Document:

exhibit102.htm

    
      
        

      
EXHIBIT 10.2

     

    

    CARMAX,
INC.

    NOTICE OF
MARKET STOCK UNIT GRANT

    

    [Date]

     

     

     

    ________________________________

    ________________________________
________________________________

    

    Dear
_____________________:

    

    The Board
of Directors of CarMax, Inc. (the “Company”) wants to provide you with an
opportunity to share in the success of our Company.  Accordingly, I am
pleased to inform you that, as of _________________ (the “Grant Date”), the
Compensation and Personnel Committee of the Board of Directors of the Company
(the “Committee”) exercised its authority pursuant to the CarMax, Inc. 2002
Stock Incentive Plan, as amended and restated (the “Plan”) and granted you
Market Stock Units of the Company (the “Market Stock Units”) as set forth
herein.

    

    The
Market Stock Units are a form of Restricted Stock Units under the Plan and are
subject to the provisions of the Plan.  The Committee administers the
Plan.  The terms of the Plan are incorporated into this Notice of
Market Stock Unit Grant (the “Notice of Grant”) and in the case of any conflict
between the Plan and this Notice of Grant, 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 Notice of
Grant.  Additionally, a copy of a Prospectus for the Plan, which
describes material terms of the Plan, can be found on The CarMax
Way.  Copies of the Prospectus, 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 Market Stock Units:

                              	 
      
	
                                Grant
      Date Fair Market Value:

                              	 
      

                      

                    

                  

                

              

            

          

        

         

      

    

    

    Vesting of Market Stock
Units

    

    Except as
otherwise provided in this Notice of Grant, the Market Stock Units will vest and
become nonforfeitable on [THREE YEAR ANNIVERSARY DATE] or such earlier date as
may be provided in this Notice of Grant or the Plan (the “Vesting Date”)
provided you continue to be employed by the Company from the Grant Date until
the Vesting Date.  Prior to the Vesting Date, the Market Stock Units
are not transferable by you by means of sale, assignment, exchange, pledge or
otherwise.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    Additional Vesting and
Forfeiture Provisions

    

    
      	
              1.
       

            	
              Termination
      Without Cause or for Good Reason.  If the Company terminates
      your employment with the Company for any reason other than “Cause” (as
      defined in your employment or severance agreement with the Company),
      including for “Involuntary Termination Without Cause” or “Termination
      Without Cause” (as applicable and as defined in your employment or
      severance agreement with the Company) or you terminate your employment for
      “Good Reason” (if applicable and as defined in your employment or
      severance agreement with the Company) then all Market Stock Units will
      become immediately vested and nonforfeitable, effective as of the date of
      the termination of your employment.  In such instance, the
      Payment Date shall be the Vesting
Date.

            

    

    

    
      	
              2.  

            	
              Termination
      For Cause. Upon termination of your employment with the Company for Cause,
      and notwithstanding the terms of the “Age and Service Vesting” section set
      forth below, your Market Stock Units will be immediately forfeited,
      effective as of the date of your
termination.

            

    

    

    
      	
              3.  

            	
              Change
      in Full-Time Employment Status.  In the event that your
      employment with the Company changes from full-time to part-time for any
      reason, and notwithstanding the terms of the “Age and Service Vesting”
      section set forth below, your Market Stock Units will be immediately
      forfeited, effective as of the date of the
  change.

            

    

    

    
      	
              4.  

            	
              Resignation;
      Leave.  In the event that you resign your employment with the
      Company, your Market Stock Units will be immediately forfeited, effective
      as of your resignation date, except as otherwise provided in the “Age and
      Service Vesting” section set forth below.  Employees on
      authorized leave (as determined under the Company’s authorized leave
      policy) will not be considered as having terminated merely by reason of
      the leave.

            

    

    

    Payment for Market Stock
Units

    

    Payment
for your Market Stock Units shall be made in shares of Company Stock as soon as
practicable following [THREE YEAR ANNIV DATE], but in no event later than the
last day such payment may be made while still qualifying for the short–term
deferral exception from Code Section 409A.  [THREE YEAR ANNIV DATE]
shall be referred to herein as the “Payment Date.”

