Document:

Exhibit 10.1, Keith D. Browning

    
      

CARMAX,
      INC.

     

    SEVERANCE
      AGREEMENT

     

    FOR

     

    EXECUTIVE
      OFFICER

     

    THIS
      SEVERANCE AGREEMENT (“Agreement”)
      is
      made, entered into and is effective this February 14, 2007 (“Effective
      Date”)
      by and
      between CarMax, Inc., a Virginia corporation, and its affiliated companies
      (collectively, the “Company”),
      and
      Keith D. Browning (the “Executive”).

     

    WHEREAS,
      the Company recognizes the Executive’s intimate knowledge and experience in the
      business of the Company, and has appointed the Executive as Executive Vice
      President and Chief Financial Officer (“CFO”);

     

    WHEREAS,
      the Executive will develop and come in contact with the Company’s proprietary
      and confidential information that is not readily available to the public, and
      that is of great importance to the Company and that is treated by the Company
      as
      secret and confidential information;

     

    WHEREAS,
      the Company and the Executive desire to agree upon the terms, conditions,
      compensation and benefits of the Executive’s future employment;

     

    WHEREAS,
      upon execution of this Agreement, any prior employment or severance agreement
      between the Executive and the Company, whether oral or written, will have no
      force and effect with respect to the terms and conditions of Executive’s
      employment and will be replaced and superseded by the terms of this Agreement;
      and

     

    WHEREAS,
      in consideration of the Executive’s execution of the Agreement, the Company will
      grant to the Executive an award of options to purchase 2,000 shares of Company
      common stock pursuant to the Company’s 2002 Stock Incentive Plan, as amended and
      restated;

     

    NOW,
      THEREFORE, in consideration of the Executive’s service as the Company’s
      Executive Vice President and CFO, and the award of options, and of the premises,
      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. Employment
      Acceptance

     

    The
      Company hereby agrees to employ the Executive and the Executive hereby accepts
      employment as Executive Vice President and CFO of the Company, in accordance
      with the terms and conditions set forth herein.

     

    Article
      2. Position
      and Responsibilities

     

    During
      the term of the Executive’s employment with the Company (“Term”),
      the
      Executive agrees to serve as Executive Vice President and CFO of the Company.
      In
      his capacity as Executive Vice President and CFO of the Company, the Executive
      shall report directly to the

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    President
      and Chief Executive Officer (“CEO”)
      and
      shall have the duties and responsibilities of Executive Vice President and
      CFO
      of the Company and such other duties and responsibilities not inconsistent
      with
      the performance of his duties as Executive Vice President and CFO of the
      Company. The Executive’s principal work location shall be the corporate
      headquarters of the Company located in the Richmond, Virginia metropolitan
      area.

     

    Article
      3. Standard
      of Care

     

    3.1 General.
      During
      the Term, the Executive shall devote his full business time, attention,
      knowledge and skills to the Company’s business and interests. The Executive
      covenants, warrants, and represents that he shall:

     

    
      	 	
              (a)

            	
              Devote
                his best efforts and talents to the performance of his employment
                obligations and duties for the
                Company;

            

    

     

    
      	 	
              (b)

            	
              Exercise
                the highest degree of loyalty and the highest standards of conduct
                in the
                performance of his duties;

            

    

     

    
      	 	
              (c)

            	
              Observe
                and conform to the Company’s bylaws and other rules, regulations, and
                policies established or issued by the Company;
                and

            

    

     

    
      	 	
              (d)

            	
              Refrain
                from taking advantage, for himself or others, of any corporate
                opportunities of the Company.

            

    

     

    3.2 Forfeiture
      and Return of Incentive Compensation.
      It is
      the Company’s expectation that the Executive will discharge his duties hereunder
      with utmost attention to the standards set forth in Section 3.1. In the event
      the CarMax, Inc. Board of Directors (“Board”)
      determines that the Executive has engaged in conduct constituting Cause (as
      defined in Section 7.6(a)), which conduct directly results in the filing of
      a
      restatement of any financial statement previously filed with the Securities
      and
      Exchange Commission (or other governmental agency) under the Federal securities
      laws, the Executive shall immediately (a) forfeit all unpaid Affected
      Compensation (as defined below) and (b) upon demand by the Company repay to
      the
      Company all Affected Compensation received or realized by the Executive together
      with interest at the prime rate in effect from time to time as reported in
      The
      Wall Street Journal; provided, however, that the forfeiture and repayment
      provisions of this Section 3.2 shall not apply to conduct constituting “gross
      negligence” under Section 7.6(a)(ii) or to conduct under Section 7.6(a)(iii),
      Section 7.6(a)(vii) or Section 7.6(a)(viii). “Affected
      Compensation”
means
      any payment to the Executive, any award or vesting of any equity or other
      short-term or long-term incentive compensation to the Executive, or any
      before-tax proceeds of a sale of previously awarded equity compensation realized
      by the Executive, in any instance in which (i) the payment, award or vesting
      of
      the foregoing was expressly conditioned upon the achievement of certain
      financial results that were subsequently the subject of such restatement, and
      (ii) a lesser amount of payment, award or vesting or before-tax proceeds of
      a
      sale of any of the foregoing would have been made to, vested in or otherwise
      earned or realized by, the Executive based upon such restated financial
      results.

     

    
      
        
        

      

      
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    Article
      4. Other
      Activities

     

    During
      the Term, the Executive shall comply with the provisions of Article 8 herein.
      Furthermore, during his employment, the Executive agrees to obtain the CEO’s
      written consent before entering into any other occupation, even if dissimilar
      to
      that of the Company, including, without limitation, service as a member of
      a
      board of directors of one or more other companies. Such consent may be granted
      or withheld, in the CEO’s sole discretion. The Executive may participate on
      charitable and civic boards, and in educational, professional, community and
      industry affairs, without CEO consent, provided that such participation does
      not
      interfere with the performance of his duties.

     

    Article
      5. Compensation
      and Benefits

     

    As
      remuneration for all services to be rendered by the Executive during the Term,
      and as consideration for complying with the covenants herein during and after
      the termination or expiration of the Term, the Company shall pay and provide
      to
      the Executive the following compensation and benefits:

     

    5.1 Base
      Salary.
      During
      the Term, the Company shall pay the Executive a base salary (“Base
      Salary”)
      in an
      amount established and approved by the Compensation and Personnel Committee
      of
      the Board (“Compensation
      Committee”);
      provided, however, that such Base Salary shall be established at a rate of
      not
      less than $561,330.00 per year, except as otherwise provided in this Section
      5.1
      below. 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 Compensation Committee shall review and adjust the Base Salary
      as it deems appropriate at least annually during the Term; provided, however,
      that the Executive’s Base Salary shall not be decreased without the Executive’s
      written consent, other than across-the-board reductions applicable to all senior
      officers of the Company. If adjusted, the Base Salary shall be so adjusted
      for
      all purposes of this Agreement.

     

    5.2 Annual
      Bonus.
      In
      addition to his Base Salary, the Executive shall be entitled to participate
      in
      the Company’s Annual Performance-Based Bonus Plan (“Annual
      Bonus Plan”),
      as
      such Annual Bonus Plan may exist from time to time during the Term. Under the
      Company’s Annual Bonus Plan, the Executive has the opportunity to earn an annual
      bonus with respect to any fiscal year of the Company (“Annual
      Bonus”).
      The
      Annual Bonus will be determined by a formula approved each fiscal year by the
      Compensation Committee (the “Annual
      Bonus Formula”)
      in its
      sole discretion. At the beginning of each fiscal year, the Compensation
      Committee will authorize, in accordance with the Annual Bonus Plan, the
      Executive’s Annual Bonus for that fiscal year, which shall be targeted at sixty
      percent (60%) of the Executive’s Base Salary for that fiscal year (“Target
      Bonus Rate”).
      The
      specified Target Bonus Rate may be increased from time to time by the
      Compensation Committee but shall not be decreased without the Executive’s
      written consent. Depending upon the actual financial performance recorded by
      the
      Company for any given fiscal year, the Executive’s Annual Bonus may be increased
      or decreased solely in accordance with the Annual Bonus Formula and otherwise
      in
      accordance with the Annual Bonus Plan.

     

    
      
        
        

      

      
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    5.3 Long-Term
      Incentives.
      During
      the Term, the Executive shall be eligible to participate in the Company’s 2002
      Stock Incentive Plan, as amended and restated (or any successor incentive plan
      thereto), to the extent that the Compensation Committee, in its sole discretion,
      determines is appropriate. The Compensation Committee will make its
      determination consistent with the methodology used by the Company for
      compensating the Executive’s peer executives. Additionally, the Executive shall
      be entitled to participate in all other incentive plans, whether equity-based
      or
      cash-based, applicable generally to his peer executives within the
      Company.

     

    5.4 Retirement
      and Deferred Compensation Plans.
      During
      the Term, the Executive shall be entitled to participate in all tax-qualified
      and nonqualified retirement and deferred compensation plans, policies and
      programs applicable generally to his peer executives within the Company, subject
      to the eligibility and participation requirements of such plans, policies and
      programs.

     

    5.5 Welfare
      Benefit Plans.
      During
      the Term, the Executive and the Executive’s family will be entitled to
      participate in all welfare benefit plans, policies and programs, including
      those
      defined under Section 3(1) of the Employee Retirement Income Security Act of
      1974, as amended, provided by the Company to his peer executives within the
      Company, subject to the eligibility requirements and other provisions of such
      plans, policies and programs.

     

    5.6 Fringe
      Benefits.
      During
      the Term, the Executive will be entitled to fringe benefits in accordance with
      the plans, policies and programs of the Company in effect for his peer
      executives within the Company.

     

    5.7 Vacation.
      During
      the Term, the Executive will be entitled to participate in the Company’s Time
      Away paid time off program for salaried employees (or successor paid time off
      program) as that program is administered by the Company and as it may be amended
      or modified from time to time; provided, in all events, the Executive will
      be
      entitled to not less than 30 days of paid vacation each fiscal
      year.

     

    5.8 Right
      to Change Plans.
      By
      reason of Sections 5.4, 5.5, 5.6 and 5.7 herein, the Company shall not be
      obligated to institute, maintain, or refrain from changing, amending, or
      discontinuing any benefit plan, policy or program, so long as such changes
      are
      similarly applicable to the Executive’s peer executives.

     

    Article
      6. Expenses

     

    During
      the Term, the Company shall pay or reimburse the Executive for all ordinary
      and
      necessary expenses, in a reasonable amount, that 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 Company finds that the Executive’s
      participation is in the best interests of the Company. The payment or
      reimbursement of expenses shall be subject to such rules concerning
      documentation of expenses and the type or magnitude of such expenses as the
      Compensation Committee or the Company, as applicable, may establish from time
      to
      time.

     

    
      
        
        

      

      
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    Article
      7. Employment
      Termination

     

    7.1 Date
      of Termination.
      The
      Company or the Executive may terminate the Executive’s employment in accordance
      with the provisions of this Article 7. The “Date
      of Termination”
of
      the
      Executive’s employment shall be as determined in Sections 7.2, 7.3, 7.4, 7.5,
      7.6, and 7.7 below. 

     

    7.2 Termination
      Due to Retirement or Death.
      

     

    (a) In
      the
      event the Executive’s employment ends by reason of Retirement (as defined
      below), the Date of Termination shall be the date set forth in a notice by
      the
      Executive, which notice shall be given to the Company at least ninety (90)
      days
      prior to such date. In the event of the Executive’s death, the Date of
      Termination shall be the date of death. In either case, the Executive’s benefits
      shall be determined in accordance with the Company’s retirement, survivor’s
      benefits, insurance and other applicable plans and programs of the Company
      then
      in effect. For the purposes of this Agreement, “Retirement”
shall
      mean the Executive’s voluntary termination of employment at a time during which
      he is eligible for “Normal Retirement” or “Early Retirement” as such terms are
      defined in the CarMax, Inc. Pension Plan as of the Effective Date.

     

    (b) Upon
      the
      Date of Termination due to the Executive’s Retirement or death, the Company
      shall be obligated to pay the Executive or, if applicable, the Executive’s
      beneficiary or estate, the following “Accrued
      Obligations”:
      (i) any Base Salary that was accrued but not yet paid as of the Date of
      Termination; (ii) the unpaid Annual Bonus, if any, earned with respect to
      the fiscal year preceding the Date of Termination; (iii) any compensation
      previously deferred by the Executive by his own election; and (iv) all
      other employee welfare and retirement benefits to which the Executive is
      entitled on the Date of Termination in accordance with the terms of the
      applicable plan or plans. The Accrued Obligations payable under the above
      clauses (i) and (ii) shall be paid to the Executive in a lump sum cash payment
      within ten (10) days after the Date of Termination or as soon thereafter as
      may
      be practicable. The Accrued Obligations payable under clauses (iii) and (iv)
      shall be paid in accordance with the terms of the plan under which they are
      due.

     

    (c) Upon
      the
      Date of Termination due to the Executive’s Retirement, the Executive shall be
      entitled to a pro rata share of the Annual Bonus based on actual performance
      for
      the fiscal year in which the Date of Termination occurs (such proration to
      be
      based on the fraction, the numerator of which is the number of full completed
      days of employment during the fiscal year through the Date of Termination,
      and
      the denominator of which is 365) (“Pro
      Rata Actual Bonus”).
      The
      Pro Rata Actual Bonus, if any, shall be paid to the Executive when annual
      bonuses are paid to other senior officers of the Company for such fiscal
      year.

     

    (d) Upon
      the
      Date of Termination due to the Executive’s death, the Executive’s beneficiary or
      estate shall be entitled to a pro rata share of the Annual Bonus at the Target
      Bonus Rate for the fiscal year in which the Date of Termination occurs (such
      proration to be based on the fraction, the numerator of which is the number
      of
      full completed days of employment during the fiscal year through the Date of
      Termination, and the denominator of which is 365) (“Pro
      Rata Target Bonus”).
      The
      Pro Rata Target Bonus shall be paid to the

     

    
      
        
        

      

      
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    Executive’s
      beneficiary or estate in a lump sum cash payment within ten (10) days after
      the
      date of the Executive’s death or as soon as practicable thereafter.

     

    (e) Upon
      the
      termination of the Executive’s employment due to his Retirement or death, the
      terms and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 7.2.

    

    7.3 Termination
      Due to Disability.

    

    (a) The
      Company shall have the right to terminate the Executive’s employment for his
      Disability (as defined below). The Date of Termination due to Disability shall
      be the date set forth in a notice to the Executive, which notice shall be given
      by the Company at least thirty (30) days prior to such date. For the purposes
      of
      this Agreement, “Disability”
or
      “Disabled”
shall
      mean any physical or mental illness or injury that causes the Executive (i)
      to
      be considered “disabled” for the purpose of eligibility to receive
      income-replacement benefits in accordance with the Company’s long-term
      disability plan in which the Executive is a participant, or (ii) if the
      Executive does not participate in any such plan, to be unable to substantially
      perform the duties of his position for 180 days in the aggregate during any
      period of twelve (12) consecutive months and a physician selected by the Company
      (and reasonably acceptable to the Executive) shall have furnished to the Company
      certification that the return of the Executive to his normal duties is
      impossible or improbable. The Board shall review the foregoing information
      and
      shall determine in good faith if the Executive is Disabled. The Board’s decision
      shall be binding on the Executive. Notwithstanding the foregoing, if the
      Executive incurs a physical or mental illness or injury that does not constitute
      a Disability, such physical or mental illness or injury shall not constitute
      a
      failure by the Executive to perform his duties hereunder and shall not be deemed
      a breach or default of this Agreement by the Executive.

    

    (b) Upon
      the
      Date of Termination due to the Executive’s Disability, the Executive shall be
      entitled to his Accrued Obligations and a Pro Rata Target Bonus. The Accrued
      Obligations provided under Section 7.2(b)(i) and (ii) and the Pro Rata Target
      Bonus shall be paid to the Executive in a lump sum cash payment within ten
      (10)
      days after the Date of Termination or as soon as practicable thereafter. The
      Accrued Obligations provided under Section 7.2(b)(iii) and (iv) shall be
      paid in accordance with the terms of the plan under which they are
      due.

     

    (c) Upon
      the
      termination of the Executive’s employment due to his Disability, the terms and
      conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 7.3.

