Document:

exhibit102.htm

     

      
        

      

    

    Exhibit 10.2

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    CARMAX,
INC.

    BENEFIT
RESTORATION PLAN

    

    

    As
Amended and Restated

    

    January
1, 2008

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

      TABLE OF
CONTENTS

    

     

    
      	
              Section
      I

            	
              Purpose
      of the Plan

            	
              1

            
	
              1.1

            	
              Purpose

            	
              1

            
	
              1.2

            	
              Structure

            	
              1

            
	
              1.3

            	
              Definitions

            	
              1

            
	 
      	 
      	 
      
	
              Section
      II

            	
              Eligibility

            	
              3

            
	
              2.1

            	
              Eligible
      Employees

            	
              3

            
	
              2.2

            	
              Participation

            	
              3

            
	
              2.3

            	
              No
      Duplication of Benefits

            	
              3

            
	 
      	 
      	 
      
	
              Section
      III

            	
              Benefits

            	
              3

            
	
              3.1

            	
              Minimum
      Service Requirement

            	
              3

            
	
              3.2

            	
              Supplemental
      Benefit

            	
              4

            
	
              3.3

            	
              Adjustment
      for Early or Late Commencement

            	
              4

            
	
              3.4

            	
              Maximum
      Benefit

            	
              4

            
	
              3.5

            	
              Additional
      Benefit Service

            	
              5

            
	 
      	 
      	 
      
	
              Section
      IV

            	
              Computation
      and Payment of Supplemental Benefit

            	
              5

            
	
              4.1

            	
              Computation

            	
              5

            
	
              4.2

            	
              Payment

            	
              5

            
	
              4.3

            	
              Payments
      to Key Employees

            	
              6

            
	 
      	 
      	 
      
	
              Section
      V

            	
              Computation
      and Payment of Survivor Benefit

            	
              6

            
	
              5.1

            	
              Pre-Retirement
      Survivor Benefit

            	
              6

            
	
              5.2

            	
              Post-Retirement
      Survivor Benefit

            	
              7

            
	
              5.3

            	
              Actuarial
      Assumptions

            	
              7

            
	
              5.4

            	
              Medium
      of Payment

            	
              8

            
	 
      	 
      	 
      
	
              Section
      VI

            	
              Administration

            	
              8

            
	
              6.1

            	
              Amendment
      and Termination

            	
              8

            
	
              6.2

            	
              Plan
      Administrator

            	
              8

            
	
              6.3

            	
              Claims
      Procedure

            	
              8

            
	
              6.4

            	
              Qualified
      Domestic Relations Orders

            	
              8

            
	 
      	 
      	 
      
	
              Section
      VII

            	
              Change
      of Control

            	
              9

            
	
              7.1

            	
              Effect
      of Change of Control

            	
              9

            
	
              7.2

            	
              Definition
      of Change of Control

            	
              9

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	 
      
	
              Section
      VIII

            	
              Miscellaneous

            	
              9

            
	
              8.1

            	
              Tax
      Matters

            	
              9

            
	
              8.2

            	
              Rights
      Under the Plan

            	
              9

            
	
              8.3

            	
              Effect
      on Employment

            	
              10

            
	
              8.4

            	
              Successors;
      Governing Law

            	
              10

            
	
              8.5

            	
              Assumption
      of Liabilities From Predecessor Plan

            	
              10

            
	 
      	 
      	 
      
	
              Appendix
      A

            	
              Provisions
      Applicable to a Pre-2005 Supplemental Benefit

            	
              11

            

    

    

     

    

     

    

    
      
        
          ii 

        

        
           

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

     

    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.  This amendment and restatement is effective January 1,
2008.

    

    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 is amended to conform
the written terms of the Plan to the requirements of Section 409A of the
Code.  These amendments apply 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.

    

    

    Section I

    Purpose of the
Plan

     

    

    1.1           Purpose.  CarMax,
Inc. (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 of Directors of the Company (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 Sections 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 means any company or business organization that is under common
control with the Company and that has adopted the Pension Plan as a Related
Company.

     

    (b)           Benefit
Commencement Date means, 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
terminates

     

    

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    employment
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)           Code means
the Internal Revenue Code of 1986, as amended.

     

    (d)           Effective
Date means October 1, 2002, which is the original effective date of the
Plan.

