Document:

Prepared by R.R. Donnelley Financial -- Form of Transition Services Agreement

 EXHIBIT 10.2 
  
 FORM OF
TRANSITION SERVICES AGREEMENT 
  
 This TRANSITION SERVICES AGREEMENT is dated as of
                         , 2002, by and between Circuit City Stores, Inc., a Virginia corporation (“Circuit City
Stores”) and CarMax, Inc., a Virginia corporation (“CarMax”). 
  
 RECITALS 
  
 WHEREAS, Circuit City Stores and CarMax have entered into the Separation Agreement dated as of
                         , 2002 (the “Separation Agreement”), providing for the conveyance by Circuit City Stores and
certain Subsidiaries of Circuit City Stores to CarMax of all of the assets and liabilities attributed to the CarMax Group to be held by CarMax or one or more of the CarMax Subsidiaries. 
  
 WHEREAS, CarMax has been operated by its parent Circuit City Stores, and has been dependent upon Circuit City Stores for various support and services since CarMax’s inception;

  
 WHEREAS, in connection with the implementation of the Separation Agreement, CarMax will need certain administrative and
infrastructure support in connection with the ongoing administrative and operation of CarMax; 
  
 WHEREAS, as a condition to the
respective obligations of the parties to the Separation Agreement to consummate the transactions contemplated therein, the Separation Agreement requires the execution and delivery of this Agreement pursuant to which Circuit City Stores agrees to
provide CarMax certain transition services upon the terms set forth herein. 
  
 NOW, THEREFORE, in consideration of the foregoing
and the mutual promises set forth hereinafter, the parties hereby agree as follows: 
  
 ARTICLE I 
  
 Section 1.1    Definitions.    Terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Separation Agreement. In addition, the following terms, as used herein, have the following meanings: 
  
 “Fully Loaded Cost” shall mean, with respect to any service supplied, the sum of (i) the allocable portion of all direct and indirect costs included in the functional department’s cost center relating
to services supplied, determined in accordance with Circuit City Stores’ cost accounting practices on the date hereof, plus (ii) an amount equal to ten percent (10%) of the amount in clause (i). 
  
 “Service” or “Transition Services” shall mean each distinct service or all services listed in Column A of Schedule 1 and Schedule 2
attached hereto. 

  
 ARTICLE II 
  
 Section 2.1    Duration of Services on Schedule 1.    This Agreement shall be effective as of the time and day on
which Circuit City Stores redeems its CarMax Group Stock in exchange for shares of CarMax Common Stock pursuant to the Separation Agreement (“Redemption Date”) and shall continue, with respect to each Service listed on Schedule 1, through
the date or for the period shown in Column B for such Service. At the option of CarMax, exercised by no less than thirty (30) days written notice to Circuit City Stores, the Service(s) specified in such written notice shall continue for a renewal
period of three (3) months. The provision of Service(s) specified in each written notice may be extended for consecutive three (3) month periods (or portions thereof); provided; however, that in no event will any Transition Service be
provided for more than [twelve (12) months] from the Redemption Date for the Services listed on Schedule 1. CarMax may, upon thirty (30) days written notice to Circuit City, terminate the provision of any Service listed on Schedule 1 during the
initial term or any renewal period. 
  
 Section 2.2    Duration of Services on Schedule
2.    This Agreement shall be effective as of the Redemption Date and shall continue, with respect to each Service listed on Schedule 2, through the date or for the period shown in Column B of Schedule 2 for such
Service. At the option of CarMax, exercised by no less than thirty (30) days written notice to Circuit City Stores, the Service(s) specified in such written notice shall continue for a renewal period of six (6) months. The provision of Service(s)
specified in each written notice may be extended for consecutive six (6) month periods (or portions thereof); provided; however, that in no event will any Transition Service be provided for more than [twenty-four (24) months] or
forty-eight (48) months, depending upon the initial term of the Service, from the Redemption Date for the Services listed on Schedule 2. For all Services on Schedule 2 other than the Computer Center, STS, and the Administrative Services
(collectively, the “Extended Services”), CarMax may, upon thirty (30) days written notice to Circuit City Stores, terminate the provision of any Service listed on Schedule 2 during the initial term or any renewal period. For the Extended
Services, CarMax may, upon six (6) months written notice to Circuit City Stores, terminate the provision of any Extended Service during the initial term or any renewal period. 
  