    

    Number of Shares of Company
Stock To Be Awarded on the Payment Date

    

    The
number of shares of Company Stock that will be awarded to you on the Payment
Date shall be determined in accordance with the following formula:

    

    (Number
of Market Share Units granted in this Notice of Grant)

     

    
      multiplied
by

      

      ((the
Payment Date Fair Market Value) divided by (the Grant Date Fair Market
Value)).

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    

    For
purposes of the formula set forth above:

    

    
      	
              1.  

            	
              The
      Grant Date Fair Market Value, which is set forth on page one of this
      Notice of Grant, shall be equal to the volume-weighted average trading
      price of the Company Stock occurring on the New York Stock Exchange on the
      Grant Date.

            

    

    

    
      	
              2.  

            	
              The
      Payment Date Fair Market Value shall be equal to the average of the
      closing price of the Company Stock occurring on the New York Stock
      Exchange on the Payment Date and the 39 trading dates preceding the
      Payment Date.

            

    

    

    
      	
              3.  

            	
              Notwithstanding
      the calculation set forth in the preceding paragraph, the Payment Date
      Fair Market Value shall be capped at two times the Grant Date Fair Market
      Value.

            

    

    

    Shareholder
Rights

    

    The
Market Stock Units shall not represent an equity security of the Company and
shall not carry any voting or dividend rights, except the right to receive
payments equivalent to dividends as set forth below.

    

    Dividend Equivalent
Rights

    

    You shall
accumulate dividend equivalent rights on all Market Stock Units in an amount
equal to the dividends paid, if any, with respect to a share of Company Stock on
each date that a dividend is paid on the Company Stock prior to the Payment
Date.  The dividend equivalent rights shall be converted into
additional Market Stock Units based on the Fair Market Value of a share of
Company Stock on the date the dividend is paid and shall accumulate and be paid
in additional shares of Company Stock when the payment for the corresponding
Market Stock Units is made.  Such additional Market Stock Units shall
be subject to the same forfeiture restrictions as apply to the Market Stock
Units to which they relate and shall be converted into shares of Company Stock
using the same formula, Grant Date Fair Market Value and Payment Date Fair
Market Value set forth above.

    

    Tax
Withholding

    

    On the
Payment Date, you will have taxable income equal to the value of the Market
Stock Units on that date.  You will be required to reimburse the
Company for the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect
to the vesting of the Market Stock Units (“Tax Withholdings”).  The
Company has the right to retain and withhold from any payment under this
Agreement any required Tax
Withholdings.  At its discretion, the Company may require you to
reimburse it for any Withholding Taxes and withhold any payments, in whole or in
part, until the Company is so reimbursed.  The Company shall also have
the unrestricted right to withhold from any other cash amounts due (or to become
due) from the Company to you, including from your wages or commissions, an
amount equal to any Tax Withholdings.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    
Death
or Disability

    If your
employment by the Company terminates because you die or become disabled, all
Market Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.

    

    Age and Service
Vesting

    

    If your
employment with the Company terminates, such termination is not for cause and as
of the date if the termination you have:

    

    
      	
              1.

            	
              Attained
      55 years of age and completed ten years or more of continuous employment
      with the Company;

            

    

    

    
      	
              2.

            	
              Attained
      62 years of age and completed seven years or more of continuous employment
      with the Company; or

            

    

    

    
      	
              3.

            	
              Attained
      65 years of age and completed five years or more of continuous employment
      with the Company;

            

    

    

    then all
Market Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.

    

    Change of
Control

    

    Notwithstanding
anything to the contrary herein, in the event of a Change of Control, all Market
Stock Units covered by this Notice of Grant shall vest in accordance with the
following:

    

    
      	
              ·  

            	
              50%
      of your Market Stock Units shall vest effective upon the date of the
      Change of Control.  In such instance, the Payment Date shall be
      the Vesting Date.

            

    

    
      	
              ·  

            	
              50%
      of your Market Stock Units shall vest effective upon the one-year
      anniversary of the date of the Change of Control.  In such
      instance, the Payment Date shall be the Vesting
  Date.

            

    

    

    Notwithstanding
the foregoing, in the event that any of your Market Stock Units would have
vested sooner than the one-year anniversary of the date of the Change of Control
(based upon the vesting schedule set forth in the “Vesting of Market Stock
Units” section hereof or
any other terms or conditions affecting vesting rights contained herein), such
sooner vesting date shall apply to such Market Stock Units.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    

    Change of Capital
Structure

    

    If the
number of outstanding shares of the Company 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 Market Stock
Units covered by this Notice of Grant and the Grant Date Fair Market Value will
automatically be adjusted, as provided in the Plan and as the Committee shall
determine to be equitably required so as to preserve the value of the Market
Stock Units that existed immediately before the change; provided, however, that
the Company will not be required to issue any fractional shares as a result of
such adjustment.