     

    (e)           Key
Employee means a Participant who, as of December 31 of any calendar year,
satisfies the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code
(applied in accordance with the Treasury Regulations thereunder and disregarding
Section 416(i)(5) of the Code).  Such Participant will be considered a
Key Employee for purposes of the Plan for the 12-month period commencing on the
next following April 1.

     

    (f)           Maximum
Benefit means the maximum annual Supplemental Benefit payable from the
Plan as determined under Section 3.4.

     

    (g)           Participant
means an individual who is eligible to participate in the Plan under Section
II.

     

    (h)           Pension
Plan means the CarMax, Inc. Pension Plan as in effect from time to
time.

     

    (i)           Post-Retirement
Survivor Benefit means 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.

     

    (j)           Post-2004
Supplemental Benefit means 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.

     

    (k)           Pre-Retirement
Survivor Benefit means 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.

     

    (l)           Supplemental
Benefit means 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.

     

    (m)           Tax Limits
means 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).

     

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    The
following terms shall have the meanings provided in the Pension
Plan:  Actuarial Equivalent, Alternate Payee, Beneficiary, Benefit
Service, Disability Pension, Early Retirement Date, 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.

     

    Section 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 8.5 shall become a Participant as of the Effective
Date.

     

    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.

     

    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.

     

    

    Section 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),

     

     

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    (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.

     

    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,

     

    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).

     

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    (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.

     

    3.5           Additional Benefit
Service.  At its discretion, the Board of Directors 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.

     

    

    Section IV

    Computation and Payment of
Supplemental Benefit

     

    

    4.1           Computation.  The
amount of the Supplemental Benefit described in Section 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.

     

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    (b)           The
Supplemental Benefit described in Section 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 becomes
a Participant.

     

    (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.

     

    (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 Code 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.

     

    4.3           Payments to Key
Employees.  Payment of the Post-2004 Supplemental Benefit of a
Participant who is a Key Employee on his termination of employment shall
commence on the first day of the month following the six-month anniversary of
the Key Employee’s termination of employment.  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.

     

    

    Section 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:

     

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    (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 what
would have been 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.

     

    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

     

    (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.

     

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    5.4           Medium of
Payment.  The Pre-Retirement Survivor Benefit and
Post-Retirement Survivor Benefit will be paid in cash or a cash
equivalent.

     

    Section VI

    Administration

     

    

    6.1           Amendment and
Termination. The Board of the Company may amend or terminate the Plan at
any time; provided, however, that no amendment or termination of the Plan shall
reduce a Participant’s accrued benefit under the Plan as of the date of the
amendment or termination.  For this purpose, 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.

     

    6.2           Plan
Administrator.  The Plan shall be administered by the
Compensation and Personnel Committee of the Board (the “Plan
Administrator”).  The decisions of the Plan Administrator shall be
final and binding on all persons.  The Plan Administrator will have
the express discretionary authority to interpret and administer the Plan, and to
make all decisions with respect to the interpretation and administration of the
Plan.  No benefit shall be paid under this Plan unless the Plan
Administrator determines in its discretion that a Participant or Beneficiary is
entitled to the benefit.

     

    6.3           Claims
Procedure.  Each Participant or Beneficiary of a deceased
Participant shall be entitled to file with the Plan Administrator a written
claim for benefits under the Plan.  The Plan Administrator shall
review and act on the claim in accordance with the requirements of the Employee
Retirement Income Security Act of 1974, as amended, and Department of Labor
Regulations thereunder.

     

    6.4           Qualified Domestic Relations
Orders.  If the Plan Administrator receives a Qualified
Domestic Relations Order requiring the payment of a Participant’s Supplemental
Benefit under this Plan to a person other than the Participant, the Plan
Administrator shall take the following steps:

     

    (a)           If
benefits are in pay status, the Plan Administrator shall account separately for
the amounts that will be payable to the Alternate Payee.

     

    (b)           The
Plan Administrator shall promptly notify the named Participant and the Alternate
Payee of the receipt of the Qualified Domestic Relations Order.

     

    (c)           The
Plan Administrator shall pay the specified amounts to the Alternate Payee
pursuant to the Order; provided, however, that the Plan Administrator may
distribute or cause to be distributed in a single lump sum to the Alternate
Payee the Actuarial Equivalent of the Alternate Payee’s Pre-2005 Supplemental
Benefit under this Plan.

     

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    Section VII

    Change of
Control

     

    

    7.1           Effect of Change of
Control.  Immediately prior to a Change of Control as defined
in Section 7.2, the Company shall immediately 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 payable as a single lump sum
payment.  The Trust shall be funded with cash or cash equivalents
other than stock of the Company.

