Document:

Prepared by R.R. Donnelley Financial -- Form of Employee Benefits Agreements

  
 Exhibit 10.3 
  
 FORM OF EMPLOYEE BENEFITS AGREEMENT 
  
 BY AND
BETWEEN CIRCUIT CITY STORES, INC. AND 
  
 CARMAX, INC. 
  
 Effective as of May 21, 2002 

  
 FORM OF EMPLOYEE BENEFITS AGREEMENT 
  
 This EMPLOYEE BENEFITS AGREEMENT, dated as of             , 2002 (the
“Effective Date”) is by and between Circuit City Stores, Inc., a Virginia corporation (“Circuit City”), and CarMax, Inc., a Virginia corporation and a wholly owned subsidiary of Circuit City (“CarMax”). 

 
 WHEREAS, the Board of Directors of Circuit City has determined that it is in the best interests of Circuit City and its
shareholders to separate CarMax from Circuit City’s remaining businesses such that CarMax will become an independent, separately traded public business (the “Separation”); 
  
 WHEREAS, in furtherance of the foregoing, Circuit City and CarMax have entered into a Separation Agreement, dated as of May 21, 2002 (the “Separation Agreement”),
and other specific agreements that will govern certain matters relating to the Separation and the relationship of Circuit City, CarMax, and their respective Affiliates following the Separation Date; and 
  
 WHEREAS, Circuit City and CarMax have agreed to enter into this Agreement to provide for the allocation of assets, liabilities, and
responsibilities with respect to certain employee compensation and benefit plans and programs between them. 
  
 NOW,
THEREFORE, the parties, intending to be legally bound, agree as follows: 

  
 ARTICLE I 
  
 DEFINITIONS 
  
 For purposes of this
Agreement the following terms shall have the following meanings: 
  
 
	 
	 1.1
 	  	 “Administration Period” means the period from the consummation of the Separation until the date on which CarMax determines it can properly
administer the applicable employee benefit plan or payroll practice without assistance from Circuit City, which period may differ as between benefit plans and practices. CarMax shall notify Circuit City at least thirty days in advance of any
termination of the Administration Period, with respect to any benefit plan or payroll practice, and provided however that the Administration Period shall in no event extend for a period in excess of one year from the consummation of the Separation
with respect to any benefit plan or payroll practice.
 
	 
	 1.2
 	  	 “Affiliate” means a member of an entity’s controlled group of corporations within the meaning of Section 414 of the Code.
 
	 
	 1.3
 	  	 “Agreement” means this Employee Benefits Agreement, including all the Schedules hereto.
 
	 
	 1.4
 	  	 “Auditing Party” is defined in Section 6.5(a).
 
	 
	 1.5
 	  	 “Award,” when immediately preceded by “Circuit City,” means an award under the Circuit City Stock Incentive Plan; when immediately
preceded by “CarMax,” means an award under the CarMax Stock Incentive Plan.
 
	 
	 1.6
 	  	 “CarMax” is defined in the recitals to this Agreement.
 
	 
	 1.7
 	  	 “CarMax Common Stock” means common shares, par value of $0.50 per share, of CarMax to be issued to holders of CarMax Group Common Stock and holders
of Circuit City Group Common Stock in the Separation and that also trades before and through the CarMax Dividend Date on a “When issued” basis.
 
	 
	 1.8
 	  	 “CarMax Dividend” shall mean the distribution by Circuit City of CarMax Common Stock as a dividend to holders of Circuit City Group Common Stock in
the Separation.
 
	 
	 1.9
 	  	 “CarMax Dividend Date” means the date on which the CarMax Common Stock held by Circuit City is distributed as a dividend to holders of Circuit City
Group Common Stock and the date on which Circuit City Stores Common Stock ceases to trade on a “when issued” basis.
 
	 
	 1.10
 	  	 “CarMax Employee” means any individual who, as of the consummation of the Separation, is either actively employed by or then on a leave of absence
from CarMax or a CarMax Entity.
 

 
 

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	 1.11
 	  	 “CarMax Entity” means CarMax and any Person that is, at the relevant time, an Affiliate of CarMax or is otherwise controlled, directly or
indirectly, by CarMax.
 
	 
	 1.12
 	  	 “CarMax Executive” means a CarMax Employee or Circuit City Transferee who is eligible to participate in or receive a benefit under any CarMax
Executive Benefit Plan.
 
	 
	 1.13
 	  	 “CarMax Executive Benefit Plans” means the executive benefit and nonqualified plans, programs, and arrangements (exclusive of Individual
Agreements) established and sponsored by CarMax, for the benefit of employees and former employees of CarMax or a CarMax Entity after the Close of the Separation Date.
 
	 
	 1.14
 	  	 “CarMax Exchange Date” means the date on which CarMax Group Common Stock is redeemed in exchange for CarMax Common Stock.
 
	 
	 1.15
 	  	 “CarMax 401(k) Plan” means the CarMax, Inc. 401(k) Savings Plan.
 
	 
	 1.16
 	  	 “CarMax Group Common Stock” means common shares, par value of $0.50 per share, of Circuit City designated as “Circuit City Stores,
Inc.—CarMax Group Common Stock” in the Circuit City Amended and Restated Articles of Incorporation, to be redeemed by Circuit City in the Separation.
 
	 
	 1.17
 	  	 “CarMax Group Option” means an option (either nonqualified or incentive) to purchase shares of CarMax Group Common Stock pursuant to a Circuit City
Stock Incentive Plan.
 
	 
	 1.18
 	  	 “CarMax Stock Incentive Plan” means the Stock Incentive Plan or program to be established by CarMax, effective immediately prior to the CarMax
Dividend Date, in connection with the treatment of options as described in Article V.
 
	 
	 1.19
 	  	 “CarMax Post-Dividend Stock Value” means the average of the sum of the closing sales prices of CarMax Common Stock as reported on the NYSE
Composite Transaction Tape as of 4:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect) for each of the five trading days consisting of the CarMax Dividend Date and the four trading days immediately preceding
the CarMax Dividend Date.
 
	 
	 1.20
 	  	 “CarMax Pre-Dividend Stock Value” means the average of the sum of the closing sale prices of CarMax Group Common Stock Reported on the NYSE
Composite Transaction Tape as of 4:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect) for each of the five trading days consisting of the CarMax Dividend Date and the four trading days immediately preceding
the CarMax Dividend Date.
 
	 
	 1.21
 	  	 “CarMax Option” means an option (either nonqualified or incentive) to purchase shares of CarMax Common Stock pursuant to the CarMax Stock Incentive
Plan.
 
	 
	 1.22
 	  	 “CarMax Retirement Plan” means the Retirement Plan of CarMax, Inc., established on March 1, 2002.
 
	 
	 1.23
 	  	 “Circuit City” is defined in the recitals to this Agreement.
 

 
 

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	 1.24
 	  	 “Circuit City Common Stock” means the common shares, par value $.50 per share, of Circuit City designated as “Common Stock” in the
Circuit City Amended and Restated Articles of Incorporation immediately after the Separation, such shares having previously been designated as Circuit City Group Common Stock and having been redesignated as “Common Stock” pursuant to an
amendment to the Amended and Restated Articles of Incorporation to be filed by Circuit City in connection with the Separation.
 
	 
	 1.25
 	  	 “Circuit City Employee” means any individual who, as of the consummation of the Separation, is either actively employed by or then on a leave of
absence from Circuit City or a Circuit City Entity, but does not include any Circuit City Transferee or any CarMax Employee.
 
	 
	 1.26
 	  	 “Circuit City Entity” means any entity that is, at the time relevant to the applicable provision of this Agreement, an Affiliate of Circuit City,
except that, for periods beginning after the Separation Date, the term “Circuit City Entity” shall not include CarMax or a CarMax Entity.
 
	 
	 1.27
 	  	 “Circuit City Executive” means an employee or former employee of Circuit City who, immediately before the Close of the Separation Date, is eligible
to participate in or receive a benefit under any Circuit City Executive Benefit Plan.
 
	 
	 1.28
 	  	 “Circuit City Executive Benefit Plans” means the executive benefit and nonqualified plans, programs, and arrangements (exclusive of Individual
Agreements) established and sponsored by Circuit City, to the extent maintained, agreed upon, or assumed by Circuit City or a Circuit City Entity (other than CarMax or a CarMax Entity) for the benefit of employees and former employees of Circuit
City or a Circuit City Entity (other than CarMax or a CarMax Entity) before the Close of the Separation Date.
 
	 
	 1.29
 	  	 “Circuit City 401(k) Plan” means the Circuit City Stores, Inc. 401(k) Plan.
 
	 
	 1.30
 	  	 “Circuit City Group Common Stock” means common shares, par value of $0.50 per share, of Circuit City designated as “Circuit City Stores,
Inc.—Circuit City Group Common Stock” in the Circuit City Amended and Restated Articles of Incorporation that trade before the CarMax Dividend Date “with due bills” to reflect the right to receive the CarMax
Dividend.
 
	 
	 1.31
 	  	 “Circuit City Group Option” means an option (either nonqualified or incentive) to purchase shares of Circuit City Group Common Stock pursuant to a
Circuit City Stock Incentive Plan.
 
	 
	 1.32
 	  	 “Circuit City Stock Incentive Plan” means either or both of the Circuit City Stores, Inc. 1988 Stock Incentive Plan and the Circuit City Stores,
Inc.1994 Stock Incentive Plan.
 
	 
	 1.33
 	  	 “Circuit City Post-Dividend Stock Value” means the average of the sum of the closing sale prices of Circuit City Stores Common Stock reported on
the NYSE Composite
 

 
 

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	  	  	 Transaction Tape as of 4:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect) for each of the five trading days
consisting of the CarMax Dividend Date and the four trading days immediately preceding the CarMax Dividend Date.
 
	 
	 1.34
 	  	 “Circuit City Pre-Dividend Stock Value” means the average of the sum of the closing sale prices of Circuit City Group Common Stock reported on the
NYSE Composite Transaction Tape as of 4:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect) for each of the five trading days consisting of the CarMax Dividend Date and the four trading days immediately
preceding the CarMax Dividend Date.
 
	 
	 1.35
 	  	 “Circuit City Retirement Plan” means the Retirement Plan of Circuit City Stores, Inc.
 
	 
	 1.36
 	  	 “Circuit City Stores Common Stock” means common shares, par value of $0.50 per share, of Circuit City designated as “Circuit City Stores,
Inc.—Common Stock” in the Circuit City Amended and Restated Articles of Incorporation of Circuit City Stores, Inc. that trade before and through the CarMax Dividend Date on a “when issued” basis to denote no rights to receive the
CarMax Dividend and continue to trade after the CarMax Dividend Date.
 
	 
	 1.37
 	  	 “Circuit City Stores Option” means an option (either nonqualified or incentive) to purchase shares of Circuit City Stores Common Stock pursuant to
a Circuit City Stock Incentive Plan.
 
	 
	 1.38
 	  	 “Circuit City Transferees” means individuals who are employees of Circuit City or a Circuit City Entity (other than CarMax or a CarMax Entity) at
any time after February 28, 2002 and who become employees of CarMax or a CarMax Entity after the Separation Date and prior to March 1, 2003; provided however, that such individuals shall not be deemed to be Circuit City Transferees hereunder until
such transfer of employment has occurred.
 
	 
	 1.39
 	  	 “Close of the Separation Date” means 11:59:59 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the
Separation Date.
 
	 
	 1.40
 	  	 “COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and ERISA Sections 601 through 608.
 
	 
	 1.41
 	  	 “Code” means the Internal Revenue Code of 1986, as amended, or any successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that provision.
 
	 
	 1.42
 	  	 “Disposition Year” means the Circuit City fiscal year during which the Separation Date occurs or the first CarMax fiscal year that ends after the
Separation Date, as applicable.
 