    

    By
accepting this grant on-line, this Notice of Grant, together with the Plan, will
become an agreement between you and the Company that is governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Virginia.  By accepting this online agreement, you agree that you are
in compliance with, and will abide by, the Company’s “Policy Against Insider
Trading – Associates” which can be found on The CarMax Way.

    

    

    Sincerely,

    

    

    

    [Name,
Title]

    

    ACCEPTED:

    

    Signature

     

    
      

        
          
            
              
                
                  
                    	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                            Printed
      Name

                          	 
      	
                            Employee
      ID
Number

                          

                  

                

              

            

          

        

    

    

    

 

     

    5exhibit103.htm

    
      

    

    EXHIBIT
10.3

     

    CARMAX,
INC.

    NOTICE OF
RESTRICTED STOCK UNIT GRANT

    

    [Date]

    

     

    ______________________________

    ______________________________

    ______________________________

     

    Dear
_____________________:

    

    The Board
of Directors of CarMax, Inc. (the “Company”) wants to provide you with an
opportunity to share in the success of our Company.  Accordingly, I am
pleased to inform you that, as of _________________ (the “Grant Date”), the
Compensation and Personnel Committee of the Board of Directors of the Company
(the “Committee”) exercised its authority pursuant to the CarMax, Inc. 2002
Stock Incentive Plan, as amended and restated (the “Plan”) and granted you
Restricted Stock Units of the Company (the “Restricted Stock Units”) as set
forth herein.

    

    The
Restricted Stock Units are subject to the provisions of the Plan.  The
Committee administers the Plan.  The terms of the Plan are
incorporated into this Notice of Restricted Stock Unit Grant (the “Notice of
Grant”), and in the case of any conflict between the Plan and this Notice of
Grant, 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 Notice of Grant.  Additionally, a copy of a Prospectus for the
Plan, which describes material terms of the Plan, can be found on The CarMax
Way.  Copies of the Prospectus, 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 Restricted Stock Units:

                      	 
      
	
                        Grant
      Date Fair Market Value:

                      	 
      

              

            

          

        

      
  

    

    Vesting of Restricted Stock
Units

    

    Except as
otherwise provided in this Notice of Grant, the Restricted Stock Units will vest
and become nonforfeitable on [THREE YEAR ANNIVERSARY DATE] or such earlier date
as may be provided in this Notice of Grant or the Plan (the “Vesting Date”)
provided you continue to be employed by the Company from the Grant Date until
the Vesting Date.  Prior to the Vesting Date, the Restricted Stock
Units are not transferable by you by means of sale, assignment, exchange, pledge
or otherwise.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Payment for Restricted Stock
Units

    

    The value
of each Restricted Stock Unit on the Vesting Date shall equal the Fair Market
Value of a share of Company Stock, with certain exceptions as noted in the
paragraph below.  Payment for your Restricted Stock Units shall be
made in a single lump sum cash payment as soon as practicable following the
Vesting Date, but in no event later than the last day such payment may be made
while still qualifying for the short–term deferral exception from Internal
Revenue Code Section 409A.

    

    The value
on the Vesting Date of each Restricted Stock Unit shall not exceed two times,
and shall not be less than .75 times, the Grant Date Fair Market Value of one
share of Company Stock.  Accordingly, on the Vesting Date, the
Company’s payment obligations shall not exceed $____ [Insert 2 x Grant Date FMV]
per Restricted Stock Unit, and shall not be less than $____ [Insert .75 x Grant
Date FMV] per Restricted Stock Unit.

    

    Shareholder
Rights

    

    The
Restricted Stock Units shall not represent an equity security of the Company and
shall not carry any voting or dividend rights, except the right to receive
payments equivalent to dividends as set forth herein.