     

    7.4 Voluntary
      Termination by the Executive Without Good Reason.
      The
      Executive may terminate his employment at any time without Good Reason (as
      defined in Section 7.7) by

     

    
      
        
        

      

      
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    giving
      the Company at least forty five (45) days notice, which notice shall state
      the
      Date of Termination. The Company reserves the right to require the Executive
      not
      to work during the notice period but shall pay the Executive his accrued and
      unpaid Base Salary, at the rate then in effect provided in Section 5.1
      herein, through the Date of Termination (but not to exceed forty-five (45)
      days), and such payment shall be made to the Executive within ten (10) days
      after the Date of Termination or as soon thereafter as may be practicable.
      The
      Company shall also pay the Executive any compensation previously deferred by
      the
      Executive by his own election and all other employee welfare and retirement
      benefits to which the Executive is entitled on the Date of Termination, all
      in
      accordance with the terms of the applicable plan or plans under which they
      are
      due. In the event of the Executive’s voluntary termination of employment without
      Good Reason, the terms and conditions of the awards and agreements applicable
      to
      the Executive’s outstanding stock options, stock grants, stock appreciation
      rights, performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 7.4.

     

    7.5 Involuntary
      Termination by the Company Without Cause.
      Upon
      notice to the Executive, the Company may terminate the Executive’s employment at
      any time for any reason other than for Cause and other than due to Disability
      (“Involuntary
      Termination Without Cause”).
      The
      Date of Termination shall be the date stated in such notice.

     

    (a) In
      the
      event of the Executive’s Involuntary Termination Without Cause, which occurs
      prior to the occurrence of a Change in Control or an Asset Sale (each as defined
      in Section 11.2) or after the conclusion of the Change in Control Employment
      Period (defined at Section 11.4), the Executive shall receive the following
      payments and benefits:

     

    (i) The
      Company shall pay to the Executive, in equal monthly installments over the
      twenty-four (24) month period following the Date of Termination, an amount
      equal
      to the product of two (2) times the sum of (x) the Executive’s Base Salary and
      (y) the amount of the last Annual Bonus for the Executive as determined by
      the
      Compensation Committee in
      accordance with the Annual Bonus Plan, regardless of the Date of
      Termination.

     

    (ii) The
      Executive’s participation in the Company’s health, dental, and vision plans will
      end on the last day of the month in which the Date of Termination occurs. The
      Executive may elect to continue coverage under the health, dental and/or vision
      plans for himself and his eligible dependents in accordance with the terms
      and
      procedures of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
      amended (“COBRA”).
      If
      the Executive elects COBRA coverage, the Executive shall be responsible for
      remitting the COBRA premium to the Company (or to a COBRA administrator
      designated by the Company) in accordance with the terms of the Company’s health,
      dental and vision plans and applicable COBRA requirements. If the Executive
      elects COBRA coverage, the Company shall reimburse the Executive for a portion
      of the cost of such coverage until the end of the COBRA coverage period, up
      to a
      maximum period of eighteen (18) months. The amount of the Company’s
      reimbursement shall be equal to the sum of (1) the amount the Company would
      have
      otherwise paid for such coverage if the Executive had remained an active
      employee of the Company, and (2)

     

    
      
        
        

      

      
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    the
      COBRA
      administration fee. If the Executive does not elect COBRA coverage, the Company
      shall have no obligation to the Executive with respect to health, dental and
      vision benefits following the Date of Termination.

     

    (iii) The
      Company shall provide the Executive with outplacement services not to exceed
      a
      cost of $25,000.00.

     

    (iv) The
      Executive shall be entitled to his Accrued Obligations and a Pro Rata Actual
      Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and (ii)
      shall be paid to the Executive in a lump sum cash payment within ten (10) days
      after the Date of Termination or as soon thereafter as may be practicable.
      The
      Accrued Obligations provided under Section 7.2(b)(iii) and (iv) shall be paid
      in
      accordance with the terms of the plan under which they are due. The Pro Rata
      Actual Bonus, if any, shall be paid to the Executive when annual bonuses are
      paid to other senior officers of the Company for such fiscal year.

     

    (v) The
      terms
      and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 7.5.

     

    (b) Amounts
      payable under this Section 7.5 shall be in lieu of any amounts otherwise payable
      under any severance plan or agreement covering senior officers of the
      Company.

     

    (c) In
      the
      event that the Company terminates the Executive’s employment at any time for any
      reason (i) other than for Cause and other than due to Disability and (ii) after
      the Executive has attained age 65 of higher, such termination shall not be
      deemed an Involuntary Termination Without Cause.

     

    7.6 Termination
      For Cause.
      The
      Company may terminate the Executive’s employment at any time for Cause, without
      notice or liability for doing so. The Date of Termination shall be the date
      that
      Cause is determined as provided below.

     

    (a) For
      purposes of this Agreement, “Cause”
means
      a
      good faith determination by the Board that one (1) or more of the following
      has
      occurred:

     

    (i) The
      Executive has committed a material breach of this Agreement, which breach was
      not cured or waived by the Company, within ten (10) days of receipt by the
      Executive of notice from the Company specifying the breach;

     

    (ii) The
      Executive has committed gross negligence in the performance of his duties
      hereunder, intentionally fails to perform his duties, engages in intentional
      misconduct or intentionally refuses to abide by or comply with the directives
      of
      the Board, the CEO or the Company’s policies and procedures, as applicable,
      which actions continued for a period of ten (10) days after receipt by the
      Executive of notice of the need to cure or cease;

     

    
      
        
        

      

      
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    (iii) The
      Executive has willfully and continuously failed to perform substantially his
      duties (other than any such failure resulting from the Executive’s Disability or
      incapacity due to bodily injury or physical or mental illness), after a written
      demand for substantial performance is delivered to the Executive by the Board
      or
      the CEO that specifically identifies the manner in which the Board or the CEO
      believes that the Executive has not substantially performed his
      duties;

     

    (iv) The
      Executive has willfully violated a material requirement of the Company’s code of
      conduct or breached his fiduciary duty to the Company;

     

    (v) The
      Executive’s conviction of (or a plea of guilty or nolo contendere to) a felony
      or any crime involving moral turpitude, dishonesty, fraud, theft or financial
      impropriety;

     

    (vi) The
      Executive has engaged in illegal conduct, embezzlement or fraud with respect
      to
      the business or affairs of the Company;

     

    (vii) The
      Executive has failed to disclose to the Board a conflict of interest of which
      the Executive knew or with reasonable diligence should have known in connection
      with any transaction entered into on behalf of the Company; or

     

    (viii) The
      Executive has failed to agree to a modification of the Agreement pursuant to
      Section 17.3 hereof when the purpose of the modification is to comply with
      applicable federal, state or local laws or regulations, or when such
      modification is designed to further define the restrictions of Article 8 or
      otherwise enhance the enforcement of Article 8 without increasing the duration
      or scope of the Article 8 restrictions.

     

    No
      act or
      failure to act on the Executive’s part will be considered “willful” if conducted
      by the Executive in good faith and with a reasonable belief that the Executive’s
      act or omission was in, and not opposed to, the best interests of the
      Company.

     

    (b) If
      the
      Executive’s employment is terminated for Cause during the Term, this Agreement
      will terminate without further obligation of the Company to the Executive other
      than (i) the payment to the Executive of his accrued and unpaid Base Salary
      through the Date of Termination, and (ii) the payment of any
      compensation previously deferred by the Executive by his own election and all
      other employee welfare and retirement benefits to which the Executive is
      entitled on the Date of Termination, all in accordance with the terms of the
      applicable plan or plans under which they are due. In the event of the
      Executive’s termination of employment for Cause, the terms and conditions of the
      awards and agreements applicable to the Executive’s outstanding stock options,
      stock grants, stock appreciation rights, performance-based grants, and all
      other
      forms of long-term incentive compensation, regardless of whether such
      compensation is equity or cash based, will govern the consequences of the
      termination of the Executive’s employment under this Section 7.6.

     

    7.7 Termination
      for Good Reason.
      At any
      time during the Term, the Executive may terminate his employment for Good Reason
      (as defined below) upon notice to the Company. Such notice shall state the
      intended Date of Termination and shall be given to the Company at

     

    
      
        
        

      

      
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    least
      forty-five (45) days prior to such date and shall set forth in detail the facts
      and circumstances claimed to provide grounds for such termination. The Company
      shall have the right to cure the facts and circumstances giving rise to such
      grounds for termination for Good Reason. If the Company does not so cure within
      such forty-five (45) day notice period, then the Executive’s employment shall
      terminate on the Date of Termination stated in the notice.

     

    (a) For
      purposes of this Agreement, “Good
      Reason”
shall
      mean, without the Executive’s express written consent, the occurrence of any one
      (1) or more of the following:

     

    (i) A
      reduction in the Executive’s Base Salary (other than, prior to the occurrence of
      a Change in Control or Asset Sale, a reduction across-the-board affecting all
      senior officers in substantially like percentages of their base salaries) or
      Target Bonus Rate;

     

    (ii) A
      material reduction in the Executive’s duties or authority as Executive Vice
      President and CFO of the Company, or any removal of the Executive from or any
      failure to reappoint or reelect the Executive to such positions (except in
      connection with the termination of the Executive’s employment for Cause or
      Disability, as a result of the Executive’s death or Retirement or by the
      Executive other than for Good Reason);

     

    (iii) The
      Executive being required to relocate to a principal place of employment more
      than 35 miles from the Company’s headquarters except, prior to the occurrence of
      a Change in Control or Asset Sale, in connection with the relocation of
      substantially all senior Company executives pursuant to the relocation of the
      Company’s headquarters;

     

    (iv) If
      applicable, the failure by the shareholders of the Company to elect or to
      reelect the Executive as a director of the Board or the removal of the Executive
      from such position; or

     

    (v) The
      failure of the Company to obtain an agreement from any successor to all or
      substantially all of the assets or business of the Company to assume and agree
      to perform this Agreement within fifteen (15) days after a merger,
      consolidation, sale or similar transaction.

     

    (b) In
      the
      event of the Executive’s voluntary termination of employment for Good Reason,
      which occurs prior to the occurrence of a Change in Control or an Asset Sale
      or
      after the conclusion of the Change in Control Employment Period, the Executive
      shall receive the following payments and benefits:

     

    (i) The
      Company shall pay to the Executive, in equal monthly installments over the
      twenty-four (24) month period following the Date of Termination, an amount
      equal
      to the product of two (2) times the sum of (x) the Executive’s Base Salary and
      (y) the amount of the last Annual Bonus for the Executive as determined by
      the
      Compensation Committee in
      accordance with the Annual Bonus Plan, regardless of the Date of
      Termination.

     

    
      
        
        

      

      
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    (ii) The
      Executive’s participation in the Company’s health, dental, and vision plans will
      end on the last day of the month in which the Date of Termination occurs. The
      Executive may elect to continue coverage under the health, dental and/or vision
      plans for himself and his eligible dependents in accordance with the terms
      and
      procedures of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
      amended (“COBRA”).
      If
      the Executive elects COBRA coverage, the Executive shall be responsible for
      remitting the COBRA premium to the Company (or to a COBRA administrator
      designated by the Company) in accordance with the terms of the Company’s health,
      dental and vision plans and applicable COBRA requirements. If the Executive
      elects COBRA coverage, the Company shall reimburse the Executive for a portion
      of the cost of such coverage until the end of the COBRA coverage period, up
      to a
      maximum period of eighteen (18) months. The amount of the Company’s
      reimbursement shall be equal to the sum of (1) the amount the Company would
      have
      otherwise paid for such coverage if the Executive had remained an active
      employee of the Company, and (2) the COBRA administration fee. If the Executive
      does not elect COBRA coverage, the Company shall have no obligation to the
      Executive with respect to health, dental and vision benefits following the
      Date
      of Termination.

     

    (iii) The
      Company shall provide the Executive with outplacement services not to exceed
      a
      cost of $25,000.00.

     

    (iv) The
      Executive shall be entitled to his Accrued Obligations and his Target Bonus
      for
      the fiscal year in which the Date of Termination occurs. The Target Bonus and
      the Accrued Obligations provided under Section 7.2(b)(i) and (ii) shall be
      paid to the Executive in a lump sum cash payment within ten (10) days after
      the
      Date of Termination or as soon thereafter as may be practicable. The Accrued
      Obligations provided under Section 7.2(b)(iii) and (iv) shall be paid in
      accordance with the terms of the plan under which they are due.

     

    (v) The
      terms
      and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 7.7.

     

    (c) The
      Executive’s right to terminate his employment for Good Reason shall not be
      affected by the Executive’s incapacity due to physical or mental illness not
      constituting a Disability.
      Amounts
      payable under this Section 7.7 shall be in lieu of any amounts otherwise payable
      under any severance plan or agreement covering senior officers of the
      Company.

     

    7.8 Conditions
      on Company Obligations.
      All
      payments and benefits made or provided pursuant to Article 7 are subject to
      the
      Executive’s:

     

    (a) Compliance
      with the provisions of Article 8, Article 9, Article 10 and Section 17.2
      hereof;

     

    
      
        
        

      

      
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    (b) Except
      with respect to payment of the Executive’s Accrued Obligations, delivery to the
      Company of an executed Agreement and General Release, which shall be
      substantially in the form attached hereto as Exhibit A (with such changes or
      additions as needed under then applicable law to give effect to its intent
      and
      purpose) (“Agreement
      and General Release”)
      within
      twenty-one (21) days of presentation thereof by the Company to the Executive.
      Notwithstanding the due date of any post-employment termination payments
      hereunder, any amounts due following a termination of employment under this
      Agreement shall not be due until after the expiration of any revocation period
      applicable to the Agreement and General Release without the Executive having
      revoked such Agreement and General Release; and

     

    (c) Compliance
      with Section 409A of the Internal Revenue Code of 1986, as amended
      (“Code”).

     

    After
      payment of all amounts and benefits under this Article 7, the Company thereafter
      shall have no further obligation under this Agreement.

     

    Article
      8. Covenant
      Not to Compete; Intellectual Property

     

    8.1 Acknowledgement
      and Agreement Regarding Covenant Not to Compete.

     

    (a) The
      Executive acknowledges and agrees as follows: (i) the Company operates a unique
      business concept in the United States regarding the sale and servicing of new
      and used vehicles in a highly competitive industry; (ii) the Company’s
      competitors have attempted to duplicate the Company’s business concept in
      various markets throughout the United States, including markets where the
      Company does not currently have a business location, and may continue to do
      so;
      and (iii) in connection with the Executive’s employment, he will receive access
      to, and training regarding, the Company’s business concept and will,
      accordingly, acquire commercially valuable knowledge of, and insight into,
      the
      Company’s operations and its proprietary and confidential information, any of
      which if made available to the Company’s competitors could place the Company at
      an unfair competitive disadvantage.

     

    (b) The
      Executive and the Company acknowledge that the Executive’s services are of a
      special, extraordinary, and intellectual character that gives the Executive
      unique value, that the Company’s business is highly competitive, and that
      violation of the Covenant Not to Compete (as defined in Section 8.2 below)
      provided herein would cause immediate, immeasurable, and irreparable harm,
      loss,
      and damage to the Company not adequately compensable by a monetary award. In
      the
      event of any breach or threatened breach by the Executive of the Covenant Not
      to
      Compete, 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 for Cause.

     

    (c) The
      Executive and the Company have examined in detail the Covenant Not to Compete
      contained herein and agree that the restraint imposed upon the Executive is
      reasonable in light of the legitimate business interests of the Company and
      is
      not unduly harsh

     

    
      
        
        

      

      
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    upon
      the
      Executive’s ability to earn a livelihood. If any provision of the Covenant Not
      to Compete relating to the time period, geographic area or scope of restricted
      activities shall be declared by a court of competent jurisdiction to exceed
      the
      maximum time period, geographic area or scope of activities, as applicable,
      that
      such court deems reasonable and enforceable, such time period, geographic area
      or scope of activities shall be deemed to be, and thereafter shall become,
      the
      maximum time period or largest geographic area or scope of activities that
      such
      court deems reasonable and enforceable and this Agreement shall automatically
      be
      considered to have been amended and revised to reflect such
      determination.