	 
	 1.43
 	  	 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
 

 
 

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	 1.44
 	  	 “Health and Welfare Plans,” when immediately preceded by “Circuit City,” means the health and welfare plans established and sponsored by
Circuit City, to the extent maintained, agreed upon, or assumed by Circuit City for the benefit of employees and retirees of Circuit City and Circuit City Entities (other than CarMax or a CarMax Entity after the consummation of the Separation), and
such other health and welfare plans or programs as may apply to such employees and retirees and, when immediately preceded by “CarMax,” means the health and welfare plans sponsored and maintained by CarMax or a CarMax Entity before or
after the Separation.
 
	 
	 1.45
 	  	 “HIPAA” means the health insurance portability and accountability requirements for “group health plans” under the Health Insurance
Portability and Accountability Act of 1996, as amended.
 
	 
	 1.46
 	  	 “Individual Agreement” means an individual contract or agreement (whether written or unwritten) entered into between Circuit City, a Circuit City
Entity, CarMax, or a CarMax Entity and a Circuit City Executive or a CarMax Executive that establishes the terms and conditions of the employment of such individual, including any rights to special executive compensation or benefits.

	 
	 1.47
 	  	 “Liabilities” means any liability, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever arising, and whether or not the same that is or would properly be reflected on a balance sheet of Circuit City, any Circuit City Entity, CarMax, or any CarMax Entity, or the notes thereto, including all costs and expenses relating
thereto.
 
	 
	 1.48
 	  	 “NYSE” means the New York Stock Exchange.
 
	 
	 1.49
 	  	 “Participating Company” means (a) Circuit City, (b) any Person (other than an individual) that Circuit City has approved for participation in, and
which is participating in, a Plan sponsored by Circuit City or a Circuit City Entity, and (c) any Person (other than an individual) which, by the terms of such a Plan, participates in such Plan or any employees or retirees of which, by the terms of
such Plan, participate in or are covered by such Plan.
 
	 
	 1.50
 	  	 “Person” means and includes an association, an individual, a partnership, a joint venture, a joint stock company, a corporation, a trust, an
unincorporated organization, a limited liability company, a group, a government or other department or agency thereof and any other entity.
 
	 
	 1.51
 	  	 “Plan,” when immediately preceded by “Circuit City,” means any plan, policy, program, payroll practice, on-going arrangement, contract,
trust, insurance policy or other agreement or funding vehicle, to the extent amended from time to time, for which the eligible classes of participants include employees or former employees of Circuit City or a Circuit City Entity, and when
immediately preceded by “CarMax,” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy
 

 
 

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	  	  	 or other agreement or funding vehicle as amended from time to time, for which the eligible classes of participants are limited to employees or former
employees of CarMax or a CarMax Entity, but no other Circuit City Entity.
 
	 
	 1.52
 	  	 “Separation Date” means the last date as of which CarMax is a member of Circuit City’s controlled group of corporations within the meaning of
Code Section 414.
 

 
 

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 ARTICLE II 
  
 GENERAL PRINCIPLES 
  
 
	 
	 2.1
 	  	 Assumption and Retention of Liabilities.
 
	 
	  	  	 (a)    CarMax shall not assume any Liabilities not expressly provided to be assumed in this
Agreement.
 
	 
	  	  	 (b)    As of the consummation of the Separation, CarMax shall assume and agree to pay, perform,
fulfill, and discharge, except as expressly provided in this Agreement, (i) all Liabilities under CarMax Plans, (ii) all employment or service-related Liabilities with respect to (A) all CarMax Employees (and their dependents and beneficiaries), (B)
former employees of CarMax or a CarMax Entity (and their dependents and beneficiaries) whose last employment with a Circuit City Entity was primarily connected to CarMax or a CarMax Entity and (C) any individual who is, or was, an independent
contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker or in any other employment relationship primarily connected to CarMax or a
CarMax Entity, in each case for periods during which such individuals were employees of, or primarily performed services for CarMax or a CarMax Entity, as applicable, (iii) all employment-related Liabilities with respect to all Circuit City
Transferees for periods of service with CarMax or a CarMax Entity after the Separation Date and (iv) any Circuit City Liabilities expressly transferred to CarMax or a CarMax Entity under this Agreement.
 
	 
	  	  	 (c)    Circuit City shall retain all Liabilities not expressly transferred to and assumed by
CarMax pursuant to this Agreement, including Liabilities other than those described in Section 2.1(b)(ii) relating to CarMax Employees, Circuit City Transferees, and their dependents and beneficiaries, arising out of or resulting from employment as
employees of Circuit City or a Circuit City Entity for periods on or before the Separation Date (including without limitation all Liabilities under Circuit City Plans) or that are expressly retained by Circuit City in this Agreement or any other
written agreement between CarMax and Circuit City.
 
	 
	  	  	 (d)    Notwithstanding anything to the contrary in this Section 2.1, Liabilities relating to the
CarMax Retirement Plan shall be treated as described in Section 3.2.
 
	 
	 2.2
 	  	 CarMax Participation in the Circuit City Plans.    Effective as of the consummation of the Separation, CarMax and each CarMax
Entity shall cease to be a Participating Company in any Circuit City Plan, and Circuit City and CarMax and each CarMax Entity shall take all necessary action before the Separation Date to effectuate such cessation as a Participating
Company.
 

 
 

 8 

 
	 
	 2.3
 	  	 Sponsorship of the CarMax Plans.    Effective no later than immediately after the Separation Date, CarMax shall assume, or shall
cause a CarMax Entity to assume, sponsorship of (a) the CarMax Retirement Plan and (b) each other CarMax Plan (each of which is listed on Schedule 2.3 of the Agreement).
 
	 
	 2.4
 	  	 Terms of Participation by CarMax Employees in CarMax Plans.    Circuit City and CarMax shall adopt, or cause to be adopted, all
reasonable and necessary Plan amendments and procedures to prevent CarMax Employees and former employees from receiving duplicative benefits from the Circuit City Plans and the CarMax Plans. With respect to CarMax Employees and Circuit City
Transferees, each CarMax Plan shall provide that all service, all compensation, and all other benefit-affecting determinations that, as of the consummation of the Separation, were recognized under the corresponding Circuit City Plan shall, as of
immediately after the consummation of the Separation (or the transfer employment for purposes of Circuit City Transferees) receive full recognition, credit, and validity and be taken into account under such CarMax Plan, except to the extent that
duplication of benefits would result.
 
	 
	 2.5
 	  	 Service Crediting.    With respect to CarMax Employees and Circuit City Transferees, each CarMax Plan shall provide that for
purposes of determining eligibility to participate, vesting, and entitlement to benefits (but not for accrual of pension benefits under any defined benefit pension plan), service prior to the Separation Date with Circuit City or a Circuit City
Entity shall be treated as service with CarMax or the applicable CarMax entity; provided, however, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting periods, evidence of insurability requirements, or the application of any preexisting condition limitations under any CarMax Plan. Each CarMax Plan shall waive pre-existing condition limitations
with respect to CarMax Employees and Circuit City Transferees. CarMax Employees and Circuit City Transferees shall be given credit under the applicable CarMax Plan for amounts paid during the Disposition Year prior to the Separation Date for
purposes of applying deductibles, copayments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the CarMax Plan. With respect to individuals who, following the Separation Date but prior to
March 1, 2003, either (i) cease employment with Circuit City or a Circuit City Entity and immediately become employees of CarMax or a CarMax Entity or (ii) are CarMax Employees and cease employment with CarMax or a CarMax Entity and immediately
become employees of Circuit City or a Circuit City Entity, Circuit City and CarMax and their respective Affiliates shall (i) credit service recognized by the other under the terms of their respective benefit plans and programs where appropriate (but
not for purposes of benefit accruals under any pension plan except as provided in Section 3.2), (ii) transfer accounts between the Circuit City 401(k) Plan and the CarMax 401(k) Plan and (iii) provide coverage and benefits relating to health and
welfare plans in a manner consistent with the provisions of Article IV. The service crediting described above shall be subject to any applicable “service bridging” or “break in service” rules under the Circuit City Retirement
Plan and 401(k) Plan and the CarMax Retirement Plan and 401(k) Plan.health and welfare plans in a manner consistent with the provisions of Article IV. The service crediting described above shall be subject to any applicable “service
bridging” or “break in service” rules under the Circuit City Retirement Plan and 401(k) Plan and the CarMax Retirement Plan and 401(k) Plan.health and welfare plans in a manner consistent with the provisions of Article IV. The service
crediting described above shall be subject to any applicable “service bridging” or “break in service” rules under the Circuit City Retirement Plan and 401(k) Plan and the CarMax Retirement Plan and 401(k) Plan.
 

 
 

 9 

 
	 
	 2.6
 	  	 Approval of Plans.    Prior to the Separation Date, Circuit City shall cause CarMax to adopt (i) the CarMax Stock Incentive Plan,
which shall have terms and conditions that are substantially similar to the Circuit City Stock Incentive Plan; (ii) the CarMax Employee Stock Purchase Plan; (iii) the CarMax Annual Performance-Based Bonus Plan, which shall have terms and conditions
that are substantially similar to the Circuit City Annual Performance-Based Bonus Plan; and (iv) the CarMax Supplemental Executive Retirement Plan, which shall have terms and conditions substantially similar to the Circuit City Supplemental
Executive Retirement Plan, which plans shall be approved prior to the Separation Date by Circuit City shareholders.
 
	 
	 2.7
 	  	 CarMax Transferees.    In the event that a CarMax Employee or a Circuit City Transferee becomes an employee of Circuit City or a
Circuit City Entity on or after the Separation Date but before February 28, 2003, the individual and his or her associated employment Liabilities, including but not limited to those liabilities under the CarMax health and welfare plans, and assets
and accrued benefits with respect to the CarMax 401(k) Plan and Retirement Plan shall be transferred to Circuit City or the applicable Circuit City benefit plans under the same general principles as those provided in this Agreement for transferring
the employment Liabilities, assets and accrued benefits of Circuit City Transferrees to CarMax or the CarMax employee benefit plans.
 

 
 

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 ARTICLE III 
  
 DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS 
  
 
	 
	 3.1
 	  	 CarMax 401(k) Plan.
 
	 
	  	  	 (a)    CarMax, Inc. 401(k) Savings Plan and Trust.    Circuit City and
CarMax shall adopt or cause to be adopted any amendments to any trust agreements or plan documents reasonably necessary to transfer settlor responsibility and sponsorship of the CarMax 401(k) Plan and related trust from Circuit City and the trustees
appointed by Circuit City to CarMax and trustees appointed by CarMax. Such amendments will be effective as of the consummation of the Separation.
 
	 
	  	  	 (b)    Assumption of Liabilities and Transfer of Assets.    Circuit
City and CarMax shall cause, in the manner described herein, the accounts under the Circuit City 401(k) Plan of each former and current CarMax Employee and Circuit City Transferee to be transferred to the CarMax 401(k) Plan as soon as practicable
after the Separation Date or such earlier date as Circuit City and CarMax shall mutually determine; provided, however, that such transfer (and the related assumption of liabilities) shall not occur if Circuit City, CarMax or any other Circuit City
or CarMax Plan fiduciary reasonably believes that the transfer could result in the failure of the Circuit City 401(k) Plan or the CarMax 401(k) Plan to qualify under Code Section 401(a). Circuit City agrees to provide to CarMax, in connection with
the transfer to the CarMax 401(k) Plan, a list of the CarMax Employees, former employees and Circuit City Transferees who were participants in or are otherwise entitled to benefits under the Circuit City 401(k) Plan, including descriptions of their
respective account balances and the protected benefits (within the meaning of Code Section 411(d)(6)) attached to their accounts. As soon as practicable after the Separation Date: (i) Circuit City shall cause the accounts (including any outstanding
loan balances) of each CarMax Employee and Circuit City Transferee in the Circuit City 401(k) Plan (without regard to any applicable vesting schedule) to be transferred to the CarMax 401(k) Plan and its related trust in kind based on the investment
election of the individuals; (ii) CarMax (or any successor CarMax Entity) and the CarMax 401(k) Plan shall assume and be solely responsible for all liabilities under the CarMax 401(k) Plan relating to the accounts that are so transferred as of the
time of such transfer; and (iii) CarMax shall cause such transferred accounts to be accepted by the CarMax 401(k) Plan and its related trust and shall cause the CarMax 401(k) Plan to satisfy all protected benefit requirements under the Code and
applicable law with respect to the transferred accounts. In determining whether a CarMax Employee is vested in his or her account under the CarMax 401(k) Plan, the CarMax 401(k) Plan shall credit each CarMax Employee, former employee or Circuit City
Transferee with all the individual’s service credited under the Circuit City 401(k) Plan. Prior to the date upon which the transfer described above occurs, Circuit City shall
 

 
 

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	  	  	 contribute to the Circuit City 401(k) Plan all matching contributions, if any, due to the CarMax Employees, former employees and
Circuit City Transferees pursuant to the terms and conditions of such Plan prior to the transfer date.
 