 Section 2.3    Employees.    Employees of Circuit City or its Affiliates who are made available to provide the
Services shall at all times remain the employees of Circuit City or its Affiliates and shall not at any time be deemed the agents, representatives, employees or leased employees of CarMax. Circuit City is solely responsible for designating the
individual employees to be made available to CarMax to provide the Services, and for the wages, salary, benefits, expenses or other costs (including workers’ compensation claims or any other employment related liability) (“collectively,
employee costs”) associated with such individuals. All other employees or personnel provided by CarMax or any third party in connection with this Transition Services Agreement shall remain the employees or personnel of CarMax or such third
party and shall not be deemed the agents, representatives, employees or leased employees of Circuit City or its Affiliates. Neither Circuit City nor its Affiliates shall be responsible for the employee costs associated with work to be performed by
such employees or personnel of 
 

 2 

 CarMax or any third party. Neither party shall be responsible for the acts of or for supervising the other party’s employees or personnel. 

 
 Section 2.4    Efforts for Alternative Sources of
Services.    Notwithstanding the foregoing but except with respect to the Extended Services, CarMax shall use all reasonable best efforts to establish, as quickly as reasonably possible, their own systems
and employees to perform the Services supplied to them by Circuit City Stores and, upon at least thirty (30) days prior written notice to Circuit City Stores, to terminate its use of each such respective Service. 
  
 ARTICLE III 
  
 Section
3.1    Performance.    Circuit City Stores agrees to provide timely to CarMax the Transition Services listed on Schedule 1 and 2 to the extent requested by CarMax, at levels
consistent with and in no event to exceed the extent to which such Transition Services had been made available to CarMax before the date hereof. 
  
 Section 3.2    Cost of Services.    The cost of each Service shall be the Fully Loaded Cost. 
  
 Section 3.3    Invoice and Payment.    Circuit City shall provide an invoice to CarMax no later than the
fifteenth day of the month following each calendar month in which Transition Services are provided. The invoice shall set forth in detail the Transition Services performed during the preceding month and cost associated with each Transition Service.
Invoices shall be payable by CarMax within sixty (60) days after their receipt by CarMax (the “Payment Date”). 
  
 Section 3.4    Late Payment.    Any payment due and unpaid under this Transition Services Agreement by the Payment Date shall bear interest from the Payment Date at
a rate per annum of two percent (1%) over the prime rate of interest published by [SunTrust Bank], or its successor, on the first day of each month, for large commercial lenders. In addition, Circuit City may, after giving thirty (30) days written
notice to CarMax, suspend Services under this Transition Services Agreement until Circuit City has been paid in full all amounts due for Transition Services rendered and expenses incurred. Notwithstanding the foregoing or anything else to the
contrary, there shall be no suspension of Transition Services during which there is a good faith dispute concerning any invoice. 
  
 Section 3.5    Performance by Third Parties.    CarMax understands that during the term of this Agreement, Circuit City Stores may decide to have all or a portion of any
particular Service performed in whole or in part, by a third-party provider. In such event, Circuit City Stores may assign all or a portion of its obligations hereunder relating to such Service to such third-party provider; provided however,
that no such assignment (i) shall diminish in any material respect the nature, scope or timeliness of the Transition Services to be provided by Circuit City Stores or (ii) [increase the amounts payable by CarMax for Transition Services under 3(b)].
CarMax agrees to provide such third-party provider CarMax’s specified service level requirements for the remainder of the term of this Agreement, such service level to reflect the service level then provided by Circuit City Stores for the
remainder of the term of this Agreement. 
 