     

    8.2 Covenant
      Not to Compete.
      In
      order to protect the Company’s legitimate business interests from competitors
      and to protect the Company’s critical interest in its proprietary and
      confidential information, and in return for the consideration set forth in
      this
      Agreement, the Executive covenants and agrees to the following “Covenant
      Not to Compete”:

     

    (a) During
      the Executive’s employment and for a period of two (2) years following the last
      day of the Executive’s employment, the Executive will not, directly or
      indirectly, compete with the Company by acting “in a competitive capacity” (as
      defined in Section 8.2(c)), whether as an individual, partner, or joint
      venturer, for, or on behalf of, any person or entity operating or developing
      the
      same or similar business as the Company within any Metropolitan Statistical
      Area
      (as defined under applicable regulations of the Census Bureau of the U.S.
      Department of Commerce) in which the Company has a business location or in
      which
      the Company is engaged in real estate site selection. Entities (including the
      affiliates of such entities) engaged, or which could become engaged, in the
      same
      or similar business as the Company include, but are not limited to: Sonic
      Automotive, Inc.; Lithia Motors, Inc.; Group 1 Automotive, Inc.; UnitedAuto
      Group; AutoNation, Inc.; Penske Motors; Asbury Automotive Group; Price One;
      Hendrick Automotive Group; CarMotive; Saturn Group; Hertz; Enterprise; and
      any
      automotive retail operation affiliated with, owned, operated, or controlled
      by
      Home Depot, Inc., Lowe’s Companies, Inc., Target Corporation, Wal-Mart Stores,
      Inc., Sears, Roebuck and Company, Carrefour, Costco Wholesale Corporation,
      Royal
      Dutch/Shell Group of Companies, Exxon Mobil Corporation, ChevronTexaco Corp.,
      or
      Gulliver International Co., Ltd.

     

    (b) A
      business will not be considered to be in competition with the Company for
      purposes of this Section 8.2 if the business, or operating unit of the
      business, in which the Executive will be employed does not have, nor is expected
      to have within the two (2) years following the Executive’s termination of
      employment, annual gross revenues of at least $5,000,000 derived from the sale
      and servicing of new or used vehicles.

     

    (c) Acting
      “in
      a
      competitive capacity”
shall
      mean providing to a person or entity covered by this Section 8.2, directly
      or indirectly, the same or similar services as the Executive provided to the
      Company during his employment, and/or engaging in any business or segment of
      business about which the Executive first acquired proprietary or confidential
      information during the course of his employment with the Company.

     

    (d) Notwithstanding
      the foregoing, nothing herein shall be deemed to prevent or limit the right
      of
      the Executive to invest in the capital stock or other securities (not exceeding
      two percent (2%) of such outstanding capital stock or securities) of
      any
      corporation whose stock or securities are regularly traded on any public
      exchange, nor shall anything contained herein be

     

    
      
        
        

      

      
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    deemed
      to
      prevent the Executive from investing in real estate for his own benefit, so
      long
      as such investment (i) is not related to or in support of any entity
      engaged in a business similar to that of the Company and (ii) does not
      detract from the Executive’s performance of his duties and obligations
      hereunder.

     

    8.3 Intellectual
      Property.
      The
      Executive understands and acknowledges that any writing, invention, design,
      system, process, development or discovery (collectively, "Intellectual
      Property")
      conceived, developed created or made by the Executive, alone or with others,
      both during the Term of this Agreement and in the course of the Executive’s
      employment prior to the Term, is the sole and exclusive property of the Company
      to the extent such Intellectual Property is related to the Executive's duties
      or
      is within the scope of the Company's actual or anticipated business. The
      Executive agrees to assign to the Company any and all of his right, title,
      and
      interest in and to such Intellectual Property, including, but not limited to,
      patent, trademark and other rights. The Executive further agrees to cooperate
      fully with the Company to secure, maintain, enforce, or defend the Company's
      ownership of and rights in such Intellectual Property. The rights and remedies
      of this Section 8.3 are in addition to any rights and remedies available under
      applicable law.

    

     

    Article
      9. Non-Solicitation
      / Non-Hiring of Employees

     

    The
      Executive agrees that during the Executive’s employment with the Company and for
      a period of two (2) years following the last day of the Executive’s employment,
      the Executive shall not, directly or indirectly, solicit or induce, or attempt
      to solicit or induce, any employee of the Company to leave the Company for
      any
      reason whatsoever or hire any individual employed by the Company. For purposes
      of this Article 9, employee shall mean any individual employed by the
      Company within the three (3) month period prior to, and including, the last
      day
      of the Executive’s employment.

     

    Article
      10. Confidentiality

     

    10.1 Protected
      Information.
      The
      Executive understands and agrees that any information, data and trade secrets
      about the Company and its suppliers and distributors are the property of the
      Company and are essential to the protection of the Company’s goodwill and to the
      maintenance of the Company’s competitive position and accordingly should be kept
      secret. For purposes of this Agreement, “Protected
      Information”
means
      trade secrets, confidential and proprietary business information of or about
      the
      Company, and any other information of the Company, including, but not limited
      to, Intellectual Property, customer lists (including potential customers),
      sources of supply, processes, plans, materials, pricing information, internal
      memoranda, marketing plans, promotional plans, internal policies, research,
      purchasing, accounting and financial information, computer programs, hardware,
      software, and products and services that 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.

     

    
      
        
        

      

      
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    10.2 Covenant.
      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 and that Protected Information has been and will be developed at
      substantial cost and effort to the Company. The Executive agrees to hold in
      strict confidence and safeguard any Protected Information, gained by the
      Executive in any manner or from any source during the Executive’s employment.
      The Executive shall not, without the prior written consent of the Company,
      at
      any time, directly or indirectly, divulge, furnish, use, disclose 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 with the Company), either during the Executive’s employment with the
      Company or subsequent to the last day of the Executive’s employment, any
      Protected Information, or cause any such information of the Company to enter
      the
      public domain.

     

    10.3 Nonexclusivity.
      Nothing
      contained in this Article 10 is intended to reduce in any way protection
      available to the Company pursuant to the Uniform Trade Secrets Act as adopted
      in
      Virginia or any other state or other applicable laws that prohibit the misuse
      or
      disclosure of confidential or proprietary information.

     

    Article
      11. Change
      in Control; Sale of Assets

     

    11.1 Purpose.
      The
      Company recognizes that the possibility of a Change in Control or Asset Sale
      exists, and the uncertainty and questions that it may raise among management
      may
      result in the departure or distraction of management personnel to the detriment
      of the Company. Accordingly, the purpose of this Article 11 is to encourage
      the Executive to continue employment after a Change in Control or Asset Sale
      by
      providing reasonable employment security to the Executive and to recognize
      the
      prior service of the Executive in the event of a termination of employment
      under
      certain circumstances after a Change in Control or Asset Sale. This
      Article 11 shall not become effective, and the Company shall have no
      obligation hereunder, if the employment of the Executive with the Company
      terminates before a Change in Control or Asset Sale.

     

    11.2 Definitions.

     

    (a) “Change
      in Control”
of
      the
      Company means the occurrence of either of the following events: (i) a third
      person, including a “group” as defined in Section 13(d)(3) of the Securities
      Exchange Act of 1934, as amended, becomes, or obtains the right to become,
      the
      beneficial owner of Company securities having twenty percent (20%) or more
      of
      the combined voting power of the then outstanding securities of the Company
      that
      may be cast for the election of directors to the Board of the Company (other
      than as a result of an issuance of securities initiated by the Company in the
      ordinary course of business); or (ii) as the result of, or in connection
      with, any cash tender or exchange offer, merger or other business combination,
      sale of assets or contested election, or any combination of the foregoing
      transactions, the persons who were directors of the Company before such
      transactions shall cease to constitute a majority of the board or of the board
      of directors of any successor to the Company.

     

    (b) “Asset
      Sale”
shall
      mean a sale of all or substantially all of the assets of the Company in a single
      transaction or a series of related transactions.

     

    
      
        
        

      

      
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    11.3 Long-Term
      Incentive Compensation.
      The
      terms and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences to the Executive upon the occurrence of a Change
      in
      Control or an Asset Sale or upon a termination of the Executive’s employment
      thereafter.

     

    11.4 Continued
      Employment Following Change in Control or an Asset Sale.
      If a
      Change in Control or an Asset Sale occurs and the Executive is employed by
      the
      Company on the date the Change in Control or Asset Sale occurs (the
“Change
      in Control Date”),
      the
      period beginning on the Change in Control Date and ending on the second (2nd)
      anniversary of such date shall be the “Change
      in Control Employment Period.”

     

    11.5 Termination
      of Employment During Change in Control Employment Period.
      The
      Executive will be entitled to the compensation and benefits described in this
      Section 11.5 if, during the Change in Control Employment Period,
      (a) the Company terminates his employment for any reason other than for
      Cause or due to Disability, or (b) the Executive voluntarily terminates his
      employment with the Company for Good Reason. The compensation and benefits
      described in this Section 11.5 are in lieu of, and not in addition to, any
      compensation and benefits provided to the Executive pursuant to
      Sections 7.5 and 7.7 herein and any amounts otherwise payable under any
      severance plan or agreement covering senior officers of the Company. Upon such
      a
      termination of employment, the Executive shall receive the following payments
      and benefits:

     

    (a) The
      Executive shall be entitled to his Accrued Obligations and a Pro Rata Target
      Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and (ii) and
      the
      Pro Rata Target Bonus shall be paid to the Executive in a lump sum cash payment
      within ten (10) days after the Date of Termination or as soon thereafter as
      may
      be practicable. The Accrued Obligations provided under Section 7.2(b)(iii)
      and
      (iv) shall be paid in accordance with the terms of the plan under which they
      are
      due.

     

    (b) The
      Company shall pay to the Executive an amount equal to 2.99 times the Executive’s
      Final Compensation. For purposes of this Agreement, “Final
      Compensation”
means
      the Base Salary in effect at the Date of Termination, plus the higher Annual
      Bonus paid or payable for the two (2) most recently completed fiscal years.
      This
      payment will be paid to the Executive in a lump sum cash payment not later
      than
      the forty-fifth (45th) day following the Date of Termination.

     

    (c) The
      Executive’s participation in the Company’s health, dental, and vision plans will
      end on the last day of the month in which the Date of Termination occurs. The
      Executive may elect to continue coverage under the health, dental and/or vision
      plans for himself and his eligible dependents in accordance with the terms
      and
      procedures of COBRA. If the Executive elects COBRA coverage, the Executive
      shall
      be responsible for remitting the COBRA premium to the Company (or to a COBRA
      administrator designated by the Company) in accordance with the terms of the
      health, dental and vision plans and applicable COBRA requirements. If the
      Executive elects COBRA coverage, the Company shall reimburse the Executive
      for a
      portion of the cost of such coverage until the end of the COBRA
      coverage

     

    
      
        
        

      

      
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    period,
      up to a maximum period of eighteen (18) months. The amount of the Company’s
      reimbursement shall be equal to the sum of (1) the amount the Company would
      have
      otherwise paid for such coverage if the Executive had remained an active
      employee of the Company, and (2) the COBRA administration fee. If the Executive
      does not elect COBRA coverage, the Company shall have no obligation to the
      Executive with respect to health, dental and vision benefits following the
      Date
      of Termination.

     

    (d) The
      Company shall provide the Executive with outplacement services not to exceed
      a
      cost of $25,000.00.

     

    11.6 Death,
      Disability or Retirement Termination During Change In Control Employment
      Period.
      If the
      Executive’s employment ends by reason of Retirement, the Executive’s death, or
      as a result of Disability during the Change in Control Employment Period, this
      Agreement will terminate without any further obligation on the part of the
      Company under this Agreement other than:

     

    (a) The
      Executive (or his beneficiary or his estate in the event of his death) will
      be
      entitled to the payment of the Executive’s Accrued Obligations and a Pro Rata
      Target Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and
      (ii)
      and the Pro Rata Target Bonus shall be paid in a lump sum cash payment within
      ten (10) days after the Date of Termination or as soon thereafter as may be
      practicable. The Accrued Obligations provided under Section 7.2(b)(iii) and
      (iv)
      shall be paid in accordance with the terms of the plan under which they are
      due;
      and

     

    (b) The
      terms
      and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 11.6.

     

    11.7 Termination
      for Cause and Termination Other Than For Good Reason Following a Change in
      Control.

     

    (a) If
      the
      Executive’s employment is terminated for Cause during the Change in Control
      Employment Period, this Agreement will terminate without further obligation
      to
      the Executive other than the payment to the Executive of his accrued and unpaid
      Base Salary through the Date of Termination, as well as any deferred
      compensation and other employee welfare and retirement benefits to which the
      Executive is entitled on the Date of Termination in accordance with the terms
      of
      the applicable plan or plans under which they are due. The terms and conditions
      of the awards and agreements applicable to the Executive’s outstanding stock
      options, stock grants, stock appreciation rights, performance-based grants,
      and
      all other forms of long-term incentive compensation, regardless of whether
      such
      compensation is equity or cash based, will govern the consequences of the
      termination of the Executive’s employment under this Section
      11.7(a).

     

    
      
        
        

      

      
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    (b) If
      the
      Executive terminates employment during the Change in Control Employment Period
      other than for Good Reason, this Agreement will terminate without further
      obligation to the Executive other than:

     

    (i) The
      Executive (or his beneficiary or his estate in the event of his death) will
      be
      entitled to the payment of the Executive’s Accrued Obligations. The Accrued
      Obligations provided under Section 7.2(b)(i) and (ii) shall be paid in a lump
      sum cash payment within ten (10) days after the Date of Termination or as soon
      thereafter as may be practicable. The Accrued Obligations provided under Section
      7.2(b)(iii) and (iv) shall be paid in accordance with the terms of the plan
      under which they are due; and

     

    (ii) 
      The
      terms and conditions of the awards and agreements applicable to the Executive’s
      outstanding stock options, stock grants, stock appreciation rights,
      performance-based grants, and all other forms of long-term incentive
      compensation, regardless of whether such compensation is equity or cash based,
      will govern the consequences of the termination of the Executive’s employment
      under this Section 11.7(b).

     

    11.8 Conditions
      on Company Obligations.
      All
      payments and benefits made or provided pursuant to Article 11 are subject to
      the
      Executive’s compliance with the provisions of Section 7.8. After payment of
      all amounts and benefits under this Article 11, the Company thereafter shall
      have no further obligation under this Agreement.

     

    Article
      12. Assignment

     

    12.1 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,
      or
      control of all or substantially all, of the assets or the business of the
      Company. Except as provided herein, the Company may not otherwise assign this
      Agreement.

     

    12.2 Assignment
      by the Executive.
      The
      services to be provided by the Executive to the Company hereunder are personal
      to the Company 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.

     

    Article
      13. Dispute
      Resolution

     

    Except
      for actions initiated by the Company to enjoin a breach by, or to recover
      damages from, the Executive related to violation of any of the restrictive
      covenants in Articles 8, 9 or 10 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    of
      this
      Agreement, and except for actions initiated by the Company or the Executive
      with
      respect to declaratory judgments related to the restrictive covenants in
      Articles 8, 9 or 10 of this Agreement, which the Company or the Executive may
      bring in an appropriate court of law or equity, any disagreement between the
      Executive and the Company concerning anything covered by this Agreement or
      concerning other terms or conditions of the Executive’s employment or the
      termination of the Executive’s employment will be settled by final and binding
      arbitration pursuant to the Company’s Dispute Resolution Rules and Procedures.
      The CarMax 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
      the
      Executive and the Company and may be enforced in a court of appropriate
      jurisdiction. Responsibility for all arbitration costs, including legal fees,
      shall be in accordance with the Dispute Resolution Rules and
      Procedures.

     

    Article
      14. Litigation
      By Third Parties

     

    All
      litigation or inquiries by third parties (including, but not limited to, those
      by the Company’s shareholders or by government agencies) arising out of or in
      connection with the Executive’s performance under this Agreement, against either
      the Company or the Executive or both, shall be jointly defended or opposed
      by
      the parties hereto to support this Agreement. The Company shall appoint legal
      counsel for the parties and shall bear the costs, reasonable legal fees and
      expenses related to such litigation or inquiry.

     

    Article
      15. Indemnity;
      Limitation of Liability

     

    As
      an
      officer of the Company, the Executive shall be entitled to indemnity and
      limitation of liability as provided pursuant to the Company’s Articles of
      Incorporation, bylaws and any other governing document, as the same shall be
      amended from time to time.

     

    Article
      16. Notice

     

    Any
      notices, requests, demands, or other communications provided for by this
      Agreement shall be in writing, and given by delivery in person or by registered
      or certified mail, postage prepaid (in which case notice will be deemed to
      have
      been given on the third day after mailing) or by overnight delivery by a
      reliable overnight courier service (in which case notice will be deemed to
      have
      been given on the day after delivery to such courier service). Notices to the
      Executive shall be directed to the last address he has filed in writing with
      the
      Company. Notices to the Company shall be directed to the Secretary of the
      Company, with a copy directed to the Chairman of the Board of the
      Company.