    

    Dividend Equivalent
Rights

    

    You shall
accumulate dividend equivalent rights on all Restricted Stock Units in an amount
equal to the dividends paid, if any, with respect to a share of Company Stock on
each date that a dividend is paid on the Company Stock prior to the Vesting
Date.  The dividend equivalent rights shall be converted into
additional Restricted Stock Units based on the Fair Market Value of a share of
Company Stock on the date the dividend is paid and shall accumulate and be paid
in cash when the payment for the corresponding Restricted Stock Units is
made.  Such additional Restricted Stock Units shall be subject to the
same forfeiture restrictions and value limitations as apply to the Restricted
Stock Units to which they relate.

    

    Tax
Withholding

    

    On the
Vesting Date, you will have taxable income equal to the value of the Restricted
Stock Units on that date.  You will be required to reimburse the
Company for the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to the vesting of the Restricted Stock
Units (“Tax Withholdings”).  The Company has the right to retain and
withhold from any payment under this Agreement any required Tax
Withholdings.  At its discretion, the Company may require you to
reimburse it for any Withholding Taxes and withhold any payments, in whole or in
part, until the Company is so reimbursed.  The Company shall also have
the unrestricted right to withhold from any other cash amounts due (or to become
due) from the Company to you, including from your wages or commissions, an
amount equal to any Tax Withholdings.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Forfeiture of Restricted
Stock Units

    

    Your
Restricted Stock Units shall be forfeited upon the earliest to occur prior to
the Vesting Date of the following:

    

    
      	
              1.

            	
              Termination
      of Employment by the Company.  Except as otherwise provided in
      the “Age and Service Vesting” section set forth below, upon termination of
      your employment with the Company by the Company for any reason, other than
      death or disability, your unvested Restricted Stock Units will be
      immediately forfeited.

            

    

    

    
      	
              2.

            	
              Resignation.  In
      the event that you resign your employment with the Company, any Restricted
      Stock Units that have not vested by your resignation date will be
      forfeited on your resignation date, except as otherwise provided in the
      “Age and Service Vesting” section set forth
  below.

            

    

     

    Death
or Disability

    If your
employment by the Company terminates because you die or become disabled, all
Restricted Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.

    

    Age and Service
Vesting

    

    If your
employment with the Company terminates, such termination is not for cause and as
of the date if the termination you have:

    

    
      	
              1.

            	
              Attained
      55 years of age and completed ten years or more of continuous employment
      with the Company;

            

    

    

    
      	
              2.

            	
              Attained
      62 years of age and completed seven years or more of continuous employment
      with the Company; or

            

    

    

    
      	
              3.

            	
              Attained
      65 years of age and completed five years or more of continuous employment
      with the Company;

            

    

    

    then all
Restricted Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.

    

    Change of
Control

    

    Notwithstanding
anything to the contrary herein, in the event of a Change of Control, all
Restricted Stock Units covered by this Notice of Grant shall vest in accordance
with the following:

    

    
      	
              ·  

            	
              50%
      of your Restricted Stock Units shall vest effective upon the date of the
      Change of Control.

            

    

    

    
      	
              ·  

            	
              50%
      of your Restricted Stock Units shall vest effective upon the one-year
      anniversary of the date of the Change of
  Control.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    

    Notwithstanding
the foregoing, in the event that any of your Restricted Stock Units would have
vested sooner than the one-year anniversary of the date of the Change of Control
(based upon the vesting schedule set forth in the “Vesting of Restricted Stock
Units” section hereof or any other terms or conditions affecting vesting rights
contained herein), such sooner vesting date shall apply to such Restricted Stock
Units.

    

    Change of Capital
Structure

    

    If the
number of outstanding shares of the Company 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 Restricted Stock Units
covered by this Notice of Grant and the Grant Date Fair Market Value will
automatically be adjusted, as provided in the Plan and as the Committee shall
determine to be equitably required so as to preserve the value of the Restricted
Stock Units that existed immediately before the change.

    

    By
accepting this grant on-line, this Notice of Grant, together with the Plan, will
become an agreement between you and the Company that is governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Virginia.  By accepting this online agreement, you agree that you are
in compliance with, and will abide by, the Company’s “Policy Against Insider
Trading – Associates” which can be found on The CarMax Way.

    

    

    Sincerely,

    

    

    

    [Name,
Title]

    

    ACCEPTED:

    

    Signature

    
 

    
      
        
          
            
              
                	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                        Printed
      Name

                      	 
      	
                        Employee
      ID
Number

                      

              

            

          

        

      

 

     

     

    4

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