 3 

  
 Section 3.6    Force Majeure.

  

	 	(a)
	 
	Circuit City Stores may suspend or reduce, in whole or in part, the performance or supply of any or all of the Transition Services or any of its obligations hereunder to the
extent it is materially impeded in its ability to provide such Service as a result of an act of God, labor dispute, war, riot, fire or other casualty, acts of any governmental body, or other cause or conditions beyond such party’s reasonable
control (each a “Force Majeure Event”). Circuit City Stores shall use its reasonable best efforts to restore the suspended or reduced Transition Service. Any Transition Services not provided by reason of this section shall be promptly
resumed upon the elimination of the Force Majeure Event. 
 

  

	 	(b)
	 
	During any period in which any Transition Services are reduced or suspended pursuant to Section 3.6(a), CarMax shall not be obligated to remit payment for the reduced,
suspended or terminated portion of such Transition Services. 
 

  
 Section
3.7    Limitation of Liability of Circuit City Stores. 
  

	 	(a)
	 
	Neither Circuit City Stores, nor its Affiliates, Subsidiaries, employees or agents shall be liable to CarMax for, and CarMax shall release and discharge and shall indemnify and
hold harmless Circuit City Stores, its Affiliates, Subsidiaries, employees and agents from any and all claims, liabilities, actions, suits, judgments, losses, injuries, damages (including, without limitation, incidental or consequential damages),
costs and expenses arising out of or connected with any act or omission of Circuit City Stores, its Affiliates, Subsidiaries, employees or agents, with respect to the Transition Services listed on Schedule 1 or Schedule 2, or any failure to provide
the Transition Services listed on Schedule 1 or Schedule 2 to CarMax other than (i) a refusal by Circuit City Stores in material breach of this Agreement or (ii) gross negligence or willful misconduct of Circuit City Stores, its employees or agents.

 

  

	 	(b)
	 
	CarMax shall not use the Transition Services listed on Schedule 1 or Schedule 2 for any purpose other than the operation of their internal business. CarMax will indemnify
Circuit City Stores against any loss, damage or expense incurred by Circuit City Stores as a result of CarMax’s misuse or employment of any such Transition Service. 
 

  
 Section 3.8    Absence of Warranties.    The parties expressly agree that no warranty shall be implied under
this Agreement, whether warranties of utility or of fitness for any particular purpose or of merchantability or of any other type and, further, that no warranties of any sort are made herein. 
  

ARTICLE IV 
  
 Section
4.1    Notices.    All notices and other communications required or permitted hereunder shall be in writing (including telex, facsimile transmission or similar writing) and
shall be given: 
  

	 	(a)
	 
	If to Circuit City Stores or to the Circuit City Subsidiaries to: 
 

 

 4 

  
 
	 Circuit City Stores, Inc.
 
	 9950 Mayland Drive
 
	 Richmond, Virginia 23223-1464
 
	 Attn:    Michael T. Chalifoux
 
	 Fax:    (804) [418-8286]
 

 
  

	 	(b)    If
	 
	to CarMax to: 
 

  
 
	 CarMax, Inc.
 
	 4900 Cox Road
 
	 Glen Allen, Virginia 23060-3314
 
	 Attn:    Keith D. Browning
 
	 Fax:    (804) 967-2978
 

 
  
 or to such other person or to such other address or facsimile number as the party to whom such notice is
to be given may have furnished the other parties in writing by like notice. If mailed, any such communication shall be deemed to have been given on the third business day following the day on which the communication is posed by registered or
certified mail (return receipt requested). If given by any other means it shall be deemed to have been given when delivered to the address specified in this Section. 
  
 Section 4.2    Interpretation.    The headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement. 
  