     

    Article
      17. Miscellaneous

     

    17.1 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 and severance agreements entered into
      by
      and between the Company, and the Executive, and all amendments thereto, in
      their
      entirety.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    17.2 Return
      of Materials.
      Upon
      the termination of the Executive’s employment with the Company, however such
      termination is effected, the Executive shall promptly deliver to the Company
      all
      property (including Intellectual Property), records, materials, documents,
      and
      copies of documents concerning the Executive’s business and/or its customers
      (hereinafter collectively “Company
      Materials”)
      which
      the Executive has in his possession or under his control at the time of
      termination of his employment. The Executive further agrees not to take or
      extract any portion of Company Materials in written, computer, electronic or
      any
      other reproducible form without the prior written consent of the
      Board.

     

    17.3 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.

     

    17.4 Severability.
      It is
      the intention of the parties that the provisions of the restrictive covenants
      herein shall be enforceable to the fullest extent permissible under the
      applicable law. If any clause or provision of this Agreement is held to be
      illegal, invalid, or unenforceable under present or future laws effective during
      the Term hereof, then the remainder of this Agreement shall not be affected
      thereby, and in lieu of each clause or provision of this Agreement that is
      illegal, invalid or unenforceable, there shall be added, as a part of this
      Agreement, a clause or provision as similar in terms to such illegal, invalid
      or
      unenforceable clause or provision as may be possible and as may be legal, valid
      and enforceable.

     

    17.5 Section
      409A.
      Notwithstanding any other provision of this Agreement, (i) to the extent
      applicable, payment
      of compensation under this Agreement will be administered in accordance with
      the
      requirements of Code Section 409A, including, without limitation, the
      postponement for six (6) months of any one or more payments of such compensation
      to the Executive, and (ii) if either the Company or the Executive determines
      that any provision of this Agreement may cause compensation payable to the
      Executive to be classified as income under Code Section 409A(a) or (b) and
      thereby results in tax penalties to the Executive, the Company or the Executive,
      as the case may be, shall notify the other party and the parties will jointly
      determine if and to what extent the Agreement must be amended to comply with
      Code Section 409A.

     

    17.6 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.

     

    17.7 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.

     

    17.8 Restrictive
      Covenants of the Essence.
      The
      restrictive covenants of the Executive set forth herein are of the essence
      of
      this Agreement, and they shall be construed as independent of any other
      provision in this Agreement; the existence of any claim or cause of action
      of
      the Executive against the Company, whether predicated on this Agreement or
      not,
      shall not constitute a defense to the enforcement by the Company of the
      restrictive covenants contained herein. The Company shall at all times maintain
      the right to seek enforcement of these

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    provisions
      whether or not the Company has previously refrained from seeking enforcement
      of
      any such provision as to the Executive or any other individual who has signed
      an
      agreement with similar provisions. Notwithstanding any provision contained
      within this Agreement, the obligations of the Executive under Articles 8, 9,
      10,
      13 and 17 of this Agreement shall continue after the termination of this
      Agreement and the Executive’s employment and shall be binding on the Executive’s
      heirs, executors, legal representatives and assigns.

     

    17.9 Beneficiaries.
      The
      Executive may designate one (1) or more persons or entities as the primary
      or
      contingent beneficiaries of any amounts to be received under this Agreement.
      Such designation must be in the form of a signed writing acceptable to the
      Company’s chief legal officer. The Executive may make or change such designation
      at any time.

     

    17.10 Full
      Settlement.
      Except
      as set forth in this Agreement, the Company’s obligation to make the payments
      provided for in this Agreement and otherwise to perform its obligations
      hereunder shall not be affected by any circumstances, including without
      limitation, set-off, counterclaim, recoupment, defense or other claim, right
      or
      action which the Company may have against the Executive or others, except to
      the
      extent any amounts are due the Company or its subsidiaries or affiliates
      pursuant to a judgment against the Executive. In no event shall the Executive
      be
      obligated to seek other employment in mitigation of the amounts payable to
      the
      Executive under any of the provisions of this Agreement, nor shall the amount
      of
      any payment hereunder be reduced by any compensation earned by the Executive
      as
      a result of employment by another employer; provided, that continued health,
      dental and vision benefit plan participation pursuant to Section 7.5(b)(ii)
      or Section 11.5(c) herein shall be reduced to the extent that the Executive
      becomes eligible to such benefits from a subsequent employer.

     

    17.11 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.

     

    17.12 Resignations.
      Upon
      the termination of the Executive’s employment, however such termination is
      effected, he shall be deemed to have resigned as of the date of such termination
      all offices and directorships he may have held with the Company and all
      subsidiaries.

     

    Article
      18. 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.

     

    [Signature
      Page Follows]

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Executive and the Company have executed this Agreement
      as
      of the Effective Date.

    
      
        	 	 
	 	 
                
                CARMAX,
                  INC.:

                 

                 

              
	 	By: /s/
                Thomas J.
                Folliard                                   
                
	 	Thomas
                J. Folliard
	 	
                President
                  and

                Chief
                  Executive Officer

              
	 	
                 

                 

              
	 	
                EXECUTIVE/EMPLOYEE:

                 

                 

              
	 	
                /s/
                  Keith D.
                  Browning                                          
                  

              
	 	Keith
                D. Browning
	 	
                Executive
                  Vice President and 

                Chief
                  Financial Officer

              

      

       

    

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    [Form
      of
      Release]

    

    AGREEMENT
      AND GENERAL RELEASE

    

    CarMax,
      Inc., its affiliates, subsidiaries, divisions, successors and assigns in such
      capacity, and the current, future and former employees, officers, directors,
      trustees and agents thereof (collectively referred to throughout this Agreement
      as the “Company”)
      and
      _______________________ (“Executive”),
      his
      heirs, executors, administrators, successors and assigns (together with
      Executive, collectively referred to throughout this Agreement and General
      Release as “Employee”)
      agree:

     

    1. Last
      Day of Employment.
      The
      Executive’s last day of employment with the Company is ____________, 20__. In
      addition, effective as of ____________, 20__, the Executive resigns from the
      Executive’s position as Executive Vice President and Chief Financial Officer of
      the Company, and will not be eligible for any benefits or compensation after
      ____________, 20__, other than as specifically provided in Articles 7 or 11,
      as
      applicable, of the Severance Agreement between the Company and the Executive
      dated as of __________ __, 200_ (“Severance
      Agreement”)
      and
      the Executive’s continued right to indemnification and directors and officers
      liability insurance. In addition, effective as of ____________, 20__, the
      Executive resigns from all offices, directorships, trusteeships, committee
      memberships and fiduciary capacities held with, or on behalf of, the Company
      or
      any benefit plans of the Company. These resignations will become irrevocable
      as
      set forth in Section 3 below.

     

    2. Consideration.
      The
      parties acknowledge that this Agreement and General Release is being executed
      in
      accordance with Article 7 or Article 11 of the Severance Agreement, as
      applicable, and that this Agreement and General Release is a condition to the
      receipt by Employee of all payments and benefits thereunder.

     

    3. Revocation.
      The
      Executive may revoke this Agreement and General Release for a period of seven
      (7) calendar days following the day the Executive executes this Agreement and
      General Release. Any revocation within this period must be submitted, in
      writing, to the Company and state, “I hereby revoke my acceptance of our
      Agreement and General Release.” The revocation must be personally delivered to
      the Company’s _______________, or his/her designee, or mailed to the Company,
      _______________________________ and postmarked within seven (7) calendar days
      of
      execution of this Agreement and General Release. This Agreement and General
      Release shall not become effective or enforceable until the revocation period
      has expired. If the last day of the revocation period is a Saturday, Sunday,
      or
      legal holiday in Virginia, then the revocation period shall not expire until
      the
      next following day which is not a Saturday, Sunday, or legal
      holiday.

     

    4. General
      Release of Claims.
      Employee knowingly and voluntarily releases and forever discharges the Company
      from any and all claims, rights, causes of action, demands, fees costs,
      expenses, including attorneys’ fees, and liabilities of any kind whatsoever,
      whether known or unknown, against the Company, that Employee has, has ever
      had
      or may have as of the date of

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    
      
        execution
          of this Agreement and General Release, including, but not limited to, any
          alleged violation of:

         

        
          	
                  ●

                   

                	
                  The
                    Age Discrimination in Employment Act of 1967, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Older Workers Benefit Protection Act of 1990;

                   

                
	
                  ●

                   

                	
                  The
                    National Labor Relations Act, as amended;

                   

                
	
                  ●

                   

                	
                  Title
                    VII of the Civil Rights Act of 1964, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Civil Rights Act of 1991;

                   

                
	
                  ●

                   

                	
                  Sections
                    1981 through 1988 of Title 42 of the United States Code, as
                    amended;

                   

                
	
                  ●

                   

                	
                  The
                    Employee Retirement Income Security Act of 1974, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Immigration Reform and Control Act, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Americans with Disabilities Act of 1990, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Worker Adjustment and Retraining Notification Act, as
                    amended;

                   

                
	
                  ●

                   

                	
                  The
                    Occupational Safety and Health Act, as amended;

                   

                
	
                  ●

                   

                	
                  The
                    Family and Medical Leave Act of 1993;

                   

                
	
                  ●

                   

                	
                  All
                    other federal, state or local civil or human rights laws, whistleblower
                    laws, or any other local, state or federal law, regulations and
                    ordinances; 

                   

                
	
                  ●

                   

                	
                  All
                    public policy, contract, tort, or common laws; and

                   

                
	
                  ●

                   

                	
                  All
                    allegations for costs, fees, and other expenses including attorneys’ fees
                    incurred in these matters.

                   

                

        

        Notwithstanding
          anything herein to the contrary, the sole matters to which the Agreement
          and
          General Release do not apply are: (i) Employee’s rights of indemnification and
          directors and officers liability insurance coverage to which the Executive
          was
          entitled immediately prior to __________ __, 20__ with regard to the Executive’s
          service as an officer and director of the Company (including, without
          limitation, under Article 15 of the Severance Agreement); (ii) Employee’s rights
          under any tax-qualified pension plan or claims for accrued vested benefits
          under
          any other employee benefit plan, policy or arrangement maintained by the
          Company
          or under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
          amended;
          (iii) Employee’s rights under Article 7 or Article 11 of the Severance
          Agreement, as the case may be; and (iv) Employee’s rights as a stockholder of
          the Company.

         

        5. No
          Claims Permitted.
          Except
          with respect to the filing of a petition for a declaratory judgment as
          permitted
          in Article 13 of the Severance Agreement, Employee waives the Executive’s right
          to file any charge or complaint against the Company arising out of
          the

      

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    Executive’s
      employment with or separation from the Company before any federal, state or
      local court or any state or local administrative agency, except where such
      waivers are prohibited by law. This Agreement and General Release, however,
      does
      not prevent Employee from filing a charge with the Equal Employment Opportunity
      Commission, any other federal government agency, or any government agency
      concerning claims of discrimination, although Employee waives the Executive’s
      right to recover any damages or other relief in any claim or suit brought by
      or
      through the Equal Employment Opportunity Commission or any other state or local
      agency on behalf of Employee under the Age Discrimination in Employment Act,
      Title VII of the Civil Rights Act of 1964 as amended, the Americans with
      Disabilities Act, or any other federal or state discrimination law, except
      where
      such waivers are prohibited by law.

     

    6. Affirmations.
      Employee affirms the Executive has not filed, has not caused to be filed, and
      is
      not presently a party to, any claim, complaint, or action against the Company
      in
      any forum or form. Employee further affirms that the Executive has been paid
      or
      has received all compensation, wages, bonuses, commissions, and/or benefits
      to
      which the Executive may be entitled and no other compensation, wages, bonuses,
      commissions and benefits are due to the Executive, except as provided in Article
      7 or Article 11 of the Severance Agreement, as applicable. The Employee also
      affirms the Executive has no known workplace injuries.

     

    7. Cooperation;
      Return of Property.
      Employee agrees to reasonably cooperate with the Company and its counsel in
      connection with any investigation, administrative proceeding, arbitration or
      litigation relating to any matter that occurred during the Executive’s
      employment in which the Executive was involved or of which the Executive has
      knowledge. The Company will reimburse the Employee for any reasonable
      out-of-pocket travel, delivery or similar expenses incurred in providing such
      service to the Company. Employee represents that the Executive has returned
      to
      the Company all property belonging to the Company, including but not limited
      to
      any leased vehicle, laptop, cell phone, keys, access cards, phone cards and
      credit cards.

     

    8. Governing
      Law and Interpretation.
      This
      Agreement and General Release shall be governed and construed in
      accordance with the laws of the Commonwealth of Virginia, without reference
      to
      Virginia’s choice of law statutes or decisions. In the event Employee or the
      Company breaches any provision of this Agreement and General Release, Employee
      and the Company acknowledge that either
      may institute an action to specifically enforce any term or terms of this
      Agreement and General Release pursuant to the dispute resolution provisions
      of
      Article 13 of the Severance Agreement. Should any provision of this Agreement
      and General Release be declared illegal or unenforceable by any court of
      competent jurisdiction and should the provision be incapable of being modified
      to be enforceable, such provision shall immediately become null and void,
      leaving the remainder of this Agreement and General Release in full force and
      effect. Nothing herein, however, shall operate to void or nullify any
      enforceable general release language contained in this Agreement and General
      Release.

     

    9. No
      Admission of Wrongdoing.
      Employee agrees neither this Agreement and General Release nor the furnishing
      of
      the consideration for this Agreement and General Release shall be deemed or
      construed at any time for any purpose as an admission by the Company of any
      liability or unlawful conduct of any kind.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    10. Amendment.
      This
      Agreement and General Release may not be modified, altered or changed except
      upon express written consent of both parties wherein specific reference is
      made
      to this Agreement and General Release.

     

    11. Entire
      Agreement.
      This
      Agreement and General Release sets forth the entire agreement between the
      parties hereto and fully supersedes any prior agreements or understandings
      between the parties; provided, however, that notwithstanding anything in this
      Agreement and General Release, the provisions in the Severance Agreement which
      are intended to survive termination of the Severance Agreement, including but
      not limited to those contained in Articles 8, 9 and 10, 13 and in Section 17.2
      thereof, shall survive and continue in full force and effect. Employee
      acknowledges the Executive has not relied on any representations, promises,
      or
      agreements of any kind made to the Executive in connection with the Executive’s
      decision to accept this Agreement and General Release.

     

    EMPLOYEE
      HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO
      REVIEW AND CONSIDER THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED
      IN
      WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND
      GENERAL RELEASE. 

     

    EMPLOYEE
      AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND
      GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE
      (21) CALENDAR DAY CONSIDERATION PERIOD. 

     

    HAVING
      ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES
      SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN THE
      SEVERANCE AGREEMENT, TO WHICH EMPLOYEE WOULD NOT OTHERWISE BE ENTITLED, EMPLOYEE
      FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT
      AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE
      HAS OR MIGHT HAVE AGAINST THE COMPANY, AS OF THE DATE OF EXECUTION OF THIS
      AGREEMENT.

     

    [Signature
      Page Follows]

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
      Agreement and General Release as of the date set forth below:

     

     

    
      	 	 
	 	 CARMAX,
              INC.:
               

               

            
	 	By: 
              ______________________________ 
	 	Name:_____________________________ 
	 	Title:______________________________ 
	 	
               

               

            
	 	
              EXECUTIVE/EMPLOYEE:

               

               

            
	 	
              Name:
                _____________________________

               

               

            

    

    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    27Exhibit 10.2, Michael K. Dolan

    
      
        

CARMAX,
        INC.

       

      SEVERANCE
        AGREEMENT

       

      FOR

       

      EXECUTIVE
        OFFICER

       

      THIS
        SEVERANCE AGREEMENT (“Agreement”)
        is
        made, entered into and is effective this February 14, 2007 (“Effective
        Date”)
        by and
        between CarMax, Inc., a Virginia corporation, and its affiliated companies
        (collectively, the “Company”),
        and
        Michael K. Dolan (the “Executive”).