	 
	  	  	 (c)    Circuit City and CarMax agree to use commercially reasonable efforts to coordinate the
nondiscrimination testing for the Circuit City 401(k) Plan and the CarMax 401(k) Plan for the plan year ending February 27, 2003, to the extent deemed advisable.
 
	 
	 3.2
 	  	 CarMax Retirement Plan.    Effective no later than the consummation of the Separation, Circuit City shall transfer sponsorship of
the CarMax Retirement Plan to CarMax. Each Circuit City Transferee who is transferred to CarMax or a CarMax Entity after the Separation but on or prior to March 1, 2003 and who has an accrued benefit under the Circuit City Retirement Plan that has
not been transferred to the CarMax Retirement Plan (“Subsequent Transferee”) shall have his accrued benefit and associated benefit liabilities transferred to the CarMax Retirement Plan as soon as practicable after February 28, 2003. CarMax
shall ensure that the CarMax Retirement Plan accepts and Circuit City shall ensure that the Circuit City Retirement Plan makes any transfer of benefits and liabilities required under this Section 3.2. Circuit City shall cause the trustee of the
Circuit City Retirement Plan to transfer cash from the trust under the Circuit City Retirement Plan to the trust under the CarMax Retirement Plan, in an amount determined by a certified actuary chosen by Circuit City and CarMax (the
“Actuary”) to be equal to the present value of all accrued benefits as of February 28, 2002 (the “Valuation Date”) with respect to Subsequent Transferees on a termination basis in accordance with Section 414(1) of the Code and
the regulations promulgated thereunder. If the market value of assets as of the Valuation Date is not sufficient to fund such present value, assets will be allocated to various priority categories under section 4044 of ERISA. The calculation of the
present value of such benefits shall be performed by the Actuary. From the Valuation Date to the date of transfer, the assets to be transferred shall be credited with interest at the rate per annum mutually agreed to by Circuit City and CarMax and
an amount equal to such interest shall be transferred to the trust under the CarMax Retirement Plan on the date the transfer of assets occurs. Effective as of the date the transfer of employment, Subsequent Transferees shall cease to accrue benefits
under the Circuit City Retirement Plan and shall commence to accrue benefits under the CarMax Retirement Plan. Effective as of the date the transfer of assets occurs, CarMax shall assume all liabilities and obligations with respect to benefits
accrued by the Subsequent Transferees under the Circuit City Retirement Plan and shall indemnify and hold harmless Circuit City, its officers, directors, employees and agents and affiliates from and against any and all liabilities with respect to
such benefits.
 

 
 

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 ARTICLE IV 
  
 HEALTH AND WELFARE PLANS 
  
 
	 
	 4.1
 	  	 Assumption of Health and Welfare Plan Liabilities.
 
	 
	  	  	 (a)    All Liabilities relating to, arising out of, or resulting from health and welfare coverage
or claims incurred by or on behalf of CarMax Employees on or before the Separation Date for periods of employment with CarMax before the Separation Date, or their covered dependents under the Circuit City Health and Welfare Plans shall become
Liabilities of CarMax as of the consummation of the Separation, and, except as provided in Section 4.1(b), all Liabilities relating to health and welfare coverage or claims incurred by or on behalf of CarMax Employees, Circuit City Transferees, or
their covered dependents after the Separation Date shall be Liabilities of CarMax under the corresponding CarMax Health and Welfare Plans. Except as provided in Section 4.1(b), a claim or Liability (i) for medical and dental benefits shall be deemed
to be incurred upon the rendering of health services giving rise to the obligation to pay such benefits; (ii) for life insurance and accidental death and dismemberment insurance benefits shall be deemed to be incurred upon the occurrence of the
event giving rise to the entitlement to such benefits; and (iii) for disability benefits shall be deemed to be incurred on the date an individual is deemed to be disabled, as defined under the applicable plan.
 
	 
	  	  	 (b)    As of the Separation Date for periods of time following the Separation Date or date of
transfer as the case may be, CarMax also shall be responsible for all Liabilities that relate to, arise out of, or result from any denture work, bridge work, crown installation, or root canal therapy for a CarMax Employee, Circuit City Transferee,
or his or her covered dependent for which preparatory dental services have been rendered under a Circuit City Health and Welfare Plan on or before the Separation Date or date of transfer as the case may be for such dental treatment that occurs after
the Separation Date. Coverage for any such hospitalization or dental services shall be provided after the Separation Date without interruption under the appropriate CarMax Health and Welfare Plan subject to applicable plan rules and
limitations.
 
	 
	 4.2
 	  	 Health and Welfare Plan Transitional Coverage Rules.
 
	 
	  	  	 (a)    CarMax Employees, Circuit City Transferees and their covered dependents who participate in
Circuit City Health and Welfare Plans immediately before the Separation Date (i) will be treated in the same manner under the Circuit City Health and Welfare Plans as any other similarly situated employee of Circuit City or a Circuit City Entity
with the same years of service and age who may otherwise terminate his or her employment with Circuit City and all Circuit City Entities on the Separation Date; and (ii) will automatically be enrolled on the day following the
 

 
 

 13 

  
 
	 
	  	  	 Separation Date in CarMax Health and Welfare Plans corresponding to the Circuit City Health and Welfare Plans in which the CarMax
Employee, Circuit City Transferee, and his or her covered dependents, if any, participated immediately before the Separation Date. CarMax will maintain the CarMax Health and Welfare Plans as a continuation of the Circuit City Health and Welfare
Plans, so that CarMax will give CarMax Employees and Circuit City Transferees credit under the CarMax Health and Welfare Plans for payments made under the Circuit City Health and Welfare Plans for purposes of deductibles and maximum out-of-pocket
limits for the Disposition Year.
 
	 
	  	  	 (b)    With respect to any CarMax Employee, Circuit City Transferee and his or her dependents (if
any) who were covered under a Circuit City Health and Welfare Plan immediately before the Close of the Separation Date, CarMax shall take the appropriate actions reasonably necessary to ensure that the proof of insurability requirements (if any) and
the preexisting condition exclusions (if any) applicable to new enrollees under the corresponding CarMax Health and Welfare Plans (if any) are waived with respect to such CarMax Employee, Circuit City Transferee and his or her dependents, provided
that to the extent necessary, such individual or his or her dependents enroll for coverage in the corresponding CarMax Health and Welfare Plan within no more than 31 days after the last day of the month in which the Separation Date or date of
transfer as the case may be occurs.
 
	 
	  	  	 (c)    The transfer of employment from Circuit City or a Circuit City Entity to CarMax or a
CarMax Entity as of the consummation of the Separation shall not be required to be treated as a “status change” with respect to any CarMax Employee or Circuit City Transferee under the Circuit City Health and Welfare Plans or the CarMax
Health and Welfare Plans.
 
	 
	 4.3
 	  	 Post-Disposition Transitional Rules.    Effective as of or prior to the Separation Date, CarMax shall establish a dependent care
assistance plan (the “CarMax DCA Plan”) that is substantially similar to the Circuit City Dependent Care Assistance Plan (the “Circuit City DCA Plan”), to cover CarMax Employees and Circuit City Transferees. The CarMax Employees
and Circuit City Transferees who elected to participate in the Circuit City DCA Plan for the Disposition Year automatically will be eligible to participate in the CarMax DCA Plan for that part of the Disposition Year remaining after the Separation
Date. CarMax shall maintain the CarMax DCA Plan as a continuation of the Circuit City DCA Plan for the Disposition Year, so that the aggregate benefit that any CarMax Employee or Circuit City Transferee receives under the Circuit City DCA Plan and
the CarMax DCA Plan is not less than the benefits such CarMax Employee or Circuit City Transferee would have received had he or she remained a Circuit City Employee through the Disposition Year.
 
	 
	  	  	 (a)    If the aggregate amount contributed by CarMax Employees and Circuit City Transferees for
the Disposition Year to the Circuit City DCA Plan exceeds the aggregate claims paid by Circuit City for the Disposition Year with respect to the accounts of individuals under such plan, Circuit City will pay CarMax an amount in cash equal to such
excess, to the extent that the aggregate amount contributed
 

 
  

	

 

 14 

 
	 
	  	  	 by the CarMax Employees or Circuit City Transferees for the Disposition Year to the CarMax DCA Plan is less than the aggregate claims
paid by CarMax for the Disposition Year with respect to the such individuals under those plans.
 
	 
	  	  	 (b)    If the aggregate amount contributed by CarMax Employees and Circuit City Transferees for
the Disposition Year to the Circuit City DCA Plan is less than the aggregate claims paid by Circuit City for Disposition Year with respect to the accounts of such individuals under such plan, CarMax will pay Circuit City an amount in cash equal to
such deficit, to the extent that the aggregate amount contributed by the CarMax Employees and Circuit City Transferees for the Disposition Year to the CarMax DCA Plan exceeds the aggregate claims paid by CarMax for the Disposition Year with respect
to such individuals under those plans.
 
	 
	  	  	 (c)    The foregoing payments will be made as soon as practicable after all claims have been paid
with respect to the Disposition Year.
 
	 
	 4.4
 	  	 Workers’ Compensation Liabilities.    Except as provided below, all workers’ compensation Liabilities relating to,
arising out of, or resulting from any claim by CarMax Employees or Circuit City Transferees that result from an accident or from an occupational disease which is incurred or becomes manifest, as the case may be, on or before the Separation Date and
while such individual was employed by Circuit City or a Circuit City Entity shall be retained by Circuit City. CarMax and each CarMax Entity shall be solely responsible for all workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim incurred for a compensable injury sustained (i) by CarMax Employees at any time; and (ii) by Circuit City Transferees after the date their employment is transferred. For purposes of this Agreement, an injury shall be deemed
to be sustained upon the occurrence of the event giving rise to eligibility for workers’ compensation benefits or in the case of an occupational disease, at such time as the occupational disease is diagnosed by a qualified medical professional,
as the case may be. Circuit City, each Circuit City Entity, CarMax and each CarMax Entity shall cooperate with respect to any notification to appropriate governmental agencies of the disposition and the issuance of new, or the transfer of existing,
workers’ compensation insurance policies and claims handling contracts.
 
	 
	 4.5
 	  	 Payroll Taxes and Reporting.    Circuit City and CarMax shall, to the extent practicable, (i) treat CarMax (or a CarMax Entity
designated by CarMax) as a “successor employer” and Circuit City (or the appropriate Circuit City Entity) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to CarMax Employees
and Circuit City Transferees for purposes of taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act, and (ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one IRS Form W-2 with respect to each CarMax Employee and Circuit City Transferee for the Disposition Year. Circuit City, each Circuit City Entity, CarMax and each CarMax Entity shall each bear its responsibility for payroll tax
obligations and for the proper reporting to the appropriate governmental authorities of
 

 
 

 15 

  
 
	 
	  	  	 compensation earned by their respective employees after the Separation Date, including compensation related to the exercise of Options.
 
