Plan.

24