       

      WHEREAS,
        the Company recognizes the Executive’s intimate knowledge and experience in the
        business of the Company, and has appointed the Executive as Executive Vice
        President and Chief Administrative Officer (“CAO”);

       

      WHEREAS,
        the Executive will develop and come in contact with the Company’s proprietary
        and confidential information that is not readily available to the public,
        and
        that is of great importance to the Company and that is treated by the Company
        as
        secret and confidential information;

       

      WHEREAS,
        the Company and the Executive desire to agree upon the terms, conditions,
        compensation and benefits of the Executive’s future employment;

       

      WHEREAS,
        upon execution of this Agreement, any prior employment or severance agreement
        between the Executive and the Company, whether oral or written, will have
        no
        force and effect with respect to the terms and conditions of Executive’s
        employment and will be replaced and superseded by the terms of this Agreement;
        and

       

      NOW,
        THEREFORE, in consideration of the Executive’s recent appointment as the
        Company’s Executive Vice President and CAO, and of the premises, 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. Employment
        Acceptance

       

      The
        Company hereby agrees to employ the Executive and the Executive hereby accepts
        employment as Executive Vice President and CAO of the Company, in accordance
        with the terms and conditions set forth herein.

       

      Article
        2. Position
        and Responsibilities

       

      During
        the term of the Executive’s employment with the Company (“Term”),
        the
        Executive agrees to serve as Executive Vice President and CAO of the Company.
        In
        his capacity as Executive Vice President and CAO of the Company, the Executive
        shall report directly to the President and Chief Executive Officer
        (“CEO”)
        and
        shall have the duties and responsibilities of Executive Vice President and
        CAO
        of the Company and such other duties and responsibilities not inconsistent
        with
        the performance of his duties as Executive Vice President and CAO of
        the

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Company.
        The Executive’s principal work location shall be the corporate headquarters of
        the Company located in the Richmond, Virginia metropolitan area.

       

      Article
        3. Standard
        of Care

       

      3.1 General.
        During
        the Term, the Executive shall devote his full business time, attention,
        knowledge and skills to the Company’s business and interests. The Executive
        covenants, warrants, and represents that he shall:

       

      
        	 	
                (a)

              	
                Devote
                  his best efforts and talents to the performance of his employment
                  obligations and duties for the
                  Company;

              

      

       

      
        	 	
                (b)

              	
                Exercise
                  the highest degree of loyalty and the highest standards of conduct
                  in the
                  performance of his duties;

              

      

       

      
        	 	
                (c)

              	
                Observe
                  and conform to the Company’s bylaws and other rules, regulations, and
                  policies established or issued by the Company;
                  and

              

      

       

      
        	 	
                (d)

              	
                Refrain
                  from taking advantage, for himself or others, of any corporate
                  opportunities of the Company.

              

      

       

      3.2 Forfeiture
        and Return of Incentive Compensation.
        It is
        the Company’s expectation that the Executive will discharge his duties hereunder
        with utmost attention to the standards set forth in Section 3.1. In the event
        the CarMax, Inc. Board of Directors (“Board”)
        determines that the Executive has engaged in conduct constituting Cause (as
        defined in Section 7.6(a)), which conduct directly results in the filing
        of a
        restatement of any financial statement previously filed with the Securities
        and
        Exchange Commission (or other governmental agency) under the Federal securities
        laws, the Executive shall immediately (a) forfeit all unpaid Affected
        Compensation (as defined below) and (b) upon demand by the Company repay
        to the
        Company all Affected Compensation received or realized by the Executive together
        with interest at the prime rate in effect from time to time as reported in
        The
        Wall Street Journal; provided, however, that the forfeiture and repayment
        provisions of this Section 3.2 shall not apply to conduct constituting “gross
        negligence” under Section 7.6(a)(ii) or to conduct under Section 7.6(a)(iii),
        Section 7.6(a)(vii) or Section 7.6(a)(viii). “Affected
        Compensation”
means
        any payment to the Executive, any award or vesting of any equity or other
        short-term or long-term incentive compensation to the Executive, or any
        before-tax proceeds of a sale of previously awarded equity compensation realized
        by the Executive, in any instance in which (i) the payment, award or vesting
        of
        the foregoing was expressly conditioned upon the achievement of certain
        financial results that were subsequently the subject of such restatement,
        and
        (ii) a lesser amount of payment, award or vesting or before-tax proceeds
        of a
        sale of any of the foregoing would have been made to, vested in or otherwise
        earned or realized by, the Executive based upon such restated financial
        results.

       

      Article
        4. Other
        Activities

       

      During
        the Term, the Executive shall comply with the provisions of Article 8 herein.
        Furthermore, during his employment, the Executive agrees to obtain the CEO’s
        written consent before entering into any other occupation, even if dissimilar
        to
        that of the Company, including,

       

      
        
          
          

        

        
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      without
        limitation, service as a member of a board of directors of one or more other
        companies. Such consent may be granted or withheld, in the CEO’s sole
        discretion. The Executive may participate on charitable and civic boards,
        and in
        educational, professional, community and industry affairs, without CEO consent,
        provided that such participation does not interfere with the performance
        of his
        duties.

       

      Article
        5. Compensation
        and Benefits

       

      As
        remuneration for all services to be rendered by the Executive during the
        Term,
        and as consideration for complying with the covenants herein during and after
        the termination or expiration of the Term, the Company shall pay and provide
        to
        the Executive the following compensation and benefits:

       

      5.1 Base
        Salary.
        During
        the Term, the Company shall pay the Executive a base salary (“Base
        Salary”)
        in an
        amount established and approved by the Compensation and Personnel Committee
        of
        the Board (“Compensation
        Committee”);
        provided, however, that such Base Salary shall be established at a rate of
        not
        less than $530,145.00 per year, except as otherwise provided in this Section
        5.1
        below. 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 Compensation Committee shall review and adjust the Base
        Salary
        as it deems appropriate at least annually during the Term; provided, however,
        that the Executive’s Base Salary shall not be decreased without the Executive’s
        written consent, other than across-the-board reductions applicable to all
        senior
        officers of the Company. If adjusted, the Base Salary shall be so adjusted
        for
        all purposes of this Agreement.

       

      5.2 Annual
        Bonus.
        In
        addition to his Base Salary, the Executive shall be entitled to participate
        in
        the Company’s Annual Performance-Based Bonus Plan (“Annual
        Bonus Plan”),
        as
        such Annual Bonus Plan may exist from time to time during the Term. Under
        the
        Company’s Annual Bonus Plan, the Executive has the opportunity to earn an annual
        bonus with respect to any fiscal year of the Company (“Annual
        Bonus”).
        The
        Annual Bonus will be determined by a formula approved each fiscal year by
        the
        Compensation Committee (the “Annual
        Bonus Formula”)
        in its
        sole discretion. At the beginning of each fiscal year, the Compensation
        Committee will authorize, in accordance with the Annual Bonus Plan, the
        Executive’s Annual Bonus for that fiscal year, which shall be targeted at sixty
        percent (60%) of the Executive’s Base Salary for that fiscal year (“Target
        Bonus Rate”).
        The
        specified Target Bonus Rate may be increased from time to time by the
        Compensation Committee but shall not be decreased without the Executive’s
        written consent. Depending upon the actual financial performance recorded
        by the
        Company for any given fiscal year, the Executive’s Annual Bonus may be increased
        or decreased solely in accordance with the Annual Bonus Formula and otherwise
        in
        accordance with the Annual Bonus Plan.

       

      5.3 Long-Term
        Incentives.
        During
        the Term, the Executive shall be eligible to participate in the Company’s 2002
        Stock Incentive Plan, as amended and restated (or any successor incentive
        plan
        thereto), to the extent that the Compensation Committee, in its sole discretion,
        determines is appropriate. The Compensation Committee will make its
        determination consistent with the methodology used by the Company for
        compensating the Executive’s peer executives. Additionally, the Executive shall
        be entitled to participate in all other incentive

       

      
        
          
          

        

        
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      plans,
        whether equity-based or cash-based, applicable generally to his peer executives
        within the Company.

       

      5.4 Retirement
        and Deferred Compensation Plans.
        During
        the Term, the Executive shall be entitled to participate in all tax-qualified
        and nonqualified retirement and deferred compensation plans, policies and
        programs applicable generally to his peer executives within the Company,
        subject
        to the eligibility and participation requirements of such plans, policies
        and
        programs.

       

      5.5 Welfare
        Benefit Plans.
        During
        the Term, the Executive and the Executive’s family will be entitled to
        participate in all welfare benefit plans, policies and programs, including
        those
        defined under Section 3(1) of the Employee Retirement Income Security Act
        of
        1974, as amended, provided by the Company to his peer executives within the
        Company, subject to the eligibility requirements and other provisions of
        such
        plans, policies and programs.

       

      5.6 Fringe
        Benefits.
        During
        the Term, the Executive will be entitled to fringe benefits in accordance
        with
        the plans, policies and programs of the Company in effect for his peer
        executives within the Company.

       

      5.7 Vacation.
        During
        the Term, the Executive will be entitled to participate in the Company’s Time
        Away paid time off program for salaried employees (or successor paid time
        off
        program) as that program is administered by the Company and as it may be
        amended
        or modified from time to time; provided, in all events, the Executive will
        be
        entitled to not less than 30 days of paid vacation each fiscal
        year.

       

      5.8 Right
        to Change Plans.
        By
        reason of Sections 5.4, 5.5, 5.6 and 5.7 herein, the Company shall not be
        obligated to institute, maintain, or refrain from changing, amending, or
        discontinuing any benefit plan, policy or program, so long as such changes
        are
        similarly applicable to the Executive’s peer executives.

       

      Article
        6. Expenses

       

      During
        the Term, the Company shall pay or reimburse the Executive for all ordinary
        and
        necessary expenses, in a reasonable amount, that 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 Company finds that the Executive’s
        participation is in the best interests of the Company. The payment or
        reimbursement of expenses shall be subject to such rules concerning
        documentation of expenses and the type or magnitude of such expenses as the
        Compensation Committee or the Company, as applicable, may establish from
        time to
        time.

       

      Article
        7. Employment
        Termination

       

      7.1 Date
        of Termination.
        The
        Company or the Executive may terminate the Executive’s employment in accordance
        with the provisions of this Article 7. The “Date
        of Termination”
of
        the
        Executive’s employment shall be as determined in Sections 7.2, 7.3, 7.4, 7.5,
        7.6, and 7.7 below.

       

      
        
          
          

        

        
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      7.2 Termination
        Due to Retirement or Death.

       

      (a) In
        the
        event the Executive’s employment ends by reason of Retirement (as defined
        below), the Date of Termination shall be the date set forth in a notice by
        the
        Executive, which notice shall be given to the Company at least ninety (90)
        days
        prior to such date. In the event of the Executive’s death, the Date of
        Termination shall be the date of death. In either case, the Executive’s benefits
        shall be determined in accordance with the Company’s retirement, survivor’s
        benefits, insurance and other applicable plans and programs of the Company
        then
        in effect. For the purposes of this Agreement, “Retirement”
shall
        mean the Executive’s voluntary termination of employment at a time during which
        he is eligible for “Normal Retirement” or “Early Retirement” as such terms are
        defined in the CarMax, Inc. Pension Plan as of the Effective Date.

       

      (b) Upon
        the
        Date of Termination due to the Executive’s Retirement or death, the Company
        shall be obligated to pay the Executive or, if applicable, the Executive’s
        beneficiary or estate, the following “Accrued
        Obligations”:
        (i) any Base Salary that was accrued but not yet paid as of the Date of
        Termination; (ii) the unpaid Annual Bonus, if any, earned with respect to
        the fiscal year preceding the Date of Termination; (iii) any compensation
        previously deferred by the Executive by his own election; and (iv) all
        other employee welfare and retirement benefits to which the Executive is
        entitled on the Date of Termination in accordance with the terms of the
        applicable plan or plans. The Accrued Obligations payable under the above
        clauses (i) and (ii) shall be paid to the Executive in a lump sum cash payment
        within ten (10) days after the Date of Termination or as soon thereafter
        as may
        be practicable. The Accrued Obligations payable under clauses (iii) and (iv)
        shall be paid in accordance with the terms of the plan under which they are
        due.

       

      (c) Upon
        the
        Date of Termination due to the Executive’s Retirement, the Executive shall be
        entitled to a pro rata share of the Annual Bonus based on actual performance
        for
        the fiscal year in which the Date of Termination occurs (such proration to
        be
        based on the fraction, the numerator of which is the number of full completed
        days of employment during the fiscal year through the Date of Termination,
        and
        the denominator of which is 365) (“Pro
        Rata Actual Bonus”).
        The
        Pro Rata Actual Bonus, if any, shall be paid to the Executive when annual
        bonuses are paid to other senior officers of the Company for such fiscal
        year.

       

      (d) Upon
        the
        Date of Termination due to the Executive’s death, the Executive’s beneficiary or
        estate shall be entitled to a pro rata share of the Annual Bonus at the Target
        Bonus Rate for the fiscal year in which the Date of Termination occurs (such
        proration to be based on the fraction, the numerator of which is the number
        of
        full completed days of employment during the fiscal year through the Date
        of
        Termination, and the denominator of which is 365) (“Pro
        Rata Target Bonus”).
        The
        Pro Rata Target Bonus shall be paid to the Executive’s beneficiary or estate in
        a lump sum cash payment within ten (10) days after the date of the Executive’s
        death or as soon as practicable thereafter.

       

      (e) Upon
        the
        termination of the Executive’s employment due to his Retirement or death, the
        terms and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such

      
        
          
          

        

        
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      compensation
        is equity or cash based, will govern the consequences of the termination
        of the
        Executive’s employment under this Section 7.2.

      

      7.3 Termination
        Due to Disability.

      

      (a) The
        Company shall have the right to terminate the Executive’s employment for his
        Disability (as defined below). The Date of Termination due to Disability
        shall
        be the date set forth in a notice to the Executive, which notice shall be
        given
        by the Company at least thirty (30) days prior to such date. For the purposes
        of
        this Agreement, “Disability”
or
        “Disabled”
shall
        mean any physical or mental illness or injury that causes the Executive (i)
        to
        be considered “disabled” for the purpose of eligibility to receive
        income-replacement benefits in accordance with the Company’s long-term
        disability plan in which the Executive is a participant, or (ii) if the
        Executive does not participate in any such plan, to be unable to substantially
        perform the duties of his position for 180 days in the aggregate during any
        period of twelve (12) consecutive months and a physician selected by the
        Company
        (and reasonably acceptable to the Executive) shall have furnished to the
        Company
        certification that the return of the Executive to his normal duties is
        impossible or improbable. The Board shall review the foregoing information
        and
        shall determine in good faith if the Executive is Disabled. The Board’s decision
        shall be binding on the Executive. Notwithstanding the foregoing, if the
        Executive incurs a physical or mental illness or injury that does not constitute
        a Disability, such physical or mental illness or injury shall not constitute
        a
        failure by the Executive to perform his duties hereunder and shall not be
        deemed
        a breach or default of this Agreement by the Executive.

      

      (b) Upon
        the
        Date of Termination due to the Executive’s Disability, the Executive shall be
        entitled to his Accrued Obligations and a Pro Rata Target Bonus. The Accrued
        Obligations provided under Section 7.2(b)(i) and (ii) and the Pro Rata Target
        Bonus shall be paid to the Executive in a lump sum cash payment within ten
        (10)
        days after the Date of Termination or as soon as practicable thereafter.
        The
        Accrued Obligations provided under Section 7.2(b)(iii) and (iv) shall be
        paid in accordance with the terms of the plan under which they are
        due.

       

      (c) Upon
        the
        termination of the Executive’s employment due to his Disability, the terms and
        conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the consequences of the termination of the Executive’s employment
        under this Section 7.3.

       

      7.4 Voluntary
        Termination by the Executive Without Good Reason.
        The
        Executive may terminate his employment at any time without Good Reason (as
        defined in Section 7.7) by
        giving
        the Company at least forty five (45) days notice, which notice shall state
        the
        Date of Termination. The Company reserves the right to require the Executive
        not
        to work during the notice period but shall pay the Executive his accrued
        and
        unpaid Base Salary, at the rate then in effect provided in Section 5.1
        herein, through the Date of Termination (but not to exceed forty-five (45)
        days), and such payment shall be made to the Executive within ten (10) days
        after the Date of Termination or as soon thereafter as may be practicable.
        The
        Company shall also pay the Executive any compensation previously deferred
        by the
        Executive by his own election and all

       

      
        
          
          

        

        
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      other
        employee welfare and retirement benefits to which the Executive is entitled
        on
        the Date of Termination, all in accordance with the terms of the applicable
        plan
        or plans under which they are due. In the event of the Executive’s voluntary
        termination of employment without Good Reason, the terms and conditions of
        the
        awards and agreements applicable to the Executive’s outstanding stock options,
        stock grants, stock appreciation rights, performance-based grants, and all
        other
        forms of long-term incentive compensation, regardless of whether such
        compensation is equity or cash based, will govern the consequences of the
        termination of the Executive’s employment under this Section 7.4.