	 
	 4.6
 	  	 COBRA and HIPAA Liability and Compliance.    As of the Separation Date, CarMax shall be responsible for all COBRA Liabilities
relating to, arising out of, or resulting from any claim by any CarMax Employee or former CarMax Employee or his or her qualified dependents that result from a qualifying event occuring on or before the Separation Date and while such individual was
employed by CarMax. As of the Separation Date, for periods of time following the Separation Date or date of transfer as the case may be, CarMax also shall be responsible for all COBRA Liabilities that relate to, arise out of, or result from
qualifying events for any CarMax Employee, former CarMax Employee, Circuit City Transferee, or their qualified dependents. Circuit City shall be responsible for administering compliance with the health care continuation requirements of COBRA, the
certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the Circuit City Health and Welfare Plans with respect to CarMax Employees and their covered dependents who incur a COBRA qualifying event or loss of
coverage under the Circuit City Health and Welfare Plans at any time on or before the consummation of the Separation and Circuit City Transferees who incur a COBRA qualifying event or loss of coverage after the date their employment is transferred.
Subject to Section 6.2, effective immediately after the Separation Date, CarMax shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA,
and the corresponding provisions of the CarMax Health and Welfare Plans with respect to CarMax Employees, Circuit City Transferees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the CarMax Health and
Welfare Plans at any time after the consummation of the Separation.
 

 
 

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 ARTICLE V 
  
 EXECUTIVE BENEFITS AND OTHER BENEFITS 
  
 
	 
	 5.1
 	  	 Individual Agreements—Assumption of Liabilities and Consents.
 
	 
	  	  	 (a)    Circuit City has been providing compensation and benefits, subject to reimbursement from
CarMax, to certain Circuit City Transferees, during the period those Circuit City Transferees have been providing services on a substantially full-time basis to a CarMax Entity. Circuit City shall continue to provide such compensation and benefits
through the Separation Date, and be entitled to reimbursement from a CarMax Entity, in accordance with established practices.
 
	 
	  	  	 (b)    Certain plans and programs of Circuit City, as well as certain Individual Agreements,
provide for the payment of certain compensation and benefits in the event of the termination of employment of the individual covered by the terms of such plans or Individual Agreements. Prior to the Separation Date, Circuit City shall take all
necessary and appropriate actions so that a termination of a CarMax Employee’s or Circuit City Transferee’s employment with Circuit City described in Section 2.7 shall not constitute a termination of employment for purposes of any
Individual Agreement, the Circuit City Supplemental Executive Retirement Plan, or other similar plans and programs. A termination of employment from Circuit City of a CarMax Employee or a Circuit City Transferee in connection with or in anticipation
of the consummation of the transactions contemplated by the Separation shall not be deemed to be a termination of employment for purposes of administering benefits under such Individual Agreements or any other plan or program, the payment or vesting
of which is conditioned upon termination of employment
 
	 
	 5.2
 	  	 Circuit City Annual Performance-Based Bonus Plan.    CarMax shall be responsible for determining all awards payable under the
CarMax Annual Performance-Based Bonus Plan to CarMax Employees and Circuit City Transferees for the Disposition Year. CarMax shall also determine for Circuit City Transferees (a) the extent to which established performance criteria (as interpreted
by CarMax, in its sole discretion, after taking into account the effects of the Separation) have been met, and (b) the payment level for each Circuit City Transferee. CarMax shall assume all Liabilities with respect to any such awards payable to
CarMax Employees and Circuit City Transferees for the Disposition Year.
 
	 
	 5.3
 	  	 Awards under the Circuit City Stock Incentive Plan or Otherwise.    Circuit City and CarMax shall use their commercially
reasonable efforts to take all actions necessary or appropriate so that each outstanding Circuit City Award granted under any Circuit City Stock Incentive Plan held by any individual who is either a current or former employee of Circuit City or a
Circuit City Entity (as determined by Circuit City) and any CarMax
 

 
 

 17 

  
 
	 
	  	  	 Employee or Circuit City Transferee shall be adjusted as set forth in this Article V and as illustrated in Schedule 5.3(a) hereto.
 
	 
	  	  	 (a) Circuit City Group Options Held by Circuit City Employees.
 
	 
	  	  	 (i)     This Section 5.3(a) shall apply to any individual who is not a CarMax Employee as of
the Close of the Separation Date and who is holding a Circuit City Group Option at that time. As determined by the Committee (as that term is defined in the Circuit City Stock Incentive Plan) pursuant to its authority under any of the Circuit City
Stock Incentive Plans, each Circuit City Group Option outstanding under any Circuit City Stock Incentive Plan as of the CarMax Dividend Date shall be adjusted so that each individual who is the holder of a Circuit City Group Option will have such
option converted, immediately after the CarMax Dividend, into a Circuit City Stores Option under the applicable Circuit City Stock Incentive Plan.
 
	 
	  	  	 (ii)    The adjustment set forth in Section 5.3(a)(i) shall be made as follows:

	 
	  	  	 The exercise price per share of Circuit City Stores Common Stock subject to a Circuit City Stores Option will be equal to the product
obtained by multiplying (a) times (b) where “(a)” equals the exercise price per share of the Circuit City Group Option with respect to which an adjustment is being made immediately before the CarMax Dividend, and “(b)” equals the
quotient obtained by dividing the Circuit City Post-Dividend Stock Value by the Circuit City Pre-Dividend Stock Value.
 
	 
	  	  	 The number of shares of Circuit City Stores Common Stock subject to a Circuit City Stores Option will equal the product obtained by
multiplying (a) times (b) where “(a)” equals the number of shares of Circuit City Group Common Stock covered by the Circuit City Group Option, and “(b)” equals the quotient obtained by dividing the Circuit City Pre-Dividend Stock
Value by the Circuit City Post-Dividend Stock Value.
 
	 
	  	  	 (iii)  After the Separation Date, Circuit City Stores Options, regardless of by whom held, shall be settled
by Circuit City pursuant to the terms of the applicable Circuit City Stock Incentive Plan.
 
	 
	  	  	 (b) Circuit City Group Options Held by CarMax Employees.
 
	 
	  	  	 (i)     This Section 5.3(b) shall apply to any individual who is a CarMax Employee holding a
Circuit City Group Option as of the Close of the Separation Date. Each Circuit City Group Option outstanding under any Circuit City Stock Incentive Plan as of the CarMax Dividend Date shall be adjusted so that each individual who is the holder of a
Circuit City Group
 

 
 

 18 

  
 
	 
	  	  	 Option will have such option converted, immediately after the CarMax Dividend, into a CarMax Option under the CarMax Stock Incentive
Plan.
 
	 
	  	  	 (ii)    The adjustment set forth in Section 5.3(b)(i) shall be made as follows:

	 
	  	  	 The exercise price per share of CarMax Common Stock subject to a CarMax Option will be equal to the product obtained by multiplying
(a) times (b) where “(a)” equals the exercise price per share of the Circuit City Group Option with respect to which an adjustment is being made immediately before the CarMax Dividend, and “(b)” equals the quotient obtained by
dividing the CarMax Post-Dividend Stock Value by the Circuit City Pre-Dividend Stock Value.
 
	 
	  	  	 The number of shares of CarMax Common Stock subject to a CarMax Option will equal the product obtained by multiplying (a) times (b)
where “(a)” equals the number of shares of Circuit City Group Common Stock covered by the Circuit City Group Option, and “(b)” equals the quotient obtained by dividing the Circuit City Closing Stock Value by the CarMax Opening
Stock Value.
 
	 
	  	  	 (c)    CarMax Group Options Held by CarMax Employees.
 
	 
	  	  	 (i)     This Section 5.3(c) shall apply to any individual who is a CarMax Employee holding a
CarMax Group Option as of the Close of the Separation Date. This Section 5.3(c) shall also apply to any individual holding a CarMax Group Option as of the Close of the Separation Date who is not a CarMax Employee or a Circuit City Employee at that
time. The CarMax Group Option shall be modified to be a CarMax Option by substituting CarMax Common Stock for CarMax Group Common Stock under the option. The per share exercise price, number of shares and all other terms of a CarMax Option after the
Separation Date will be the same as the applicable CarMax Group Option before the Separation Date.
 
	 
	  	  	 (ii)    After the Separation Date, CarMax Options, regardless of by whom held, shall be settled
by CarMax pursuant to the terms of the CarMax Stock Incentive Plan.
 
	 
	  	  	 (d)    CarMax Group Options Held by Circuit City Employees.
 
	 
	  	  	 (i)     This Section 5.3(c) shall apply to any individual who is a Circuit City Employee as
of the Close of the Separation Date and who is holding a CarMax Group Option at that time. As determined by the Committee (as that term is defined in the Circuit City Stock Incentive Plan) pursuant to its authority under any of the Circuit City
Stock Incentive Plans, each CarMax Group Option outstanding under any Circuit City Stock Incentive Plan as of the CarMax Dividend Date shall be adjusted so that each
 

 
 

 19 

 
	  	  	 individual who is the holder of a CarMax Group Option will have such option converted, immediately after the CarMax Dividend, into a
Circuit City Stores Option under the Circuit City Stock Incentive Plan.
 
	 
	  	  	 (ii)    The adjustment set forth in Section 5.3(d)(i) shall be made as follows:

	 
	  	  	 The exercise price per share of Circuit City Common Stock subject to a Circuit City Stores Option will be equal to the product
obtained by multiplying (a) times (b) where “(a)” equals the exercise price per share of the CarMax Group Option with respect to which an adjustment is being made immediately before the CarMax Dividend, and “(b)” equals the
quotient obtained by dividing the Circuit City Post-Dividend Stock Value by the CarMax Pre-Dividend Stock Value.
 
	 
	  	  	 The number of shares of Circuit City Common Stock subject to a Circuit City Stores Option will equal the product obtained by
multiplying (a) times (b) where “(a)” equals the number of shares of CarMax Group Common Stock covered by the CarMax Group Option, and “(b)” equals the quotient obtained by dividing the CarMax Opening Stock Value by the Circuit
City Closing Stock Value.
 
	 
	  	  	 (e)    Option Terms.    Each Circuit City Stores Option issued as part
of the adjustment to Circuit City Group Options or CarMax Group Options pursuant to Section 5.3(a) or (d) shall be subject to the same terms and conditions regarding term, vesting, and other provisions regarding exercise as set forth in the original
Circuit City Group Option or CarMax Group Option. Each CarMax Option issued as part of the adjustment to CarMax Group Options or Circuit City Group Options pursuant to Section 5.3(b) or (c) shall be subject to the same terms and conditions regarding
term, vesting, and other provisions regarding exercise as set forth in the CarMax Group Option or Circuit City Group Option. Notwithstanding the foregoing, Circuit City will take such action as is necessary to ensure that with respect to the Circuit
City Stores Option grants that are held by Circuit City Employees who become CarMax Employees after the Separation Date but on or before February 28, 2003, such individuals will not incur a termination of employment for purposes of the Circuit City
Stores Options. CarMax will take such action as is necessary to ensure that with respect to the CarMax Option grants that are held by CarMax Employees who become Circuit City Employees after the Separation Date but on or before February 28, 2003,
such individuals will not incur a termination of employment for purposes of the CarMax Options.
 
	 
	  	  	 The Circuit City Stores Options and CarMax Options shall not be exercisable until the adjustments provided in Sections 5.3(a)-(d) have
been made.
 
	 
	  	  	 (f)     Circuit City and CarMax Restricted Stock.    The
restricted shares of Circuit City Group Common Stock that are outstanding under any Circuit City Stock Incentive Plan or otherwise as of the CarMax Dividend Date shall not be adjusted except for
 

 
 

 20 

 
	  	  	 adjustments applicable to all shares of Circuit City Group Common Stock and shall remain subject to all prior restrictions following
the CarMax Dividend Date. Circuit City will hold the shares of CarMax Common Stock issued in the CarMax Dividend subject to the same restrictions as applicable to the restricted shares of Circuit City Group Common Stock on which the CarMax Dividend
was paid. The restricted shares of CarMax Group Common Stock that are outstanding under any Circuit City Stock Incentive Plan or otherwise as of the CarMax Dividend Date (i) shall be assumed by the CarMax Stock Incentive Plan, (ii) shall not be
adjusted except for adjustments applicable to all shares of CarMax Group Common Stock, and (iii) shall remain subject to all prior restrictions following the CarMax Dividend Date.
 