     

    7.2           Definition of Change of
Control.  “Change of Control” means the occurrence of either of
the following events: (i) a third person, including a “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes, or
obtains the right to become, the beneficial owner 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.

     

    

    Section VIII

    Miscellaneous

     

    

    8.1           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.

     

    8.2           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 7.1, 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 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.

     

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    8.3           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.

     

    8.4           Successors; Governing
Law.  The Plan is binding on the Company and its successors and
assigns and on Participants and their Beneficiaries, successors, estates, and
distributees.  The Plan will be administered according to the laws of
the Commonwealth of Virginia.

     

    8.5           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
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.

     

    

     

    WITNESS
the following signature as of the Effective Date.

     

    
      	 
      	
              CARMAX,
      INC.

            
	 	 
	 
      	
              By /s/ Keith D. Browning

            
	 
      	
              Keith
      D. Browning

            
	 
      	
              Executive
      Vice President

            
	 
      	
              &
      Chief Financial Officer

            

    

     

     

     

     

    
 

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    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.

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

    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,

     

    reduced
by

     

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

        CarMax,
Inc.

        Benefit
Restoration Plan

        As Amended and
Restated January 1, 2008

      

    

    

    

      (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.

    

    

    

    13exhibit103.htm

    
      

    

    Exhibit 10.3

    

      [CarMax
Master Form Directors Stock Option Grant}

      

      [Date]

      

      

      

      «Title»
«FirstName» «LastName»

      «Company»

      «Address1»

      «Address2»

      «City»,
«State»  «PostalCode»

      

      Dear
«FirstName»:

      

      You have
been granted non-statutory stock options (the “Options”) to purchase shares of
the common stock of CarMax, Inc. (the “Company”) as set forth
herein.  This grant is made pursuant to the 2002 Non-Employee
Directors Stock Incentive Plan, as amended and restated (the
“Plan”).  The Options are not qualified for
Incentive Stock Option treatment.

      

      The
Options are subject to the provisions of the Plan.  The terms of the
Plan are incorporated into this letter and in the case of any conflict between
the Plan and this letter, the terms of the Plan shall control.  All
capitalized terms not defined herein shall have the meaning given to them in the
Plan.  Please refer to the Plan for certain conditions not set forth
in this letter. Copies of the Plan and the Company’s annual report to
shareholders on Form 10-K for fiscal year 20__ are available from the Company’s
corporate secretary at (804) 747-0422.

      

      
        	 
      	
                Number
      of Shares Subject to Option:

              	 
      	
                [_____]

              	 
      
	 
      	
                Option
      Price Per Share:

              	 
      	
                [$__.__]

              	 
      

      

      

      Vesting of
Options

      

      The
Options shall vest, and shall be exercisable, on the earliest of the following
dates:

      

      
        	
                1.  

              	
                Except
      as otherwise provide in this letter, the Options will vest and become
      exercisable according to the following schedule:  one-third on
      [______, 20__], one-third on [______, 20__],  and one-third on
      [______, 20__] provided you continue to serve as a Director of the Company
      on such dates.

              

      

      

      
        	
                2.  

              	
                The
      date of a Change of Control.

              

      

      

      The
Options may be exercised in whole or in part, from the dates described
immediately above until the Options terminate, as described below.

      

      Termination of
Options

      

      The
Options shall terminate under the following conditions:

      

      
        	
                1.  

              	
                Expiration.  The
      Option will expire on [_____________] (the “Expiration
    Date”).

              

      

      

      
        	
                2.  

              	
                Cessation
      of Service.  If your service as a Director of the Company ceases
      for any reason other than death or disability prior to your completion of
      five year (5) years of service as a Director, your unvested Options will
      terminate.  Your vested Options will be unaffected and remain
      subject to the terms of this
letter.

              

      

      
        
          
            1 of
3

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      Death, Disability or
Cessation of Services after Five Years Service

      

      If your
service as a Director terminates (i) because you die, (ii) because you become
disabled, or (iii) for any other reason after service as a Director for a period
of at least five (5) consecutive years and you are in good standing with the
Company, all of your Options covered by this letter will become immediately
vested and exercisable, effective as of the date of such termination, and you,
your personal representative, distributees, or legatees, as applicable, may
exercise your vested Options at any time before the Expiration
Date.

      

      Exercise of
Options

      

      When the
Options are exercisable, you may purchase shares of Company Common Stock under
your Option by:

      

      
        	
                1.  