       

      7.5 Involuntary
        Termination by the Company Without Cause.
        Upon
        notice to the Executive, the Company may terminate the Executive’s employment at
        any time for any reason other than for Cause and other than due to Disability
        (“Involuntary
        Termination Without Cause”).
        The
        Date of Termination shall be the date stated in such notice.

       

      (a) In
        the
        event of the Executive’s Involuntary Termination Without Cause, which occurs
        prior to the occurrence of a Change in Control or an Asset Sale (each as
        defined
        in Section 11.2) or after the conclusion of the Change in Control Employment
        Period (defined at Section 11.4), the Executive shall receive the following
        payments and benefits:

       

      (i) The
        Company shall pay to the Executive, in equal monthly installments over the
        twenty-four (24) month period following the Date of Termination, an amount
        equal
        to the product of two (2) times the sum of (x) the Executive’s Base Salary and
        (y) the amount of the last Annual Bonus for the Executive as determined by
        the
        Compensation Committee in
        accordance with the Annual Bonus Plan, regardless of the Date of
        Termination.

       

      (ii) The
        Executive’s participation in the Company’s health, dental, and vision plans will
        end on the last day of the month in which the Date of Termination occurs.
        The
        Executive may elect to continue coverage under the health, dental and/or
        vision
        plans for himself and his eligible dependents in accordance with the terms
        and
        procedures of the Consolidated Omnibus Budget Reconciliation Act of 1985,
        as
        amended (“COBRA”).
        If
        the Executive elects COBRA coverage, the Executive shall be responsible for
        remitting the COBRA premium to the Company (or to a COBRA administrator
        designated by the Company) in accordance with the terms of the Company’s health,
        dental and vision plans and applicable COBRA requirements. If the Executive
        elects COBRA coverage, the Company shall reimburse the Executive for a portion
        of the cost of such coverage until the end of the COBRA coverage period,
        up to a
        maximum period of eighteen (18) months. The amount of the Company’s
        reimbursement shall be equal to the sum of (1) the amount the Company would
        have
        otherwise paid for such coverage if the Executive had remained an active
        employee of the Company, and (2) the COBRA administration fee. If the Executive
        does not elect COBRA coverage, the Company shall have no obligation to the
        Executive with respect to health, dental and vision benefits following the
        Date
        of Termination.

       

      (iii) The
        Company shall provide the Executive with outplacement services not to exceed
        a
        cost of $25,000.00.

       

      
        
          
          

        

        
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      (iv) The
        Executive shall be entitled to his Accrued Obligations and a Pro Rata Actual
        Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and (ii)
        shall be paid to the Executive in a lump sum cash payment within ten (10)
        days
        after the Date of Termination or as soon thereafter as may be practicable.
        The
        Accrued Obligations provided under Section 7.2(b)(iii) and (iv) shall be
        paid in
        accordance with the terms of the plan under which they are due. The Pro Rata
        Actual Bonus, if any, shall be paid to the Executive when annual bonuses
        are
        paid to other senior officers of the Company for such fiscal year.

       

      (v) The
        terms
        and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the consequences of the termination of the Executive’s employment
        under this Section 7.5.

       

      (b) Amounts
        payable under this Section 7.5 shall be in lieu of any amounts otherwise
        payable
        under any severance plan or agreement covering senior officers of the
        Company.

       

      (c) In
        the
        event that the Company terminates the Executive’s employment at any time for any
        reason (i) other than for Cause and other than due to Disability and (ii)
        after
        the Executive has attained age 65 of higher, such termination shall not be
        deemed an Involuntary Termination Without Cause.

       

      7.6 Termination
        For Cause.
        The
        Company may terminate the Executive’s employment at any time for Cause, without
        notice or liability for doing so. The Date of Termination shall be the date
        that
        Cause is determined as provided below.

       

      (a) For
        purposes of this Agreement, “Cause”
means
        a
        good faith determination by the Board that one (1) or more of the following
        has
        occurred:

       

      (i) The
        Executive has committed a material breach of this Agreement, which breach
        was
        not cured or waived by the Company, within ten (10) days of receipt by the
        Executive of notice from the Company specifying the breach;

       

      (ii) The
        Executive has committed gross negligence in the performance of his duties
        hereunder, intentionally fails to perform his duties, engages in intentional
        misconduct or intentionally refuses to abide by or comply with the directives
        of
        the Board, the CEO or the Company’s policies and procedures, as applicable,
        which actions continued for a period of ten (10) days after receipt by the
        Executive of notice of the need to cure or cease;

       

      (iii) The
        Executive has willfully and continuously failed to perform substantially
        his
        duties (other than any such failure resulting from the Executive’s Disability or
        incapacity due to bodily injury or physical or mental illness), after a written
        demand for substantial performance is delivered to the Executive by the Board
        or
        the CEO that specifically identifies the manner in which the Board or the
        CEO
        believes that the Executive has not substantially performed his
        duties;

       

      
        
          
          

        

        
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      (iv) The
        Executive has willfully violated a material requirement of the Company’s code of
        conduct or breached his fiduciary duty to the Company;

       

      (v) The
        Executive’s conviction of (or a plea of guilty or nolo contendere to) a felony
        or any crime involving moral turpitude, dishonesty, fraud, theft or financial
        impropriety;

       

      (vi) The
        Executive has engaged in illegal conduct, embezzlement or fraud with respect
        to
        the business or affairs of the Company;

       

      (vii) The
        Executive has failed to disclose to the Board a conflict of interest of which
        the Executive knew or with reasonable diligence should have known in connection
        with any transaction entered into on behalf of the Company; or

       

      (viii) The
        Executive has failed to agree to a modification of the Agreement pursuant
        to
        Section 17.3 hereof when the purpose of the modification is to comply with
        applicable federal, state or local laws or regulations, or when such
        modification is designed to further define the restrictions of Article 8
        or
        otherwise enhance the enforcement of Article 8 without increasing the duration
        or scope of the Article 8 restrictions.

       

      No
        act or
        failure to act on the Executive’s part will be considered “willful” if conducted
        by the Executive in good faith and with a reasonable belief that the Executive’s
        act or omission was in, and not opposed to, the best interests of the
        Company.

       

      (b) If
        the
        Executive’s employment is terminated for Cause during the Term, this Agreement
        will terminate without further obligation of the Company to the Executive
        other
        than (i) the payment to the Executive of his accrued and unpaid Base Salary
        through the Date of Termination, and (ii) the payment of any
        compensation previously deferred by the Executive by his own election and
        all
        other employee welfare and retirement benefits to which the Executive is
        entitled on the Date of Termination, all in accordance with the terms of
        the
        applicable plan or plans under which they are due. In the event of the
        Executive’s termination of employment for Cause, the terms and conditions of the
        awards and agreements applicable to the Executive’s outstanding stock options,
        stock grants, stock appreciation rights, performance-based grants, and all
        other
        forms of long-term incentive compensation, regardless of whether such
        compensation is equity or cash based, will govern the consequences of the
        termination of the Executive’s employment under this Section 7.6.

       

      7.7 Termination
        for Good Reason.
        At any
        time during the Term, the Executive may terminate his employment for Good
        Reason
        (as defined below) upon notice to the Company. Such notice shall state the
        intended Date of Termination and shall be given to the Company at least
        forty-five (45) days prior to such date and shall set forth in detail the
        facts
        and circumstances claimed to provide grounds for such termination. The Company
        shall have the right to cure the facts and circumstances giving rise to such
        grounds for termination for Good Reason. If the Company does not so cure
        within
        such forty-five (45) day notice period, then the Executive’s employment shall
        terminate on the Date of Termination stated in the notice.

       

      
        
          
          

        

        
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      (a) For
        purposes of this Agreement, “Good
        Reason”
shall
        mean, without the Executive’s express written consent, the occurrence of any one
        (1) or more of the following:

       

      (i) A
        reduction in the Executive’s Base Salary (other than, prior to the occurrence of
        a Change in Control or Asset Sale, a reduction across-the-board affecting
        all
        senior officers in substantially like percentages of their base salaries)
        or
        Target Bonus Rate;

       

      (ii) A
        material reduction in the Executive’s duties or authority as Executive Vice
        President and CAO of the Company, or any removal of the Executive from or
        any
        failure to reappoint or reelect the Executive to such positions (except in
        connection with the termination of the Executive’s employment for Cause or
        Disability, as a result of the Executive’s death or Retirement or by the
        Executive other than for Good Reason);

       

      (iii) The
        Executive being required to relocate to a principal place of employment more
        than 35 miles from the Company’s headquarters except, prior to the occurrence of
        a Change in Control or Asset Sale, in connection with the relocation of
        substantially all senior Company executives pursuant to the relocation of
        the
        Company’s headquarters;

       

      (iv) If
        applicable, the failure by the shareholders of the Company to elect or to
        reelect the Executive as a director of the Board or the removal of the Executive
        from such position; or

       

      (v) The
        failure of the Company to obtain an agreement from any successor to all or
        substantially all of the assets or business of the Company to assume and
        agree
        to perform this Agreement within fifteen (15) days after a merger,
        consolidation, sale or similar transaction.

       

      (b) In
        the
        event of the Executive’s voluntary termination of employment for Good Reason,
        which occurs prior to the occurrence of a Change in Control or an Asset Sale
        or
        after the conclusion of the Change in Control Employment Period, the Executive
        shall receive the following payments and benefits:

       

      (i) The
        Company shall pay to the Executive, in equal monthly installments over the
        twenty-four (24) month period following the Date of Termination, an amount
        equal
        to the product of two (2) times the sum of (x) the Executive’s Base Salary and
        (y) the amount of the last Annual Bonus for the Executive as determined by
        the
        Compensation Committee in
        accordance with the Annual Bonus Plan, regardless of the Date of
        Termination.

       

      (ii) The
        Executive’s participation in the Company’s health, dental, and vision plans will
        end on the last day of the month in which the Date of Termination occurs.
        The
        Executive may elect to continue coverage under the health, dental and/or
        vision
        plans for himself and his eligible dependents in accordance with the terms
        and
        procedures of the Consolidated Omnibus Budget Reconciliation Act of 1985,
        as
        amended (“COBRA”).
        If
        the Executive elects COBRA coverage, the Executive shall be

       

      
        
          
          

        

        
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      responsible
        for remitting the COBRA premium to the Company (or to a COBRA administrator
        designated by the Company) in accordance with the terms of the Company’s health,
        dental and vision plans and applicable COBRA requirements. If the Executive
        elects COBRA coverage, the Company shall reimburse the Executive for a portion
        of the cost of such coverage until the end of the COBRA coverage period,
        up to a
        maximum period of eighteen (18) months. The amount of the Company’s
        reimbursement shall be equal to the sum of (1) the amount the Company would
        have
        otherwise paid for such coverage if the Executive had remained an active
        employee of the Company, and (2) the COBRA administration fee. If the Executive
        does not elect COBRA coverage, the Company shall have no obligation to the
        Executive with respect to health, dental and vision benefits following the
        Date
        of Termination.

       

      (iii) The
        Company shall provide the Executive with outplacement services not to exceed
        a
        cost of $25,000.00.

       

      (iv) The
        Executive shall be entitled to his Accrued Obligations and his Target Bonus
        for
        the fiscal year in which the Date of Termination occurs. The Target Bonus
        and
        the Accrued Obligations provided under Section 7.2(b)(i) and (ii) shall be
        paid to the Executive in a lump sum cash payment within ten (10) days after
        the
        Date of Termination or as soon thereafter as may be practicable. The Accrued
        Obligations provided under Section 7.2(b)(iii) and (iv) shall be paid in
        accordance with the terms of the plan under which they are due.

       

      (v) The
        terms
        and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the consequences of the termination of the Executive’s employment
        under this Section 7.7.

       

      (c) The
        Executive’s right to terminate his employment for Good Reason shall not be
        affected by the Executive’s incapacity due to physical or mental illness not
        constituting a Disability.
        Amounts
        payable under this Section 7.7 shall be in lieu of any amounts otherwise
        payable
        under any severance plan or agreement covering senior officers of the
        Company.

       

      7.8 Conditions
        on Company Obligations.
        All
        payments and benefits made or provided pursuant to Article 7 are subject
        to the
        Executive’s:

       

      (a) Compliance
        with the provisions of Article 8, Article 9, Article 10 and Section 17.2
        hereof;

       

      (b) Except
        with respect to payment of the Executive’s Accrued Obligations, delivery to the
        Company of an executed Agreement and General Release, which shall be
        substantially in the form attached hereto as Exhibit A (with such changes
        or
        additions as needed under then applicable law to give effect to its intent
        and
        purpose) (“Agreement
        and General Release”)
        within
        twenty-one (21) days of presentation thereof by the Company to the Executive.
        Notwithstanding the due date of any post-employment termination payments
        hereunder, any amounts due following a termination of employment under this
        Agreement shall not be due until

       

      
        
          
          

        

        
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      after
        the
        expiration of any revocation period applicable to the Agreement and General
        Release without the Executive having revoked such Agreement and General Release;
        and

       

      (c) Compliance
        with Section 409A of the Internal Revenue Code of 1986, as amended
        (“Code”).

       

      After
        payment of all amounts and benefits under this Article 7, the Company thereafter
        shall have no further obligation under this Agreement.

       

      Article
        8. Covenant
        Not to Compete; Intellectual Property

       

      8.1 Acknowledgement
        and Agreement Regarding Covenant Not to Compete.

       

      (a) The
        Executive acknowledges and agrees as follows: (i) the Company operates a
        unique
        business concept in the United States regarding the sale and servicing of
        new
        and used vehicles in a highly competitive industry; (ii) the Company’s
        competitors have attempted to duplicate the Company’s business concept in
        various markets throughout the United States, including markets where the
        Company does not currently have a business location, and may continue to
        do so;
        and (iii) in connection with the Executive’s employment, he will receive access
        to, and training regarding, the Company’s business concept and will,
        accordingly, acquire commercially valuable knowledge of, and insight into,
        the
        Company’s operations and its proprietary and confidential information, any of
        which if made available to the Company’s competitors could place the Company at
        an unfair competitive disadvantage.

       

      (b) The
        Executive and the Company acknowledge that the Executive’s services are of a
        special, extraordinary, and intellectual character that gives the Executive
        unique value, that the Company’s business is highly competitive, and that
        violation of the Covenant Not to Compete (as defined in Section 8.2 below)
        provided herein would cause immediate, immeasurable, and irreparable harm,
        loss,
        and damage to the Company not adequately compensable by a monetary award.
        In the
        event of any breach or threatened breach by the Executive of the Covenant
        Not to
        Compete, 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 for Cause.

       

      (c) The
        Executive and the Company have examined in detail the Covenant Not to Compete
        contained herein and agree that the restraint imposed upon the Executive
        is
        reasonable in light of the legitimate business interests of the Company and
        is
        not unduly harsh upon the Executive’s ability to earn a livelihood. If any
        provision of the Covenant Not to Compete relating to the time period, geographic
        area or scope of restricted activities shall be declared by a court of competent
        jurisdiction to exceed the maximum time period, geographic area or scope
        of
        activities, as applicable, that such court deems reasonable and enforceable,
        such time period, geographic area or scope of activities shall be deemed
        to be,
        and thereafter shall become, the maximum time period or largest geographic
        area
        or scope of activities that such

       

      
        
          
          

        

        
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      court
        deems reasonable and enforceable and this Agreement shall automatically be
        considered to have been amended and revised to reflect such
        determination.