	 
	  	  	 (g)    Circuit City Stock Appreciation Rights and CarMax Stock Appreciation
Rights.
 
	 
	  	  	 (i)     As determined by the Committee (as that term is defined in the Circuit City Stock
Incentive Plan or the CarMax Stock Incentive Plan) pursuant to its authority under any of the Circuit City Stock Incentive Plans or the CarMax Stock Incentive Plan, each Circuit City Stock Appreciation Right (“Circuit City SAR”)
outstanding under any Circuit City Stock Incentive Plan and held by an employee of a Circuit City Entity or a CarMax Entity as of the CarMax Dividend Date shall be adjusted in the same manner as the related Circuit City Group Option is adjusted
under Section 5.3(a) or (b).
 
	 
	  	  	 (ii)    As determined by the Committee (as that term is defined in the Circuit City Stock
Incentive Plan or the CarMax Stock Incentive Plan) pursuant to its authority under any of the Circuit City Stock Incentive Plans or the CarMax Stock Incentive Plan, each CarMax Stock Appreciation Right (“CarMax SAR”) outstanding under any
Circuit City Stock Incentive Plan and held by an employee of a Circuit City Entity or a CarMax Entity as of the CarMax Dividend Date shall be adjusted in the same manner as the related CarMax Group Option is adjusted under Section 5.3(c) or
(d).
 
	 
	  	  	 (iii)  After the Separation Date, Circuit City SARs, regardless of by whom held, shall be settled by
Circuit City pursuant to the terms of the Circuit City Stock Incentive Plan. After the Separation Date, CarMax SARs, regardless of by whom held, shall be settled by CarMax pursuant to the terms of the CarMax Stock Incentive Plan.
 
	 
	  	  	 (h)    Taxes.    Except as may be provided pursuant to a separate
agreement between Circuit City and CarMax, Circuit City shall claim the benefit of federal, state, and local tax deductions related to the exercise of all Circuit City Stores Options, and Circuit City SARs that are exercised by Circuit City
Employees after the Separation Date and CarMax shall not claim any such tax deductions. Circuit City shall be responsible for the proper payroll tax treatment and the proper reporting to the appropriate governmental authorities of compensation
relating to
 

 
 

 21 

 
	 
	  	  	 all option and SAR exercises by Circuit City Employees. Except as may be provided pursuant to a separate agreement between Circuit
City and CarMax, CarMax shall claim the benefit of federal, state, and local tax deductions related to the exercise of all Circuit City Group Options, Circuit City SARs, CarMax Options and CarMax SARs that are exercised by both CarMax Employees
after the Separation Date and Circuit City Transferees after their transfer date and Circuit City shall not claim any such tax deductions. CarMax shall be responsible for the proper payroll tax treatment and the proper reporting to the appropriate
governmental authorities of compensation relating to all option and SAR exercises by CarMax Employees and Circuit City Transferees. Circuit City and CarMax agree to act (or to take such action) with respect to such federal, state, or local tax
deductions, and with respect to fulfilling the payroll tax and reporting obligations on compensation as are reasonably necessary or appropriate to achieve, maintain and/or preserve such tax results. Any amounts required to be reimbursed by one party
to another under this subsection shall be paid within 30 days of invoice.
 
	 
	  	  	 (h)    Partial Interests in Shares.    To the extent that any
adjustment in stock options or stock appreciation rights results in any fractional interest in shares, such fractional interest shall be rounded to the nearest whole share. No fractional interests in shares or stock appreciation rights shall be
payable in cash or otherwise.
 
	 
	  	  	 (i)     Incentive Stock Options.    Circuit City and CarMax agree
to use their commercially reasonable efforts to preserve the value and tax treatment accorded incentive stock options awarded under the Circuit City Stock Incentive Plan.
 
	 
	 5.4
 	  	 Employee Stock Purchase Plans.    As of the consummation of the Separation, CarMax will assume and accept all assets and
liabilities of the 1997 Circuit City Stores, Inc. Employee Stock Purchase Plan for CarMax Group Employees. All transferred amounts will be applied on the next exercise date coincident with or next following the Separation Date toward the purchase of
CarMax Common Stock.
 
	 
	 5.5
 	  	 Registration Requirements.    As soon as practicable following the time as of which the Form 10 or Form 8-A for CarMax, Inc., as
the case may be, is declared effective by the Securities and Exchange Commission, CarMax agrees that it shall cause to be registered pursuant to the Securities Act of 1933, as amended, the shares of CarMax Common Stock authorized for issuance under
the CarMax Stock Incentive Plan and the CarMax Employee Stock Purchase Plan. Circuit City shall use commercially reasonable efforts to assist CarMax in completing such registration.
 
	 
	 5.7
 	  	 Confidentiality and Proprietary Information.    No provision of the Separation Agreement or this Agreement shall be deemed to
release any individual for any violation of any agreement or policy pertaining to confidential or proprietary information of Circuit City or any of its Affiliates or of CarMax or any of its Affiliates, respectively, or otherwise relieve any
individual of his or her obligations under any such agreements or policies.
 

 
 

 22 

 
	 
	 5.8
 	  	 Circuit City Nonqualified Pension Plans and Arrangements.    CarMax will assume all Liabilities relating to CarMax Employees,
former employees of CarMax and Circuit City Transferees under the CarMax Supplemental Executive Retirement Plan and any individual nonqualified pension arrangements identified in Schedule 5.8 hereto as of the consummation of the Separation and for
all service after the Separation Date, and shall make benefit payments to CarMax Employees and Circuit City Transferees at such times and in such manner as is provided for under the terms of the respective nonqualified pension plans and
arrangements.
 
	 
	 5.9
 	  	 Circuit City Director Plans.    Circuit City and CarMax shall use their commercially reasonable efforts to take all actions
necessary or appropriate so that each outstanding Circuit City Award granted under Circuit City Stores, Inc. Amended And Restated 1989 Non-Employee Directors Stock Option Plan and Circuit City Stores, Inc. 2000 Non-Employee Directors Stock Incentive
Plan held by any individual who is either a current or former member of the Board of Directors of Circuit City shall be adjusted as set forth in this Section 5.9.
 
	 
	  	  	 (a)    Continuing Circuit City Directors.    This Section 5.9(a) shall
apply to options and SARs held by individuals who continue to be members of the Board of Directors of Circuit City after the Separation Date. Each Circuit City Group Option and SAR shall be adjusted in the manner provided in Section 5.3(a). Each
CarMax Group Option and SAR shall be adjusted in the manner provided in Section 5.3(c).
 
	 
	  	  	 (b)    CarMax Directors.    This Section 5.9(b) shall apply to options
held by individuals who cease to be members of the Board of Directors of Circuit City after the Separation Date and become members of the Board of Directors of CarMax. Each Circuit City Group Option and SAR shall be adjusted in the manner provided
in Section 5.3(a). Each CarMax Group Option and SAR shall be adjusted in the manner provided in Section 5.3(c).
 

 
 

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 ARTICLE VI 
  
 GENERAL AND ADMINISTRATIVE 
  
 
	 
	 6.1
 	  	 Payment of Liabilities.    CarMax shall pay directly, or reimburse Circuit City promptly for, all compensation payable to Circuit
City Transferees for services rendered to CarMax while in the employ of Circuit City or a Circuit City Entity on or before the consummation of the Separation to the extent not previously reimbursed. To the extent the amount of such Liabilities is
not yet determinable because the status of individuals as Circuit City Transferees is not yet determined, except as otherwise specified herein or in another ancillary agreement with respect to particular Liabilities, CarMax shall make such payments
or reimbursements based upon Circuit City’s reasonable estimates of the amounts thereof, and when such status is determined, CarMax shall make additional reimbursements or payments, or Circuit City shall reimburse CarMax, to the extent
necessary to reflect the actual amount of such Liabilities.
 
	 
	 6.2
 	  	 Administration of the CarMax Plans.    During the Administration Period, with respect to a plan or a payroll practice, Circuit
City shall assist CarMax in (i) all aspects of the delivery of employee benefits to CarMax Employees and Circuit City Transferees, (ii) the administration of and tax and reporting obligations related to CarMax’s payroll processes, and (iii) the
administration of the CarMax Plans, including the CarMax 401(k) Plan, CarMax Retirement Plan, CarMax Supplemental Executive Retirement Plan, CarMax Health and Welfare Plans, CarMax Employee Stock Purchase Plan, and any other plans or programs that
are implemented by CarMax on and after the Separation Date and which are substantially similar to the benefit plans provided by Circuit City to its employees. CarMax shall pay Circuit City for such services in accordance with the terms of a
transition services agreement between Circuit City and CarMax. During the Administration Period with respect to a plan, CarMax may not change any CarMax Plan without the consent of Circuit City if the change would materially and adversely affect the
administration of the CarMax Plan.
 
	 
	 6.3
 	  	 Sharing of Participant Information.    Circuit City and CarMax shall share, Circuit City shall cause each applicable Circuit City
Entity to share, and CarMax shall cause each applicable CarMax Entity to share, with each other and their respective agents and vendors (without obtaining releases) all participant information necessary for the efficient and accurate administration
of each of the Circuit City Plans and the CarMax Plans. Circuit City and CarMax and their respective authorized agents shall, subject to applicable laws on confidentiality, be given reasonable and timely access to, and may make copies of, all
information relating to the subjects of this Agreement in the custody of the other party, to the extent necessary for such administration. Until the consummation of the Separation, all participant information shall be provided in the manner and
medium applicable to Participating Companies in the Circuit City Plans generally, and thereafter until the time at which the parties subsequently determine, all participant information shall be provided in a manner and medium that are
compatible
 

 
 

 24 

 
	  	  	 with the data processing systems of Circuit City as in effect as of the consummation of the Separation, unless otherwise agreed to by Circuit City and
CarMax.
 
	 
	 6.4
 	  	 Non-Termination of Employment; No Third Party Beneficiaries.    Except as expressly provided in this Agreement, no provision of
this Agreement or the Separation Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any future, present, or former employee of Circuit City, a Circuit City Entity,
CarMax, or a CarMax Entity under any Circuit City Plan or CarMax Plan or otherwise. Without limiting the generality of the foregoing: (i) except as expressly provided in this Agreement, neither the occurrence of the consummation of the Separation
nor the termination of the Participating Company status of CarMax or a CarMax Entity shall cause any employee to be deemed to have incurred a termination of employment which entitles such individual to the commencement of benefits under any of the
CarMax Plans or any of the Individual Agreements; (ii) except as expressly provided in this Agreement, nothing in this Agreement shall preclude CarMax or any CarMax Entity, at any time after the consummation of the Separation, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any CarMax Plan, any benefit under any Plan or any trust, insurance policy or funding vehicle related to any CarMax Plan; and (iii) except as expressly
provided in this Agreement, nothing in this Agreement shall preclude Circuit City or any Circuit City Entity, at any time after the Close of the Separation Date, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise
altering in any respect any Circuit City Plan, any benefit under any Plan or any trust, insurance policy or funding vehicle related to any Circuit City Plan.
 
	 
	 6.5
 	  	 Audit Rights with Respect to Information Provided.
 
	 
	  	  	 (a)    Each of Circuit City and CarMax, and their duly authorized representatives, shall have the
right to conduct audits with respect to all information provided to it by the other party. The party conducting the audit (the “Auditing Party”) shall have the sole discretion to determine the procedures and guidelines for conducting
audits and the selection of audit representatives under this Section 6.5(a). The Auditing Party shall have the right to make copies of any records at its expense, subject to the confidentiality provisions set forth in the Separation Agreement, which
are incorporated by reference herein. The party being audited shall provide the Auditing Party’s representatives with reasonable access during normal business hours to its operations, computer systems and paper and electronic files, and provide
workspace to its representatives. After any audit is completed, the party being audited shall have the right to review a draft of the audit findings and to comment on those findings in writing within five business days after receiving such
draft.
 