 Section 4.3    Books and
Records.    In addition to the maintenance of the data relating to each Service that shall be transferred to CarMax as described in Attachment A, Circuit City shall maintain books, records, documents and other evidence,
consistent with normal accounting procedures and practices, sufficient to accurately and properly reflect the performance of the Services hereunder and the amounts due Circuit City hereunder. CarMax or its representatives shall have access at all
reasonable times to such records for the purposes of auditing and verifying the accuracy of the invoices submitted by Circuit City. Circuit City shall maintain such books and records five years from the completion of all Services. 

 
 Section 4.4    Confidentiality.    Each party acknowledges that it
may be necessary to disclose Confidential Information (as defined below) to the other in order to facilitate the provision of Services under this Transition Services Agreement. Except as agreed by the parties pursuant to this Transition Services
Agreement, each party agrees not to use, copy, disclose to third parties (other than consultants engaged in the provision of Services) or to publish any Confidential Information of the other which is (i) confidential under applicable law, including
but not limited to applicable NRC regulations, or (ii) proprietary and confidential information including, without limitation, the following: (a) any trade secret, know-how, invention, software program, application, documentation, schematic,
procedure, contract, information, knowledge, data, process, technique, design, drawing, program, formula or test data, work in progress, engineering, manufacturing, marketing, financial, sales, supplier, customer, employee, investor, or business
information, whether in oral, written, graphic or electronic form; or (b) any document, diagram, photograph, drawing, computer program or other communication that is either conspicuously marked “confidential”, 
 

 5 

 known or reasonably should have been known by the other party to be confidential, or is of a proprietary nature, and is learned or disclosed in the course of
discussions, studies or other work undertaken between the parties. Notwithstanding the foregoing, the Parties shall have the right to disclose any information necessary to comply with any request or order of a Governmental Authority or court.
Nothing in this Section shall be deemed to limit or restrict in any way the right of a Governmental Authority to exercise its authority to audit or review the books or records of a party or any Affiliate of a party, but the party must advise the
other party of the pending disclosure as described below. 
  
 If a party intends to disclose Confidential Information to any
Governmental Authority or court, the Disclosing party shall, to the extent doing so does not violate any such request or order, advise the Non-Disclosing party prior to disclosure and cooperate in any effort by the Non-Disclosing party to minimize
the amount of Confidential Information disclosed, secure confidential treatment of such Confidential Information, or seek permission from such Governmental Authority or court to revise the Confidential Information in a manner consistent with the
interests of the Parties and in a manner which meets the requirements of the Governmental Authority or court. 
  
 Except to the
extent information is confidential under applicable law, any information transmitted to either party will not be deemed Confidential Information if that information is: 
  

	 	(a)
	 
	In the receiving party’s possession without restriction on disclosure prior to disclosure hereunder; 
 

  

	 	(b)
	 
	At the time of disclosure, generally available to the public without restriction on disclosure except to the extent then applicable corporate policies on confidentiality and
handling of proprietary information would have prevent disclosure; 
 

  

	 	(c)
	 
	After disclosure, generally available to the public without restriction on disclosure, by publication or otherwise, through no fault of receiving party; or 

  

	 	(d)
	 
	After the time of disclosure, received from a third party who imposes no obligation of confidentiality and who, insofar as the receiving party can reasonably determine, did not
acquire any such Confidential Information directly or indirectly from the other party subject to requirements of confidentiality. 
 

  
 The provisions of this Section shall survive the termination of the Transition Services and shall bind the parties and their successors and assigns for a period of five (5) years after initial disclosure of such
Confidential Information. Notwithstanding the foregoing, to the extent information may not be disclosed under applicable law, such information shall remain subject to this confidentiality provision until no longer protected under applicable law.

  
 Section 4.5     Governing Law and Venue.     This
Transition Services Agreement shall be governed by and construed in accordance with the domestic laws of the Commonwealth of Virginia, without regard to its conflicts of law rules. 
  