       

      8.2 Covenant
        Not to Compete.
        In
        order to protect the Company’s legitimate business interests from competitors
        and to protect the Company’s critical interest in its proprietary and
        confidential information, and in return for the consideration set forth in
        this
        Agreement, the Executive covenants and agrees to the following “Covenant
        Not to Compete”:

       

      (a) During
        the Executive’s employment and for a period of two (2) years following the last
        day of the Executive’s employment, the Executive will not, directly or
        indirectly, compete with the Company by acting “in a competitive capacity” (as
        defined in Section 8.2(c)), whether as an individual, partner, or joint
        venturer, for, or on behalf of, any person or entity operating or developing
        the
        same or similar business as the Company within any Metropolitan Statistical
        Area
        (as defined under applicable regulations of the Census Bureau of the U.S.
        Department of Commerce) in which the Company has a business location or in
        which
        the Company is engaged in real estate site selection. Entities (including
        the
        affiliates of such entities) engaged, or which could become engaged, in the
        same
        or similar business as the Company include, but are not limited to: Sonic
        Automotive, Inc.; Lithia Motors, Inc.; Group 1 Automotive, Inc.; UnitedAuto
        Group; AutoNation, Inc.; Penske Motors; Asbury Automotive Group; Price One;
        Hendrick Automotive Group; CarMotive; Saturn Group; Hertz; Enterprise; and
        any
        automotive retail operation affiliated with, owned, operated, or controlled
        by
        Home Depot, Inc., Lowe’s Companies, Inc., Target Corporation, Wal-Mart Stores,
        Inc., Sears, Roebuck and Company, Carrefour, Costco Wholesale Corporation,
        Royal
        Dutch/Shell Group of Companies, Exxon Mobil Corporation, ChevronTexaco Corp.,
        or
        Gulliver International Co., Ltd.

       

      (b) A
        business will not be considered to be in competition with the Company for
        purposes of this Section 8.2 if the business, or operating unit of the
        business, in which the Executive will be employed does not have, nor is expected
        to have within the two (2) years following the Executive’s termination of
        employment, annual gross revenues of at least $5,000,000 derived from the
        sale
        and servicing of new or used vehicles.

       

      (c) Acting
        “in
        a
        competitive capacity”
shall
        mean providing to a person or entity covered by this Section 8.2, directly
        or indirectly, the same or similar services as the Executive provided to
        the
        Company during his employment, and/or engaging in any business or segment
        of
        business about which the Executive first acquired proprietary or confidential
        information during the course of his employment with the Company.

       

      (d) Notwithstanding
        the foregoing, nothing herein shall be deemed to prevent or limit the right
        of
        the Executive to invest in the capital stock or other securities (not exceeding
        two percent (2%) of such outstanding capital stock or securities) of
        any
        corporation whose stock or securities are regularly traded on any public
        exchange, nor shall anything contained herein be deemed to prevent the Executive
        from investing in real estate for his own benefit, so long as such investment
        (i) is not related to or in support of any entity engaged in a business
        similar to that of the Company and (ii) does not detract from the
        Executive’s performance of his duties and obligations hereunder.

       

      
        
          
          

        

        
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      8.3 Intellectual
        Property.
        The
        Executive understands and acknowledges that any writing, invention, design,
        system, process, development or discovery (collectively, "Intellectual
        Property")
        conceived, developed created or made by the Executive, alone or with others,
        both during the Term of this Agreement and in the course of the Executive’s
        employment prior to the Term, is the sole and exclusive property of the Company
        to the extent such Intellectual Property is related to the Executive's duties
        or
        is within the scope of the Company's actual or anticipated business. The
        Executive agrees to assign to the Company any and all of his right, title,
        and
        interest in and to such Intellectual Property, including, but not limited
        to,
        patent, trademark and other rights. The Executive further agrees to cooperate
        fully with the Company to secure, maintain, enforce, or defend the Company's
        ownership of and rights in such Intellectual Property. The rights and remedies
        of this Section 8.3 are in addition to any rights and remedies available
        under
        applicable law.

       

      

       

      Article
        9. Non-Solicitation
        / Non-Hiring of Employees

       

      The
        Executive agrees that during the Executive’s employment with the Company and for
        a period of two (2) years following the last day of the Executive’s employment,
        the Executive shall not, directly or indirectly, solicit or induce, or attempt
        to solicit or induce, any employee of the Company to leave the Company for
        any
        reason whatsoever or hire any individual employed by the Company. For purposes
        of this Article 9, employee shall mean any individual employed by the
        Company within the three (3) month period prior to, and including, the last
        day
        of the Executive’s employment.

       

      Article
        10. Confidentiality

       

      10.1 Protected
        Information.
        The
        Executive understands and agrees that any information, data and trade secrets
        about the Company and its suppliers and distributors are the property of
        the
        Company and are essential to the protection of the Company’s goodwill and to the
        maintenance of the Company’s competitive position and accordingly should be kept
        secret. For purposes of this Agreement, “Protected
        Information”
means
        trade secrets, confidential and proprietary business information of or about
        the
        Company, and any other information of the Company, including, but not limited
        to, Intellectual Property, customer lists (including potential customers),
        sources of supply, processes, plans, materials, pricing information, internal
        memoranda, marketing plans, promotional plans, internal policies, research,
        purchasing, accounting and financial information, computer programs, hardware,
        software, and products and services that 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.

       

      10.2 Covenant.
        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 and that Protected Information has been and will be developed
        at
        substantial cost and effort to the Company. The Executive agrees to hold
        in
        strict confidence and safeguard any Protected Information, gained by the
        Executive in any manner or from any source

       

      
        
          
          

        

        
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      during
        the Executive’s employment. The Executive shall not, without the prior written
        consent of the Company, at any time, directly or indirectly, divulge, furnish,
        use, disclose 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 with the Company), either during the Executive’s
        employment with the Company or subsequent to the last day of the Executive’s
        employment, any Protected Information, or cause any such information of the
        Company to enter the public domain.

       

      10.3 Nonexclusivity.
        Nothing
        contained in this Article 10 is intended to reduce in any way protection
        available to the Company pursuant to the Uniform Trade Secrets Act as adopted
        in
        Virginia or any other state or other applicable laws that prohibit the misuse
        or
        disclosure of confidential or proprietary information.

       

      Article
        11. Change
        in Control; Sale of Assets

       

      11.1 Purpose.
        The
        Company recognizes that the possibility of a Change in Control or Asset Sale
        exists, and the uncertainty and questions that it may raise among management
        may
        result in the departure or distraction of management personnel to the detriment
        of the Company. Accordingly, the purpose of this Article 11 is to encourage
        the Executive to continue employment after a Change in Control or Asset Sale
        by
        providing reasonable employment security to the Executive and to recognize
        the
        prior service of the Executive in the event of a termination of employment
        under
        certain circumstances after a Change in Control or Asset Sale. This
        Article 11 shall not become effective, and the Company shall have no
        obligation hereunder, if the employment of the Executive with the Company
        terminates before a Change in Control or Asset Sale.

       

      11.2 Definitions.

       

      (a) “Change
        in Control”
of
        the
        Company means the occurrence of either of the following events: (i) a third
        person, including a “group” as defined in Section 13(d)(3) of the Securities
        Exchange Act of 1934, as amended, becomes, or obtains the right to become,
        the
        beneficial owner of Company securities having twenty percent (20%) or more
        of
        the combined voting power of the then outstanding securities of the Company
        that
        may be cast for the election of directors to the Board of the Company (other
        than as a result of an issuance of securities initiated by the Company in
        the
        ordinary course of business); or (ii) as the result of, or in connection
        with, any cash tender or exchange offer, merger or other business combination,
        sale of assets or contested election, or any combination of the foregoing
        transactions, the persons who were directors of the Company before such
        transactions shall cease to constitute a majority of the board or of the
        board
        of directors of any successor to the Company.

       

      (b) “Asset
        Sale”
shall
        mean a sale of all or substantially all of the assets of the Company in a
        single
        transaction or a series of related transactions.

       

      11.3 Long-Term
        Incentive Compensation.
        The
        terms and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the 

       

      
        
          
          

        

        
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      consequences
        to the Executive upon the occurrence of a Change in Control or an Asset Sale
        or
        upon a termination of the Executive’s employment thereafter.

       

      11.4 Continued
        Employment Following Change in Control or an Asset Sale.
        If a
        Change in Control or an Asset Sale occurs and the Executive is employed by
        the
        Company on the date the Change in Control or Asset Sale occurs (the
“Change
        in Control Date”),
        the
        period beginning on the Change in Control Date and ending on the second (2nd)
        anniversary of such date shall be the “Change
        in Control Employment Period.”

       

      11.5 Termination
        of Employment During Change in Control Employment Period.
        The
        Executive will be entitled to the compensation and benefits described in
        this
        Section 11.5 if, during the Change in Control Employment Period,
        (a) the Company terminates his employment for any reason other than for
        Cause or due to Disability, or (b) the Executive voluntarily terminates his
        employment with the Company for Good Reason. The compensation and benefits
        described in this Section 11.5 are in lieu of, and not in addition to, any
        compensation and benefits provided to the Executive pursuant to
        Sections 7.5 and 7.7 herein and any amounts otherwise payable under any
        severance plan or agreement covering senior officers of the Company. Upon
        such a
        termination of employment, the Executive shall receive the following payments
        and benefits:

       

      (a) The
        Executive shall be entitled to his Accrued Obligations and a Pro Rata Target
        Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and (ii)
        and the
        Pro Rata Target Bonus shall be paid to the Executive in a lump sum cash payment
        within ten (10) days after the Date of Termination or as soon thereafter
        as may
        be practicable. The Accrued Obligations provided under Section 7.2(b)(iii)
        and
        (iv) shall be paid in accordance with the terms of the plan under which they
        are
        due.

       

      (b) The
        Company shall pay to the Executive an amount equal to 2.99 times the Executive’s
        Final Compensation. For purposes of this Agreement, “Final
        Compensation”
means
        the Base Salary in effect at the Date of Termination, plus the higher Annual
        Bonus paid or payable for the two (2) most recently completed fiscal years.
        This
        payment will be paid to the Executive in a lump sum cash payment not later
        than
        the forty-fifth (45th) day following the Date of Termination.

       

      (c) The
        Executive’s participation in the Company’s health, dental, and vision plans will
        end on the last day of the month in which the Date of Termination occurs.
        The
        Executive may elect to continue coverage under the health, dental and/or
        vision
        plans for himself and his eligible dependents in accordance with the terms
        and
        procedures of COBRA. If the Executive elects COBRA coverage, the Executive
        shall
        be responsible for remitting the COBRA premium to the Company (or to a COBRA
        administrator designated by the Company) in accordance with the terms of
        the
        health, dental and vision plans and applicable COBRA requirements. If the
        Executive elects COBRA coverage, the Company shall reimburse the Executive
        for a
        portion of the cost of such coverage until the end of the COBRA coverage
        period,
        up to a maximum period of eighteen (18) months. The amount of the Company’s
        reimbursement shall be equal to the sum of (1) the amount the Company would
        have
        otherwise paid for such coverage if the Executive had remained an active
        employee of the Company, and (2) the COBRA administration fee. If the Executive
        does not elect COBRA coverage, the

       

      
        
          
          

        

        
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      Company
        shall have no obligation to the Executive with respect to health, dental
        and
        vision benefits following the Date of Termination.

       

      (d) The
        Company shall provide the Executive with outplacement services not to exceed
        a
        cost of $25,000.00.

       

      11.6 Death,
        Disability or Retirement Termination During Change In Control Employment
        Period.
        If the
        Executive’s employment ends by reason of Retirement, the Executive’s death, or
        as a result of Disability during the Change in Control Employment Period,
        this
        Agreement will terminate without any further obligation on the part of the
        Company under this Agreement other than:

       

      (a) The
        Executive (or his beneficiary or his estate in the event of his death) will
        be
        entitled to the payment of the Executive’s Accrued Obligations and a Pro Rata
        Target Bonus. The Accrued Obligations provided under Section 7.2(b)(i) and
        (ii)
        and the Pro Rata Target Bonus shall be paid in a lump sum cash payment within
        ten (10) days after the Date of Termination or as soon thereafter as may
        be
        practicable. The Accrued Obligations provided under Section 7.2(b)(iii) and
        (iv)
        shall be paid in accordance with the terms of the plan under which they are
        due;
        and

       

      (b) The
        terms
        and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the consequences of the termination of the Executive’s employment
        under this Section 11.6.

       

      11.7 Termination
        for Cause and Termination Other Than For Good Reason Following a Change in
        Control.

       

      (a) If
        the
        Executive’s employment is terminated for Cause during the Change in Control
        Employment Period, this Agreement will terminate without further obligation
        to
        the Executive other than the payment to the Executive of his accrued and
        unpaid
        Base Salary through the Date of Termination, as well as any deferred
        compensation and other employee welfare and retirement benefits to which
        the
        Executive is entitled on the Date of Termination in accordance with the terms
        of
        the applicable plan or plans under which they are due. The terms and conditions
        of the awards and agreements applicable to the Executive’s outstanding stock
        options, stock grants, stock appreciation rights, performance-based grants,
        and
        all other forms of long-term incentive compensation, regardless of whether
        such
        compensation is equity or cash based, will govern the consequences of the
        termination of the Executive’s employment under this Section
        11.7(a).

       

      (b) If
        the
        Executive terminates employment during the Change in Control Employment Period
        other than for Good Reason, this Agreement will terminate without further
        obligation to the Executive other than:

       

      (i) The
        Executive (or his beneficiary or his estate in the event of his death) will
        be
        entitled to the payment of the Executive’s Accrued Obligations. The Accrued
        Obligations provided under Section 7.2(b)(i) and (ii) shall be paid in a
        lump
        sum

       

      
        
          
          

        

        
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      cash
        payment within ten (10) days after the Date of Termination or as soon thereafter
        as may be practicable. The Accrued Obligations provided under Section
        7.2(b)(iii) and (iv) shall be paid in accordance with the terms of the plan
        under which they are due; and

       

      (ii) 
        The
        terms and conditions of the awards and agreements applicable to the Executive’s
        outstanding stock options, stock grants, stock appreciation rights,
        performance-based grants, and all other forms of long-term incentive
        compensation, regardless of whether such compensation is equity or cash based,
        will govern the consequences of the termination of the Executive’s employment
        under this Section 11.7(b).

       

      11.8 Conditions
        on Company Obligations.
        All
        payments and benefits made or provided pursuant to Article 11 are subject
        to the
        Executive’s compliance with the provisions of Section 7.8. After payment of
        all amounts and benefits under this Article 11, the Company thereafter shall
        have no further obligation under this Agreement.

       

      Article
        12. Assignment

       

      12.1 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, or
        control of all or substantially all, of the assets or the business of the
        Company. Except as provided herein, the Company may not otherwise assign
        this
        Agreement.

       

      12.2 Assignment
        by the Executive.
        The
        services to be provided by the Executive to the Company hereunder are personal
        to the Company 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.

       

      Article
        13. Dispute
        Resolution

       

      Except
        for actions initiated by the Company to enjoin a breach by, or to recover
        damages from, the Executive related to violation of any of the restrictive
        covenants in Articles 8, 9 or 10 of this Agreement, and except for actions
        initiated by the Company or the Executive with respect to declaratory judgments
        related to the restrictive covenants in Articles 8, 9 or 10 of this Agreement,
        which the Company or the Executive may bring in an appropriate court of law
        or
        equity, any disagreement between the Executive and the Company concerning
        anything covered by this Agreement or concerning other terms or conditions
        of
        the Executive’s employment or the termination of the Executive’s employment will
        be settled by final and binding arbitration

       

      
        
          
          

        

        
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      pursuant
        to the Company’s Dispute Resolution Rules and Procedures. The CarMax 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 the Executive
        and
        the Company and may be enforced in a court of appropriate jurisdiction.
        Responsibility for all arbitration costs, including legal fees, shall be
        in
        accordance with the Dispute Resolution Rules and Procedures.

       

      Article
        14. Litigation
        By Third Parties

       

      All
        litigation or inquiries by third parties (including, but not limited to,
        those
        by the Company’s shareholders or by government agencies) arising out of or in
        connection with the Executive’s performance under this Agreement, against either
        the Company or the Executive or both, shall be jointly defended or opposed
        by
        the parties hereto to support this Agreement. The Company shall appoint legal
        counsel for the parties and shall bear the costs, reasonable legal fees and
        expenses related to such litigation or inquiry.

       

      Article
        15. Indemnity;
        Limitation of Liability

       

      As
        an
        officer of the Company, the Executive shall be entitled to indemnity and
        limitation of liability as provided pursuant to the Company’s Articles of
        Incorporation, bylaws and any other governing document, as the same shall
        be
        amended from time to time.