	 
	  	  	 (b)    The Auditing Party’s audit rights under this Section 6.5 shall include the right to
audit, or participate in an audit facilitated by the party being audited, of any Affiliates of the party being audited and of any benefit providers and third parties with whom the party being audited has a relationship, or agents of such party,
to
 

 
 

 25 

 
	 
	  	  	 the extent any such persons are affected by or addressed in this Agreement (collectively, the “Non-parties”), subject to the
consent of such party. The party being audited shall, upon written request from the Auditing Party, provide an individual (at the Auditing Party’s expense) to supervise any audit of a Non-party. The Auditing Party shall be responsible for
supplying, at the Auditing Party’s expense, additional personnel sufficient to complete the audit in a reasonably timely manner. The responsibility of the party being audited shall be limited to providing, at the Auditing Party’s expense,
a single individual at each audited site for purposes of facilitating the audit.
 
	 
	 6.6
 	  	 Fiduciary Matters.    Circuit City and CarMax each acknowledge that actions required to be taken pursuant to this Agreement may be
subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination that
to do so would violate such a fiduciary duty or standard. Each party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the
other party for any Liabilities caused by the failure to satisfy any such responsibility.
 
	 
	 6.7
 	  	 Consent of Third Parties.    If any provision of this Agreement is dependent on the consent of any third party (such as a vendor
or a union) and such consent is withheld, Circuit City and CarMax shall use commercially reasonable efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision of this Agreement cannot be
implemented due to the failure of such third party to consent, Circuit City and CarMax shall negotiate in good faith to implement the provision in a mutually satisfactory manner. The phrase “commercially reasonable efforts” as used herein
shall not be construed to require the incurrence of any non-routine or unreasonable expense or liability or the waiver of any right.
 

 
 

 26 

  
 ARTICLE VII 
  
 MISCELLANEOUS 
  
 
	 
	 7.1
 	  	 Effect if Disposition Does Not Occur.    If the consummation of the Separation does not occur, then all actions and events that
are, under this Agreement, to be taken or occur effective immediately prior to or as of the consummation of the Separation, or immediately after the Separation Date, or otherwise in connection with the Separation, shall not be taken or occur except
to the extent specifically agreed by CarMax and Circuit City.
 
	 
	 7.2
 	  	 Relationship of Parties.    Nothing in this Agreement shall be deemed or construed by the parties or any third party as creating
the relationship of principal and agent, partnership or joint venture between the parties, it being understood and agreed that no provision contained herein, and no act of the parties, shall be deemed to create any relationship between the parties
other than the relationship set forth herein.
 
	 
	 7.3
 	  	 Affiliates.    Each of Circuit City and CarMax shall cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth in this Agreement to be performed by a Circuit City Entity or a CarMax Entity, respectively.
 
	 
	 7.4
 	  	 Governing Law.    To the extent not preempted by applicable federal law, this Agreement shall be governed by, construed and
interpreted in accordance with the laws of the Commonwealth of Virginia as to all matters, including matters of validity, construction, effect, performance and remedies.
 
	 
	 7.5
 	  	 References.    All references to Sections, Articles or Schedules contained herein mean Sections, Articles or Schedules of or to
this Agreement, as the case may be, unless otherwise stated or unless the context otherwise requires.
 
	 
	 7.6
 	  	 Counterparts.    This Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same agreement.
 
	 
	 7.7
 	  	 Assignment.    No party to this Agreement will convey, assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party.
 
	 
	 7.8
 	  	 Cooperation.    Circuit City and CarMax will cooperate in taking all such action as may be necessary or appropriate to implement
the provisions of this Agreement, including making all appropriate filings as may be required under ERISA or the Code, the regulations thereunder and any other applicable laws, exchanging and sharing all appropriate records, amending plan, trust,
record keeping and other related documents and implementing all appropriate communications with participants.
 
	 
	 7.9
 	  	 Notices.    All notices, requests, claims, demands and other communications required or permitted to be given hereunder will be in
writing and will be delivered by hand,
 

 
 

 27 

 
	  	  	 telecopied, e-mailed or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when
so delivered by hand or telecopied, when e-mail confirmation is received if delivered by e-mail, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests,
claims, demands and other communications will be addressed as set forth in the Separation Agreement, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
 
	 
	 7.10
 	  	 Waivers; Remedies; Dispute Resolution.    No failure or delay on the part of Circuit City or CarMax in exercising any right, power
or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of Circuit City or CarMax of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single
or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. It is understood and agreed that any dispute, controversy or question
arising under this Agreement shall be subject to the dispute resolution provisions of Article X of the Separation Agreement.
 

 
  
 * * * * * 
  
 IN WITNESS WHEREOF, the parties have caused this Employee Benefits Agreement to be duly executed as of the day and year first above written. 
  
 CIRCUIT CITY STORES, INC. 
  
 By:                                     
                                        
                    
 Name:

 Title: 
  
 CARMAX, INC. 
  
 By:                                     
                                        
                    
 Name:

 Title: 
 

 28Prepared by R.R. Donnelley Financial -- Employment Agreement - W. Austin Ligon

  
 Exhibit 10.4 
  
 Employment Agreement for 
 W. Austin Ligon 
  
 Circuit City Stores, Inc. 
  
 March 1 2002 
 

 1 

  
 Circuit City Stores, Inc. 
  

Employment Agreement for W. Austin Ligon 
  
 This EMPLOYMENT AGREEMENT is made, entered into, and is effective as of the first day of March 2002 (the “Effective Date”), by and between Circuit City Stores, Inc. (the “Company”) and W. Austin Ligon (the
“Executive”).WHEREAS, the Company desires to employ the Executive as Carmax Group President; and 
  
 WHEREAS, the Company recognizes the Executive’s intimate knowledge and experience in the business of the Company, and desires to secure the employment of the Executive in the role of Carmax Group President of the Company.

  
 NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set
forth in this Agreement, and of other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 
  
 Article 1.     Term of Employment 
  
 The Company hereby agrees to employ the Executive and the Executive hereby accepts employment as Carmax Group President of the Company, in accordance with the terms and conditions set forth herein, for
an initial period of three (3) years, commencing as of the Effective Date of this Agreement, as indicated above; subject, however, to earlier termination as expressly provided herein. 
  
 The initial three (3) year period of employment automatically shall be extended for one (1) additional year at the end of the initial three (3) year term, and then again
after each successive year thereafter. However, either party may terminate this Agreement at the end of the initial three (3) year period, or at the end of any successive one (1) year term thereafter, by giving the other party written notice of
intent not to renew, delivered at least three (3) months prior to the end of the initial period or each successive term thereafter. In the event of a Change in Control (as defined in Section 8.2) of the Company, the term of this Agreement shall not
be less than two (2) years from the date of the Change in Control. 
  
 The Executive’s employment period
hereunder (“Employment Period”) shall begin on March 1, 2002 and end on March 1, 2005, on which its term expires by reason of an election not to renew by the Company or the Executive (“Expiration Date”), except that if
Executive’s employment is terminated on a date prior to the Expiration Date (“Effective Date of Termination”) pursuant to Article 6 or Article 8 hereof, the Employment Period shall terminate on said date. 
 

 2 

  
 Article 2.     Position and Responsibilities 
  
 During the term of this Agreement, the Executive agrees to serve as Carmax Group President of the Company. In his capacity as Carmax Group
President of the Company, the Executive shall report directly to the CEO and shall have the duties and responsibilities of Carmax Group President, and such other duties and responsibilities not inconsistent with the performance of his duties as
Carmax Group President. 
  
 Article 3.     Standard of Care 
  

During the term of this Agreement, the Executive agrees to devote substantially his full-time attention and energies to the Company’s business. The Executive
covenants, warrants, and represents that he shall: 
  

	 	(a)
	 
	Devote his full and best efforts to the fulfillment of his employment obligations; and 
 

  

	 	(b)
	 
	Exercise the highest degree of loyalty and the highest standards of conduct in the performance of his duties. 
 

  
 This Article 3 shall not be construed as preventing the Executive from investing assets in such form or manner as will not require his
services in the daily operations of the affairs of the companies in which such investments are made, nor will this article prohibit his serving on the board of directors of a noncompeting company. 
  
 Article 4.     Compensation and Benefits 
  
 As remuneration for all services to be rendered by the Executive during the Employment Period, and as consideration for complying with the covenants herein, the Company shall pay and provide to the
Executive the following: 
  
 4.1.    Base
Salary.     The Company shall pay the Executive a Base Salary in an amount which shall be established and approved by the Compensation Committee of the Board of Directors; provided, however, that such Base
Salary shall not be less than dollars $625,000 per year. This Base Salary shall be subject to all appropriate federal and state withholding taxes and payable in accordance with the normal payroll practices of the Company. The Base Salary shall be
reviewed at least annually following the Effective Date of this Agreement, while this Agreement is in force, to ascertain whether, in the judgment of the Compensation Committee, such Base Salary should be increased. If so increased, the Base Salary
as stated above shall, likewise, be increased for all purposes of this Agreement. 
  
 4.2.    Annual Bonus.    In addition to his salary, the Executive shall be entitled to participate in the Company’s short-term incentive program,
as such program may exist from time to time, with bonus opportunities equal to a minimum of 60% of Base Salary and commensurate with the position of Carmax Group President, as determined at the sole discretion of the Company’s Compensation
Committee. If so increased, the Annual Bonus Rate as stated above shall, likewise, be increased for all purposes of this Agreement. 
 

 3 

 4.3.    Long-Term Incentives.    The Executive shall
be eligible to participate in the Company’s long-term incentive plan, to the extent that the Board of Directors of the Company or the Compensation Committee, in their discretion, determines is appropriate. The Board of Directors will make its
determination consistent with the methodology used by the Company for compensating its senior management employees. 
  
 4.4.    Retirement Benefits.    The Company shall provide to the Executive participation in all Company pension, insurance, fringe benefit, and executive compensation plans and
programs, subject to the eligibility and participation requirements of such plans. 
  
 4.5.    Employee Benefits.    The Company shall provide to the Executive all benefits, as commensurate with the position of Carmax Group President, but at a minimum
not less than those provided by the Company to other senior executives subject to the eligibility requirements and other provisions of such arrangements. Such benefits may include group term life insurance, comprehensive health and major medical
insurance, dental and life insurance, and short-term and long-term disability. 
  
 4.6.    Perquisites.    The Company shall provide to the Executive, at the Company’s cost, all perquisites, which are commensurate with the position of Carmax Group President
but at a minimum not less than those provided by the Company to other senior executives. 
  
 4.7.    Right to Change Plans.    By reason of Sections 4.5 and 4.6 herein, the Company shall not be obligated to institute, maintain, or refrain from changing, amending, or
discontinuing any benefit plan or perquisite, so long as such changes are similarly applicable to executive employees generally. 
  
 Article 5.     Expenses 
  
 The Company shall pay or reimburse the
Executive for all ordinary and necessary expenses, in a reasonable amount, which the Executive incurs in performing his duties under this Agreement including, but not limited to, travel, entertainment, professional dues and subscriptions, and all
dues, fees, and expenses associated with membership in various professional, business, and civic associations and societies in which the Executive’s participation is in the best interests of the Company. 
  
 Article 6.     Employment Terminations 
  
 6.1.    Termination Due to Retirement or Death.    In the event the Executive’s employment is terminated while this Agreement is in force, by reason
of Retirement (defined as voluntary Normal Retirement under the then established rules of the Company’s tax-qualified retirement plan) or death, the Executive’s benefits shall be determined in accordance with the Company’s retirement,
survivor’s benefits, insurance, and other applicable programs of the Company then in effect. In addition all stock grants, except performance based grants in the case of retirement, will become immediately vested and may be exercised by you,
your personal representatives, distributees, legatees, or estate at any time before the expiration date of the grant. 
 