 Section 4.6    Severability.    Any term or provision of this Transition Services Agreement that is held invalid or
unenforceable in any situation shall not affect the validity or 
 

 6 

 enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation;
provided, however, that the remaining terms and provisions of this Transition Services Agreement may be enforced only to the extent that such enforcement in the absence of any invalid terms and provisions would not result in (a)
deprivation of a party of a material aspect of its original bargain upon execution of this Transition Services Agreement, (b) unjust enrichment of a party, or (c) any other manifestly unfair or inequitable result. 
  
 Section 4.7    Miscellaneous.    This Agreement (i) together
with the Separation Agreement, constitutes the entire agreement relating to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof
and in the event of a conflict between this Agreement and the Separation Agreement, the terms of this Agreement shall control; (ii) is an independent agreement, the rights and obligations of the parties to which shall not be affected by any
provision of, or remedy arising under or with respect to, the Separation Agreement or any other agreement between the parties, except to the extent expressly provided in any such agreement; and (iii) is not intended to and shall not confer upon any
other person or business entity, other than the parties hereto or any permitted assignees, any rights or remedies with respect to the subject matter hereof. 
  
 Section 4.8    Counterparts.    This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 
  
 *        *        *        *        * 
 

 7 

  
 IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their duly
authorized officers. 
  
 
	 CIRCUIT CITY STORES, INC.
 
	 
	 By:
 	 	 

	 
	 Name:
 	 	 

	 
	 Title:
 	 	 

 
  
 
	 CARMAX, INC.
 
	 
	 By:
 	 	 

	 
	 Name:
 	 	 

	 
	 Title:
 	 	 

 
  
 

 8 

  
 SCHEDULE 1 
  
 Transition Services 
  
 
	 Column A
 Transition Services
 
	 	 Column B
 Initial Term of Service
 

	 
	 Payroll
 	 	 [6 Months]
 
	 Human Resources
 	 	 [6 Months]
 
	 Benefits Administration
 	 	 [6 Months]
 
	 Purchasing of Television Advertising
 	 	 [6 Months]
 
	 Car Stereo Installation and Displays
 	 	 [6 Months]
 

 
  
 

 9 

  
 SCHEDULE 2 
  
 Transition Services 
  
 
	 Column A
 Transition
Service
 
	 	 Column B
 Initial Term of Service
 

	 Computer Center
 	 	 [24 Months]
 
	 STS
 	 	 [24 Months]
 
	 Security
 	 	 [24 Months]
 
	 Cafeteria Services
 	 	 [12 Months]
 
	 Telecommunications
 	 	 [12 Months]
 
	 Administrative Services
 	 	 [24 Months]
 
	 Tax Sharing Services
 	 	 [12 Months]
 
	 Relocation
 	 	 [24 Months]
 

 
  
 

 10Prepared by R.R. Donnelley Financial -- Form of Benefit Restoration Plan

  
 Exhibit 10.6 
  
  
  
  
  
 FORM OF CARMAX, INC. 