       

      Article
        16. Notice

       

      Any
        notices, requests, demands, or other communications provided for by this
        Agreement shall be in writing, and given by delivery in person or by registered
        or certified mail, postage prepaid (in which case notice will be deemed to
        have
        been given on the third day after mailing) or by overnight delivery by a
        reliable overnight courier service (in which case notice will be deemed to
        have
        been given on the day after delivery to such courier service). Notices to
        the
        Executive shall be directed to the last address he has filed in writing with
        the
        Company. Notices to the Company shall be directed to the Secretary of the
        Company, with a copy directed to the Chairman of the Board of the
        Company.

       

      Article
        17. Miscellaneous

       

      17.1 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 and severance agreements entered
        into by
        and between the Company, and the Executive, and all amendments thereto, in
        their
        entirety.

       

      17.2 Return
        of Materials.
        Upon
        the termination of the Executive’s employment with the Company, however such
        termination is effected, the Executive shall promptly deliver to the Company
        all
        property (including Intellectual Property), records, materials, documents,
        and
        copies of documents concerning the Executive’s business and/or its customers
        (hereinafter collectively “Company
        Materials”)
        which
        the Executive has in his possession or under his control at the time of
        termination of his employment. The Executive further agrees not to take or
        

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      extract
        any portion of Company Materials in written, computer, electronic or any
        other
        reproducible form without the prior written consent of the Board.

       

      17.3 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.

       

      17.4 Severability.
        It is
        the intention of the parties that the provisions of the restrictive covenants
        herein shall be enforceable to the fullest extent permissible under the
        applicable law. If any clause or provision of this Agreement is held to be
        illegal, invalid, or unenforceable under present or future laws effective
        during
        the Term hereof, then the remainder of this Agreement shall not be affected
        thereby, and in lieu of each clause or provision of this Agreement that is
        illegal, invalid or unenforceable, there shall be added, as a part of this
        Agreement, a clause or provision as similar in terms to such illegal, invalid
        or
        unenforceable clause or provision as may be possible and as may be legal,
        valid
        and enforceable.

       

      17.5 Section
        409A.
        Notwithstanding any other provision of this Agreement, (i) to the extent
        applicable, payment
        of compensation under this Agreement will be administered in accordance with
        the
        requirements of Code Section 409A, including, without limitation, the
        postponement for six (6) months of any one or more payments of such compensation
        to the Executive, and (ii) if either the Company or the Executive determines
        that any provision of this Agreement may cause compensation payable to the
        Executive to be classified as income under Code Section 409A(a) or (b) and
        thereby results in tax penalties to the Executive, the Company or the Executive,
        as the case may be, shall notify the other party and the parties will jointly
        determine if and to what extent the Agreement must be amended to comply with
        Code Section 409A.

       

      17.6 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.

       

      17.7 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.

       

      17.8 Restrictive
        Covenants of the Essence.
        The
        restrictive covenants of the Executive set forth herein are of the essence
        of
        this Agreement, and they shall be construed as independent of any other
        provision in this Agreement; the existence of any claim or cause of action
        of
        the Executive against the Company, whether predicated on this Agreement or
        not,
        shall not constitute a defense to the enforcement by the Company of the
        restrictive covenants contained herein. The Company shall at all times maintain
        the right to seek enforcement of these provisions whether or not the Company
        has
        previously refrained from seeking enforcement of any such provision as to
        the
        Executive or any other individual who has signed an agreement with similar
        provisions. Notwithstanding any provision contained within this Agreement,
        the
        obligations of the Executive under Articles 8, 9, 10, 13 and 17 of this
        Agreement shall continue after the termination of this Agreement and the
        Executive’s employment and shall be binding on the Executive’s heirs, executors,
        legal representatives and assigns.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      17.9 Beneficiaries.
        The
        Executive may designate one (1) or more persons or entities as the primary
        or
        contingent beneficiaries of any amounts to be received under this Agreement.
        Such designation must be in the form of a signed writing acceptable to the
        Company’s chief legal officer. The Executive may make or change such designation
        at any time.

       

      17.10 Full
        Settlement.
        Except
        as set forth in this Agreement, the Company’s obligation to make the payments
        provided for in this Agreement and otherwise to perform its obligations
        hereunder shall not be affected by any circumstances, including without
        limitation, set-off, counterclaim, recoupment, defense or other claim, right
        or
        action which the Company may have against the Executive or others, except
        to the
        extent any amounts are due the Company or its subsidiaries or affiliates
        pursuant to a judgment against the Executive. In no event shall the Executive
        be
        obligated to seek other employment in mitigation of the amounts payable to
        the
        Executive under any of the provisions of this Agreement, nor shall the amount
        of
        any payment hereunder be reduced by any compensation earned by the Executive
        as
        a result of employment by another employer; provided, that continued health,
        dental and vision benefit plan participation pursuant to Section 7.5(b)(ii)
        or Section 11.5(c) herein shall be reduced to the extent that the Executive
        becomes eligible to such benefits from a subsequent employer.

       

      17.11 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.

       

      17.12 Resignations.
        Upon
        the termination of the Executive’s employment, however such termination is
        effected, he shall be deemed to have resigned as of the date of such termination
        all offices and directorships he may have held with the Company and all
        subsidiaries.

       

      Article
        18. 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.

       

      [Signature
        Page Follows]

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Executive and the Company have executed this Agreement
        as
        of the Effective Date.

      
        
          	 	 
	 	 CARMAX,
                  INC.:
                   

                   

                
	 	By: /s/
                  Thomas J.
                  Folliard                                  
                  
	 	Thomas
                  J. Folliard
	 	
                  President
                    and

                  Chief
                    Executive Officer

                
	 	
                   

                   

                
	 	
                  EXECUTIVE/EMPLOYEE:

                   

                   

                
	 	
                  /s/
                    Michael K.
                    Dolan                                         
                    

                
	 	Michael
                  K. Dolan
	 	
                  Executive
                    Vice President and 

                  Chief Administrative
                    Officer

                

        

         

      

      

        
          
            
            

          

          
            22

            
              

            

          

          
            
            

          

        

      

      

      EXHIBIT
        A

      

      [Form
        of
        Release]

      

      AGREEMENT
        AND GENERAL RELEASE

      

      CarMax,
        Inc., its affiliates, subsidiaries, divisions, successors and assigns in
        such
        capacity, and the current, future and former employees, officers, directors,
        trustees and agents thereof (collectively referred to throughout this Agreement
        as the “Company”)
        and
        _______________________ (“Executive”),
        his
        heirs, executors, administrators, successors and assigns (together with
        Executive, collectively referred to throughout this Agreement and General
        Release as “Employee”)
        agree:

       

      1. Last
        Day of Employment.
        The
        Executive’s last day of employment with the Company is ____________, 20__. In
        addition, effective as of ____________, 20__, the Executive resigns from
        the
        Executive’s position as Executive Vice President and Chief Administrative
        Officer of the Company, and will not be eligible for any benefits or
        compensation after ____________, 20__, other than as specifically provided
        in
        Articles 7 or 11, as applicable, of the Severance Agreement between the Company
        and the Executive dated as of __________ __, 200_ (“Severance
        Agreement”)
        and
        the Executive’s continued right to indemnification and directors and officers
        liability insurance. In addition, effective as of ____________, 20__, the
        Executive resigns from all offices, directorships, trusteeships, committee
        memberships and fiduciary capacities held with, or on behalf of, the Company
        or
        any benefit plans of the Company. These resignations will become irrevocable
        as
        set forth in Section 3 below.

       

      2. Consideration.
        The
        parties acknowledge that this Agreement and General Release is being executed
        in
        accordance with Article 7 or Article 11 of the Severance Agreement, as
        applicable, and that this Agreement and General Release is a condition to
        the
        receipt by Employee of all payments and benefits thereunder.

       

      3. Revocation.
        The
        Executive may revoke this Agreement and General Release for a period of seven
        (7) calendar days following the day the Executive executes this Agreement
        and
        General Release. Any revocation within this period must be submitted, in
        writing, to the Company and state, “I hereby revoke my acceptance of our
        Agreement and General Release.” The revocation must be personally delivered to
        the Company’s _______________, or his/her designee, or mailed to the Company,
        _______________________________ and postmarked within seven (7) calendar
        days of
        execution of this Agreement and General Release. This Agreement and General
        Release shall not become effective or enforceable until the revocation period
        has expired. If the last day of the revocation period is a Saturday, Sunday,
        or
        legal holiday in Virginia, then the revocation period shall not expire until
        the
        next following day which is not a Saturday, Sunday, or legal
        holiday.

       

      4. General
        Release of Claims.
        Employee knowingly and voluntarily releases and forever discharges the Company
        from any and all claims, rights, causes of action, demands, fees costs,
        expenses, including attorneys’ fees, and liabilities of any kind whatsoever,
        whether known or unknown, against the Company, that Employee has, has ever
        had
        or may have as of the date of

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      execution
        of this Agreement and General Release, including, but not limited to, any
        alleged violation of:

       

      
        	
                ●

                 

              	
                The
                  Age Discrimination in Employment Act of 1967, as amended;

                 

              
	
                ●

                 

              	
                The
                  Older Workers Benefit Protection Act of 1990;

                 

              
	
                ●

                 

              	
                The
                  National Labor Relations Act, as amended;

                 

              
	
                ●

                 

              	
                Title
                  VII of the Civil Rights Act of 1964, as amended;

                 

              
	
                ●

                 

              	
                The
                  Civil Rights Act of 1991;

                 

              
	
                ●

                 

              	
                Sections
                  1981 through 1988 of Title 42 of the United States Code, as
                  amended;

                 

              
	
                ●

                 

              	
                The
                  Employee Retirement Income Security Act of 1974, as amended;

                 

              
	
                ●

                 

              	
                The
                  Immigration Reform and Control Act, as amended;

                 

              
	
                ●

                 

              	
                The
                  Americans with Disabilities Act of 1990, as amended;

                 

              
	
                ●

                 

              	
                The
                  Worker Adjustment and Retraining Notification Act, as
                  amended;

                 

              
	
                ●

                 

              	
                The
                  Occupational Safety and Health Act, as amended;

                 

              
	
                ●

                 

              	
                The
                  Family and Medical Leave Act of 1993;

                 

              
	
                ●

                 

              	
                All
                  other federal, state or local civil or human rights laws, whistleblower
                  laws, or any other local, state or federal law, regulations and
                  ordinances; 

                 

              
	
                ●

                 

              	
                All
                  public policy, contract, tort, or common laws; and

                 

              
	
                ●

                 

              	
                All
                  allegations for costs, fees, and other expenses including attorneys’ fees
                  incurred in these matters.

                 

              

      

      Notwithstanding
        anything herein to the contrary, the sole matters to which the Agreement
        and
        General Release do not apply are: (i) Employee’s rights of indemnification and
        directors and officers liability insurance coverage to which the Executive
        was
        entitled immediately prior to __________ __, 20__ with regard to the Executive’s
        service as an officer and director of the Company (including, without
        limitation, under Article 15 of the Severance Agreement); (ii) Employee’s rights
        under any tax-qualified pension plan or claims for accrued vested benefits
        under
        any other employee benefit plan, policy or arrangement maintained by the
        Company
        or under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended;
        (iii) Employee’s rights under Article 7 or Article 11 of the Severance
        Agreement, as the case may be; and (iv) Employee’s rights as a stockholder of
        the Company.

       

          5. No
        Claims Permitted.
        Except
        with respect to the filing of a petition for a declaratory judgment as permitted
        in Article 13 of the Severance Agreement, Employee waives the Executive’s right
        to file any charge or complaint against the Company arising out of
        the

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      Executive’s
        employment with or separation from the Company before any federal, state
        or
        local court or any state or local administrative agency, except where such
        waivers are prohibited by law. This Agreement and General Release, however,
        does
        not prevent Employee from filing a charge with the Equal Employment Opportunity
        Commission, any other federal government agency, or any government agency
        concerning claims of discrimination, although Employee waives the Executive’s
        right to recover any damages or other relief in any claim or suit brought
        by or
        through the Equal Employment Opportunity Commission or any other state or
        local
        agency on behalf of Employee under the Age Discrimination in Employment Act,
        Title VII of the Civil Rights Act of 1964 as amended, the Americans with
        Disabilities Act, or any other federal or state discrimination law, except
        where
        such waivers are prohibited by law.

       

      6. Affirmations.
        Employee affirms the Executive has not filed, has not caused to be filed,
        and is
        not presently a party to, any claim, complaint, or action against the Company
        in
        any forum or form. Employee further affirms that the Executive has been paid
        or
        has received all compensation, wages, bonuses, commissions, and/or benefits
        to
        which the Executive may be entitled and no other compensation, wages, bonuses,
        commissions and benefits are due to the Executive, except as provided in
        Article
        7 or Article 11 of the Severance Agreement, as applicable. The Employee also
        affirms the Executive has no known workplace injuries.

       

      7. Cooperation;
        Return of Property.
        Employee agrees to reasonably cooperate with the Company and its counsel
        in
        connection with any investigation, administrative proceeding, arbitration
        or
        litigation relating to any matter that occurred during the Executive’s
        employment in which the Executive was involved or of which the Executive
        has
        knowledge. The Company will reimburse the Employee for any reasonable
        out-of-pocket travel, delivery or similar expenses incurred in providing
        such
        service to the Company. Employee represents that the Executive has returned
        to
        the Company all property belonging to the Company, including but not limited
        to
        any leased vehicle, laptop, cell phone, keys, access cards, phone cards and
        credit cards.

       

      8. Governing
        Law and Interpretation.
        This
        Agreement and General Release shall be governed and construed in
        accordance with the laws of the Commonwealth of Virginia, without reference
        to
        Virginia’s choice of law statutes or decisions. In the event Employee or the
        Company breaches any provision of this Agreement and General Release, Employee
        and the Company acknowledge that either
        may institute an action to specifically enforce any term or terms of this
        Agreement and General Release pursuant to the dispute resolution provisions
        of
        Article 13 of the Severance Agreement. Should any provision of this Agreement
        and General Release be declared illegal or unenforceable by any court of
        competent jurisdiction and should the provision be incapable of being modified
        to be enforceable, such provision shall immediately become null and void,
        leaving the remainder of this Agreement and General Release in full force
        and
        effect. Nothing herein, however, shall operate to void or nullify any
        enforceable general release language contained in this Agreement and General
        Release.

       

      9. No
        Admission of Wrongdoing.
        Employee agrees neither this Agreement and General Release nor the furnishing
        of
        the consideration for this Agreement and General Release shall be deemed
        or
        construed at any time for any purpose as an admission by the Company of any
        liability or unlawful conduct of any kind.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      10. Amendment.
        This Agreement and General Release may not be modified, altered or changed
        except upon express written consent of both parties wherein specific reference
        is made to this Agreement and General Release.

       

      11. Entire
        Agreement.
        This
        Agreement and General Release sets forth the entire agreement between the
        parties hereto and fully supersedes any prior agreements or understandings
        between the parties; provided, however, that notwithstanding anything in
        this
        Agreement and General Release, the provisions in the Severance Agreement
        which
        are intended to survive termination of the Severance Agreement, including
        but
        not limited to those contained in Articles 8, 9 and 10, 13 and in Section
        17.2
        thereof, shall survive and continue in full force and effect. Employee
        acknowledges the Executive has not relied on any representations, promises,
        or
        agreements of any kind made to the Executive in connection with the Executive’s
        decision to accept this Agreement and General Release.

       

      EMPLOYEE
        HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO
        REVIEW AND CONSIDER THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED
        IN
        WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT
        AND
        GENERAL RELEASE. 

       

      EMPLOYEE
        AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND
        GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE
        (21) CALENDAR DAY CONSIDERATION PERIOD.

       

      HAVING
        ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES
        SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN THE
        SEVERANCE AGREEMENT, TO WHICH EMPLOYEE WOULD NOT OTHERWISE BE ENTITLED, EMPLOYEE
        FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT
        AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE
        HAS OR MIGHT HAVE AGAINST THE COMPANY, AS OF THE DATE OF EXECUTION OF THIS
        AGREEMENT.

       

      [Signature
        Page Follows]

      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
        Agreement and General Release as of the date set forth below:

       

       

      
        	 	 
	 	 
                
                CARMAX,
                  INC.:

                 

                 

              
	 	By: 
                ______________________________ 
	 	Name:_____________________________ 
	 	Title:______________________________ 
	 	
                 

                 

              
	 	
                EXECUTIVE/EMPLOYEE:

                 

                 

              
	 	
                Name:
                  _____________________________

                 

                 

              

      

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      27

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