 4 

  
 The Effective Date of Termination shall be ninety (90) days following the date
the Executive provides the Company with written notice that the Executive is terminating employment by reason of Retirement or on the Executive’s date of death. Upon the Effective Date of Termination, the Company shall be obligated to pay the
Executive or, if applicable, the Executive’s estate: (a) any salary that was accrued but not yet paid as of the Effective Date of Termination; (b) the unpaid Annual Bonus, if any, with respect to the calendar year preceding the Effective Date
of Termination (such Annual Bonus, if any, to be determined in the manner it would have been determined and payable at the time it would have been payable under Section 4.2 had there been no termination of the Employment Period); (c) a pro rata
share of target Annual Bonus for the calendar year in which the Effective Date of Termination occurs (the calculation by which the Annual Bonus is multiplied by a fraction, the numerator of which is the number of full completed days in the bonus
plan year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365)); and (d) all other rights and benefits that the Executive is vested in, pursuant to other plans and programs of the Company.

  
 6.2.    Termination Due to Disability.    In the event that the
Executive terminates employment by reason of Disability (as defined below) during the term of this Agreement and is, therefore, unable to perform his duties herein for more than one hundred eighty (180) total calendar days during any period of
twelve (12) consecutive months, or in the event of the CEO’s reasonable expectation that the Executive’s Disability will exist for more than a period of one hundred eighty (180) calendar days, the Company shall have the right to terminate
the Executive’s active employment as provided in this Agreement. 
  
 The Effective Date of Termination
shall be specified by the CEO in a written notice that shall be delivered to the Executive of the Company’s intent to terminate for Disability, but shall be no less than thirty (30) calendar days after the CEO delivers the written notice to the
Executive. Upon the Effective Date of Termination, the Company shall be obligated to pay the Executive or, if applicable, the Executive’s estate: (a) any salary that was accrued but not yet paid as of the Effective Date of Termination; (b) the
unpaid Annual Bonus, if any, with respect to the calendar year preceding the Effective Date of Termination (such Annual Bonus, if any, to be determined in the manner it would have been determined and payable at the time it would have been payable
under Section 4.2 had there been no termination of the Employment Period); (c) a pro rata share of target Annual Bonus for the calendar year in which the Effective Date of Termination occurs (the calculation by which the Annual Bonus is multiplied
by a fraction, the numerator of which is the number of full completed days in the bonus plan year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365)); and (d) all other rights and benefits that
the Executive is vested in, pursuant to other plans and programs of the Company. 
  
 The term “Disability”
shall mean, for all purposes of this Agreement, the incapacity of the Executive, due to injury, illness, disease, or bodily or mental infirmity, to engage in the performance of substantially all of the usual duties of employment with the Company as
contemplated by Article 2 herein, such Disability to be determined by the CEO of the Company upon receipt of and in reliance on competent medical advice from one (1) or more individuals, selected by the CEO, who are qualified to give such
professional medical advice. 
 

 5 

  
 It is expressly understood that the Disability of the Executive for a period of
one hundred eighty (180) calendar days or less in the aggregate during any period of twelve (12) consecutive months, in the absence of any reasonable expectation that his Disability will exist for more than such a period of time, shall not
constitute a failure by him to perform his duties hereunder and shall not be deemed a breach or default, and the Executive shall receive full compensation for any such period of Disability or for any other temporary illness or incapacity during the
term of this Agreement. 
  
 If your employment by the Company terminates because you become disabled all of your
outstanding stock grants, including performance based grants, will become immediately vested, effective as of the date of your disability. Then, you, your personal representatives, distributees, or legatees may exercise your grants at any time
before the expiration date of the grant. 
  
 6.3.    Voluntary Termination by the
Executive.    The Executive may terminate this Agreement at any time by giving the CEO of the Company written notice of intent to terminate, delivered at least thirty (30) calendar days prior to the Effective Date of
Termination that is specified by the Executive in the written notice. Upon the Effective Date of Termination, the Company shall pay the Executive his full Base Salary, at the rate then in effect as provided in Section 4.1 herein, through the
Effective Date of Termination, plus all other benefits to which the Executive has a vested right to at that time (for this purpose, the Executive shall not be paid any Annual Bonus with respect to the fiscal year in which voluntary termination under
this Section 6.3 occurs). The Company thereafter shall have no further obligations under this Agreement. 
  
 6.4.    Involuntary Termination by the Company Without Cause.    At all times during the term of this Agreement, the CEO may terminate the Executive’s employment, as provided under
this Agreement, at any time, for reasons other than death, Disability, Retirement, or for Cause, by notifying the Executive in writing of the Company’s intent to terminate, at least thirty (30) calendar days prior to the Effective Date of
Termination that is specified by the Company in the written notice. In addition, the Company’s unilateral decision to refrain from renewing the term of this Agreement at the Expiration Date shall be deemed an involuntary termination without
Cause. 
  
 Upon the Effective Date of Termination, the Company shall pay to the Executive an amount payable in equal
monthly installments over the following twenty-four (24) months equal to the product of two (2) times both the Base Salary and the Executive’s target Annual Bonus established for the fiscal year in which the Executive’s Effective Date of
Termination occurs. The Company shall also pay to the Executive the amount equal to a pro rata share of target Annual Bonus for the calendar year in which the Effective Date of Termination occurs (the calculation by which the Annual Bonus is
multiplied by a fraction, the numerator of which is the number of full completed days in the bonus plan year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365). In addition, the Company shall
continue, at the same cost to the Executive as existed as of the Effective Date, all health, welfare, and benefit plan participation for two (2) full years following employment termination provided that the applicable COBRA health insurance benefit
continuation period shall begin as of the Effective Date of Termination. The Company shall also provide the Executive with outplacement services not to exceed a cost of fifty thousand dollars ($50,000). 
 

 6 

  

	 	a)
	 
	Any unvested stock options or any outstanding restricted stock, excluding restricted stock grants issued under a performance based plan, that would become
vested (that is, transferable and nonforfeitable) if the Executive remained an employee through the Term of this Agreement will become vested as of the date of the Executive’s termination of employment. The Executive must satisfy the tax
withholding requirements described in Section 10 with respect to the restricted stock. 
 

  
 
The Executive will be credited with age and service credit through the end of the Term of this Agreement for purposes of computing benefits under the Company’s pension, medical and other benefit plans, and the Company will continue the
executive’s coverage under the company’s benefit plans as if the executive remained employed through the end of the term of this agreement. Service credited to the executive for purposes of the company’s pension plans pursuant to this
subsection (ii) shall be in addition to any service credited to the executive pursuant to section 5(c). Notwithstanding the foregoing, if the company determines that giving such age and service credit or continued coverage could adversely affect the
tax qualification or tax treatment of a benefit plan, or otherwise have adverse legal ramifications, the company may pay the executive a lump sum cash amount that reasonably approximates the after-tax value to the executive of such age and service
credit and continued coverage through the end of the term of this agreement, in lieu of giving such credit and continued coverage. 
  
 The Company thereafter shall have no further obligations under this Agreement. 
  
 6.5.    Termination For Cause.    Nothing in this Agreement shall be construed to prevent the Company from terminating the Executive’s employment under this Agreement for
“Cause.” 
  
 “Cause” means the Executive’s: 
  

	 	(a)
	 
	Willful and continued failure to perform substantially the Executive’s duties with the Company after the Company delivers to the Executive written demand
for substantial performance specifically identifying the manner in which the Executive has not substantially performed the Executive’s duties; 
 

  

	 	(b)
	 
	Conviction for a felony; 
 

  

	 	(c)
	 
	Willfully engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or 
 

 

	 	(d)
	 
	Failure of the Employee to disclose to the CEO a conflict of interest, of which he knew or, with reasonable diligence, would have known, in connection with any
transaction entered into on behalf of the Company. 
 

 

 7 

  
 For purposes of this Section 6.5, no act or omission by the Executive shall be
considered “willful” unless it is done or omitted in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act or failure to act based upon advice of counsel for
the Company or CEO, shall be conclusively presumed to be done or omitted to be done by the Executive in good faith and in the best interests of the Company. 
  
 In the event this Agreement is terminated for Cause, the Company shall pay the Executive his Base Salary through the Effective Date of Termination and the Executive shall immediately thereafter forfeit
all rights and benefits (other than vested benefits) he would otherwise have been entitled to receive under this Agreement. The Company thereafter shall have no further obligations under this Agreement. 
  
 6.6.    Termination for Good Reason.    At any time during the term of this Agreement, the
Executive may terminate this Agreement for Good Reason (as defined below) by giving the CEO of the Company thirty (30) calendar days’ written notice of intent to terminate, which notice sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination. 
  
 The Effective Date of Termination shall occur upon
the expiration of the thirty (30) day notice period, and the Company shall pay and provide to the Executive the benefits set forth in this Section 6.6. 
  
 Good Reason shall mean, without the Executive’s express written consent, the occurrence of any one (1) or more of the following: 
  

	 	(a)
	 
	Assigning to the Executive duties inconsistent with the Executive’s position (including status, offices, titles, and reporting requirements), authority, or
responsibilities in effect on the Effective Date of this Agreement, or any other action by the Company which results in a diminution of the Executive’s position, authority, duties, or responsibilities as constituted as of the Effective Date of
this Agreement (excluding an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof if notice is given by Executive); 
 

 

	 	(b)
	 
	Reducing the Executive’s Base Salary; 
 

  

	 	(c)
	 
	Failing to maintain the Executive’s participation in the Company’s annual bonus and long-term incentive plan in a manner that is consistent with the
Executive’s position, authority, or responsibilities; 
 

  

	 	(d)
	 
	Failing to maintain the Executive’s amount of benefits under, or relative level of participation in, the Company’s employee benefit or retirement
plans, perquisites, policies, practices, or arrangements in which the Executive participates as of the Effective Date of this Agreement; 
 

 

 8 

  

	 	(e)
	 
	Purportedly terminating the Executive’s employment otherwise than as expressly permitted by this Agreement; or 
 

  

	 	(f)
	 
	Failing to comply with and satisfy Section 9.1 hereof by requiring any successor to the Company to assume and agree to perform the Company’s obligations
hereunder. 
 

  
 Upon the Effective Date of Termination, the Executive shall be entitled to receive
the same payments and benefits as he is entitled to receive following an involuntary termination of his employment by the Company without Cause, as specified in Section 6.4 herein. Said payment shall commence within thirty (30) calendar days
following the Effective Date of Termination. 
  
 The Executive’s right to terminate employment for Good Reason
shall not be affected by the Executive’s incapacity due to physical or mental illness. 
  
 The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein. 
  
 Article 7.    Noncompetition and Confidentiality 
  
 7.1.    Noncompetition.    During the Employment Period and for a period of two (2) years after the Effective Date of Termination, the Executive shall not: (a) directly or indirectly act
in concert or conspire with any person employed by the Company in order to engage in or prepare to engage in or to have a financial or other interest in any business which is a Direct Competitor (as defined below); or (b) serve as an employee,
agent, partner, shareholder, director, or consultant for, or in any other capacity participate, engage, or have a financial or other interest in, any business which is a Direct Competitor (provided, however, that notwithstanding anything to the
contrary contained in this Agreement, the Executive may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are registered under Section 12 of the Securities Exchange Act of 1934). 

 
 For purposes of this Agreement, the term “Direct Competitor” is any business entity which: (a) through the
Executive’s efforts, induces the Company’s employees to terminate employment for the purpose of being employed by such business entity; or (b) is engaged in the business of the Company and engages in Substantial Competition with the
Company in one or more Metropolitan Statistical Areas (“MSAs”) in which the Company has its operations, or in which, at the date the Executive’s employment terminates, the Company is engaged in real estate site selection or has taken
further steps toward the commencement of operations in the future, either alone or in association with another entity, and in which the Company collectively produced, or is projected to produce in the first year of operations, more than five million
dollars ($5,000,000) of gross sales. A business will not be considered to be in “Substantial Competition” with the Company if: (i) the business or the operating unit of the business in which the Executive is employed or with which the
Executive is associated (the “Business Unit”) is not engaged in the retail sales and service of consumer electronics or (ii) if sales of the Business Unit’s products or services in the retail sales and service of consumer electronics
constitute less than ten percent (10%) of such Business Unit’s sales; or (iii) if the sales of the Business Unit in the retail sales and service of consumer electronics do constitute more than ten percent (10%) of the sales of the Business
Unit, but there is not significant geographic overlap between such Business Unit’s and the Company’s business locations. 
 