BENEFIT RESTORATION PLAN 
 

  
 TABLE OF CONTENTS 
  
 
	 Exind 3
 
	  	  	  	 Page
 

	  	  	  	  	  
	  	  	 Section I
 	  	  
	  	  	 Purpose of the Plan
 	  	  
	  	  	  	  	  
	 1.1
 	  	 Purpose
 	  	 2
 
	 1.2
 	  	 Structure
 	  	 2
 
	 1.3
 	  	 Definitions
 	  	 2
 
	  	  	  	  	  
	  	  	 Section II
 	  	  
	  	  	 Eligibility
 	  	  
	  	  	  	  	  
	 2.1
 	  	 Eligible Employees
 	  	 3
 
	 2.2
 	  	 Participation
 	  	 3
 
	 2.3
 	  	 No Duplication of Benefits
 	  	 3
 
	  	  	  	  	  
	  	  	 Section III
 	  	  
	  	  	 Benefits
 	  	  
	  	  	  	  	  
	 3.1
 	  	 Minimum Service Requirement
 	  	 3
 
	 3.2
 	  	 Supplemental Benefit
 	  	 3
 
	 3.3
 	  	 Adjustment for Early or Late Commencement
 	  	 3
 
	 3.4
 	  	 Maximum Benefit
 	  	 4
 
	 3.5
 	  	 Additional Benefit Service
 	  	 4
 
	  	  	  	  	  
	  	  	 Section IV
 	  	  
	  	  	 Computation and Payment of Retirement Benefit
 	  	  
	  	  	  	  	  
	 4.1
 	  	 Computation
 	  	 4
 
	 4.2
 	  	 Payment
 	  	 4
 
	 4.3
 	  	 Distribution of Accrued Benefit
 	  	 5
 
	  	  	  	  	  
	  	  	 Section V
 	  	  
	  	  	 Computation and Payment of Survivor Benefit
 	  	  
	  	  	  	  	  
	 5.1
 	  	 Pre-Retirement Survivor Benefit
 	  	 5
 
	 5.2
 	  	 Post-Retirement Survivor Benefit
 	  	 5
 
	 5.3
 	  	 Computation
 	  	 6
 
	 5.4
 	  	 Payment
 	  	 6
 
	  	  	  	  	  
	  	  	 Section VI
 	  	  
	  	  	 Administration
 	  	  
	  	  	  	  	  
	 6.1
 	  	 Effective Date, Amendment and Termination
 	  	 6
 
	 6.2
 	  	 Plan Administrator
 	  	 6
 
	 6.3
 	  	 Claims Procedure
 	  	 6
 
	  	  	  	  	  
	  	  	 Section VII
 	  	  
	  	  	 Change of Control
 	  	  
	  	  	  	  	  
	 7.1
 	  	 Effect of Change of Control
 	  	 7
 
	 7.2
 	  	 Definition of Change of Control
 	  	 7
 
	  	  	  	  	  
	  	  	 Section VIII
 	  	  
	  	  	 Miscellaneous
 	  	  
	 8.1
 	  	 Withholding
 	  	 7
 
	 8.2
 	  	 Rights Under the Plan
 	  	 7
 
	 8.3
 	  	 Effect on Employment
 	  	 7
 
	 8.4
 	  	 Successors; Governing Law
 	  	 8
 
	 8.5
 	  	 Assumption of Liabilities From Predecessor Plan
 	  	 8
 

 
 

  
 FORM OF CARMAX, INC. 
 BENEFIT RESTORATION PLAN 
  
 Section I 
 Purpose of the Plan 
  
 1.1    Purpose.    CarMax, Inc. (the “Company”) maintains this CarMax, Inc. Benefit Restoration Plan (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 below for a select group of management or highly compensated
employees (and their Beneficiaries) with compensation in excess of the limit on compensation under Section 401(a)(17) of the Code, or whose benefits are limited under the Retirement 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 Retirement Plan as a Related Company. 
  
 (b) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (c)
“Effective Date” means the day after the last day as of which the Company is a member of a controlled group of corporations with Circuit City Stores, Inc. within the meaning of Code Section 414. 
  
 (d) “Maximum Benefit” means the maximum annual Supplemental Benefit payable from the Plan as determined under Section 3.4.

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

  
 (f) “Pre-Retirement Survivor Benefit” means the benefit payable under the Plan to a surviving
Spouse of a Participant as determined under Section 5.1. 
  
 (g) “Post-Retirement Survivor Benefit”
means the benefit payable under the Plan to a Beneficiary of a Participant as determined under Section 5.2. 
  
 (h) “Retirement Plan” means the Retirement Plan of CarMax, Inc. as in effect from time to time. 
  
 (i) “Supplemental Benefit” means the benefit payable under the Plan as determined by Section 3.2, subject to adjustments as provided in the Plan. 
  