              	
                Giving
      written notice to the Company, signed by you, stating the number of shares
      you have elected to purchase; and

              

      

      

      
        	
                2.  

              	
                Remitting
      payment of the exercise price in full in cash or by delivery of shares of
      Company Common Stock owned by you (valued at their Fair Market Value on
      the date of exercise) in satisfaction of all or any part of the exercise
      price; and

              

      

      

      
        	
                3.  

              	
                Remitting
      payment to satisfy the income tax withholding requirement for
      non-statutory options or making other arrangements to satisfy such
      withholding that are satisfactory to the Company and permitted by the
      Plan.

              

      

      

      Transferability of
Options

      

      Except as
provided below, the Options are not transferable by you other than by will or by
the laws of descent and distribution and is exercisable during your lifetime
only by you.  You may transfer your rights under the Option during
your lifetime subject to the following limitations:

      

      
        	
                1.  

              	
                Transfers
      are allowed only to the following
transferees:

              

      

      

      
        	
                a)  

              	
                Your
      spouse, children, step-children, grandchildren, step-grandchildren or
      other lineal descendants (including relationships arising from legal
      adoptions).  Such individuals are hereinafter referred to as
      “Immediate Family Members”.

              

      

      
        	
                b)  

              	
                Trust(s)
      for the exclusive benefit of any one or more of your Immediate Family
      Members.

              

      

      
        	
                c)  

              	
                Partnership(s),
      limited liability company(ies) or other entity(ies), the only partners,
      members or interest holder of which are among your Immediate Family
      Members.

              

      

      
        	
                d)  

              	
                Pursuant
      to a court issued divorce decree or Domestic Relations Order (as defined
      in the Code or Title I of the Employee Retirement Income Security Act (or
      rules thereunder)).

              

      

      

      
        	
                2.  

              	
                You
      may not receive any consideration in connection with the
      transfer.

              

      

      

      
        	
                3.  

              	
                Transferees
      may not subsequently transfer their rights under the Option except by will
      or by the laws of descent or
distribution.

              

      

      

      
        	
                4.  

              	
                Following
      the transfer, the Option will continue to be subject to the same terms and
      conditions as were applicable immediately prior to transfer (except that
      the transferee may deliver the Option exercise notice and payment of the
      exercise price).

              

      

      

      
        	
                5.  

              	
                You
      must give written notice of the transfer to the Company and the Company
      may require that any transfer is conditioned upon the transferee executing
      any document or agreement requested by the
  Company.

              

      

      
        
          
            2 of
3

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      Change in Capital
Structure

      

      If the
number of outstanding shares of the Company’s Common Stock is increased or
decreased as a result of a stock dividend, stock split, subdivision or
consolidation of shares, or other similar change in capitalization, the number
of Company shares for which you have unexercised Options and the exercise price
will automatically be adjusted, as provided in the Plan, (i) so as to preserve
the ratio that existed immediately before the change between the number of such
shares and the total number of shares of Company stock previously outstanding,
and (ii) so that your aggregate Option price remains the same; provided,
however, that the Company will not be required to issue any fractional shares
upon exercise of your Options as a result of such adjustment.

      

      Acceptance of
Option

      

      Please
indicate your acceptance of the terms and conditions pertaining to the Options
granted herein by signing your name in the space provided below and returning
one copy to the attention of [__________].  When signed by you, this
letter, together with the Plan, will become a Stock Option Agreement between you
and the Company which is governed by and construed and enforced in accordance
with the laws of the Commonwealth of Virginia.  This letter will not be effective as
a Stock Option Agreement unless it is signed and returned to ____________ at the
CarMax Home Office (12800 Tuckahoe Creek Parkway, Richmond, VA 23238), as soon
as possible, but in no event later than [_______, 20__].

      

      Acceptance
of this letter places no obligation or commitment on you to exercise the
Options.  By accepting this letter, you agree that if you have not
achieved the Company stock ownership levels as required by the Company’s
Corporate Governance Guidelines, if applicable, then upon exercise of any
Options you will retain at least 50% of the underlying shares remaining after
satisfaction of the option exercise cost and applicable tax
liability.

      

      Sincerely,

      

      

      

      Keith D.
Browning

      Executive
Vice President and Chief Financial Officer

      

      

      Accepted
this ______________ day of ___________________________, 200_

      

      

      

      ______________________________________________

      Signature

      

      ______________________________________________

      Printed
Name
3
of 3

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