 9 

  
 In the event that the Executive’s employment is terminated within two (2)
years following a Change in Control (as defined in Section 8.2), under circumstances described in Section 8.3, the Executive shall not be bound by the provisions of this section. 
  
 7.2.    Confidentiality.    The Company has advised the Executive and the Executive acknowledges that it is the policy of the
Company to maintain as secret and confidential all Protected Information (as defined below), and that Protected Information has been and will be developed at substantial cost and effort to the Company. The Executive shall not at any time, directly
or indirectly, divulge, furnish, or make accessible to any person, firm, corporation, association, or other entity (otherwise than as may be required in the regular course of the Executive’s employment), nor use in any manner, either during the
Employment Period or after the termination, for any reason, of the Employment Period, any Protected Information, or cause any such information of the Company to enter the public domain. 
  
 For purposes of this Agreement, “Protected Information” means trade secrets, confidential and proprietary business information of the Company, and any other
information of the Company, including, but not limited to, customer lists (including potential customers), sources of supply, processes, plans, materials, pricing information, internal memoranda, marketing plans, internal policies, and products and
services which may be developed from time to time by the Company and its agents or employees, including the Executive; provided, however, that information that is in the public domain (other than as a result of a breach of this Agreement), approved
for release by the Company or lawfully obtained from third parties who are not bound by a confidentiality agreement with the Company, is not Protected Information. 
  
 7.3.    Acknowledgement of Covenants.    The parties hereto acknowledge that the Executive’s services are of a special,
extraordinary, and intellectual character which gives him unique value, and that the business of the Company and its subsidiaries is highly competitive, and that violation of any of the covenants provided in this Section 7 would cause immediate,
immeasurable, and irreparable harm, loss, and damage to the Company not adequately compensable by a monetary award. The Executive acknowledges that the time, geographical area, and scope of activity restrained by the provisions of this Section 7 are
reasonable and do not impose a greater restraint than is necessary to protect the goodwill of the Company’s business. The Executive further acknowledges that he and the Company have negotiated and bargained for the terms of this Agreement and
that the Executive has received adequate consideration for entering into this Agreement. In the event of any such breach or threatened breach by the Executive of any one or more of such covenants, the Company shall be entitled to such equitable and
injunctive relief as may be available to restrain the Executive from violating the provisions hereof. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available at law or in equity for such breach or
threatened breach, including the recovery of damages and the immediate termination of the employment of the Executive hereunder. 
  
 7.4.    Enforceability.    If any court determines that the foregoing covenant, or any part thereof, is unenforceable because of the duration or geographical scope of such provision, or
for any other reason, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced. 

 10 

  
 Article 8.    Change in Control 
  
 8.1.    Change in Control.    This Article 8 shall not become effective, and the Company
shall have no obligation hereunder, if the employment of the Executive with the Company shall terminate prior to a Change in Control (as defined in Section 8.2 below) of the Company. 
  
 8.2.    Definition of Change in Control.    Change in Control of the Company means, and shall be deemed to have occurred
upon, the first to occur of any of the following events: 
  

	 	(a)
	 
	The acquisition by any individual, entity, or group (a “Person”), including a “person” within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but excluding an Affiliate (as defined below) of the Company, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15 percent
(15%) or more of either: (i) the then outstanding shares of common stock of the Circuit City Group (the “Outstanding Common Stock”); or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company (excluding an acquisition resulting from the exercise of an option, conversion
right, or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company; (C) any acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this Section 8.2; 

  

	 	(b)
	 
	Individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of such Board; provided that any individual who becomes a director of the Company subsequent to the Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened
election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be
deemed a member of the Incumbent Board; 
 

  

	 	(c)
	 
	The consummation of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the
Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which: (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock
and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of,
 
 

 

 11 

	 	
respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation, which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either
directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be; (ii)
no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which
beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, twenty-five percent (25%) or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly
or indirectly, twenty-five percent (25%) or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation
entitled to vote generally in the election of directors; and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate
Transaction; or 
 

  

	 	(d)
	 
	The consummation of a plan of complete liquidation, dissolution, or sale of substantially all the assets of the Company. 
 

 
 For purposes of this Article 8, “Affiliate” shall mean with reference to a specified Person, any Person that directly
or indirectly through one (1) or more intermediaries controls or is controlled by or is under common control with the specified Person. For purposes of this definition, “control” (including, with correlative meaning, the terms
“controlled by” and “under common control with”), as used in respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person,
whether through ownership of voting securities or by contract or otherwise. 
 

 12 

  
 8.3.    Change-in-Control Severance
Benefits.    If at any time during the term of this Agreement there is a Change in Control of the Company and the Executive’s employment is terminated for any reason other than death, Disability, Retirement, Voluntary
Termination (other than for Good Reason), or Cause within two (2) years following the Change in Control [or the Executive voluntarily terminates for any reason in the thirteenth month following a Change in Control of the Company ], the Company shall
provide to the Executive the following: 
  

	 	(a)
	 
	Base Salary and all other benefits due him as if he had remained an employee pursuant to Article 4 through the remainder of the month in which the termination
occurs, less applicable withholding taxes and other authorized payroll deductions; 
 

  

	 	(b)
	 
	The amount equal to a pro rata share of target Annual Bonus for the calendar year in which the Effective Date of Termination occurs (the calculation by which
the Annual Bonus is multiplied by a fraction, the numerator of which is the number of full completed days in the bonus plan year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365); 

  

	 	(c)
	 
	A lump-sum severance allowance in an amount which is equal to the product of three (3) times both the Executive’s Base Salary at the rate in effect
immediately prior to the termination and the Executive’s target Annual Bonus established for the fiscal year in which the Executive’s termination of employment occurs; 
 

  

	 	(d)
	 
	Continuation at the same cost to the Executive as existed as of the Effective Date, of all health, welfare, and benefit plan participation for three (3) full
years following employment termination, provided that the applicable COBRA health insurance benefit continuation period shall begin as of the Effective Date of Termination; 
 

  

	 	(e)
	 
	Provision of outplacement services for the Executive not to exceed a cost of fifty thousand dollars ($50,000); and 
 

  

	 	(f)
	 
	A lump-sum payment equal to the three (3) year costs of perquisites outlined in Section 4.6 above. 
 

  
 8.4.    Excise Tax Equalization Payment.    In the event that the Executive becomes
entitled to severance benefits or any other payment or benefit under this Agreement, or under any other agreement with or plan of the Company (in the aggregate, the “Total Payments”), if any of the Total Payments will be subject to the tax
(the “Excise Tax”) imposed by Section 4999 of the Code (or any similar excise tax that may hereafter be imposed), the Company shall pay to the Executive in cash an additional amount (the “Gross-Up Payment”), such that the net
amount retained by the Executive after deduction of any Excise Tax upon the Total Payments and any federal, state, and local income tax and Excise Tax upon the Gross-Up Payment provided for by this Section 8.4 (including FICA and FUTA), shall be
equal to the Total Payments. The Company shall make such payment to the Executive as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. 
 

 13 

  
 For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, and state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive’s residence on the Effective Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. 
  
 The Company’s Compensation Committee shall determine, based upon the advice of the Company’s independent certified public
accountants, whether any payments or benefits hereunder are subject to the Excise Tax.  
  
 8.5.    Subsequent Recalculation.    In the event the Internal Revenue Service adjusts the computation of the Company under Section 8.4 herein so that the Executive did not receive the
greatest net benefit, the Company shall reimburse the Executive for the full amount necessary to make the Executive whole, plus a market rate of interest, as determined by the Compensation Committee. 
  
 Article 9.    Assignment 
  
 9.1.    Assignment by Company.    This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of,
any successor of the Company, and any such successor shall be deemed substituted for all purposes of the “Company” under the terms of this Agreement. As used in this Agreement, the term “successor” shall mean any person, firm,
corporation, or business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or the business of the Company. Notwithstanding such assignment, the Company shall remain, with such
successor, jointly and severally liable for all its obligations hereunder. 
  
 Failure of the Company to obtain the
agreement of any successor to be bound by the terms of this Agreement prior to the effectiveness of any such succession shall be a breach of this Agreement, and shall immediately entitle the Executive to compensation from the Company in the same
amount and on the same terms as the Executive would be entitled in the event of a termination of employment for Good Reason as provided in Section 8.3 herein. Except as herein provided, the Company may not otherwise assign this Agreement.

  
 9.2.    Assignment by Executive.    The services to be provided by
the Executive to the Company hereunder are personal to the Executive, and the Executive’s duties may not be assigned by the Executive; provided, however, that this Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amounts payable to the Executive hereunder remain outstanding, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, in the absence of such designee, to the Executive’s estate. 

 14 

  
 Article 10.    Dispute Resolution and Notice 
  
 10.1.    Issue Resolution.    Any disagreement between you and the Company concerning
anything covered by this Agreement or concerning other terms or conditions of your employment or the termination of your employment will be settled by final and binding arbitration pursuant to the Company’s Associate Issue Resolution Program.
The Dispute Resolution Agreement and the Dispute Resolution Rules and Procedures are incorporated herein by reference as if set forth in full in this Agreement. The decision of the arbitrator will be final and binding on both you and the Company and
may be enforced in a court of appropriate jurisdiction. 
  
 10.2.    Notice.    Any notices, requests, demands, or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail
to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices. 
  
 Article 11.    Miscellaneous 
  
 11.1.    Entire
Agreement.    This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto, with respect to the subject matter hereof, and constitutes the entire agreement of the parties with
respect thereto. Without limiting the generality of the foregoing sentence, this Agreement completely supersedes any and all prior employment agreements entered into by and between the Company and the Executive, and all amendments thereto, in their
entirety. 
  
 11.2.    Modification.    This Agreement shall not be
varied, altered, modified, canceled, changed, or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives. 
  
 11.3.    Severability.    In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect. 
  
 11.4.    Counterparts.    This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and the same Agreement. 
  
 11.5.    Tax Withholding.    The Company may withhold from any benefits payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or
governmental regulation or ruling. 
  
 11.6.    Beneficiaries.    The
Executive may designate one (1) or more persons or entities as the primary and/or contingent beneficiaries of any amounts to be received under this Agreement. Such
 
 

 15 

 
designation must be in the form of a signed writing acceptable to the CEO. The Executive may make or change such designation at any time. 
  

11.7.    Payment Obligation Absolute.    The Company’s obligation to make the payments and the arrangement provided
for herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may have against the Executive or anyone
else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company shall not seek to recover all or any part of such payment from the
Executive or from whomsoever may be entitled thereto, for any reasons whatsoever. 
  
 The Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s
obligations to make the payments and arrangements required to be made under this Agreement; provided, however, that continued health, welfare, and benefit plan participation pursuant to Section 6.4 or Section 8.3 herein shall be discontinued in the
event the Executive becomes eligible to receive substantially similar benefits from a successor employer. 
  
 11.8.    Contractual Rights to Benefits.    This Agreement establishes and vests in the Executive a contractual right to the benefits to which he is entitled hereunder. However, nothing
herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or
required hereunder. 
  
 Article 12.    Governing Law 
  
 To the extent not preempted by federal law, the provisions of this Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Virginia,
without reference to Virginia’s choice of law statutes or decisions. 
  
 IN WITNESS WHEREOF, the Executive and
the Company have executed this Agreement as of the Effective Date. 
  
 
	 Circuit City Stores, Inc.
 	  	 Executive: W. Austin Ligon
 
	  	 	  	  	  
	  	 	  	  	  
	 By:
 	 	 
	  	 

	  	 	  	  	  
	 Attest:
 	 	 
	  	  

 
  
 

 16

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