 (j) “Tax Limits” means both (1) the limit on compensation under Section 401(a)(17) of the Code (as adjusted from time to time under the terms of the
Retirement Plan), and (2) the maximum benefit limit under Section 415(b)(1)(A) of the Code (as adjusted from time to time under the terms of the Retirement Plan). 
  
 (k) The following terms shall have the meanings provided in the Retirement Plan: Actuarial Equivalent, Beneficiary, Benefit Service, Committee, Disability Pension,
Early Retirement Date, Normal Retirement Date, Permanent Disability, Plan Year, Qualified Pre-Retirement Survivor Annuity, Related Company, and Spouse. 
 

 2 

  
 Section II 
 Eligibility 
  
 2.1    Eligible
Employees.    Each participant in the Retirement Plan who is an employee of the Company or an Affiliated Company on or after the Effective Date, and whose retirement benefits under the Retirement Plan are limited by either or
both of the Tax Limits, shall be a Participant. In addition, any participant in the Retirement 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 Retirement 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 Retirement Plan
are no longer limited by either of the Tax Limits or 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 Retirement Plan. 
  
 Section III 
 Benefits 
  
 3.1    Minimum Service
Requirement.    To receive a Supplemental Benefit, a Participant must commence benefits under the Retirement Plan and meet one or more of the following criteria: 
  

	 	(a)
	 
	Have twenty-five (25) 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)
	 
	Either (i) have reached the Participant’s Early Retirement Date at the date of termination of employment with the Company or an Affiliated Company or (ii) have reached the
Participant’s Early Retirement Date and have had a continuous Permanent Disability from the date of termination of employment until the Early Retirement Date, or 
 

  

	 	(c)
	 
	Either (i) have reached the Participant’s Normal Retirement Date at the date of termination of employment with the Company or an Affiliated Company or (ii) have reached
the Participant’s 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.    If a Participant begins receiving a retirement benefit from the Retirement Plan, 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 Retirement 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 Retirement 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 Retirement 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
 
 

 3 

 
provisions of the Retirement Plan for benefits commencing after Normal Retirement Date. If a Supplemental Benefit commences when a Participant starts a Disability Pension under the Retirement
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 Retirement 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 retirement benefit that is payable to the Participant under the Retirement Plan. The Maximum Benefit is based on the payment of the Supplemental Benefit as a straight life annuity (with no ancillary
benefits). If benefits are payable in any other form, the Maximum Benefit shall be actuarially reduced to be the Actuarial Equivalent of the Maximum Benefit payable as a straight life annuity (with no ancillary benefits). 
  
 (b) The Maximum Benefit is an annual amount equal to $400,000, as adjusted below. The Maximum Benefit shall be subject to increase in
the same percentage as the Section 415 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 March 1 beginning with March 1, 2003, based on the percentage adjustment
applicable to that calendar year. 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 Retirement 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 Executive 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 Executive 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 Retirement 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 Retirement 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 Retirement Plan and ending at the
Participant’s death. 
  
 4.2    Payment.    A Participant’s Supplemental
Benefit under this Plan will be paid at the same time and in the same form of payment as benefits for the Participant under the Retirement Plan, except as provided in Section 4.3. If the benefit is to be paid in a form other than the single life
annuity form described above, the Supplemental Benefit described in Section III will be actuarially adjusted, using the actuarial assumptions then in effect under the Retirement Plan. Except as provided below, a Participant’s Supplemental
Benefit will begin to be paid on the date on which the Participant begins receiving benefits under the Retirement Plan and will be paid in cash or a cash equivalent. 
 

 4 

  
 4.3    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 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 4.3. 
  
 (b) After a distribution under this Section 4.3, the Company shall have no further liability with respect to the Supplemental Benefit. The Company has the sole
discretion to determine when and if a distribution is to be made under this Section 4.3, and to determine the amount of any distribution, and no Participant or Beneficiary shall have any right to receive a distribution under this Section 4.3.

  
 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 Retirement 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 Retirement Plan had the Participant’s Supplemental Benefit (as adjusted under Sections 3.3 and 3.4) and benefit from the Retirement Plan been paid entirely from the Retirement Plan, 
  
 REDUCED BY 
  
 (ii) The
total survivor benefit that is payable to the Spouse under the Retirement Plan. 
  
 (b) A Pre-Retirement Survivor
Benefit is payable in the same form as the survivor benefit is payable under the Retirement Plan, including benefit forms that may provide payments after the death of the surviving Spouse. 
  
 5.2    Post-Retirement Survivor Benefit.    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 Retirement Plan that provides for a survivor benefit, and (ii) a survivor benefit is payable to the Beneficiary under the Retirement 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
Retirement Plan had the Participant’s Supplemental Benefit (as adjusted under Sections 3.3 and 3.4) and benefit from the Retirement Plan been paid entirely from the Retirement Plan, 
 

 5 

  
 REDUCED BY 
  
 (ii) The total survivor benefit that is payable to the Beneficiary under the Retirement Plan. 
  
 (b) A Post-Retirement Survivor Benefit is payable to a surviving Spouse or any other Beneficiary of a Participant who is receiving a survivor benefit under the
Retirement Plan. 
  
 5.3    Computation.    The Pre-Retirement Survivor Benefit
described in Section 5.1 and the Post-Retirement Survivor Benefit described in Section 5.2 will be computed as if the survivor benefits under this Plan and the Retirement Plan were paid in the form payable under the Retirement Plan. The actuarial
assumptions used for purposes of the Retirement Plan will be used to determine the benefits payable under this Plan. 
  
 5.4    Payment.    Except as provided in Section 4.3, the Pre-Retirement Survivor Benefit and Post-Retirement Survivor Benefit will be paid at the same times and for the same duration as
payments under the Retirement Plan, commencing at the time the benefits commence under the Retirement Plan. 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 Retirement Plan as of the date of the computation. 
  
 6.2    Plan Administrator.    The Plan will be administered by one or more persons appointed by the Board to be responsible for administering the Plan (the “Plan
Administrator”). Unless the Board determines otherwise, the Plan shall be administered by the Committee which administers the Retirement Plan. 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. 
  
 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 will review the claim, and, if the claim is denied, in whole or in part, the Plan Administrator will furnish the claimant, within 90 days after the Plan Administrator’s
receipt 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) Specific reasons for the denial, 
  
 (b) Specific reference to the pertinent 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 the material or information is necessary, and 
  
 (d) An explanation of the claims review procedure. 
  
 The claimant may
request a review of the claim by an appeals committee appointed by the Board. The review may be requested in writing at any time within 90 days after the claimant receives written notice of the denial of his claim. The appeals committee shall afford
the claimant a full and fair review of the decision denying the claim and, if so requested, shall: 
 

 6 

  
 (a) Permit the claimant to review any documents that are pertinent to the
claim, 
  
 (b) Permit the claimant to submit to the committee issues and comments in writing, and 

 
 (c) Afford the claimant an opportunity to meet with a quorum of the appeals committee as part of the review procedure.

  
 The appeals committee’s decision on review shall be made in writing and shall be issued within 60 days following receipt of the request for review.
The period for decision may be extended to a date not later than 120 days after such receipt if the committee determines that special circumstances require an extension. The decision on review shall include specific reasons for the decision and
specific references to the Plan provisions on which the decision of the committee is based. 
  
 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    Withholding.    All benefits payable under this Plan will be reduced by any amounts that are
required to be withheld on account of income or payroll tax withholding or other reasons. 
  
 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. 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. 
  
 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. 
 

 7 

  
 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 becomes an employee of the Company or an Affiliated Company before March 1, 2003 who
has 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/                    
 

	  	 	  

 
 

 8

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